Tax Records Retention


Storing tax records: How long is long enough?

April 15 has come and gone and another year of tax forms and shoeboxes full of receipts is behind us. But what should be done with those documents after your check or refund request is in the mail?

Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they’re safe provided they retain their documents for this period of time.

However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines.

 

Caution: Identity theft is a serious threat in today’s world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you must dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash.

 

Record Retention Schedule

Accounting

Accounts Payable Invoices 3 years
Accounts Payable Ledger Indefinitely
Accounts Receivable Ledgers 5 years
Authorizations for Signatures Dispose when superseded
Balance Sheets Indefinitely
Bank statements and deposit slips 3 years
Budgets 3 years
Capital Asset Record 3 years after disposal
Cash Receipt Records 7 years
Check Register Indefinitely
Checks, Payroll 2 years
Checks, Voucher 3 years
Cost Accounting Records 5 years
Depreciation Schedules Indefinitely
Employee Withholding 4 years
Expense Reports 3 years
Financial Statements, Periodic 2 years
General ledgers and journals Indefinitely
Payroll Registers 3 years
Petty Cash Records 3 years
P & L Statements Indefinitely
Unrestricted contribution notification letters Indefinitely
Restricted contribution notification letters 3 years after restriction lapse

Corporate

Annual Reports Indefinitely
Audit Reports 10 years
Audit Work Papers 3 years
Bylaws, charters and minute books Indefinitely
Classified Documents: Inventories, Reports] Receipts 10 years
Forms Used, File Copies Indefinitely
Mortgages, notes, and leases (expired) 6 years
Mortgages, notes, and leases (expired) 6 years
Annuity gift agreements Indefinitely
Checks (taxes, property, and fulfillment of important contracts) Indefinitely
Contracts and agreements Indefinitely
Copyrights and trademark registrations Indefinitely
Deeds and easements Indefinitely
Labor contracts Indefinitely
Retirement and pension records Indefinitely
Tax returns Indefinitely

Correspondence

General 2 years
Legal and tax Indefinitely
License Indefinitely
Informal Only as needed
Education
CPE Certificates 6 years
Course Material 6 years
Insurance
Policies (all types – expired) 3 years
Accident Reports 6 years
Employees, Insurance Records 11 years after termination
Fire inspection reports 6 years
Group disability records 8 years
Safety reports 8 years
Claims (after settlement) 10 years

Office Supplies & Services

Inventories 1 year after end of fiscal year
Office Equipment Records 2 years after end of fiscal year
Requests for Services 1 year after end of fiscal year
Requisitions for Supplies 1 year after end of fiscal year

Personnel

Accident Reports, Injury Claims, Settlements 30 years after settlement
Applications, Changes & Terminations 5 years
Attendance Records 5 years
Contracts (expired) 3 years
Daily time allocation reports 2 years
Disability and sick-benefits records 3 years following last payout
Employee Contracts 6 years after termination
Garnishments 5 years
Job Descriptions 2 years or when superseded
2 years or when superseded 3 years
Payroll (time sheets) 3 years
Personnel applications (non-hire) 3 years

Purchasing and Sales

Purchase orders 3 years
Requisitions 3 years
Sales contracts 3 years
Sales invoices 3 years
Bills of lading 2 years
Shipping and receiving reports 2 years

Electronic records of any kind

Records on computer file servers individual computers, and diskettes Reviewed annually
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