How to Dissolve a Corporation in New York: Filings and Final Returns

To dissolve a corporation in New York, you need a board resolution and a two-thirds shareholder vote, written tax clearance from the New York State Department of Taxation and Finance, and a Certificate of Dissolution filed with the Department of State for a $60 fee. Around those three formal acts sits a wind-down: paying creditors, filing final federal and state returns, distributing anything left to shareholders, and canceling the licenses and registrations the corporation collected along the way. Stopping operations is not enough. Until the certificate is filed, franchise tax keeps accruing.¹

Get the Vote in Place

Dissolution starts inside the company. The board of directors adopts a resolution recommending dissolution and records it in the corporate minutes. Then at least two-thirds of all outstanding shares entitled to vote must approve, either at a meeting or by written consent.² Your certificate of incorporation can set a different threshold, but two-thirds is the default.

For a one- or two-owner corporation, the vote is a formality. When shareholders disagree, New York provides two court routes. Holders of at least 50% of voting shares can petition for judicial dissolution when the board or shareholders are deadlocked.³ Minority shareholders holding at least 20% can petition when those in control have engaged in oppressive, illegal, or fraudulent conduct.⁴

Get Tax Clearance from New York State

The Department of State will not accept your Certificate of Dissolution without written consent from the Department of Taxation and Finance confirming that all returns are filed and all taxes, including franchise tax, are paid. You request the consent by submitting Form TR-960. The Tax Department will either issue the consent or send back a letter identifying what is owed or missing.⁵ This step often takes several weeks, so start it before you prepare anything else.

File the Certificate of Dissolution

The Certificate of Dissolution must state the corporation’s name, its date of incorporation, and that the corporation elects to dissolve. An authorized officer signs it.⁶ Send the signed certificate, the Tax Department consent from Form TR-960, and a $60 check payable to the Department of State.⁷

Standard processing runs a few weeks. Expedited handling costs $25 extra for 24-hour turnaround or $75 extra for same-day, and same-day requests must arrive by noon.⁸ The Department will reject filings with missing signatures or inconsistencies against the corporate records on file. Once accepted, the corporation’s legal existence ends for purposes of conducting new business, but continues for the limited purpose of winding up.⁹

Notify Employees and Pay Final Wages

If your corporation has 50 or more full-time employees, the New York WARN Act requires 90 days’ written notice before a closing that affects 25 or more workers.¹⁰ The state thresholds are lower and the notice period longer than the federal WARN Act, which starts at 100 employees and 60 days’ notice for closings affecting 50 or more.¹¹ Many New York corporations that fall below the federal trigger are still covered under state law.

Regardless of size, final paychecks are due by the next regularly scheduled payday after termination and must include any accrued vacation or wages owed. Missing that payday can expose the corporation and its officers to penalties.

Pay Creditors and Settle Claims

A dissolving corporation must wind up its affairs by paying its debts, fulfilling existing contracts, and resolving pending lawsuits.¹² Secured debts and tax obligations come before unsecured claims. Directors who hand assets to shareholders while known creditors go unpaid can be held personally liable for those debts.

To flush out unknown creditors, you can publish a notice in a newspaper of general circulation in the county where the corporation’s office was located, running at least once a week for two consecutive weeks. The notice must set a deadline for creditors to present claims no earlier than six months after the first publication.¹³ Publication is not required, but it starts a clock that can bar late claims. Dissolved corporations can still be sued for pre-dissolution debts, so ignoring a claim does not end it. Some corporations set aside a contingency reserve for claims that surface after dissolution.

File Final Tax Returns

Federal

Within 30 days of adopting the dissolution resolution, file IRS Form 966 reporting the plan of dissolution or liquidation. If the plan is amended, another Form 966 is due within 30 days of the amendment.¹⁴ This filing is separate from the income tax return and easy to miss.

File a final Form 1120 (or Form 1120-S for an S corporation) with the “Final return” box checked.¹⁵ S corporations must issue Schedule K-1s to all shareholders for the final year. If the corporation had employees, file final Form 941 for employment taxes and Form 940 for federal unemployment tax, and pay any balances. The IRS can still pursue collections against dissolved entities.

