Waiver of Penalty for Tardy Statement of Information
The California Secretary of State has historically been relentless about charging the penalty imposed for the late filing of annual statements of information. During the COVID pandemic, however, the Secretary of State’s office has indicated that it will continue to provide relief from the late penalty for any reason, so long as the proper form is submitted, which may be easily accomplished online.
California business entities, including for-profit corporations, are required to file an annual statement containing certain specified information on a form prescribed by the Secretary of State.[1] If the corporation fails to file the statement of information as required, then the Secretary of State provides a delinquency notice to the corporation.[2] The notice must contain certain information required by statute, including that the corporation is subject to a $250 late filing penalty, as well as information on how the corporation can request relief from the penalty from the Secretary of State due to “reasonable cause or unusual circumstances that justify the failure to file” on time.[3] If the corporation does not file the statement of information within 60 days of being provided the notice of delinquency, the Secretary of State certifies the corporation’s name to the Franchise Tax Board, which is then required by law to assess the $250 penalty.[4]
Like the statement of information itself, a corporation’s request for a waiver of the late filing penalty may also be filed with the Secretary of State online. As required by statute, the online form continues to provide a space where the corporation must “state the specific reasons for failure to file the statement within the required filing period.” However, we have confirmed in a telephone conversation with the Secretary of State’s office that all requests for a waiver of the late penalty will be accepted due to COVID for the foreseeable future. In other words, while a reason must be specified for the late filing on the online form, any explanation will suffice to secure the waiver. Note, however, that the corporation must still be sure to file the statement of information to avoid other adverse consequences of not filing, including suspension of the corporation’s powers, rights, and privileges.[5]
[1]See Cal. Corp. Code §§ 1502(a) (for-profit corporations), 17702.09(a) (limited liability companies). The form may be filed online.
[3]Id.