If you are planning to close your business, you may be curious about the important processes regarding it. One of these things you want to do can be canceling your EIN. But, is cancelling an EIN even possible and how to cancel your EIN? In this post, we are going to be discussing this topic in detail.
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Can You Cancel an EIN Number?
Once an EIN is assigned to a business by the IRS, it is permanent and cannot be canceled. The IRS does not offer an option to cancel or delete an EIN from their records. However, if your business is no longer operating and you no longer need the EIN, you can request to deactivate it. Deactivating an EIN is essentially the same as canceling it, as it ensures that the EIN will no longer be used for business tax purposes.
It’s important to note that the EIN itself doesn’t go away completely. It remains in the IRS records for identification purposes. But deactivating it prevents any future misuse or confusion with tax filings and IRS communications. Keep in mind that just because you cannot cancel the EIN doesn’t mean that you won’t be able to close down your business properly. There’s still a structured process in place for deactivating an EIN, which we will discuss in detail in the following sections.
Why Deactivate an EIN Number?
There are various reasons why you might want to deactivate an EIN. First and foremost, if your business has closed or you’ve ceased operations, it’s important to deactivate your EIN to keep your records in order. Deactivating the EIN ensures that the IRS knows your business is no longer active and prevents any further tax filings or notifications related to your business.
For example, if you’ve decided to dissolve your business or your business has been inactive for an extended period, you should deactivate the EIN to prevent confusion with future filings. If you fail to deactivate the EIN, it might create problems down the road when dealing with taxes or future business dealings. Keeping your EIN active for a business that is no longer operational can also leave you liable for certain taxes or fees that might otherwise be avoided.
How to Deactivate an EIN Number?
Deactivating your EIN is a relatively straightforward process, though it does require a bit of paperwork and communication with the IRS. To deactivate your EIN, you must send a formal letter to the IRS. This letter should include essential information such as your business name, EIN, business address, and the EIN assignment notice (if available). Additionally, you must clearly state why you want to deactivate the EIN (i.e., your business has closed, or it’s no longer operational). Then, you should send the letter to the IRS. There are two IRS addresses where you can send your deactivation request:
- Internal Revenue Service MS 6055 Kansas City, MO 64108
- Internal Revenue Service MS 6273 Ogden, UT 84201
Be sure to check with the IRS before sending your letter, as the addresses may change from time to time.
Lastly, wait for confirmation. After sending the letter, the IRS will process your request and deactivate the EIN. The processing time may take several weeks, so be patient during this period. Once the deactivation is completed, you should receive confirmation from the IRS. At this point, the EIN will be officially deactivated, and it will no longer be tied to an active business.
Remember to File All Necessary Tax Returns Before the Deactivation
Before requesting the deactivation of your EIN, it’s crucial to ensure that all tax obligations have been fulfilled. If you’ve made tax payments, owe business taxes, or received a notice to file a tax return, you must file all outstanding tax returns and pay any taxes owed before the IRS can process your EIN deactivation.
Filing all the necessary returns is an essential step in properly closing your business with the IRS. This includes filing returns for income taxes, payroll taxes, and any other applicable taxes. If you have employees or independent contractors, you’ll also need to report final wages and payments.
Do I Have to Tell the IRS That I Have Closed My Business?
It’s your responsibility to inform the IRS that you’ve closed your business. Simply deactivating your EIN won’t automatically let the IRS know that your business has ceased operations. You must notify the IRS to close your IRS business account properly.
This is important because if the IRS doesn’t know your business is closed, they may continue to send you notices related to tax filings or business activities. By officially notifying the IRS, you’re preventing unnecessary correspondence and ensuring your business records are updated accordingly. The notification should be included in the letter you send to deactivate your EIN.
Important Steps When Closing a Business Regarding Taxes
Closing a business properly involves more than just deactivating your EIN. The IRS requires business owners to follow specific steps to close their business account and avoid future tax issues. You should take care of your employees’ wages and pay all the taxes you owe. Moreover, make sure to file a final return and report payments to contractors. Deactivating your EIN, closing your IRS business account and keeping your records are among the other important steps.
Other Important Steps of Closing a Business
While handling taxes and deactivating your EIN is a crucial part of closing a business, there are other important steps to take when winding down your business. Firstly, make sure that your decision about closing the business is certain. Also, file dissolution documents and remember to cancel things like registrations and licenses. During the process of closing your business, comply with employment and labor laws and don’t forget to resolve all financial obligations.
Contact Us for Getting Help About EIN
Deactivating your EIN while closing your business can seem like a hard thing. But with the right steps, you can go through this process in a quite simple manner. Contact us if you have questions about this process. Also, you can use our services if you are planning to get an EIN number.
