How to Cancel Your EIN with the IRS: A Guide

Hello, this is attorney Elizabeth Potts Weinstein. Today, we're discussing how to close or cancel your EIN with the IRS. If you're shutting down your business, you might wonder what to do with your EIN.

Understanding EIN

An EIN, or Employer Identification Number, is like a Social Security Number for a business. It's a tax identification number you receive from the IRS, whether you're a sole proprietorship, LLC, or corporation.

Why Close Your EIN?

When closing your business, you want to ensure everything is properly shut down to avoid future filings, payments, or taxes. This also helps prevent potential fraud, as leaving accounts open could make your business vulnerable to identity theft.

Can You Cancel an EIN?

According to the IRS, an EIN cannot be canceled. It remains attached to your business indefinitely. However, you can close your business account with the IRS to finalize all related obligations.

Steps to Close Your EIN

1. Write a Letter to the IRS:

   • Send a letter to the address where you file your tax returns. For example, in California, you would send it to the Utah address.
   • Include the legal name of your entity, the EIN, the business address, and the reason for closing the account.
   • If possible, include the original EIN assignment notice you received from the IRS.

2. Ensure All Obligations Are Met:

   • File your final tax return and make all final tax payments.
   • Close your bank accounts and settle any remaining financial obligations.
   • Complete any outstanding 1099 forms if you paid contractors during the year.

Additional Considerations

• Employment Taxes: Ensure all employment taxes are filed and paid.
• Benefit Plans: Close any pension or retirement plans.
• Record Keeping: Keep your business records for at least seven years, although it's often useful to retain them longer for reference or future planning.

Resources

The IRS provides a comprehensive page on closing a business. Reviewing this can ensure you’ve completed all necessary steps.

If you have any questions about this process, feel free to post them in the comments below. I’ll do my best to point you in the right direction