Short answer: a New York corporation is “dissolved by proclamation” when the state ends its authority to operate because it failed to file franchise tax reports or pay franchise tax for two or more years. The corporation can usually be brought back by filing the missing returns, paying what is owed, and filing the Tax Department’s consent to reinstatement with the Department of State.
Many owners learn about a proclamation only when a bank, landlord or buyer asks for a certificate of good standing. The good news is that dissolution by proclamation is usually fixable. The less good news is that the tax liability keeps growing while the corporation is inactive, so it is worth acting quickly.
What Dissolution by Proclamation Means
Under New York Tax Law §203-a, the Department of Taxation and Finance periodically certifies to the Department of State a list of corporations that have not filed franchise tax reports or paid franchise tax for two or more years. The Secretary of State then publishes a proclamation dissolving those corporations. For a foreign corporation, the equivalent step annuls its authority to do business in New York.
Once dissolved, the corporation cannot legally carry on business, and it cannot bring a lawsuit in New York courts, although it can still be sued. Its name also becomes available for another business to register. What does not disappear is the tax liability: returns, tax, penalties and interest continue to accrue for the years after the proclamation until the corporation is either reinstated or properly closed.
Consequences of Operating While Dissolved
- Personal exposure. Owners and officers who keep doing business in the corporation’s name risk being treated as personally responsible for obligations incurred during the dissolution.
- No access to court. The corporation cannot sue to collect a debt or enforce a contract until it is reinstated.
- Deal problems. Banks, landlords, licensing agencies and buyers routinely check good standing, and a dissolved status can stall a loan, lease renewal, license or sale.
- Lost name. If another company registers the name, the corporation will have to reinstate under a different name.
How to Reinstate a Corporation Dissolved by Proclamation
| Step | What happens |
|---|---|
| 1. Confirm the status | Search the NYS Department of State business entity database. A proclamation shows as an inactive status referencing dissolution by proclamation. |
| 2. File every missing return | File all delinquent franchise tax reports, including for the years after the proclamation. |
| 3. Pay what is owed | Pay the tax, penalties and interest, or reach an arrangement the Tax Department accepts. |
| 4. Request consent to reinstatement | Ask the Department of Taxation and Finance for its consent to reinstate the corporation. |
| 5. File with the Department of State | File the Tax Department’s consent with the Department of State, which annuls the dissolution. |
| 6. Clean up the name and records | If another entity has taken the corporate name in the meantime, the corporation must change its name as part of reinstatement. Update bank, license and contract records. |
Reinstatement annuls the dissolution, and New York courts have generally treated the corporation’s existence as continuing, which can validate many acts taken during the gap. That protection is not automatic in every situation, so contracts signed and lawsuits started while the corporation was dissolved should be reviewed once reinstatement is complete.
What About LLCs?
The tax-based proclamation process described here applies to corporations. New York LLCs are not dissolved by proclamation for tax delinquency in the same way, but an LLC that stops filing its biennial statement or its annual filing fee returns can show as past due, run up penalties and have trouble obtaining good standing. If your LLC’s status looks wrong, the fix starts with the same step: find out exactly which filings are missing.
Reinstate or Dissolve?
If the business is still operating or owns assets, reinstatement is usually the right move. If it has truly stopped operating, formal voluntary dissolution with tax clearance is often cleaner, but it still requires filing the delinquent returns first, because a proclamation never ends the tax obligation. Our guide to dissolving an LLC or corporation in New York walks through the voluntary process.
Need to restore good standing quickly? Our New York business attorneys coordinate the delinquent filings, the Tax Department consent and the Department of State filing so you can get back to business.
Frequently Asked Questions
What does dissolved by proclamation mean in New York?
It means New York ended a corporation’s authority to do business because it failed to file franchise tax reports or pay franchise tax for two or more years. The Department of Taxation and Finance certifies the delinquent corporations and the Department of State publishes the proclamation.
Can a corporation dissolved by proclamation be reinstated?
Yes. The corporation files all delinquent franchise tax reports, pays the tax, penalties and interest, obtains the Tax Department’s consent to reinstatement, and files that consent with the Department of State. If another business has taken the name, the corporation must reinstate under a new name.
Does dissolution by proclamation end my tax liability?
No. Tax, penalties and interest continue to accrue for the years after the proclamation. They must be resolved whether you reinstate the corporation or close it properly.
Can an LLC be dissolved by proclamation in New York?
The tax-based proclamation process applies to corporations. LLCs face different consequences for missed filings, such as past-due status and penalties, rather than dissolution by proclamation for unpaid franchise tax.
How long does reinstatement take?
It depends mostly on how many years of returns are missing and how quickly the Tax Department issues its consent. Once the consent is issued, the Department of State filing itself is straightforward.
Need to Reinstate Your Corporation?
Our business attorneys handle reinstatements, voluntary dissolutions and good-standing problems for New York companies. Schedule a free consultation.
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