Closing an S corporation involves several steps. One crucial step is notifying the IRS. This is done through a formal letter. You might need this letter for various reasons. Perhaps your business is no longer viable. Maybe you’re changing business structures.
Writing this letter can seem daunting. Don’t worry. We’ve got you covered. We will share sample letters. These templates will guide you. They make the process straightforward.
We’ll provide different examples. These samples cover various scenarios. You can adapt them to your specific needs. This article simplifies closing your S corporation.
Sample Letter To Irs To Close S Corporation
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Date]
Internal Revenue Service
[IRS Address]
[IRS City, State, Zip Code]
**Subject: Request to Terminate S Corporation Status for [Corporation Name], EIN: [EIN Number]**
Dear Sir/Madam,
This letter serves as a formal request to terminate the S corporation election for [Corporation Name], Employer Identification Number (EIN) [EIN Number].
The corporation has ceased operations as of [Date of Cessation]. All assets have been distributed, and all debts and liabilities have been satisfied. We have filed all required federal tax returns through the date of termination.
We are requesting that the S corporation status be terminated effective [Date of Termination].
Please confirm the termination of the S corporation election in writing.
Thank you for your time and attention to this matter.
Sincerely,
[Your Name]
[Your Title, if applicable]
[Your Phone Number]
[Your Email Address]
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How to Write a Letter to the IRS to Close an S Corporation
Subject Line: Clarity from the Get-Go
The subject line is your opener, your chance to immediately signal the letter’s purpose. Don’t bury the lede; be forthright.
- Example: “S Corporation Termination – [Corporation Name] – EIN: [Your EIN]”
- Brevity is key. The IRS processes countless documents; make theirs easier.
Salutation: A Formal Overture
Begin with appropriate formality. This isn’t an email to a pal; it’s a communiqué to the U.S. government.
- Acceptable: “To Whom It May Concern:” or “Internal Revenue Service:”
- Avoid personal salutations unless you have a specific contact.
Body: The Nucleus of Your Request – Identification
Clearly identify your S corporation. Ambiguity is the enemy here. Provide the essential details.
- Full legal name of the S corporation.
- Employer Identification Number (EIN).
- Business address.
Body: Declaration of Dissolution
Explicitly state your intent to dissolve the S corporation. Leave no room for misinterpretation.
- “This letter serves as formal notification of the dissolution of [Corporation Name].”
- Specify the effective date of dissolution. This is crucial.
- Indicate that all assets have been distributed and liabilities settled, if applicable. A statement affirming this simplifies the process.
Body: Reason for Dissolution (Optional, but Prudent)
While not strictly required, providing a brief rationale for the dissolution adds context and can forestall potential inquiries. A tacit acknowledgement can smooth things along.
- Examples: “Due to economic conditions,” “Following completion of project,” or “Restructuring of business operations.”
- Keep it concise and professional.
Closing: Formalities and Contact Information
End the letter on a professional note and provide contact information for any follow-up questions.
- Use a formal closing: “Sincerely,” or “Respectfully,”
- Your printed name.
- Your title (e.g., President, CEO).
- Phone number and email address.
Postscript: Signatures and Submission
The denouement. Ensure proper signatures and appropriate submission.
- Ensure the letter is signed by an authorized officer of the corporation.
- Retain a copy of the letter for your records.
- Mail the letter to the appropriate IRS address. Check the IRS website for the correct address based on your location and the type of tax form.
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Frequently Asked Questions: Closing an S Corporation with the IRS
This FAQ section addresses common questions regarding the process of informing the IRS about the termination of an S corporation. It provides guidance on the required documentation and procedures.
What is the proper format for a letter to the IRS to close an S corporation?
While there is no prescribed IRS form, the letter should clearly state the S corporation’s name, Employer Identification Number (EIN), the date of dissolution, and a statement that the corporation is ceasing operations. Include the reason for dissolution and the final tax period.
Where should I send the letter notifying the IRS of the S corporation’s closure?
Send the letter to the IRS campus designated for where the corporation files its tax returns. Refer to the IRS website or your tax professional for the correct address based on your location.
What other forms or documents need to be submitted to the IRS besides the letter?
You will need to file Form 966, Corporate Dissolution or Liquidation, and the final Form 1120-S, U.S. Income Tax Return for an S Corporation, marking it as the final return.
When should I send the notification letter to the IRS?
Send the letter as soon as possible after the dissolution or liquidation of the S corporation to avoid potential issues or penalties.
What happens after the IRS receives the notification letter?
The IRS will update its records to reflect the S corporation’s terminated status. Ensure all outstanding tax liabilities are settled to avoid future complications.