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!
