How to dissolve an S corp: the state filing and the IRS steps
To dissolve an S corp, the shareholders approve dissolution and the corporation files its state's dissolution form, which ends the corporation. For the IRS, file Form 966 within 30 days of the resolution, then a final Form 1120-S with the final return and final K-1 boxes checked, generally by the 15th day of the 3rd month after it dissolves.
Dissolving the S corp or revoking the S election?
People search for "closing an S corp" when they mean one of two different things. Revoking the S election changes how the IRS taxes the corporation. Dissolving ends the corporation. Only the second one stops the state fees and the tax returns.
| What you want | What happens | What you file |
|---|---|---|
| Close the business for good | The corporation is dissolved under state law and winds up. Its tax years end with a final return. | The state dissolution form, IRS Form 966, the final Form 1120-S and final K-1s, then the letter that closes the IRS account. Source |
| Keep the corporation, drop S status | The corporation keeps existing and is taxed as a C corporation from the revocation date. A new S election before the fifth tax year after it needs IRS consent. | A revocation statement to the IRS service center, signed by each consenting shareholder. Shareholders holding more than 50% of the issued and outstanding shares must consent. Source |
A revocation without a stated date takes effect at the start of the tax year if it is made on or before the 15th day of the 3rd month of that year, and at the start of the next tax year if made later. A revocation can name an effective date on or after the day it is filed.
What does the IRS need when an S corp closes?
The federal steps are the same in every state. The IRS lists these for a corporation that is closing, and the S corporation versions are in the Form 1120-S instructions:
| Form | When it is due | What it does |
|---|---|---|
| Form 966 | Within 30 days after the resolution or plan to dissolve is adopted | Tells the IRS about the plan, with a certified copy of the resolution attached. Source |
| Final Form 1120-S | Generally by the 15th day of the 3rd month after the date the corporation dissolved | The last S corporation return. Check the "Final return" box near the top of page 1. Source |
| Final Schedule K-1 (Form 1120-S) | With the final Form 1120-S | Each shareholder's share of the last year's income, deductions and credits. Check the "Final K-1" box on each one. Source |
| Form 1099-DIV | For the year of the liquidation payments | For each shareholder paid $600 or more in money or other property as part of a liquidation: cash in box 9, other property in box 10 at fair market value. Source |
| Forms 941 or 944, 940, W-2 and W-3 | For the quarter and year of the last wages | Only if the corporation had employees. Check the box that says the business has closed. Source |
| Forms 4797 and 8594 | With the final return, if they apply | Form 4797 if business property was sold, Form 8594 if the business was sold. Source |
| Letter to close the IRS account | After every return is filed and the tax is paid | Legal name, EIN, address and the reason for closing. The EIN itself stays the business's permanent number. Source |
One S corporation trap: an S corporation that was a C corporation before its election, or that took over assets from a C corporation, can owe the built-in gains tax on gain it recognizes from selling or distributing those assets during the 5-year recognition period. The IRS covers it in Part III of Schedule D for Form 1120-S. Those two kinds of S corporation are the only ones the IRS lists as possibly owing it.
Which state form do you file?
The state filing is what ends the corporation. Every state has its own form and fee, set by its business filing office. These are the states whose corporation forms were read at the agency on October 28, 2026:
| State | Form | Fee | Tax step before or with it |
|---|---|---|---|
| California | Certificate of Dissolution (DISS STK), plus ELEC STK unless every shareholder voted | No feeread October 28, 2026, source | Final Franchise Tax Board return (Form 100 or 100S); file the state forms within 12 months of it |
| Delaware | Certificate of Dissolution (Section 275) | $224read October 28, 2026, source | Pay franchise tax and file the annual reports through the dissolution date before you file |
| Florida | Articles of Dissolution (form CR2E012) | $35read October 28, 2026, source | Final Florida Form F-1120 if the corporation files one |
| Texas | Certificate of Termination (Form 651, the same form Texas uses for LLCs and other entities) | $40read October 28, 2026, source | Attach a certificate of account status from the Texas Comptroller (Form 05-305) |
For any other state, look up the corporation dissolution form on the Secretary of State's own site and check the fee page before you pay. In California, Delaware and Florida an LLC files a different form from a corporation (Texas uses Form 651 for both), so the LLC guides by state only apply if your S corp is an LLC that elected S status.
In what order do you do it?
- Vote to dissolveThe board and shareholders approve dissolution as the state's law and the bylaws require. Put the resolution in writing, because a certified copy goes with Form 966.
- File IRS Form 966 within 30 daysCount from the date the resolution or plan was adopted. The Form 966 date calculator shows the deadline and the final return date.
