To close an EIN, send the IRS a signed letter asking it to close the business account associated with your Employer Identification Number. There’s no form for this. The IRS won’t actually cancel the EIN itself — the number stays assigned to your entity forever — but it will deactivate the account so no further returns are expected.1Internal Revenue Service. If You No Longer Need Your EIN Writing the letter takes ten minutes. The work that has to come first is the part most people underestimate.
What Closing an EIN Actually Means
Deactivation tells the IRS the account is no longer active. The EIN itself is permanent and will never be reassigned to another entity. If you ever reopen the same business later, you can ask the IRS to reactivate the account under the original number.
Request deactivation when the business has stopped operating entirely: a sole proprietorship that shut down, a partnership that dissolved, or a corporation that liquidated. If a sole proprietorship incorporates, the new corporation needs its own EIN, and the old one should be closed.2Internal Revenue Service. When to Get a New EIN
When You Don’t Need to Close It
You don’t need to close your EIN (or get a new one) for routine changes: updating the business name, changing the address, or adding locations. An LLC that changes its tax classification — electing to be taxed as a corporation instead of a partnership, for example — keeps its existing EIN as long as the legal entity itself hasn’t changed.2Internal Revenue Service. When to Get a New EIN
File Every Final Return First
The IRS will not process a deactivation request for an account that still has outstanding filings. Which returns you owe depends on your business structure.3Internal Revenue Service. Closing a Business
Sole Proprietors
File Schedule C with your Form 1040 for the year you close. Add Form 4797 if you sold business property or equipment, and Form 8594 if you sold the entire business. Self-employment tax still applies on net earnings of $400 or more.3Internal Revenue Service. Closing a Business
Partnerships
File a final Form 1065 with the “final return” box checked near the top of page one. Check the “final K-1” box on each partner’s Schedule K-1. Report capital gains or losses on Schedule D, and file Form 4797 if the partnership sold business property.3Internal Revenue Service. Closing a Business
Corporations
Before the final income tax return, file Form 966 (Corporate Dissolution or Liquidation) within 30 days of adopting a resolution or plan to dissolve, with a certified copy of the resolution attached.4Internal Revenue Service. Form 966, Corporate Dissolution or Liquidation That 30-day clock is easy to miss while you’re winding down operations.
C corporations then file a final Form 1120; S corporations file a final Form 1120-S. Check the “final return” box, and for an S corp, check “final K-1” on each shareholder’s Schedule K-1. Report capital gains and losses on the appropriate Schedule D.3Internal Revenue Service. Closing a Business
Wrap Up Employment Taxes
If you had employees, closing requires several steps the IRS actively enforces. The Trust Fund Recovery Penalty can hold you personally liable for unpaid withholding.
- Deposit all withheld income tax, Social Security, and Medicare taxes from final paychecks.
- File a final Form 941 (or Form 944). Check the box indicating the business has closed, enter the date of final wages, and attach a statement naming who will keep the payroll records and where.
- File a final Form 940. Check box “d” in the Type of Return section.
- Issue Forms W-2 to employees by the due date of your final Form 941 or 944, and transmit Copy A to the Social Security Administration with Form W-3.
Each step is laid out on the IRS closing-a-business page by entity type.3Internal Revenue Service. Closing a Business
Pay Any Balance and Close Out Elsewhere
Pay the outstanding tax balance in full. If you can’t pay everything at once, contact the IRS about payment options; an unpaid balance will block a clean closure.5Internal Revenue Service. What if I Close My Own Business Report gains or losses from any business property sold during the wind-down on Form 4797.6Internal Revenue Service. About Form 4797, Sales of Business Property
Outside the IRS, cancel state and local registrations, licenses, and permits. Most states require articles of dissolution or a certificate of termination filed with the secretary of state. Close business bank accounts and settle vendor and loan balances. Until these are handled, the business is dormant rather than closed, and dormant businesses create problems.
Writing and Sending the Letter
Draft a plain letter including:1Internal Revenue Service. If You No Longer Need Your EIN
- The legal name of the entity
- The EIN
- The business address
- A copy of the EIN Assignment Notice, if you still have it
- The reason for closing — for example, “business permanently ceased operations on [date]”
Mail it to one of these addresses:
Internal Revenue Service
MS 6055
Kansas City, MO 64108
Internal Revenue Service
MS 6273
Ogden, UT 84201
Tax-exempt organizations use a separate address (IRS, Attn: EO Entity, Mail Stop 6273, Ogden, UT 84201) and can also fax the request to 855-214-7520. The fax option is only for exempt organizations.1Internal Revenue Service. If You No Longer Need Your EIN
Keep copies of the letter and everything attached. The IRS doesn’t publish a processing timeline for these requests, so your copies are what prove you acted on a specific date.
Why Not Just Let the EIN Sit
Leaving an inactive EIN open creates two concrete problems. The IRS may continue to expect returns from an account it considers active, and failure-to-file penalties run 5% of unpaid tax per month up to 25%, with a minimum penalty for returns more than 60 days late.7Internal Revenue Service. Failure to File Penalty An unused EIN is also a target for identity theft: someone can file fraudulent returns or fake W-2s in your business’s name. Warning signs include rejection notices for returns you didn’t file, SSA notices about W-2s you didn’t issue, or balance-due notices for taxes you don’t owe.8Internal Revenue Service. Report Identity Theft for a Business
How Long to Keep the Records
Don’t shred your files once the account is closed. The IRS ties retention to the statute of limitations:9Internal Revenue Service. How Long Should I Keep Records
- 3 years for records supporting a filed return
- 4 years for employment tax records, from the date the tax was due or paid, whichever is later
- 6 years if you failed to report more than 25% of gross income
- 7 years if you claimed a deduction for worthless securities or bad debt
- Indefinitely if you never filed a return or filed a fraudulent one
Seven years of general records covers most scenarios. Hold the deactivation letter, the EIN Assignment Notice, and any IRS correspondence about the closure permanently; they are what you’ll point to if a question ever comes back.