Case Study Business Solutions

The Paper Chase: Retaining Records

A client who is paying top dollar for office space will ask, "How long do I have to keep tax returns?" The Internal Revenue Service recommends retaining records for seven years, but it has only three years to assess any additional tax - unless you've deliberately broken the law. If there is a material misstatement of income, the IRS has up to six years to investigate. If you did not file a return or have committed fraud, there is no statute of limitations, and the IRS can demand your records at any time.

But retaining paper records can be costly: Essentially, you are paying rent for unproductive space. Since Sept. 11, the cost of insuring records has skyrocketed. Additionally, finding stored documents is inconvenient and sometimes futile.

Converting paper records to an electronic format can solve your problems. We can help make sure you follow these IRS guidelines:

• Hard copy records must be transferred to an electronic storage media through a method that ensures accuracy.
• There must be reasonable controls to ensure the integrity, accuracy, and reliability of the storage system.
• There must be an index to retrieve materials.
• Records need be viewable on a video screen.

Consider storing other important records electronically. We can help manage the process.

< back