LLC contract voidability for failure to file tax returns

Calif. Revenue and Taxation Code §§23304.1 and 23305.5
Amended by A.B. 1143
Effective date: September 15, 2014

Beginning January 1, 2014, contracts entered into by a foreign limited liability company (LLC) which has:

• not qualified to do business in California;
• does not have an account number with the FTB; and
• failed to file a California tax return;

are voidable by other parties to the contract.

This contract voidability is effective for all contracts entered into from the beginning of the year for which the LLC failed to file a tax return until:

• the date the LLC qualifies to do business in California; or
• the date it obtains an account number with the FTB.