Michigan Certificate of Dissolution Form: Fees and Tax Clearance

To close a Michigan business with the state, you file a Michigan Certificate of Dissolution with the Department of Licensing and Regulatory Affairs (LARA) and pay a $10 fee. The filing formally ends the entity’s legal existence, but only after the right internal approvals have happened, and it triggers separate obligations with the Michigan Department of Treasury and the IRS that most owners underestimate.

Get Approval Before You File

The certificate is the last step, not the first. Michigan treats corporate and LLC dissolutions under separate statutes, and the approval thresholds are different.

Corporations

For a Michigan corporation, dissolution begins with the board of directors. The board proposes dissolution and recommends it to the shareholders, unless a conflict of interest or other special circumstance makes a recommendation inappropriate; if the board withholds its recommendation on that basis, it must explain the reason to the shareholders.¹

Shareholders then vote at a properly noticed meeting. The notice has to state that voting on dissolution is one of the meeting’s purposes. Approval requires the affirmative vote of holders of a majority of the outstanding shares entitled to vote. Only after that vote does the corporation execute and file the Certificate of Dissolution.¹

LLCs

An LLC faces a higher internal bar. Dissolution requires a unanimous vote of all members entitled to vote, unless the articles of organization or operating agreement specify a triggering event. An LLC also dissolves automatically if the articles set a specific date for dissolution, or if a court enters a decree of judicial dissolution.²

One catch trips up owners who let their filings slip: if the LLC is not in good standing, LARA will not accept a dissolution filing until you fix that first. Overdue annual reports and any penalties have to be paid before the dissolution paperwork moves.²

What the Certificate Must Contain

The required content depends on entity type.

A corporation’s Certificate of Dissolution must state:

The corporation’s name, matching the name on file with LARA exactly.
The date and place of the shareholder meeting where dissolution was approved.
A statement that dissolution was proposed and approved by the required votes of both the board and the shareholders.¹

An LLC files on LARA Form CSCL/CD-731. The form asks for the LLC’s name, its bureau identification number, the reason for dissolution (either the triggering event or a unanimous vote), and the signature of a member, manager, or authorized agent. You can also set an optional effective date up to 90 days after LARA receives the document.³

Filing Fee and Where It Goes

The filing fee is $10, whether you are dissolving a for-profit corporation, professional corporation, nonprofit corporation, or LLC.⁴ Filings go to LARA’s Corporations, Securities, and Commercial Licensing Bureau. Confirm your entity’s exact registered name before submitting; a name mismatch is the most common reason a certificate gets rejected.

Michigan Treasury Tax Clearance

The filing that finishes a dissolution on paper does not finish it with the state’s tax collector. If your business is registered for taxes administered by the Michigan Department of Treasury, you must request a tax clearance. For LLCs, that request has to be made within 60 days of filing the dissolution.²

Clearance requires Form 5156 (Request for Tax Clearance) along with Form 163 (Notice of Change or Discontinuance), submitted through Michigan Treasury Online. Treasury reviews your accounts for outstanding balances across sales tax, use tax, withholding tax, and corporate income tax. Any unpaid amounts or unfiled returns have to be resolved before clearance is issued.⁵

If your business was never registered for state business taxes, you do not need to file Form 5156 and will not receive a certificate of clearance.⁵

Winding Up After Dissolution

Filing the certificate does not make the entity vanish. Under Michigan law, a dissolved corporation continues to exist for the limited purpose of winding up its affairs. During this period it can collect debts owed to it, sell or transfer assets, pay its own debts and liabilities, and do anything else necessary to close operations. What it cannot do is carry on regular business.⁶

Debts and other liabilities come before distributions. Only after they are paid do remaining assets go to shareholders, and the priority of those distributions follows the articles of incorporation and any preferences attached to different classes of stock. Officers and directors continue to owe fiduciary duties throughout the process, and shareholders who accept distributions while creditors remain unpaid can be exposed personally for those amounts. Document every payment and distribution.

Federal Filings the Dissolution Triggers

The IRS runs on its own timeline. State dissolution does not close your federal accounts.

