Consequences for not Maintaining Corporate Status with a State

When a corporation fails to comply with state requirements for maintaining its status (e.g., filing annual tax returns, paying state taxes), it can result in dire consequences. For example, one California corporation that didn’t pay its state taxes had its powers, rights, and privileges suspended. This occurred during the 90-day period in which it wanted to file a petition in Tax Court. The court rejected the petition, even though the corporation’s powers, rights, and privileges were later reinstated.