OUR THOUGHTS ON:

Accounting and Tax Records Retention

Tax

By Jeffrey Wlahofsky

Many clients ask us how long they should retain their company’s accounting and tax records.

Unfortunately, there is no simple and conclusive answer as to how long records should be retained. Records should be retained for only as long as they serve a useful purpose or until all local requirements are met. Record retention periods vary among companies; however, the retention periods should generally correspond with the longest statute of limitations prevailing in each state for breach of contract, breach of fiduciary duty and professional liability claims.

The federal income tax regulations provide that a taxpayer's records must be retained "so long as the contents thereof may become material to the administration of any Internal Revenue Service laws." Generally, the record retention period begins at the end of the tax year in which the document was created, not from the date of the document. For items supporting tax returns, the retention period begins on the filing date of the return or its due date (including extensions).

Certain company records should be retained permanently. Such records include: audit reports, annual financial reports, general ledgers, and certain personnel data. Other records should be retained for periods varying from one to ten years.

The differing statutes and regulations enacted by the various federal, state and local agencies complicate the problem because statutes of limitations and state and governmental agency requirements vary by state. Each company should carefully consider its requirements before adopting a records retention policy.

The following table provides a suggested record retention schedule that should provide guidelines to general retention requirements.  Please contact Jeff Wlahofsky with any questions concerning best practices in retention for your business.

Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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