Form 966 Within 30 Days

Any corporation that adopts a resolution or plan to dissolve must file IRS Form 966 within 30 days of adopting that resolution. The 30-day clock starts on the date shareholders approve dissolution, not on the date you file with LARA. S corporations that are qualified subchapter S subsidiaries and exempt organizations are excluded. The form requires entity information and the resolution date, with a certified copy of the resolution attached. If the resolution is later amended, another Form 966 is due within 30 days of the amendment.⁷

Final Returns and Closing Your EIN

File a final federal income tax return for the year you close. A C corporation files Form 1120 with the “final return” box checked. An S corporation files Form 1120-S and checks both the “final return” box and the “final K-1” box on each shareholder’s Schedule K-1. Partnerships file a final Form 1065.⁸

If you had employees, file final employment tax returns (Form 941 or Form 944 marked as final, plus Form 940 for federal unemployment), issue final W-2s to employees, and file Form W-3 with the Social Security Administration. Independent contractors paid $600 or more during the final year need a Form 1099-NEC.

To close the IRS business account and cancel the EIN, send a letter to the IRS at Cincinnati, OH 45999 with the entity’s legal name, EIN, address, and the reason for closing. The IRS will not close the account until all required returns are filed and all taxes are paid.⁸

If You Had Employees

A closing that eliminates jobs brings its own rules. Employers with 100 or more full-time employees must give at least 60 calendar days of advance written notice under the federal Worker Adjustment and Retraining Notification (WARN) Act before a worksite closing that affects 50 or more employees. Failure to give notice can result in liability for back pay and benefits for each day of the violation.⁹

COBRA continuation coverage exists only as long as the group health plan exists. If the plan terminates with the business, COBRA generally ends with it. Confirm the health plan’s paid-through date with the carrier, and if no COBRA will be available, send former employees a notice of unavailability.

Administrative Dissolution Is Not the Same Thing

Owners who stopped filing annual reports sometimes assume the state has already closed the business for them. LARA administratively dissolves corporations that miss annual reports after a grace period, but that is not a clean voluntary dissolution. You can lose rights to your business name and assumed names, and the entity’s tax obligations do not disappear.

Reinstatement is available under MCL 450.1925. You file the missing annual reports and pay all fees and penalties for the missed years plus any intervening years. Once reinstated, the corporation’s rights are the same as if the dissolution never happened, and contracts entered during the gap remain valid.¹⁰ If you want a clean close, reinstate first, then voluntarily dissolve.

What Causes Rejections and Delays

Skipping tax clearance is the most common problem. Owners file the certificate with LARA, assume the business is closed, and learn months later that Treasury still considers the entity active and has been adding penalties for unfiled returns. Request clearance early, ideally before the LARA filing.

Name mismatches cause rejections that are easy to avoid. The certificate must show the exact legal name on file with LARA, not a name from signage, marketing, or an assumed name. Verify your entity’s current registration before submitting.

Missing the federal deadline is easy to do. Form 966 is due 30 days after the shareholder vote, and many owners find out about the requirement only after that window has closed. Put both state and federal filings on one checklist before the vote happens.

Dissolving before debts are resolved creates personal exposure. Settle known creditors during winding up before any distribution to owners.

1
Michigan Legislature. Michigan Code MCL 450.1804 – Dissolution by Action of Board and Shareholders
2
Licensing and Regulatory Affairs (LARA). Dissolution
3
Michigan Department of Licensing and Regulatory Affairs. CSCL/CD-731 Certificate of Dissolution (LLC)
4
Michigan Department of Licensing and Regulatory Affairs. Filing Fees for Domestic Profit and Professional Corporations
5
State of Michigan. Tax Clearance Frequently Asked Questions
6
Michigan Legislature. Michigan Code MCL 450.1833 – Winding Up
7
Internal Revenue Service. Form 966 Corporate Dissolution or Liquidation
8
Internal Revenue Service. Closing a Business
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U.S. Department of Labor. Worker Adjustment and Retraining Notification (WARN) Act Frequently Asked Questions
10
Michigan Legislature. Michigan Code MCL 450.1925 – Reinstatement