TN 9 (01-18)

SL 40001.485 Legally Dissolved Entities

Although the 1983 Social Security Amendments prohibited the termination of Social Security coverage, there are still instances where an entity may be legally dissolved. When a political subdivision or absolute coverage group is legally dissolved, the State must submit to SSA a notice of legal dissolution to delete the dissolved entity from the State’s agreement.

A. Dissolved entity vs inactive entity

A “dissolved” entity is an entity that has been legally dissolved and no longer exists. An “inactive” entity is an entity that no longer has any employees and has not been legally dissolved.


When an entity becomes inactive or re-activated, the State should send a letter to the Regional Office (RO). The letter should include the name of the entity, the entity's employer identification number (EIN), the modification number the entity is covered under, and the effective date of the entity's inactivation or the effective date of the entity's reactivation.    

B. Reporting a legally dissolved political entity

If an entity is legally dissolved or is no longer in existence, the State should take prompt action to notify SSA of the dissolution. The State should send the RO a notice of legal dissolution and provide legal documentation with the notice of legal dissolution.


The RO will:

  • notify the State that the legal documentation is acceptable or ask for additional information and

  • send a copy of the notice of dissolution to the IRS.

C. Evidence of legal dissolution

The State must submit legally sufficient evidence to establish the fact of dissolution. The evidence must establish that the entity is not merely inactive or dormant, but that it no longer exists.

1. Primary evidence of dissolution

  1. a. 

    If the dissolution occurred as the result of a legal authority, evidence of the dissolution may be in the form of a copy of the legal authority under which the dissolution occurred. This may include:

    • a copy of a city ordinance, or

    • a copy of the order of an authorized official which effectuated the dissolution, or

    • a copy of the results of an election which authorized the dissolution.

    In this situation, only one document is needed to establish dissolution.

  2. b. 

    Where the dissolution resulted from the authorization of a legislative body (for example, State Legislature, County Council, City Council, etc.), acceptable evidence would be proof that the legislative authorization had been carried out with either:

    • a reference (e.g., law review, Bar journal, legal periodical, legislative history journal, legal or legislative website, etc.) to the legislative authorization, or

    • a copy of the legislation

      If the legislative authorization did not by itself dissolve the entity, a copy of the administrative or other order is required.

  3. c. 

    A statement of the fact of dissolution executed by the official of the State or political subdivision with whom orders of dissolution are filed is acceptable as evidence of dissolution.

    Obtaining the various primary evidentiary documents mentioned in a. through c. above is usually possible if the dissolution occurred recently and an existing governmental entity maintains the records.

2. Secondary evidence of dissolution

Some entities, which went totally out of existence many years ago through annexation, consolidation, or dissolution, failed to notify the State or SSA properly. In most cases, the entities just stopped paying Social Security taxes, not realizing that formal notification to the State and dissolution documentation for SSA were required so that the entities could be removed from the State’s Section 218 Agreement. Usually, the required primary evidentiary records and documentation have long since been lost or destroyed, which makes obtaining proper dissolution evidence extremely difficult or impossible.


Where primary evidence of dissolution is unobtainable, other evidence is required to serve as a basis for a determination. Examples of other evidence include:

  • meeting minutes of the entity’s governing board (e.g., school board, fire district or precinct board, water district board, public service commission, etc.) authorizing dissolution, in tandem with a published article or other evidence confirming dissolution;

  • a combination of documents of significant probity which enable the current official of the State or political subdivision with whom orders of dissolution are filed to make a determination as to whether or not the entity is legally dissolved.

Examples of acceptable documents submitted in combination for the current State or local government official’s dissolution determination are:

  • a signed statement or certified letter from an authorized State or local government official or school district superintendent declaring that the entity no longer exists;

  • meeting minutes of the entity’s governing board authorizing the entity’s dissolution;

  • an SSA earnings report query (ERQY) showing that the entity stopped reporting W-2’s in the year of the alleged dissolution;

  • information about the entity’s dissolution obtained from a State or local government’s website;

  • a signed statement from the Public Service Commission that a water district is no longer on its database.

D. Erroneous dissolution of political entity   

If the dissolution action is erroneous because an entity was not legally dissolved or in fact nonexistent, the State should request a reconsideration of the dissolution action. The State should provide supporting evidence with the request. SSA will provide the State a copy of the reconsidered determination with the supporting evidence.

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SL 40001.485 - Legally Dissolved Entities - 01/03/2018
Batch run: 01/03/2018