What Happens If I Never Use My EIN Number?
Have an EIN you never used? Learn the IRS's perspective on dormant Employer Identification Numbers and what, if anything, you need to do.
An Employer Identification Number (EIN) serves as a federal tax identification number for businesses, similar to how a Social Security Number identifies an individual. Many individuals and entities obtain an EIN for various reasons, but sometimes the intended business operations never materialize, leading to questions about the status of an unused EIN.
When an EIN is Necessary
An EIN is a distinct identifier required by the IRS for specific business activities and legal structures. Businesses need an EIN if they have employees.
Certain business structures are also mandated to obtain an EIN regardless of whether they have employees. These include corporations, partnerships, and multi-member Limited Liability Companies (LLCs) taxed as partnerships or corporations. Entities such as tax-exempt organizations, estates, trusts, and those with a Keogh plan must also secure an EIN. While sole proprietorships and single-member LLCs without employees use the owner’s Social Security Number for tax purposes, an EIN becomes necessary if they file excise tax returns or pension plan returns. An EIN can also be beneficial for opening business bank accounts or establishing business credit, even when not strictly required by the IRS.
What Happens to an Unused EIN
Once the IRS issues an EIN, it remains permanently associated with the entity to which it was assigned; it does not expire or get deactivated due to non-use. Even if a business never commences operations or files tax returns, the EIN remains on record within the IRS system.
There are no penalties from the IRS for simply obtaining an EIN and then not using it. The primary concern for the IRS is the timely filing of tax returns when required, not the mere existence of an unused EIN. If no business activity occurred and no tax returns were due under that EIN, the IRS does not require notification of its non-use.
Steps for an Unused EIN
If an EIN was obtained but never used for its intended purpose and no tax returns were filed under it, the most straightforward approach is to take no further action. This option is suitable if the entity never commenced operations or incurred any tax obligations.
However, if there is a desire to formally inform the IRS that the EIN will not be used, or if the business entity has ceased to exist and had no prior filing requirements, a formal request can be made to close the associated business account. The EIN itself cannot be canceled or deleted from IRS records, but its associated business account can be closed. To do this, a letter must be sent to the IRS containing the full legal name of the entity, the EIN, the business address, and a clear explanation for closing the account, such as the business never started or ceased operations. Including a copy of the original EIN Assignment Notice (CP 575 form) can facilitate the process.
The letter should be mailed to the Internal Revenue Service, Cincinnati, OH 45999, or for exempt organizations, to Internal Revenue Service, Attn: EO Entity, Mail Stop 6273, Ogden, UT 84201. All required tax returns, if any were due for past activity, are filed and any outstanding taxes paid before requesting closure. The IRS will process the request, which may take several weeks, and will send a confirmation letter. If no confirmation is received within 45 days, a follow-up letter marked “Second Request” can be sent. Closing the account informs the IRS that no future filings are expected under that number, preventing potential inquiries for unfiled returns.