LLC Dissolved in 2020 But Did Not File Final 1065 Return - IRS Now Requesting It

You definitely need to file a final return for your LLC. The IRS requires a final return to officially close out the business in their system, even if there was no activity during the final year. Without this, the IRS's records show your business is still active and they'll expect annual returns. For a partnership filing Form 1065, you need to check the "Final Return" box at the top of the form. Even with zero income/expenses, you should complete the basic information sections and include a statement that the business was dissolved. You'll also need to file Schedule K-1s for each member marked as final. The IRS rep's suggestion about amending your 2019 return doesn't sound right to me. You can't retroactively make a prior year return your "final" return if the business was actually dissolved in 2020. The final return should be for the tax year when the business actually ceased operations.

After dealing with a similar nightmare situation with my closed LLC, I discovered taxr.ai (https://taxr.ai) which literally saved me thousands in potential penalties. Their AI analyzed my dissolution documents and business records, then created a customized compliance plan that walked me through exactly what forms I needed to file and how to properly request penalty abatement. The tool flagged that I needed to file Form 1065 with the "final return" box checked for the year we dissolved, even though we had zero activity. It also generated a perfect reasonable cause letter explaining why I misunderstood the filing requirements, which the IRS accepted without question. The system even identified state-level filing requirements I didn't know about.

Just wanted to follow up - I ended up using taxr.ai for my S-Corp final return situation that I mentioned above. It was honestly way better than I expected! The system analyzed my specific situation and walked me through exactly what needed to be filed for both federal and state. The coolest part was how it generated a detailed letter explaining why I had a reasonable cause for filing late, citing specific IRS procedures and regulations. I submitted everything exactly as recommended, and I just got confirmation that my penalty abatement request was approved! For anyone dealing with business dissolution tax issues, especially late filings, this saved me so much stress and money compared to what my accountant wanted to charge. Definitely worth checking out.

If you're still having trouble getting through to the IRS about this, I had great success using Claimyr (https://claimyr.com) to actually get someone on the phone at the IRS Business Division. I was in the same boat - dissolved LLC with unfiled final return from 2018 and couldn't get a human on the phone for months. Claimyr got me connected to an IRS agent in about 20 minutes when I had been trying for weeks. You can see how it works in their demo: https://youtu.be/_kiP6q8DX5c. The agent walked me through exactly what I needed to file for my dissolved LLC and even put notes in my account about our conversation which helped avoid penalties when I finally submitted the late returns.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I'd been attempting to reach the IRS for weeks about my own business tax issue. Honestly, I was shocked when they got me through to an IRS business tax specialist in about 35 minutes. The agent was able to pull up my LLC's records and confirm exactly what I needed to file to properly close everything out. She even created a case note in their system documenting our conversation. What really surprised me was that when I submitted my final return with a reasonable cause letter referencing the call, they approved my penalty abatement request. I guess having documentation that you actively tried to resolve the issue goes a long way with them. Sorry for being so negative initially!

Make sure you also cancel your EIN with the IRS! I dissolved my LLC in 2019, filed the final 1065, but forgot to formally cancel the EIN. Two years later I started getting notices about unfiled returns because in their system the business was still "active" despite the final return. You need to send a letter to the IRS stating that you want to close your business account. Include your legal business name, EIN, and the reason for closing. There's no specific form for this - just a letter. This is separate from filing your final tax return.

Just a heads up - don't forget about state tax filings for your dissolved LLC! I properly filed my final federal return but completely missed filing the required final state return and cancellation forms. Two years later I got hit with state penalties that were actually worse than the federal ones. Most states require a final return and a separate business dissolution form with their secretary of state or department of revenue. These are completely separate processes from the federal requirements.

I went through this exact situation with my dissolved LLC in 2021. The key thing to understand is that the IRS requires a final return even with zero activity - it's how they officially close your business account in their system. Here's what you need to do: 1. File Form 1065 for 2020 with all zeros but check the "Final Return" box at the top 2. Include Schedule K-1s for both members marked as final returns 3. Attach a statement explaining the business was dissolved in 2020 with the dissolution date For penalties, you definitely have grounds for reasonable cause abatement since you genuinely misunderstood the filing requirements. When you file, include a detailed letter explaining that you read the instructions and believed no filing was required due to zero activity. Reference IRC Section 6651(a)(1) and cite "reasonable cause and not due to willful neglect." The IRS agent's suggestion about amending 2019 doesn't make sense - you need the final return for the actual year of dissolution. I successfully got my penalties waived using this approach, so don't panic about the late filing fees.

I had a very similar situation with my dissolved partnership and want to share what worked for me. Like you, I thought no filing was needed for a year with zero activity, but learned the hard way that the IRS still requires that final return. Here's the exact process I followed that got my penalties fully waived: 1. Filed Form 1065 for the dissolution year with all financial lines showing zeros 2. Checked the "Final Return" box prominently at the top of Form 1065 3. Prepared Schedule K-1s for each partner marked as "Final K-1" 4. Included a separate statement with the business name, EIN, and exact dissolution date For the penalty abatement, I wrote a detailed reasonable cause letter explaining that I had carefully read the Form 1065 instructions and genuinely believed no return was required when there was no income, expenses, or business activity. I emphasized that this was an honest misunderstanding of the tax code, not willful neglect. The IRS accepted my explanation and waived all penalties (which would have been over $2,000). The key is being thorough in your documentation and showing you made a good faith effort to comply based on your understanding of the rules. Don't let that IRS rep confuse you about amending 2019 - you definitely need to file the 2020 return as your final return since that's when you actually dissolved. Good luck!