An EIN Number Lasts Forever…and Ever…and Ever

When 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 discontinue or close an EIN, but just as the title of this article implies, a business’s EIN is never discontinued, reassigned or reused. Regardless of whether or not an EIN was ever used, the number is PERMANENT. The IRS cannot cancel EIN numbers; 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 must be sent to: Internal Revenue Service, Cincinnati, OH 45999. 

The letter must state the reason for closing the account and include the federal identification number, 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.

Harvard Business Services strongly suggests that you seek the assistance of a qualified tax professional when closing a business. 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 to change EINs.  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.  Here are some examples that do not require you to change EINs:

• 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 to change EINs, check out this article on IRS.gov, Do You Need a New EIN?, or feel free to contact us for more information.