We are often asked this question, but the truth is, the answer depends on a number of factors: your company’s policies, the type of files in question, whether they continue to serve a useful purpose, or if all legal and regulatory requirements are met. The record retention policy of a business should be based on the length of the statute of limitations (which varies by state) for breach of contract, breach of fiduciary duty, and professional liability claims. By the same token, with the exception of company policy guidelines, an individual’s personal records should be retained based on the same criteria.

1. How Long Should You Keep
Your Important Documents?
5788 Merrick Road, Massapequa, NY 11758 • (516) 541.6549 • info@dsjcpa.com

2.  We are often asked this question, but the truth is, the
answer depends on a number of factors: your company’s
policies, the type of files in question, whether they
continue to serve a useful purpose, or if all legal and
regulatory requirements are met.
 The record retention policy of a business should be based
on the length of the statute of limitations (which varies by
state) for breach of contract, breach of fiduciary duty,
and professional liability claims.
 By the same token, with the exception of company policy
guidelines, an individual’s personal records should be
retained based on the same criteria.

3.  The statute of limitations period for income tax returns is generally three
years from the later of their original filing or due date (six years if there is an
understatement of gross income of 25% or more). Regardless of tax
assessment periods, we recommend that taxpayers retain certain records
such as tax returns, results of an audit by a tax authority, general ledgers,
and financial statements indefinitely. This is especially true if your returns
involve depreciation, capital gains, or net operating losses.

4.  For your reference, we have provided a Record Retention Guide. We advise
you also to consult with your attorney and insurance provider when
establishing a record retention policy. You should review it and revise it as
necessary on an annual basis to reflect any changes in governmental and
professional requirements while, at the same time, considering the cost of
retention. It is also important to remember that these retention periods are
guidelines, not hard and fast rules, and are not intended to be all-inclusive.

5.  It should also be noted that the IRS permits taxpayers to convert paper tax
documents to electronic images and maintain only the electronic files. The
paper documents can then be destroyed. Although these IRS rules pertain to
businesses and sole proprietors, they presumably apply to individuals as well.
The IRS, as well as many states, has issued guidance that outlines the
requirements that must be met to take advantage of an electronic storage
system.

6.  If you have any further questions, please contact Victor C. Belgiorno at 516-
861-3704 or VBelgiorno@dsjcpa.com or Bob Jahelka at 516-861-3707
or BobJahelka@dsjcpa.com.

7. www.facebook.com/dsjcpa
http://bit.ly/DSJCPA-LI
www.twitter.com/dsjcpa
 5788 Merrick Road, Massapequa, NY 11758 • (516) 541.6549 • info@dsjcpa.com
GET SOCIAL WITH US!