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Oct
11 • 2009
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Dear New York: Would you please simplify your dissolution process? (Four Steps to Dissolving in NY)

While California has simplified its process for dissolving a corporation, New York has retained its cumbersome process.  As so many entrepreneurs face the reality of taking their small businesses off life support following the Great Recession, the time is now for New York to simplify its outdated process.

Effective September 29, 2006, California did away the requirement that all corporations submit a tax clearance certificate issued by the Franchise Tax Board along with Certificate of Dissolution. The change provides companies with an efficient dissolution process which usually takes about 7-10 days from start to finish. Unfortunately, not all jurisdictions have followed California’s example. In New York, business entities may voluntarily dissolve only after the New York State Department of Taxation and Finance gives the entity permission to do so.  Companies must obtain the consent of the State Tax Commission from the New York State Department of Taxation and Finance prior to submitting the Certificate of Dissolution to the Department of State for filing.

The overall process can be divided into four steps.

Step 1: Requesting Consent to Dissolve from the New York State Department of Taxation and Finance

The first step is to contact the New York State Department of Taxation and Finance to request permission to dissolve. Only an officer of the company may make the request by calling (1-800-327-9688) or placing a letter.

Step 2: New York State Department of Taxation and Finance Reviews the Company’s Tax File

Once the request to dissolve or surrender has bee received, the Department will determine if a final corporation tax return has been filed. The company can use the tax form it normally uses for its annual returns, but must mark an X in the box marked Final at the top of the return. The Department will also determine if the corporation is up-to-date with its returns and taxes. This includes any taxes and returns due for any part of a year in which the corporation was in existence.

If the corporation has filed all its returns and paid all its taxes and maintenance fees, the Department issues a written consent to dissolve the corporation with 7 to 10 business days. If there are outstanding issues, the Department will send a letter informing the company what needs to be done before it  can give consent to dissolve.

Step 3: Certificate of Dissolution from the Department of State

Next, the company will need to have a Certificate of Dissolution prepared and executed by an officer of the company.

Step 4: Certificate of Dissolution from the Department of State

Once the Company has obtained the Department of Taxation and Finance’s consent and prepared the Certificate of Dissolution, both need to be filed with the Department of State.

While this process can be burdensome, maintaining the company’s good standing by filing returns and paying taxes will make the dissolution process much more efficient.