Closing and reopening a federal, state, or local tax account

Make sure we've successfully filed all your outstanding returns before you close your tax accounts (see table below for timing guidance).

Close your account with the agency and let Gusto know

1. Contact the applicable agencies and close your payroll tax account with them directly.
2. Once your account is closed, let Gusto know—head to the Let Gusto know when you’ve closed a tax account with an agency dropdown below.

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: 

Federal filings

• Form W-2s and 1099s
  • Gusto will file the 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 canceling your Gusto account.
• Form 941
  • Gusto will not file $0 wage returns on Form 941 if you canceled your Gusto account for one of the below reasons:
    • The company went out of business
    • The company is being acquired by another company
    • The company no longer has employees to pay
  • If Gusto stops filing the quarterly Form 941 (in the situations above), the IRS believes your returns are missing, and they start to send notices—to avoid these, or if you receive any, contact the IRS directly to let them know you no longer owe payroll taxes and need to close your IRS account (formal notification required). 

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 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.
• We’ll stop filing zero-wage tax returns to the agency after eight quarters of inactivity—or, up until you’ve updated your Gusto account telling us that you closed your account with the state.

When to close your account to make sure filings are successful

1. Sign in to your admin account.
2. Click the Taxes & compliance section and select Tax setup.
3. At the top-right of the page, click Manage accounts.
   • You’ll see a list of all state tax accounts Gusto has on file, which will include:
     • 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 determines if Gusto is paying and filing taxes to that agency on your behalf.
4. Under the “Actions” column, click the three-dot menu.
5. Click Close tax account.
6. Click the checkbox to confirm that you’ve already closed that tax account directly with the agency—Gusto cannot close a tax account with an agency on your behalf.
7. Click Close account.

We’ll stop filing to this agency once we’ve paid the rest of the taxes that are owed.

Before letting Gusto know you’ve reopened an account, make sure you’ve completed the process with the agency first—sometimes account information changes, or you’ll need to register anew if it’s been a prolonged amount of time.

1. Sign in to your admin account.
2. Click the Taxes & compliance section and select Tax setup.
3. At the top-right of the page, click Manage accounts.
   
   • You’ll see a list of all state tax accounts Gusto has on file, which will include:
     • 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 determines if Gusto is paying and filing taxes to that agency on your behalf.
4. Under the “Actions” column, click the three-dot menu.
5. Click Reopen tax account.
6. Click the checkbox to confirm that you’ve verified the preexisting information in Gusto is still accurate. If any account information has changed, click Review the details we have link and edit the information.
   • If you’re unable to update something on your own, you may need to contact us from the Help section of your account to assist—there may be tax implications to consider.
7. Click Reopen account.

We’ll start filing to this agency again.

• Open
  • Gusto considers your account open still and you have active employees in Gusto that fall within that agency’s jurisdiction.
• Open - Consider closing
  • Gusto can see that you have not had any active employees in the agency’s jurisdiction since our last annual filing.
  • Contact the agency directly to get further clarification on if your account should be open or closed based on your current situation.
• Closed
  • You’ve let Gusto know your account is closed, and you have no remaining active employees in Gusto that fall within that agency’s jurisdiction.
• Closed - Action needed
  • You’ve let Gusto know the account is closed, but you still have active employees in Gusto that fall within that agency’s jurisdiction. You may need to dismiss the active employees if you’re no longer paying them.
  • Contact the agency directly to get further clarification on if your account should be open or closed based on your current situation.

1. Notify all federal, state, and local agencies to let them know that you’ve ceased business.
2. As needed, you can cancel your Gusto plan—during the cancellation flow, you’ll let us know how you’d like Gusto to handle pending and future filings. 
   • Certain filings may require you keep accounts open until final forms or payments are submitted. After that time, you'll need to close the accounts directly with the agencies—Gusto does not mark federal, state, or local forms as final, so you'll need to close the accounts outside of Gusto.