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It is said that running an organization
is a combination of luck and hard work. Sometimes, one or
both of these two factors is lacking, and despite a lot
of efforts to save the organization, it becomes untenable.
At that point, there’s really no alternative but to
shelve the organization altogether.
There are certain common steps involved in dissolving an
organization. Basically the following six steps are involved
in the dissolution.
- Director action. To dissolve a
company, it is necessary for all the directors to
agree on the situation and what will follow after
the organization is wound down.
- Filing the articles of dissolution:
The paperwork and other necessary documents need
to be produced to the state, once the decision is
finalized. If you have propagated your organization
to other states, those states also need to be informed
and files submitted. To resolve claims by notifying
the creditors is considered necessary before filing
a certificate of dissolution in many states. The
secretary of your state’s office can provide
valuable information regarding the filing of articles
of dissolution. Many states prefer to have clear
tax records before the filing is done.
- Filing of federal, state and
local tax forms. Even after stopping production
in your business, your tax obligations don’t
stop instantly. The documents regarding the closing
of the company should be submitted to the IRS and
the state and local tax agencies. In case of employees,
reporting the payroll may be compulsory, in order
to safeguard their interests.
- Informing the creditors. You
must inform all your creditors regarding the dissolution
of the organization. Also include your mailing address
for their convenience, as they may want to make
a claim on the assets of the organization. Also
state what documents are necessary to file for claim.
After issuing notice, usually the claim should arrive
within a period of 120 days. Notify the creditors
regarding the deadline. Obviously a note of warning
should end the notice saying the claims will not
be processed if they’re posted after the due
date. Sometimes even notice in the local newspapers
is legally sufficient.
- Handling the creditors’
claims. After the creditors make their claims, it
is at the organization's discretion either to accept
or reject the claims. If accepted, the company should
take necessary steps to pay the claimants or look
for a way of settling the claim. The creditor may
agree upon a percentage of the original claim amounts,
if the whole amount won’t be forthcoming.
However, if you reject the claim, you must inform
the creditor in writing.
- Distribution of remaining organization
assets. Your organization, in order to qualify for
501(c)(3) status, was
required to demonstrate that its assets are dedicated
to an exempt purpose. One common way to fulfill
that requirement is for the organization's certificate
of incorporation to provide that, upon dissolution,
the assets would be distributed for one or more
exempt
purposes, or to the federal government. Another
way to fulfill that requirement is to be able to
show that upon dissolution the assets would be distributed
by a court to another organization to be used in
a manner as in the judgment of the court will best
accomplish the
general purposes for which the dissolved organization
was organized. The Organizational Test Under IRC
501(c)(3). The remaining assets must be distributed
in accordance with the language stated on either
the articles of organization or the bylaws.
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| Since
1999 |
| For over 10 years, Patel & Alumit has been the trusted leader in obtaining 501c3 tax exemptions for our clients. Our experience is unparalleled and our commitment is to the thousands of clients whom we have had the privilege of serving. |
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