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Record Retention

Taxpayers who are subject to the federal income tax or who are required to file information returns with the Internal Revenue Service, must keep accurate records. In the event your return is audited, the auditor will expect you to substantiate the revenue and expenses reported on the return with proper accounting documentation. Generally, no penalty is imposed for failure to keep the required records. However, in case of a dispute with the IRS, the burden of proof is on the taxpayer. Incomplete or nonexistent records may result in interest, penalties and loss of legitimate deductions.

This guide provides suggested retention times for specific types of records. It is prepared based on information published by the American Institute of Certified Public Accountants. However, it is not all inclusive. For questions about specific applications, consult with your Accountant or Tax Preparer.

Permanent

  • Audit Records & Reports
  • Canceled Checks for Taxes, Property Purchases and Contracts
  • Cash Books
  • Charts of Accounts
  • Contracts & Leases (in effect)
  • Copyrights, Patents and Related Papers
  • Corporate Stock and Bond Records, Charters, Bylaws, Corporate Meeting Minute Books, Transfer Registers, Options, etc.
  • Current Insurance Records, Claims, Policies, etc.
  • Financial Statements (year-end. Others are optional)
  • Fixed Asset Records and Depreciation Records and Schedules
  • General Ledger and Journals
  • Income and other Tax Returns & Supporting Documentation
  • Real Estate Records (Deeds, Mortgages, Appraisals by Outside Appraisers, Bills of Sale, etc.)
  • Retirement and Pension Records
  • Tax and Legal Correspondence

Seven Years **

  • Accident Reports / Settled Insurance Claims
  • Canceled Checks (exception noted above)
  • Canceled Stock & Bond Certificates and Expired Option Records
  • Employee Earnings Summaries and Payroll / Personnel Records
  • Expense Reports, Analyses, Distribution Schedules and Payment Vouchers
  • Expired Contracts, Mortgages, Notes and Leases
  • Garnishments
  • Group Disability and other Insurance Safety Reports
  • Inventory Records of Products, Materials and Supplies
  • Invoices to Customers and from Suppliers
  • IRS Form 8300: Report on Cash Transactions Over $10,000 Received in a Trade or Business
  • Plant Cost Ledgers and other Cost Accounting Records and Reports
  • Purchase Orders, Shipping & Receiving records and related correspondence
  • Sales Records
  • Scrap and Salvage Ledgers
  • Subsidiary Ledgers and Schedules for Accounts and Notes Payable and Accounts and Notes Receivable
  • Voucher Registers and Schedules
  • Withholding Tax Statements

Three Years **

  • Bank Statements and Deposit Slips
  • Employment Applications
  • Expired Insurance Policies
  • Internal Audit Reports
  • Internal Reports (misc. financial)
  • Payroll Time Sheets or Cards

TESTIMONIALS

“Dennis and his team continue to provide the expert structural support that has helped us grow our business from no employees to many, from seasonal to year-round operations, from in person-only transactions to internet sales and deliveries. Their monthly reports ensure cost control, buying pattern adjustments, and seasonal fluctuation planning. All this and no worries about the IRS!”

- Ruth Linton, Highland Orchards, LLC

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