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Record Retention
Federal tax laws require taxpayers to
maintain the books and records needed to support amounts reported on federal
tax returns. These days, many taxpayers keep some or all of the financial
and tax records in an electronic (computerized) format. The IRS recently
issued new guidelines for such computerized records. The federal government
can potentially seek civil and criminal penalties if these guidelines are
not followed. The specific rules relating to the period records must be
kept are quite detailed; however, as general guidelines, we recommend the
record retention periods listed below. In some cases, the recommendation
may be for non-tax reasons, for example for environmental liability-exposure
reasons, keep real estate records forever.
Remember,
this is a general guideline.
|
TYPE OF
RECORD |
RETENTION PERIOD |
| Copies of tax
returns as filed |
3 Years*** |
| General
ledger |
Forever |
| Financial
statements |
Forever |
| Contracts and
leases |
Forever |
| Real estate
records |
Forever |
| Corporate
stock records and minutes |
Forever |
| Bank
statements and deposit slips |
6 Years* |
| Sales records
and journals |
6 Years* |
|
Other
records relating to revenue |
6 Years* |
| Employee
expense reports and records relating to travel/entertainment expenses |
6 Years* |
| Cancelled
checks |
3 Years* |
| Paid vendor
invoices |
3 Years* |
| Employee
payroll expense records |
3 Years* |
| Inventory
records |
3 Years** |
| Other records
relating to expenses |
3 Years* |
* From the later of the tax return due
date or filing date.
** Longer if you use LIFO.
*** Three years from date of filing unless
fraudulently filed returns; then keep returns forever! |
