StarcycleGuide
Closing your business? Starcycle runs the shutdown with you.
Get startedYou've closed your company, or you're about to, and the EIN turns out to be one more loose end. To cancel an EIN, file your business's final tax returns, pay any tax you owe, then mail the IRS a letter asking it to deactivate the number. The IRS can't cancel an EIN, but it can deactivate one, and the number stays assigned to your business permanently.
A loose end this late is tiring, but the letter is short. Most of the work is in the returns the IRS wants before it acts on your request.
Most founders think the EIN works like a subscription they can cancel once the business stops making money. That logic fails because an EIN (Employer Identification Number, the federal tax ID the IRS assigned your business) is a permanent identifier tied to a legal entity, and the IRS says it can't cancel one. Even after operations stop, the IRS still asks for a final return for the year you close. The business may feel closed to you, but on the IRS's side the account stays open until the returns are filed, the tax is paid and your letter arrives.
The wording adds to the confusion, because the IRS tells you to cancel your EIN on one page and explains on another that it can only deactivate one. Both pages are describing the same letter.
Word | Where the IRS uses it | What it refers to |
|---|---|---|
Cancel | Its closing a business page: "Cancel your EIN and close your IRS business account" | The letter you send asking the IRS to close the account |
Deactivate | Its EIN page: "we can't cancel it, but we can deactivate it" | What the IRS does with the EIN once it accepts your letter |
Permanent | Both pages | The number itself, which stays assigned to your business entity |
"Dissolve" is the odd one out, because it belongs to your state, where you file to end the LLC or corporation itself. Founders often assume the closure systems update each other, so that closing with the state closes the IRS side too. The state filing goes to a different agency, and for the EIN the only route the IRS describes is the letter. For the state side, start with how to dissolve an LLC.
An EIN cannot be canceled, because once the IRS assigns an Employer Identification Number to a business entity, it becomes that entity's permanent federal taxpayer ID number. What the IRS will do is deactivate the EIN after you send a written request, provided all outstanding tax returns are filed and all taxes owed are paid.
Many founders believe an EIN disappears when a business closes. The IRS's page on what to do if you no longer need your EIN says an EIN "becomes that entity's permanent federal taxpayer ID number" once it is assigned, and it describes no way to remove the number from the business.
The IRS will deactivate an EIN you no longer need when you ask for it in writing. The same page asks for a letter and names no form for the request, so there's no form for you to track down, and the letter is one you write yourself.
Closing an EIN is a question of order as much as paperwork. You can write every line of the letter correctly and still be early with it. Before it deactivates an EIN, the IRS requires every outstanding tax return to be filed and every tax owed to be paid. In the IRS's words, that condition applies if you "made tax payments, owe business taxes or received a notice to file a business tax return".
Tax-exempt organizations have their own conditions and their own IRS contact on that page. If you're closing one, start with how to dissolve a nonprofit.
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Get my shutdown planTo close an EIN with the IRS, file your final tax returns, pay any tax you owe, then mail a letter giving the EIN, the legal name, the address and your reason for deactivating it. Enclose the EIN assignment notice if you kept it. The IRS then deactivates the EIN and closes the business account attached to it.
Closing the IRS business account is not the bottleneck. The EIN letter is the fifth of six steps on the IRS's own list for closing a business, after the final returns, the employment tax filings, the tax payment and the contractor forms, and the hard part is everything ahead of it. The full sequence, with the IRS closing a business checklist and how you notify the IRS on each final return, is in our guide to how to close a business with the IRS.
You stop taking payments, let the lease expire and cancel the software stack, and the IRS still expects a final return for the year you close your business. The form depends on how the business is taxed, and you only need the one line below that matches yours. The IRS's closing a business page lists the return for each type:
An LLC files whichever of these matches the way it is classified for federal income tax.
Many business owners overlook the payroll filings, because the last paycheck feels like the end of payroll. If you had employees, your final Form 941 or Form 944 and your Form 940 for the year are part of the same step. Confirm the full filing list for your business with your CPA before you file anything marked final.
Founders often mistake IRS silence for approval. The IRS states that it cannot close your business account until you have filed all necessary returns and paid all taxes owed, and that holds for a balance nobody has written to you about. Pay whatever your final returns show before you mail the letter, so the request arrives with nothing outstanding against the account.
State obligations run on a separate track, and the IRS page reminds you to check your state responsibilities when you close. Your state tax agency and the office that registered your business each have their own closing steps.
With the returns filed and the tax paid, you mail the IRS your request to deactivate the EIN. After the returns, this step is the easier one. The request is a plain letter with no form attached, and the IRS lists what it has to contain.
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Get a quoteAn EIN cancellation letter gives the IRS your entity's EIN, its legal name, its address and your reason for deactivating the number. Enclose a copy of the EIN assignment notice, the notice the IRS sent when it issued the number, if you still have it.
It's natural to think the request can't go out without that notice, which may be years old by now. A copy is helpful, and the IRS asks for it only if you still have one. The IRS's closing a business page describes the same letter in slightly different words.
The IRS pages linked above don't include a template, so this sample carries the items the IRS asks for and nothing else. Replace everything in brackets with your own details.
[Date]
Internal Revenue Service
[Mailing address from the IRS page]
Re: Request to deactivate EIN [XX-XXXXXXX]
Please deactivate the employer identification number below and close the business account associated with it.
A copy of the EIN assignment notice is enclosed. [Delete this line if you no longer have the notice.]
[Signature, printed name and title]
The IRS lists the mailing address for the letter on its EIN deactivation page. Copy the address from that page on the day you mail the letter.
Mailing a letter to the IRS and then hearing nothing back is an uneasy place to be left. Neither IRS page says how long the IRS takes to respond, so there is no published date to measure the wait against. Keep a copy of the letter and of everything you enclosed with it, and write the mailing date on your copy, so the whole request is in one place while you wait.
The letter is the short part, and the IRS acts on it only when the returns behind it are filed and the tax is paid. If you're unsure where you stand, you can take one question to your CPA: which returns does the IRS still expect from you? The IRS also asks you to keep employment tax records for at least four years after filing the fourth quarter for the year, so file your copy of the letter with them.
Closing a business means taking apart a structure you built piece by piece, and the EIN is one of those pieces. If you'd like some of that off your plate, Starcycle works on the paperwork around the EIN for U.S. businesses: we prepare and file the state dissolution paperwork, track key dates and the timelines for canceling contracts and subscriptions, and keep the documents in one place. Final returns are coordinated with a partner CPA or your own, and we can also make intros to lawyers and accountants if your shutdown needs one.
The IRS lists "Cancel your EIN and close your IRS business account" as one of the six steps on its closing a business page. Neither IRS page sets a deadline for the letter, so ask your CPA when to send it in your case.
If you got an EIN and never used it, the request is the same letter, sent to the address the IRS lists on its EIN page. The IRS's requirement to file returns and pay tax first applies if you made tax payments, owe business taxes or received a notice to file a business tax return.
The IRS's EIN page describes a letter sent by mail and lists no online option. It gives a fax number for tax-exempt organizations only.