Record Retention

How Long Should You Keep your Records?

The Internal Revenue Code at Section 6001-1(e) supplies the general rule that books and records must be kept as long as the information may be material in the administration of the income tax laws. For practical purposes, this means that books and records must be kept as long as there is a possibility that a taxpayer could file an amended return or claim for refund, or the Internal Revenue Service could audit the return or assess additional tax. The ability of the IRS to audit a return is based on various statutes of limitation.

A grossly oversimplified version of the statue of limitation rules would include:


  1. Generally, the IRS has three years from the date you filed your return to assess any additional taxes you owe.
  2. However, if you did not report all of your income and it is more than 25% of the gross income you reported on your return, the IRS has 6 years from the filing date of the return to assess additional taxes.
  3. You have 3 years from the date you filed your return or two years from the date you paid the tax, whichever is later to file a claim for credit or refund. If you filed your return prior to the due date, it is considered filed on the due date. For example, if you filed your individual income tax return on March 10, the filed date for the statute is April 15.
  4. Additionally, if no return is filed or the return is false or fraudulent or if there is a willful attempt to evade tax, there is no limitation period on the assessment of additional taxes.

There may be other types of records you may need to maintain depending on the nature of your business, such as: advertising, manufacturing, sales and marketing and transportation and shipping.  Clearly, the policies and procedures that you devise for your organization may require specific input.


This page was prepared to give you general guidelines for determining how long to maintain your important records. We will be happy to provide you further information.


 

Accounting and Fiscal


TYPE OF DOCUMENT

YEARS

TYPE OF DOCUMENT

YEARS

Accounts payable ledgers

P1

Checks paid and cancelled

9

Accounts receivable ledgers

10

Checks payroll

7

Balance sheets

5

Donations

7

Bank deposit records

6

Expense reports employees

5

Bank reconciliation papers and statements

8

Financial statements, certified & periodic

P1

Bills collectible

7

Fixed capital records

P1

Bonds sales or transfers

15

General journal, ledger & supporting papers

P1

Bonds registered

P[1]

Payroll tax returns

4[2]

Building permits

20

Inventory records

3

Capital stock sales, certificates & ledgers

P1

Invoices to customers

7

Cash books

25

Invoices from sellers (vendors)

7

Cash receipts & disbursement records

10

Payroll register

7

Cash sales slips

3

Petty cash records

3

Charge slips

10

Profit and loss statements

P1

Check records

7

Buy/sell stock, bonds & mutual funds [3]

4[4]

Check register, dividend, expense

10

Corporate


Annual reports

P1

Easements

P1

Capital stock certificates and stock ledger

P1

Election ballots

20

Charters, constitution, bylaws and amendments

P1

Election records

10

Contracts employee (years after termination)

P1

General cashbooks (treasurer and auditor)

25

Contracts government & labor unions (yrs after termination

P1

Incorporation records & certificates

P1

Contracts vendor (years after termination)

10

Licenses & permits to do business (fed, state & local)

P1

Dividend checks

10

Retirement plan contributions (after assets have been withdrawn)

4

Dividend register

P1

Stock, stock transfer & stockholder records

P1

Insurance


Accident reports

11

Claims group life and hospital

4

Appraisals

P1

Claims workmen’s compensation

10

Claims automobile

10

Expired policies all types (after expiration)

3

Legal


Affidavits

10

Copyrights

P1

Claims & litigation of torts & breach of conduct

P1

Mortgages

5

Personal Property


Accident reports, injury claims & settlements

11

Injury frequency charts

10

Applications, changes, terminations

3

Insurance records (group & employee)

6

Attendance and time sheet records

6

Medical folders employee

5

Disability & sick benefits records

8

Payroll records after termination

P1

Earnings records

P1

Pension plan applications, claims & correspondence

P1

Employee service records

P1

Salary and rate changes

10

Employee contracts

P1

Withholding exemption certificates (after termination)

8

File for individual employee

3

Workmen’s compensation reports

30

Garnishments

7

Property


Appraisals

P1

Maintenance and repair buildings

10

Damage reports

7

Maintenance and repair of machinery

5

Deeds and titles

P1

Equipment records & historical folders

P1

Depreciation schedules

3

Sales

7

Inventory records

16

Taxes

P1

Leases

6

Water rights

P1

Taxation


Annuity or deferred payment plan

P1

Invoices to customers & from sellers (vendors)

7

Correspondence

20

Inventory reports

16

Depreciation schedules[5]

3

Real estate

15

Dividend register

P1

Sales & use tax records

P1

Employee withholding certificate

8

Social Security

P1

Exemption status

P1

Tax bill statements

P1

Excise reports

5

Tax returns and working papers

P1


[1] Permanent

[2] Retain for at least 4 years and preferably 7 if space is not critical. Once the period has elapsed, the supporting documents may be discarded, but the returns and W-2s themselves should be retained indefinitely.

[3] (also record of dividends, splits & reinvested dividends)

[4] Retain for four years after the asset is sold.

[5] For any rental real estate or depreciable business property you own, keep records of the property’s cost, date acquired, and schedule of depreciation claimed in previous years. If the property is sold, keep the records for four years after the sale.

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