What Makes a Corporation Inactive in NY?

The New York Secretary of State expects New York corporations to pay annual fees and submit biennial reports. Once a corporation has failed to do both of these things, the Secretary of State suspends the corporation, rendering it inactive or dormant. Dormant corporations cannot be used and provide no liability protection to their owners.

New York City has a narrower definition of a dormant corporation. For the city to release a dormant corporation from its General Corporation Tax, the company must be listed by the Secretary of State as inactive and have no transactions or dealing for an entire year. Otherwise, the city will continue to pursue tax collection and hold shareholders responsible.

Shareholders sometimes prefer to let their corporations lapse into dormancy rather than terminate or dissolve them. That's because a dormant corporation can be easily revived by paying as little as $9 in fees. Those who decide to take a break from their businesses can resume under the same corporation name and identity, rather than have to start all over again.

Dormant corporations often owe taxes. If shareholders or directors did not keep the corporation's tax filings and payments current, New York's Department of Finance and Taxation can suspend a corporation, pushing it into dormancy. Business operators cannot reactivate the corporation all taxes due are paid.

New York allows corporations to stay dormant indefinitely. A corporation only ceases to exist if shareholders file for dissolution. Once the Secretary of State approves dissolution, the only way to revive a corporation is through a court order. Otherwise, shareholders have to create a new corporation. However, dormant corporations can be revived at any time so long as any fees owed are paid to the Secretary of State and Department of Finance and Taxation.