Found an issue on this page? Let us know and we will look into it as soon as possible.
How to endorse a government check payable to a dissolved corporation?
Anonymous2 views3 answers
I have a client whose corporation was so inactive, they closed it last year but the tax return generated a refund check from both the FTB and IRS made payable to the dissolved corporation. My client has a copy of their old articles & statement of domestic stock but they are dated 1996 & 1998 respectively. Can my client endorse the checks over to the sole officer/director, i.e. "ABC Inc pay to the order of John Smith"? They are with a new bank so would the bank require a copy of the articles?
Thank you.
The dissolved corporation may open a bank account and "wind up." Dissolved corporation are very different fropm cancelled corporations or suspended corproation. The dissolved corporation may also assign the check to the shareholders or persons entitled to the check. Ask you bank what there need before signing the check.
See California Corporations Code section 2010. Reprinted here:
(a) A corporation which is dissolved nevertheless continues
to exist for the purpose of winding up its affairs, prosecuting and
defending actions by or against it and enabling it to collect and
discharge obligations, dispose of and convey its property and collect
and divide its assets, but not for the purpose of continuing
business except so far as necessary for the winding up thereof.
(b) No action or proceeding to which a corporation is a party
abates by the dissolution of the corporation or by reason of
proceedings for winding up and dissolution thereof.
(c) Any assets inadvertently or otherwise omitted from the winding
up continue in the dissolved corporation for the benefit of the
persons entitled thereto upon dissolution of the corporation and on
realization shall be distributed accordingly.
Robin MashalLitigation LawyerLos Angeles, CACA licensed ·
Disclaimer: The materials provided below are informational and should not be relied upon as legal advice.
Once a corporation is dissolved, it can no longer conduct any business, including things such as endorsing a check over to a third party. As well, the bank will likely refuse to accept deposit of a third party check. Your client may need to contact the government agency and see if the check can be reissued. Be sure to consult your own attorney to protect your legal rights.
The other answers are correct. But, if your clients have a good relationship with their bank, the bank might just accept the check without any question.
You could also just try to deposit it and see if the bank catches the problem.
However, because these are checks from government tax agencies, there may be risks, including tax risks. Best bet is to contact the IRS & FTB and ask them what to do, or contact a CPA.
