Maryland Form MW506FR is the one-page notice you send to the Comptroller of Maryland when your business permanently stops paying wages subject to Maryland withholding. You mail it alongside your final MW506 or MW506M withholding return, or separately if you filed that return electronically, and the Comptroller closes your employer withholding account.1Comptroller of Maryland. Maryland Form MW506FR – Employer Withholding Final Return If you skip it, the account stays open and the state keeps expecting returns, which can trigger estimated tax notices and penalties based on your prior payroll history.
When to File It
File the MW506FR whenever you permanently stop paying wages subject to Maryland income tax withholding. That covers dissolving the business, selling all operations to a new owner, or simply no longer having employees working in Maryland.2Maryland Comptroller. 2024 Employer Withholding Forms A structural change also counts: a sole proprietorship that incorporates, or a partnership that reorganizes as an LLC, needs to close the old account and register the successor entity for a new one.
You can also close a withholding account by phone at 410-260-7980 or 1-800-638-2937, Monday through Friday, 8:30 a.m. to 4:30 p.m., by giving your name, phone number, account number, reason for closing, and closing date.3Maryland Business Express. Closing a Business Checklist Filing the form on paper leaves you a written record.
One boundary worth naming: the MW506FR closes only your employer withholding account. It does not dissolve an LLC or corporation with the State Department of Assessments and Taxation, cancel a trade name, or handle any federal filing.3Maryland Business Express. Closing a Business Checklist Those are separate steps.
What to Gather First
The form is short but pulls together a handful of specifics:
- Your Federal Employer Identification Number (FEIN).4Maryland Business Express. Obtain a Federal Tax ID Number from the IRS
- Your Maryland Central Registration Number (CRN), issued when you first registered to do business in the state.5Maryland Business Express. Register Your Business in Maryland
- Your legal business name and any trade names, exactly as the Comptroller has them on file. A mismatch can delay processing.
- The exact calendar date of your final wage payment to Maryland employees.
- Your reason for closing (discontinued, sold, or no longer employing anyone in Maryland).
- Successor information if you sold the business: the buyer’s name, FEIN, and contact details.
- Your final-period Maryland withholding amount and the cumulative year-to-date total. Reconcile these against your W-2 data before you file, because state-federal discrepancies draw attention.
- The address where you will store your payroll records after closing. The form asks for it.
Filling Out the Form
Download the current MW506FR from the Comptroller’s website.1Comptroller of Maryland. Maryland Form MW506FR – Employer Withholding Final Return Enter your FEIN and CRN at the top, then the legal name and any trade names exactly as they appear on your Central Registration.
Enter the date you permanently discontinued paying wages. Check the box that describes why you’re closing. If you sold to a successor, fill in the buyer’s details in the section provided.
Report your final-period withholding and the year-to-date total, and check those numbers against your payroll records and any MW506 or MW506M returns already filed for the year. An authorized person — typically the owner, an officer, or a designated preparer — signs and dates the form.
Where to Send It
Mail the MW506FR with your final MW506 or MW506M return, or on its own if you filed that final return electronically.1Comptroller of Maryland. Maryland Form MW506FR – Employer Withholding Final Return The form itself goes by mail to:
Comptroller of Maryland
Revenue Administration Center
110 Carroll Street
Annapolis, Maryland 21411-00016Comptroller of Maryland. Maryland Combined Registration Online Application
Use a tracked mailing method so you have proof of delivery. If a final balance is due, include a check or money order payable to the Comptroller of Maryland. Once the return processes, your withholding account status updates to closed.
What Happens If You Don’t File
An open withholding account with no returns coming in looks, to the state, like a series of missed filings. Maryland Tax-General § 13-701 authorizes a penalty of up to 10 percent of any unpaid tax for late filing. Section 13-1007 goes further: willful failure to file an income tax withholding return is a misdemeanor punishable by a fine of up to $10,000, up to five years’ imprisonment, or both. Filing the MW506FR removes the account from that cycle.
Keeping Records After You Close
Maryland requires you to keep withholding records for at least three years after the date the tax became due or was paid, whichever is later.7Comptroller of Maryland. 2025 Maryland Employer Withholding Guide The IRS sets a longer floor of four years after the fourth-quarter return for the year in question is filed.8Internal Revenue Service. Employment Tax Recordkeeping Hold payroll records, W-2 copies, and withholding returns for at least four years to satisfy both, at the address you listed on the form.