How to Cancel an EIN Number With the IRS

An Employer Identification Number (EIN) is a unique federal tax identification number for businesses, used by the IRS to track tax obligations like payroll, excise, and income taxes. While often referred to as “canceled,” an EIN is a permanent identifier that is never reassigned. Instead, the associated business account with the IRS can be closed or deactivated when the EIN is no longer needed for tax filings.

When an EIN is No Longer Needed

An EIN becomes inactive or is no longer required by the IRS in several distinct situations. One common scenario is when a business permanently ceases all operations, meaning it has no ongoing revenue, no employees, and no future plans to conduct business. For a sole proprietorship, this means all business activities have stopped, and the owner will revert to using their Social Security number for any personal tax filings.

Similarly, if a corporation or partnership undergoes a legal dissolution process, its EIN would no longer be needed for future tax filings. This typically involves formal steps at the state level to dissolve the entity, followed by filing final federal tax returns with the IRS. For estates, an EIN obtained for administration purposes becomes inactive once the estate’s affairs are fully settled and assets distributed.

Another instance where an EIN may not be needed is if it was obtained but never used for any business activity. This can occur if a prospective business owner applies for an EIN in anticipation of starting a venture, but the business never actually commences operations, hires employees, or incurs any tax obligations. The IRS can close the associated business account in such cases. Merely stopping business operations does not automatically make an EIN inactive; specific conditions, such as filing final tax returns, must be met.

Informing the IRS About EIN Inactivity

Once you have determined that your EIN is no longer needed, the formal process of informing the IRS involves sending a written letter. This letter should clearly state your intent to close the business account associated with the EIN. There is no specific IRS form for this purpose; a simple, clear letter is sufficient.

The letter must include specific details to ensure the IRS can accurately identify your account and process the request. You should provide the complete legal name of the business entity, the Employer Identification Number itself, and the current business address. It is also important to include the specific reason for the EIN’s inactivity, such as the permanent closure of the business or that the EIN was obtained but never used. If you have a copy of the original EIN Assignment Notice (Form CP 575), it is advisable to include a copy with your letter.

The letter should be mailed to one of the IRS addresses designated for EIN deactivation or account closure, which are typically found in IRS guidance for businesses. For general business EIN deactivation, you might mail it to Internal Revenue Service, Cincinnati, OH 45999, or Internal Revenue Service, Kansas City, MO 64108. After sending the letter, the IRS will update its records to reflect the inactive status of the EIN. The IRS generally does not send a confirmation notice of account closure unless specifically requested in the letter, and it may take approximately 45 days for the IRS to process the request.

Common Misconceptions and Key Considerations

An important distinction is between an EIN becoming inactive on IRS records and the formal dissolution of a business entity. While informing the IRS about an inactive EIN addresses federal tax identification, the dissolution of a corporation or limited liability company often requires separate actions at the state level, such as filing articles of dissolution with the relevant state agency. These state-level actions are distinct from the IRS’s process for EIN inactivity.

Ignoring an unused or no longer needed EIN without informing the IRS can lead to potential complications. The IRS computer systems may still expect tax returns if the EIN remains active on their records, potentially leading to notices for unfiled returns or unaddressed tax obligations. While generally not resulting in penalties if no business activity occurred, these notices can create unnecessary administrative burdens. Therefore, even if an EIN was obtained but never used, formally notifying the IRS ensures that the entity’s tax history is accurately reflected and prevents future inquiries.