Above the Line

How long do I have to keep this crap?

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It’s one of my favorite questions, and one that I get every year.

How long do you have to keep your tax records? Is it really seven years?

No, not really. But there also isn’t a straightforward answer, either.

In general, the IRS has three years from the later of when a return is filed or is due to assess additional tax (remember, filing the return qualifies as an assessment). See 26 USC 6501. After that, the IRS is stuck with whatever tax is shown on the return. Consequently, the IRS has the incentive to move fast to assess additional taxes, which means you should hear from them no more than 18 months after you’ve filed your return. In 20 years of practice, I have not seen an audit notice more than two years after a return has been filed, but plenty at the 18 month mark.

So I can toss my 2009 tax records on April 15, 2013 then?

Not so quick. Many states have longer deadlines, usually four years, though a number have shorter deadlines which mirror the IRS. So, if all is in order, and you’re not doing anything funky on your return, you can toss your stuff on April 15, 2014. Or sooner, if your state statute allows.

What do you mean by ‘in general’?

Well, in certain circumstances, the statute can be extended. For example, you might agree to extend the statute as part of an audit. Amending a tax return refreshes the statute, at least as it applies to new items. The IRS might allege a gross (more than 25%) understatement of income, which extends the statute to six years, instead of three. Or the IRS might allege tax fraud, which removes any statute of limitations entirely. Been filing since 1916? The IRS can go all the way back until then. Finally, the statute is suspended for a period of time (150 days, generally) after a notice of deficiency is issued. So there are a number of exceptions which you need to consider.

And if I’m not doing anything funky or being audited or amending?

Check with your state, but you should be free to empty that box in four years, not seven.

That’s a relief.

I’m sure your closet agrees.


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