Closing and reopening 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 makes sure any applicable state taxes and filings can be paid and submitted to the appropriate tax agencies.

When a company no longer has any active employees in a state, and doesn’t plan to hire any in the near future, it may be necessary to close one or more of the applicable state tax accounts.

If you need to cancel your Gusto account, head to this article

Closing a tax account with an agency—company is no longer running payroll in a state, city, or locality 
  1. Contact the applicable agencies and close your payroll tax account with them directly.
  2. Once your account is closed, let Gusto know by clicking the Let Gusto know when you’ve closed a tax account with an agency dropdown below. We’ll stop filing zero-wage returns to the jurisdiction once we’ve paid the rest of the taxes that are owed.

If you no longer have wages in a city or state, here’s how we’ll handle the filings until we’re notified that you’ve formally closed your account with the tax agency: 

  • We’ll file zero-wage tax returns to the agency for up to eight quarters of wage inactivity (no applicable wages).
  • We’ll stop filing zero-wage tax returns to the agency after eight quarters of inactivity—or, up until you’ve let us know the account is closed in Gusto (instructions in the dropdown below).
    • Most tax agencies will close your account automatically after eight quarters of inactivity. In these states, your payroll tax returns may start to reject, and Gusto will notify you that we will no longer file returns to this agency.
    • Some agencies require a formal notification in order to close your account—once Gusto stops filing returns after eight quarters, you may receive notices for missing tax returns until you’ve contacted the agency to inform them you no longer owe payroll taxes to their state or city. To proactively avoid notices, contact the applicable agency and close your payroll tax account with them directly.
    • If you receive a tax bill from a city or state that you no longer have payroll activity in, contact the state or city directly to close your account.
Final quarter First day customer can close 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