Close or reopen a tax account (for admins)
This article is for admins who need to close or reopen a federal, state, or local tax account.
When you hire your first employee in a new state, you’re usually required to register your business in that state. This registration sets you up to pay state taxes and submit the required filings to the relevant tax agencies.
When you no longer have active employees in a state and do not plan to hire any soon, you may need to close one or more of your state tax accounts.
You need to close the accounts directly with the agency (outside of Gusto) before notifying us that you’ve closed them in Gusto. We do not:
Close tax accounts with federal, state, or local tax agencies on your behalf, or;
Mark tax forms as final.
You need to close the accounts outside of Gusto.
If you want to close your Gusto account completely, learn how to cancel your Gusto account.
Make sure we successfully filed all your outstanding returns before you close your tax accounts (see the table below for timing guidance).
Close your account with the agency and let us know
To close your account with the agency, and let us know:
Contact the agencies and close your payroll tax account with them directly.
Once you close your account, let us know. Go to the Close a tax account with Gusto section in the article.
If you no longer have wages in a city or state, here’s how we handle the filings until you tell us you formally closed your account with the tax agency:
Federal filings
Form W-2s and 1099s
We will file your company’s last Form W-2s and 1099s to the Social Security Administration (SSA) at the end of the tax year, unless you asked us not to when you canceled your Gusto account.
Form 941
We will not file $0 wage returns on Form 941 if you canceled your Gusto account for one of these reasons:
The company went out of business.
Another company is acquiring the company.
The company no longer has employees to pay.
If we stop filing the quarterly Form 941 (in the situations above), the Internal Revenue Service (IRS) will consider your returns to be missing and send you notices. To avoid these notices, or if you receive any, contact the IRS directly. Tell them you no longer owe payroll taxes and need to close your IRS account. The IRS requires this formal notification.
State filings
We’ll file zero-wage tax returns to the agency for up to eight quarters of wage inactivity (no applicable wages).
Most state tax agencies close your account automatically after eight quarters of inactivity. In these states, your payroll tax returns may be rejected, and we’ll notify you that we will no longer file returns to this agency.
We stop filing zero-wage tax returns with the agency after eight quarters of inactivity or when you update your Gusto account to tell us you closed your account with the state.
When to close your account for successful filings
Final quarter with Gusto (based on last check date)
When to close the agency account
January 1 – March 31
May 31
April 1 – June 30
August 30
July 1 – September 30
November 30
October 1 – December 31
February 28
After you close a tax account with an agency, you need to update Gusto so we know to stop filing with that agency.
To close a tax account in Gusto:
Go to Taxes & Compliance.
Click Tax setup.
At the top-right corner, click Manage accounts.
You’ll see a list of all state tax accounts we have on file, which includes:
The state
The specific agency
A Taxes column, where you can review all the tax types (employer and employee) paid to the specific agency.
An Account status column, which shows if we’re paying and filing taxes to that agency on your behalf.
Under the Actions column, click the three-dot menu next to the tax account you want to close.
Click Close tax account.
Click the checkbox to confirm that you’ve already closed that tax account directly with the agency. We cannot close a tax account with an agency on your behalf.
Click Close account.
We’ll stop filing with this agency once we pay the remaining taxes you owe.
After you reopen a tax account with an agency, update Gusto so we start filing with that agency again. Reopen your account with the agency first. Sometimes account information changes, or you may need to register again if a long time has passed.
To reopen a tax account in Gusto (that you've previously marked Closed):
Go to Taxes & Compliance.
Click Tax setup.
At the top-right corner, click Manage accounts.
You’ll see a list of all state tax accounts we have on file, which includes:
The state
The specific agency
A Taxes column, where you can review all the tax types (employer and employee) paid to the specific agency.
An Account status column, which shows if we’re paying and filing taxes to that agency on your behalf.
Under the Actions column, click the three-dot menu next to the tax account you want to reopen.
Click Reopen tax account.
Click the checkbox to confirm that the existing information in Gusto is still accurate. If any account information has changed, click Review the details we have and edit the information.
If you cannot update something yourself, contact us to discuss the tax implications. To contact us, sign in to your Gusto account and click the help icon
in the top-right corner of the page.
Click Reopen account.
We’ll start filing with this agency again.
Open
Your account is open. You have active employees in Gusto who work within that agency’s jurisdiction.
Open - Consider closing
You have not had any active employees in the agency’s jurisdiction since our last annual filing.
Contact the agency to confirm if you should keep your account open or close it based on your current situation.
Closed
You told us your account is closed and you have no active employees in Gusto who work within that agency’s jurisdiction.
Closed - Action needed
You told us the account is closed, but you still have active employees in Gusto who work in that agency’s jurisdiction. You may need to dismiss these active employees if you no longer pay them.
Contact the agency directly to confirm if your account should be open or closed based on your current situation.
If you stop running payroll in all locations, you need to close all your payroll tax accounts.
To close all payroll accounts:
Tell all federal, state, and local agencies that you stopped doing business.
As needed, you can cancel your Gusto plan. During cancellation, you’ll tell us how to handle pending and future filings.
Certain filings may require you to keep accounts open until you submit final forms or payments. After that, close your accounts directly with the agencies (outside of Gusto). We do not mark federal, state, or local forms as final.