A "Tax Clearance" is a certificate issued by a state's Department of Revenue (sometimes called the Department of Taxation or the Department of Treasury) that provides any outstanding tax liabilities. Many states require a company to obtain a tax clearance proving the company is current and compliant with its taxes before proceeding with various corporate transactions including the sale of a business or the withdrawal or dissolution of a company. The tax clearance itself does not constitute the withdrawal or dissolution of a company; it is often required as supporting documentation for other corporate documents filed in the process of closing a business. Additionally, a tax clearance is often required when a company elects to file a reinstatement for the purpose of receiving authority to transact business within a state again.
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