An EIN Number Lasts Forever…and Ever…and Ever

EINWhen closing a small business, there are many things to consider. On a federal level, a business typically must file an annual return for the year it goes out of business. Depending on the business structure or whether the business had employees, there are a number of tax forms that typically must be filed with the IRS before a business is deemed closed by the federal government, not to mention state tax requirements.

Does an EIN get canceled when a business closes?

Once the fiscal responsibilities have been met and the entity has been formally dissolved, one step that is frequently overlooked is closing the EIN business account with the IRS.

Many business owners think that once all final tax filings have been made, the IRS will automatically close or discontinue the entity’s EIN, but just as the title of this article implies the EIN for the business is never discontinued, reassigned or reused. Regardless of whether or not an EIN was ever used, the number is PERMANENT. An EIN cannot be canceled by the IRS; however, the business account associated with the EIN may be closed. If the EIN is needed in the future, it will still belong to the business entity even after the account is closed.

To close a business account with the IRS, a written letter is required to be sent to: Internal Revenue Service, Cincinnati, OH 45999. 

The letter must state the reason for closing the account and include the EIN, the complete legal name of the entity, and the business address. If a copy of the EIN Assignment Notice is available, be sure to include it with your letter. For entities that are deemed liable for business taxes or have been notified that business tax returns are due, the appropriate tax returns will need to be filed before the EIN account can be closed.

To be absolutely sure that all necessary filings have been made to close your business with local, state, and federal tax agencies, Harvard Business Services strongly suggests that you seek the assistance of a qualified tax professional. And please reach out to us if you need help closing your company.

I'm not closing, just re-organizing. Do I need a new EIN? 

Ultimately, the decision on whether you need a new EIN will be made by the IRS, but as a general rule, any time a business re-organizes it will need a new EIN.  Examples of re-organization include:

  • Changing from a corporation to another entity, like an LLC or Limited Partnership, or vice versa
  • Incorporating in a new state, resulting in a new state charter
  • Merging corporations, resulting in a new corporation
  • Changing a sole proprietor to a partnership or other business entity like a corporation, LLC, etc.
  • Changing a partnership to a sole proprietor or other business entity like a corporation, LLC, etc.
  • Changes to a partnership, resulting in a new partnership (i.e. one partner out, a new partner in)
  • Changes in business ownership that result in the original EIN applicant no longer maintaining ownership of the company

Aside from re-organizing a business, most other changes typically do not require a new EIN.  Some examples of changes that do not require a new EIN are:

  • Changing the name of your business
  • Changing a location or adding a location
  • Electing to be taxed as an S corporation or electing, on Form 8832 Entity Classification Election, to change the way the entity is taxed
  • A partnership or corporation declares bankruptcy

These lists are not meant to cover all situations, but do cover a number of common changes we see everyday. If you still wonder whether or not you need a new EIN, check out this article on IRS.gov, Do You Need a New EIN?, or feel free to contact us for more information.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

More By Paul Sponaugle

There are 7 comments left for An EIN Number Lasts Forever…and Ever…and Ever

Ken said: Saturday, February 3, 2018

I applied for an EIN in 2005 for a business that was a partnership, the partnership ended in 2010. I haven't done business since but wish to start it up again. Do I apply for a new EIN number as Sole Propreitor now or use the old number? Thanks.

HBS Staff replied: Monday, February 5, 2018

Typically when starting a new venture with a new company, clients often obtain a brand new EIN.

Nelly Mendel said: Thursday, November 16, 2017

Finally, my question was answered. Now, maybe you can answer this another question. Our corporation, which is non profit organization, is inactive. We are going to restate , Do I have penalties to pay to the Louisiana State revenue?

HBS Staff replied: Friday, November 17, 2017

We are experts in Delaware companies and can't speak to a Louisiana corporation. Try getting in touch with the Lousiana Division of Corporations.

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