How are tax refunds processed when there is a bankruptcy involved?
If your clients file Chapter 7 bankruptcy and only have post petition liabilities, FTB will offset the post-petition refund automatically to any outstanding post-petition debt. If your clients expect a refund on a post-petition tax year, allow six to eight weeks after filing the tax return before inquiring about its status. If your client expects a refund on a pre-petition tax year, please call us to determine its status. What about dissolving a corporation? How can my client receive a tax clearance certificate? California corporations and qualified foreign corporations must obtain a tax clearance certificate from us to complete their dissolution or surrender with the California Secretary of State. To obtain a tax clearance certificate, file a Request for Tax Clearance Certificate — Corporation, form FTB 3555. The instructions are on the form. Your clients must also file all required returns, pay any outstanding taxes, penalties, interest and fees, and do one of the following: • File a
