Tax Records

Either three years or seven years depending on the debt of the business. Some websites say to never get rid of them.
 
6 years. IRS can go back 10 years if they suspect fraud, no use keeping records back that far to help them prove their case.
 
I keep mine three years but have never done anything commercially.

Generally, the Assessment Statute Expiration Date (ASED) is ten years, so 10 years should be sufficient.

Records will not help anyone engaging in tax fraud.

Dean
 
According to my CPA tax account only 7 years. If you have tax records that go back 20 years and if IRS would audit you they can go back through all of the 20 years.
 
My tax account says the IRS can go as far as they want if you have the records and they suspect tax fraud.
 
7 years seems to be the norm, but you should retain records of establishing IRA?s and the like; as well as property transactions until sold, at least.
 
That's what I meant to say- ditch them after 6 years, because its very difficult for IRS to make a case against you unless they can look at your records, so why make it easier for them?
 
My CPA and college friend told me of a case where a man died. He owned a tavern, lost of cash sales he never reported. My CPA said IRS did a lifetime audit because the deceased had more assists than he made in his lifetime.

No idea who the IRS does lifetime audits.

I have 20 years worth of business records all on Old MS spreadsheet 4.0 and a large stack of receipts in the basement. Kids can have a bonfire when I'm gone.
 
Agree 7, but my accountant keeps my records also. Not to long ago I destroyed a pile, that was out past 7
 
If they don't have the records they make an estimate and bill you for it. Then its up to you to prove they are wrong. That's how they do it with all cases - even when the records exist. If you don't have the records to prove your case you owe them. The idea of innocent until proven guilty does not apply.
 
If you go to IRS site they usually only go back 3 years and if any problems are found they can go back 6 years. You would have to have some really screwed up tax files for them to go back farther. I use a CPA tax accountant which would go with me if was to get audited. I have paper work to cover every thing that is on tax returns .
 
You have no idea how screwed up some people's taxes are.


Warren Buffet's investment firm Berkshire Hathaway owes over a billion dollars in taxes going back to 2002 and he has entire CPA firms doing his taxes. One of his other businesses call "Net Jet" has been going back forth with the IRS for over 25 years fighting a cumulative tax bill of over $500 million.
 
What the IRS says is keep records for three years unless you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. If you don't file a return at all they say to keep records indefinitely.
 

Keep records 10 years. General rule is IRS can go back 3 years after you file a return, 6 years if there's a 25% understatement of income. If you don't file a return or you file a fraudulent return, there is no time limitation on how many years they can go back. State rules differ. I say 10 years because it gives you a little protection to defend against an auditor that's claiming you did something you did not do. In practice, 3 to 6 years is the norm which is why some practitioners advise 7 years.

When you toss your records, don't forget to go through them and pull out everything that you will always need. Paperwork relating to items depreciated long them, property purchase documents, ect. Some stuff should never be thrown away.
 
My accountant sent me a letter listing how long to keep certain records. Some 1 year, 7 years, 10 years, 25 years, lifetime. Just depends on what the document is.
 

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