Tax cleanup is where closings go wrong. Miss the final payroll deposit or forget Form 966 and the IRS stays interested in you long after the doors close. Here is the exact sequence.
The final-return set
| Form | When | Mark |
|---|---|---|
| 941 / 944 | Final quarter with payroll | "Final return" box |
| 940 | Final year | Box "d" |
| W-2 + W-3 | To employees + SSA | — |
| 1099-NEC | Contractors ≥ $600 | — |
| 966 | Within 30 days of dissolution (corps) | — |
| 1120 / 1120-S / 1065 | Final entity return | "Final" + final K-1 |
Two things that survive the closure
- Trust Fund Recovery Penalty (TFRP): unpaid withheld payroll taxes can be assessed personally against responsible individuals. It is the most dangerous closeout trap.
- Employment-tax records: keep for 4 years; entity and other records per state retention rules.
Action: file the final 941 and pay the deposit on time, then mail the EIN-closure letter. Use the Final Tax Filing Checklist so no form is skipped.
Sources: IRS "Closing a Business" checklist, Forms 941/940/966/1120 instructions, IRS Employment Tax collection (TFRP). Retrieved 2026-08-13.