That doesn't surprise me about NARA discarding the returns after 4
years. I, along with others, did some research a few years back and
calculated the average retention of the entire CFR It was 3.25 years. I
can't remember why we wanted to know, though. BTW, Larry, I'm adding
your tidbit into my IRS info sheet. I hope you don't mind.
Steve Morgan
-----Original Message-----
From: Records Management Program [mailto:[log in to unmask]] On
Behalf Of Larry Medina
Sent: Tuesday, August 15, 2006 10:04 AM
To: [log in to unmask]
Subject: Re: Retention of time sheets
Being someone who actually has lived through and survived an IRS audit
of my business in the late 1990s, I can tell you that they DO EXPECT you
to be able to produce records of all transactions down to a level of
minutiae that you could NEVER imagine for not only the specific year you
are being audited for, but for the 3 years leading up to it. I was
being audited for Tax Year 1997, and was required to produce all
supporting documentation for that year, as well as 1996, 1995 and 1994.
And the comment made by a dear friend of mine regarding credit card
receipts won't help in the event of an audit. I had statements ONLY for
one of the years, seeing as each monthly bill detailed WHO the
expenditure was with and when it happened, but the IRS demanded that I
produce actual register/transaction level receipts for some purchases,
because they were unable to ascertain if I had purchased a mix of
business and personal items at locations such as Costco, Office Depot,
etc. And their bottom line was if the transaction level receipts
couldn't be produced, then the expenses would be disallowed. Same went
for travel costs; they wanted to see where it stated how many guests
were in the room, or how many airline tickets were purchased.
The one saving grace was I wasn't Incorporated. As an individual, you
can be audited for CY+6, and up to 10 if they determine there are
possible improprieties in their findings. But as a Corporation, the
limit for audits extends to 25 years... and what's classic about that is
NARA (which is where ALL TAX RETURNS are held for the IRS) discards
returns on a 4 year cycle...
so if you're audited (and selection is done from a database) and the IRS
fails to contact NARA in time to pull your returns to be held for
potential audit, **YOU** are required to produce the copy of the return
to support yourself.
So, put THAT in your Deuteronomy and smoke it...
Larry
--
Larry Medina
Danville, CA
RIM Professional since 1972
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