Four Corporate Drive   Suite 488   Shelton, CT 06484   Tel (203) 929-3535   Fax (203) 929-5470

Record Retention We are available to consult with you to make sure you and your business avoid penalty exposure by being in full compliance with the new IRS computerized recordkeeping rules. 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 their 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 nontax reasons, for example for environmental liability-exposure reasons, keep real estate records forever. Remember, the items listed below are general guidelines TYPE OF RECORD RETENTION PERIOD Copies of tax returns as filed Forever Tax and legal correspondence Forever Audit reports of tax authorities Forever 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 and entertainment expenses 6 Years* Cancelled checks 3 Years* Paid vendor invoices 3 Years* Employee payroll expense records 3 Years* Inventory records 3 Years** Depreciation schedules At least tax life of asset plus 3 years Other capital asset records At least tax life of asset plus 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