Here comes Tax Day! You might be wondering how long you need to keep your tax records. Maybe your company has a records retention plan based on legal requirements, standard industry practices, or internal policy. Or maybe for tax records, you follow the accepted 3-year record retention period for tax documents. Three years might sound like long enough, but are you thinking about federal and state audit limitation periods? These regulations could potentially impact the time you keep such records.
Many people know that the federal IRS tax audit period is 3 years (or 6 + years if the IRS finds substantial errors). In fact, on its website, the IRS suggests businesses retain records. They suggest you keep records that show income, deduction, or credit. So yes, this period typically amounts to 3 years. But, depending on the circumstances or the particular records you keep, this can extend to 4, 6, or 7 years and sometimes indefinitely.
So how do you comply with federal and state requirements? Make sure your tax records align with audit limitation periods. This alignment minimizes hassle or complications that develop from inadequate or missing records during an audit.
In short: have a proper retention plan in place. Know the tax recordkeeping laws for your federal and local jurisdictions and be familiar with the tax audit limitation periods. Fashion a retention plan for your tax records that is responsive to the relevant legal requirements and covers your bases. Proper recordkeeping foresight and planning helps to avoid possible legal, compliance, or other issues down the road.
Contact Zasio today to see how our innovative products and services can meet your recordkeeping and information governance needs.
Disclaimer: The purpose of this post is to provide general education on Information Governance topics. The statements are informational only and do not constitute legal advice. If you have specific questions regarding the application of the law to your business activities, you should seek the advice of your legal counsel.
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