- Wind upCollect what is owed, pay the known debts or provide for them, sell or distribute the assets, and keep a record of what each shareholder received.
- Settle state taxes and annual reportsSome states will not accept the dissolution until the corporation's state taxes and reports are current. Delaware and Texas say so in their filing instructions, and California's Certificate of Dissolution states that the final Franchise Tax Board returns have been or will be filed.
- File the state dissolution formWith the Secretary of State or equivalent office in the state of incorporation, and withdraw from any other state where the corporation is registered to do business.
- File the final Form 1120-S, the final K-1s and Forms 1099-DIVPlus the final payroll forms if there were employees, and the final state income or franchise tax return.
- Close the IRS account and the restSend the IRS the letter that closes the business account, then close bank accounts, licenses and permits. Keep the corporate and tax records.
Rather not file it yourself?
Paid link: we may earn a commission at no extra cost to you. It does not change the steps we recommend.
Bizee
Bizee is a business filing service that can handle the corporation dissolution filing in most states. Its order form does not take every state, so pick yours there first, and check what the order includes and the total price before you pay. The tax, license and bank steps on this page still apply, and Bizee says it is not a law firm and does not give legal advice.
See Bizee's dissolution service ↗Paid linkLegalZoom
LegalZoom sells three dissolution packages that prepare the paperwork and file it with your state. Prices on LegalZoom's page on Oct 28, 2026, each plus state filing fees:
- Standard Dissolution, $299: Your Articles of Dissolution prepared and filed with your state, filing instructions and specialists for questions; an expedited option at checkout.
- Business Dissolution Manager, $799: Hands-on management, outstanding annual reports and reinstatements where required, a Secretary of State status evaluation, and unlimited phone and e-mail access.
- Business Dissolution Manager + Rush Filing, $899: The Business Dissolution Manager with rush filing.
Check the total at checkout before you pay.
See LegalZoom's dissolution packages ↗Paid linkBizee's order form takes corporation dissolutions in most states, but not in New Mexico, New York, Ohio, Pennsylvania, Tennessee or Washington (order form read October 28, 2026).
Not legal or tax advice. This page restates IRS instructions and state forms as of October 28, 2026. Liquidating an S corporation can change what the shareholders owe, so have a CPA or tax attorney review the final year before you file.
Sources, read October 28, 2026: IRS: 2025 Instructions for Form 1120-S; IRS: 2025 Instructions for Schedule D (Form 1120-S); IRS Form 966 (Rev. October 2016) and its instructions; IRS: Closing a business; IRS Publication 5447-B, How to Close a Corporation; IRS: Instructions for Form 1099-DIV (Rev. January 2024); IRS: Limited liability company (LLC); state forms linked in the table.
Dissolving an S corp: FAQ
Do I need to file Form 966 when I dissolve my S corp?
Yes. Form 966 lists Form 1120-S among the return types it applies to, and the IRS lists Form 966 under its corporation filing requirements, a section that includes S corporations. File it within 30 days after the shareholders or board adopt the resolution or plan to dissolve, with a certified copy of that resolution attached.
Does it cost money to close an S corp?
The cost is mostly at the state level. Each state sets its own fee for the dissolution filing; on the state forms read for this page it is no fee in California, $224 in Delaware, $35 in Florida and $40 in Texas. State taxes owed up to the dissolution date, and a CPA for the final return, often cost more than the filing itself.
Can I just revoke the S election instead?
Revoking the election does not close anything. The corporation keeps existing and is taxed as a C corporation from the effective date of the revocation. Revocation needs the consent of shareholders holding more than 50% of the issued and outstanding shares, and a new S election before the fifth tax year needs IRS consent.
When is the final 1120-S due?
A dissolved S corporation generally files its final Form 1120-S by the 15th day of the 3rd month after the date it dissolved. Check the "Final return" box on the return and the "Final K-1" box on each shareholder's Schedule K-1.
My LLC is taxed as an S corp. Which steps apply?
Both sets. For federal tax, an LLC that elected S corporation status is treated as a corporation, so it follows the corporation rules on this page: Form 966 and a final Form 1120-S. Under state law it is still an LLC, so it files the LLC dissolution or cancellation form with the state, not the corporation form.
What happens to the EIN?
Once every return is filed and the tax is paid, send the IRS a letter asking it to close the business account, with the legal name, EIN, address and the reason. The IRS closes the account, and the EIN stays the business's permanent federal taxpayer number.
These answers are general information, not legal, tax, or financial advice. Rules and fees change and vary by state: confirm current requirements with the relevant government agency and, for your situation, a licensed professional.