Record Retention Guide

Federal Law Tax Requirements

The federal tax laws require taxpayers to maintain books of account or records to support amounts reported on tax returns. The general rule is that such books and records must be kept as long as they may be relevant to a taxpayer’s claim for a tax credit or refund or to an IRS attempt to assess additional tax for the year in question.

The specific rules relating to the length of time such books and records must be kept are quite detailed. However, we recommend the following document retention periods as general guidelines. In some cases, the retention period recommended may be for nontax reasons – for example real estate records should be kept forever for environmental liability exposure reasons.

Type of RecordRetention Period
Copies of tax returns as filedForever
Tax and legal correspondenceForever
Audit reportsForever
General ledger and journalsForever
Financial statementsForever
Contracts and leasesForever
Real estate recordsForever
Corporate stock records and minutesForever
Bank statements and deposits slipsForever
Sales records and journals6 years*
Other records relating to revenue6 years*
Employee expense reports and records
relating to travel and entertainment expenses
6 years*
Canceled checks3 years*
Paid vendor invoices3 years*
Employee payroll expense records3 years*
Inventory records3 years**
Depreciation scheduleAt least tax life of asset plus 3 years
Other capital asset recordsAt least tax life of asset plus 3 years
Other records relating to expense3 years*

*From the later of the tax return due date or filing date. (All records related to a
return should be kept for at least six years if there is any concern the IRS could
show as significant understatement of gross income on the return.)

**Longer if you use LIFO

Remember, these are general guidelines.

If you have any question, please don’t hesitate to call.

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