Once returns are filed and balances cleared, close the EIN by letter to the IRS in Cincinnati, OH 45999. Include the corporation’s legal name, EIN, business address, and the reason for closing the account.¹⁶

New York

File a final franchise tax return on Form CT-3, or Form CT-3-S for an S corporation, with the “Final return” box checked. A domestic corporation remains liable for franchise tax every year it stays incorporated, even if it stopped doing business years earlier.¹ If the corporation collected sales tax, file final Form ST-100 or ST-101 and remit any remaining tax.

An S corporation that terminates its federal or New York S election on a date other than the first day of the tax year creates two short tax periods and must file Form CT-3-S for the S short year and Form CT-3 for the C short year.¹ This is one of the more common places dissolving S corporations get tripped up.

Distribute What’s Left to Shareholders

Only after debts are settled can what remains go to shareholders. Distributions follow the certificate of incorporation and bylaws. Where multiple classes of stock exist, preferred shareholders receive their liquidation preference before common shareholders receive anything.¹² Non-cash assets like real estate, equipment, or intellectual property often need to be sold to produce distributable funds. Liquidation preference math, accrued dividends, and per-share amounts need to be exact, because errors invite shareholder lawsuits.

If a shareholder cannot be located or a creditor is unknown, the corporation cannot keep the money. Those assets must be paid to the State Comptroller as abandoned property within six months of the date set for the final liquidating distribution.¹²

Cancel Licenses, DBAs, and Out-of-State Registrations

Filing the Certificate of Dissolution does not notify every agency your corporation dealt with. Cancel state-issued licenses separately, including sales tax permits and any professional licenses. Regulated industries such as alcohol sales, financial services, and healthcare require you to close out permits through the relevant licensing agency. Local governments may require cancellation of health department certifications, zoning approvals, or municipal business licenses.

If the corporation used a trade name, file a discontinuance form with the county clerk where the DBA was registered. Federal trademarks with the U.S. Patent and Trademark Office should be canceled or transferred. If the corporation was authorized to do business in other states, file a certificate of withdrawal in each of them so foreign qualification obligations stop accruing.

Keep the Records

Dissolution does not end recordkeeping. The IRS generally requires tax records for at least three years, extending to six years when gross income is underreported by more than 25%, and to seven years when the corporation claimed a deduction for worthless securities or bad debts.¹⁷ Keeping financial records for seven years is the safest cushion, because a dissolved corporation cannot easily reconstruct them later.

Employment tax records, including W-2s and payroll data, must be kept at least four years after the tax becomes due or is paid, whichever is later.¹⁸ Shareholder meeting minutes, the board resolution authorizing dissolution, and the filed Certificate of Dissolution should be kept indefinitely. Any pre-dissolution litigation files should be held through the applicable statute of limitations.

1
Department of Taxation and Finance. Instructions for Form CT-3 General Business Corporation Franchise Tax Return CT-3-I
2
New York State Senate. New York Code BSC 1001 – Authorization of Dissolution
3
New York State Senate. New York Business Corporation Law 1104 – Petition in Case of Deadlock Among Directors or Shareholders
4
New York State Senate. New York Business Corporation Law 1104-A – Petition for Judicial Dissolution Under Special Circumstances
5
Department of Taxation and Finance. Instructions for Voluntary Dissolution of a New York Corporation
6
New York State Senate. New York Business Corporation Law 1003 – Certificate of Dissolution Contents
7
Department of State. Fee Schedules
8
Department of State. Expedited Handling Services for Division of Corporations
9
New York State Senate. New York Business Corporation Law BSC 1006
10
Department of Labor. Worker Adjustment and Retraining Notification (WARN)
11
eCFR. 20 CFR Part 639 – Worker Adjustment and Retraining Notification
12
New York State Senate. New York Business Corporation Law 1005 – Procedure After Dissolution
13
New York State Senate. New York Business Corporation Law 1007 – Notice to Creditors Filing or Barring Claims
14
eCFR. 26 CFR 1.6043-1 – Return Regarding Corporate Dissolution or Liquidation
15
Internal Revenue Service. Instructions for Form 1120 (2025)
16
Internal Revenue Service. Closing a Business
17
Internal Revenue Service. How Long Should I Keep Records?
18
Internal Revenue Service. Publication 583 (12/2024), Starting a Business and Keeping Records