State agencies suspend the operations of nonprofits for several reasons:
- Failure to file one or more tax returns,
- Failure to pay the business’ balance due,
- Failure to file the annual Statement of Information with the Secretary of State or other state filings.
Suspension or forfeiture affects a nonprofit in many ways:
- The organization loses its rights, powers, and privileges to conduct business in that state,
- The organization loses the right to use its name. In turn, another organization could register with the suspended or forfeited organization’s name, and the name would then belong to the other organization,
- The organization cannot initiate lawsuits, defend itself against lawsuits, or enforce its legal contracts. But other parties can enforce their terms in these contracts,
- If the organization enters contracts while suspended or forfeited, it can never enforce those contracts unless it obtains relief of contract voidability (only available in some states),
- Suspensions and forfeitures are public information,
- The organization loses the right to get an extension to file a tax return.
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