The IRS appears to have recognized that corporations who have tax issues with the IRS may also have problems with state taxing agencies.  The IRS also noticed that, in California, the Franchise Tax Board has the right to suspend a corporation's powers, rights and privileges for failure to pay California state taxes. 

One of the lost privileges is the privilege to file suit, an issue we have previously discussed in our post last month on Medical Weight Control case.  The fact that the taxpayer had its corporate status retroactively restored was ruled, by the Tax Court, did not serve to retroactively grant a right to file suit in Tax Court.

It would appear this was not a one time only case.  Today the Tax Court came with a decision in the case of Leodis C. Matthews, APC, a California Corporation v. Commissioner, TC Memo 2015-78 that ruled against the taxpayer on virtually identical grounds.

Thus, it would appear that advisers who have California corporations with tax issues should warn the client that an FTB action could remove options for the corporation to contest IRS matters.  Thus the taxpayer may need to "find a way" to get the FTB paid if there exists unpaid California taxes.