20 Oct WITHDRAW, CANCEL, OR DISSOLVE A BUSINESS IN NEW JERSEY
WITHDRAW, CANCEL, OR
DISSOLVE A BUSINESS IN NEW JERSEY
When a business entity is closing its operation in New Jersey, steps must be taken to dissolve a business in New Jersey and remove the entity from the tax and public records. Technically, domestic corporations will dissolve, LPs/LLPs and LLCs will cancel and foreign corporations will withdraw. Dissolution allows the LLC the opportunity to wind up their affairs before terminating. They also have the option to Dissolve/Terminate concurrently. In all cases, the business must be in good standing. In addition, a Tax Clearance Certificate must be issued for both domestic and foreign for-profit corporations with assets.
The dissolution/cancellation/withdraw will be considered effective when all online information, payments and, in the case of for-profit corporations, tax clearance certificates have been received.
Consequences of Not Dissolving a Corporation
When a corporation has ceased doing business and the corporate charter is no longer desired, it is essential that the corporation is dissolved with the New Jersey State Treasurer through the Division of Revenue to avoid future Corporation Business tax, penalty, and interest. Every corporation must submit New Jersey Corporation Business Tax Returns whether a corporation discontinued business or distributed assets in liquidation and it remains subject to at least the minimum tax ($500) on an annual basis from its incorporation or authorization date until it legally dissolves through the New Jersey State Treasurer by the Division of Revenue. Failure to dissolve the corporation when the corporation has ceased doing business will result in the legal requirement to continue to file Corporation Business Tax returns with the necessary remittance of the minimum CBT tax.
The dissolution shall be considered filed and effective as of the date the Division of Revenue receives the properly completed and executed articles of dissolution, payment of all fees, and notice of Tax Clearance from the Division of Taxation. All business tax eligibilities for the corporation will be ended as of the date the request for dissolution is received and accepted by the Division of Revenue. However, prior tax liabilities will still apply and be subject to the Division of Taxation’s review. Please note that if the corporation does not resolve prior tax liabilities due the Division of Taxation and a Tax Clearance Certificate is not issued the business tax eligibilities will be reversed as if there was no lapse in subjectivity.
If dissolution procedures are not completed, and full payment of the outstanding liability is not received, the case will be forwarded to the Special Procedures Branch, Judgment Section, for further collection action. Notice and Demand for Payment letters will be sent to the Corporation and to the corporate officers. Responsible corporate officers will be held personally responsible for trust fund taxes. If the tax liability is not resolved, a Certificate of Debt will be filed in the New Jersey Superior Court against the corporation and any responsible officers. A 10.7% Cost of Collection fee is added to the docketed judgment amount and becomes part of the outstanding debt. A Notification of Judgment letter is sent to the corporation and responsible officers who are covered by the docketed judgment.