When Your Client is Closing its Doors for Good & the IRS:
- File a final tax return and related forms are Required for the year everything is closed.
- Employees Must be paid their final wages/compensation and federal tax deposits must be made in the year of last payment.
- Final employment tax returns (Forms 940, 941) must be filed and taxes must be paid.
- Because taxes could be due the next filing season, pay in the year of closure to keep things cleaner.
- Report payments to independent contractors to whom you paid at least $600 and Forms 1099 must be issued. Cancel EIN and close IRS business account. Transferring a business and not taking this step could be disastrous for the ‘new’ owners.
- Keep business records.