How long do you keep files?

[WITAXLADY]

So I have a small semi trailer - actually 2 now as part of the roof collapsed and I had to rescue some stuff from getting destroyed - filled with past year tax files.

I have some boxes that have a client that did not pay me and he has moved away.. do I need to keep his 2 boxes of files?

They are at least 6 years back.

And the other one we went thru an IRS audit and bankruptcy and he lost his land to settle up with a failing business - some of that is from 2003 - can I burn that as well?

In MY defense;

I have had to retrieve payroll paperwork from 2013!!  from the IRS and 2014 from WI and

We thought we had settled an IRS case from 2013 or maybe 2011, and they are asking for the money - Of course I can find every year except the one in question - so much for my system and saving all the tax returns. We will relook this summer, yet.

So the 3 different scenarios -

First - Do I need to keep anything past 10 years?

Second - how long after a client leaves - do I need to keep their paperwork - I do have clients that come back in 1-6 years..

Thank you!

Darlene WI

 

 

[mcb39]

Too long, I guess.   When we built on my office addition, we put a basement under it which makes a fine, safe storage room.  However, I make external backups every single year so could always reprint the return if I had too.  But, that doesn't cover the notes, forms attached, etc; so I am thinking of starting to burn more since we have an outside wood burner.  On the other hand, there have been a few instances when we have had to dig way back.  As you said, sometimes they leave and come back several years later.  I just had one last year that hadn't been here for 9 years because I fired her.  She came  back asking nicely and so far all is well.  I am going to say seven to 10 years because I have the room and I can just see so many of you throwing up your hands in horror.  That's what happens when you started out with pencils, erasers and printed forms and a copy machine.  

[Catherine]

I scan everything, and electrons stack real high before they need more space.  My electronic records go back to start of scanning. Paper? I no longer keep paper for anything except 8879-type sig pages (in ONE file folder by tax year and one folder for state pages; scanned as a whole and shredded after three years) and POAs.  POAs because so often I need to include copies (or fax them) when dealing with a new agent or issue. 

No client original docs of any kind stored, except for one of my daughters who doesn't have enough room at her apartment, and at her specific request.

With electronic records, I was able to provide copies of adoption papers to a former client who needed them after originals were lost in a move. It did take me a few minutes of digging in the old records to find them.

[Sara EA]

Electronic records are the way to go. Hire a student for the summer to start scanning, starting with the most recent prior year.  We did this and went back ten years.  All the paperwork was then shredded.  We did keep the paper records of a very few clients who had really complex histories, but now all original docs are returned to the client when the return is completed.  We also keep original docs with sigs for POAs.  We offered clients with massive old files the opportunity to retrieve them if them desired--only one did.  It is so easy to find things in the electronic file cabinet--no digging in file drawers, where something is always misfiled, no need to refile anything.  Client needs W2s for the past three years?  Print them out in a minute. IRS notice and your response?  Right there under the year in question.  The back room is now usable instead of being lined with filing cabinets, and no one has to muster the courage to go down in the basement.