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What happens to a corporation, or any of its executives, when that corporation is dissolving but has unpaid state franchise tax fees that it does not have the assets to pay? Can these corporation liabilities transfer to their executives?

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What happens to a corporation, or any of its executives, when that corporation is dissolving but has unpaid state franchise tax fees that it does not have the assets to pay?

You can't get blood out of a turnip, even if you are the tax collector. This said, if assets were transferred without consideration to someone, the tax due could be recovered from the recipient of the assets in a fraudulent transfer action against that recipient.

Can these corporation liabilities transfer to their executives?

Depends upon what the applicable state statute says.

More than one state has franchise taxes and the consequences for violating them are not the same. The magnitude of the taxes are also not the same.

In some states it is basically an annually filing fee of a couple of hundred dollars or less, and simply forcing the corporation to dissolve for nonpayment would be considered punishment enough. In California, franchise taxes amount to a full fledged and significant state level corporate income tax.

Many states impose personal liability as a matter of law on directors of corporations that pay dividends or make liquidating distributions to owners of a corporation when it is insolvent.

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