Dale K. Cline, CPA, PLLC
CERTIFIED PUBLIC ACCOUNTANT
P.O. Box 3966
Suite 101, 1333 2nd St. N.E.
Hickory, NC 28603-3966

Telephone 828-322-2407
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RECORD RETENTION

The Internal Revenue Service informally recommends that you retain tax records for seven years. State tax rules should also be considered but usually follow IRS guidelines. If a return includes a substantial understatement (25% or more) of income, the statute of limitations period, which is normally 3 years from filing, is extended to six years. If you don't file a return you should keep records indefinitely.

IRS and state audit reports should be kept permanently.

IRS guideline urges you to keep all employment tax records for at least 4 years after the date the tax becomes due or is paid whichever is later. We recommend you keep these for at least 10 years.

Certain records that substantiate the cost basis of property that you may eventually sell, or otherwise dispose of, such as investment property and business assets, should be kept longer. Once the property has sold or transferred, a minimum of seven years retention from the date of sale or transfer would be wise.

Business ledgers and financial statements are the types of records you should normally retain indefinitely.

Canceled checks and paid vendor invoices are examples of documents that should be kept a minimum of three years.

There are also non-tax reasons to keep certain documents beyond the time needed for tax purposes, such as leases, real estate closing statements, insurance policies, employment records, operating & partnership agreements along with any amendments, and other legal documents.

This is a brief overview of record retention. If you have questions regarding a specific situation, please contact us or you can go to www.irs.gov for more details.

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© 2010 Dale K. Cline, CPA, PLLC All Rights Reserved
Updated February 24, 2015