Dear TaxGuru,

I formed an S Corporation in 2004 (NY State) but never had any activity on it. I did not file my papers for 2005, 2006, and 2007 so now NY State wants me to either file or call to inform them that the company is no longer doing business in NY State and to dissolve the company.

My question is, what is the most cost effective way to handle this?

Is it less costly to file and pay taxes on it? I have read on various sites that each state requires inactive companies to pay a certain amount of taxes to the state but does not have to pay federal taxes.

Or would it be it less costly to dissolve the company?

Any insight will be greatly appreciated. Thank you.