What is the process for obtaining a Certificate of Tax Clearance from the FTB when dissolving a California corporation?

To obtain a Tax Clearance Certificate from the Franchise Tax Board (FTB), you must pay all taxes, file all required returns, and submit final dissolution paperwork to the Secretary of State, which triggers the FTB's review. Here is the step-by-step process for dissolving your corporation and getting tax clearance: Step 1: File All Required Tax Returns You must file all past-due state tax returns for the corporation. You must also file a final tax return (Form 100 for a C-Corp or 100S for an S-Corp) for the last year of business. Be sure to check the "Final Return" box on the form. Step 2: Pay All Taxes and Fees Pay all outstanding taxes, penalties, interest, and fees owed to the FTB. This includes the minimum franchise tax for the final taxable year, which applies even if the corporation was inactive or operated at a loss. You can verify your balance through the FTB's website. Step 3: File Dissolution Documents with the Secretary of State File a completed Certificate of Dissolution (Form DISS STK) with the California Secretary of State. This form certifies that the corporation has completed its winding-up procedures. Filing this document with the Secretary of State is what formally initiates the request for tax clearance from the FTB. Step 4: FTB Review and Certificate Issuance The Secretary of State will notify the FTB of your dissolution filing. The FTB will then review the corporation's account to verify that all tax requirements have been satisfied. Once confirmed, the FTB issues the Tax Clearance Certificate directly to the Secretary of State, not to you or the corporation. The Secretary of State will then finalize the dissolution. Important Details and Nuances: Unlike LLCs, corporations do not typically file a separate request form for tax clearance. The process is integrated into the dissolution filing with the Secretary of State. The entire process can take several months, so it is important to begin well in advance of your desired dissolution date. Warnings and Limitations: The Secretary of State cannot finalize the dissolution until it receives the Tax Clearance Certificate from the FTB. If you fail to file a final return or pay all outstanding balances, the FTB will not issue the certificate, and your corporation will remain legally active and continue to incur the annual minimum franchise tax. This is general information and does not constitute legal advice. For complex situations, such as those involving significant tax liabilities or business assets, you should consult with a qualified California attorney.