Can You Cancel an EIN Number? How to Close Your Account

An Employer Identification Number (EIN) is a unique nine-digit federal tax identification number issued by the IRS to U.S. business entities. This identifier is comparable to a Social Security Number for an individual, serving as the business’s permanent tax ID for various federal tax purposes. Many businesses need an EIN to file tax returns, open business bank accounts, or hire employees. An EIN cannot be “canceled” or “deleted” in the conventional sense; it is assigned for the life of the business entity. The IRS instead “closes” or “deactivates” the associated business account, while the EIN remains permanently on file.

When an EIN Becomes Inactive

An EIN is considered inactive or no longer needed by the IRS under specific circumstances. A common situation is when a business has ceased all operations and has no remaining tax obligations, formally dissolving its financial activities.

Another scenario is if a sole proprietorship obtains an EIN but never commences business operations or hires employees. Similarly, if a sole proprietorship changes its legal structure by incorporating or forming a partnership, the original EIN becomes inactive as a new entity requires its own EIN. An EIN also becomes inactive if a business mistakenly obtained multiple EINs and only requires one for its operations.

Notifying the IRS of an Inactive EIN

If a business determines its EIN is inactive, the IRS requires written notification. There is no online portal or dedicated phone line for directly canceling or deleting an EIN. The letter must clearly state the intent to close the associated business account.

The correspondence should include the complete legal name of the entity, the assigned EIN, the business address, and a precise explanation for the inactivation. Reasons include ceasing operations, never starting, or changing entity type. Including a copy of the original EIN Assignment Notice, if available, is helpful. This letter should be mailed to the Internal Revenue Service, Cincinnati, OH 45999. Ensure all outstanding tax returns have been filed and any taxes owed have been paid before sending this notification, as the IRS will not close the account until these obligations are met.

Scenarios Requiring a New EIN

Certain changes in a business’s structure or ownership necessitate obtaining a new EIN, rather than rendering the existing one inactive. This is important for compliance. For example, a sole proprietorship needs a new EIN if it incorporates, forms a partnership, or becomes subject to bankruptcy.

A partnership requires a new EIN if it incorporates, or if one partner takes over the business as a sole proprietorship. If an existing partnership dissolves and a new one is formed, even among the same individuals, a new EIN is generally required. Corporations need a new EIN if they change to a partnership or sole proprietorship, or if a new corporation is established following a statutory merger. An existing business purchased and operated as a sole proprietorship by the new owner will typically need a new EIN.