Closing With the IRS

Does this fit you?

You are winding down a business.
You have sold the business's assets and want to know what is left to file.
You own a business that has stopped operating but was never formally closed.

What it could be worth

Nothing here lowers a tax bill. It lists what IRS.gov says to do when a business closes, so nothing is left open with the IRS afterward.

The Closing a Business guide covers the decisions around the close; this one is the IRS's own checklist.

How it works

The steps, as IRS.gov lists them: “File a final return and related forms”; “Take care of your employees”; “Pay the tax you owe”; “Report payments to contract workers”; “Cancel your EIN and close your IRS business account”; “Keep your records”.

The account stays open until the end. IRS.gov: “We cannot close your business account until you have filed all necessary returns and paid all taxes owed.”

Contract workers. The Closing a business page still gives an older figure. The Instructions for Forms 1099-MISC and 1099-NEC: “For tax years beginning after 2025, the minimum threshold amount for reporting certain payments required to be reported on certain information returns and/or perform backup withholding on those payments increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027.”

Not covered here, because the wording has not been checked against IRS.gov: which final return each kind of business files, the final payroll returns, and how the EIN account is closed.

Closing With the IRS: how it works, drawn — Open the diagram full size

Sources

What you would do

List every return the business files, and mark which will be its last.
Settle the final payroll, and the forms that go to employees.
List the contractors paid in the final year, with each one's total.
Pay what the business owes before asking the IRS to close the account.
Keep the records, and decide who holds them after the business ends.

Allow one to two months. Some of it depends on other people.

What GHL needs from you

The final year's books and bank statements.
The final payroll records and the forms issued.
The contractors paid in the final year, with totals.
All of it sent through the Secure Client Portal, not by email.

What usually goes wrong

Asking to close the IRS account before the last return is filed and paid. The IRS says it cannot.
Using an old 1099-NEC figure. For tax years beginning after 2025 it is $2,000.
Throwing out the records with the business.

Common questions

Can I close the business's IRS account now and file the last return later?

IRS.gov says it cannot close the account until all necessary returns are filed and all taxes owed are paid.

The IRS page mentions $600 for contractors. Is that right?

That sentence is out of date. For tax years beginning after 2025, the Instructions for Forms 1099-MISC and 1099-NEC give $2,000.

Keeping it alive

A position is not finished when it is set up. This is what it needs each year to still be there when it matters.

Confirm it still applies — circumstances change more often than the law does.
Check the documents still say what they said — an agreement that has drifted from practice is the usual failure.
Ask GHL what changed for 2027. Figures move every year and rules move most years.