Everything has a beginning as well as an end in this world. We hope not, but let’s say you have to dissolve your small business, then there are many things to consider. At the federal level, generally, an entity has to file an annual return for the year it discontinues to operate. There are a lot of tax forms that must be filed with the Internal Revenue Service (IRS) before a business dissolution by the federal government. Filing these tax forms depend on the business structure or the number of the employees a business has. Apart from these tax forms, there are also state tax requirements that a business must fulfil. However, once financial responsibilities are fulfilled and the entity is formally dissolved, one step that is often overlooked is to cancel the EIN.
Many business owners believe that after all tax returns have been filed, the IRS will automatically close or stop the business’s EIN. However, you should keep in mind that an EIN for a business is never discontinued, reused or reassigned. It does not matter if the EIN was ever used or not, Employer Identification Number is permanent. The Internal Revenue Service (IRS) cannot cancel an EIN; however, the business that is associated with the EIN might be closed. If you want to use the EIN in the future, it will still be a part of the business even after the business account is closed.
If you need to close your business account with the IRS, then you must send a written letter to the Internal Revenue Service, Cincinnati, OH 45999.
While the letter must state the reason why you close the account, you should also include the followings:
- The Complete Legal Name of the Entity
- Business Address
- Copy of the EIN Assignment Notice (If Applicable)
For businesses that are regarded as liable for business taxes or whose business tax returns are required to be paid, the appropriate tax returns will need to be filled in order to close the EIN account.
For further information, please do not hesitate to consult us!