Storing tax records
How long is long enough?
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.
Business Documents To Keep For One Year
- Correspondence with Customers and Vendors
- Duplicate Deposit Slips
- Purchase Orders (other than Purchasing Department copy)
- Stenographer's Notebooks
- Stockroom Withdrawal Forms
Business Documents To Keep For Three Years
- Expired Insurance Policies
- General Correspondence
- Internal Audit Reports
- Petty Cash Vouchers
- Savings Bond Registration Records of Employees
Business Documents To Keep For Six Years
- Expense Analysis and Expense Distribution Schedules
- Inventories of Products, Materials & Supplies
- Invoices to Customers
- Notes Receivable Ledgers & Schedules
- Payroll Records and Summaries including payment to pensioners
- Travel and Entertainment Records
- Vouchers for Payments to Vendors, Employees, etc.
Business Records To Keep Forever
While federal guidelines do not require you to keep tax records "forever" in many cases there will be other reasons you'll want to retain these documents indefinitely.
For more detailed information on records retention please click on the link below which will take you to the IRS website which provides all the details.