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Record Retention -2006 Tax Returns?

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    Record Retention -2006 Tax Returns?

    When is it safe to destroy my 2006 paper returns? Need the room. Have a cd on the actual files.

    #2
    A preparer does not have to keep paper returns. Just a list of returns prepared. So, you can decide if you want to store returns electronically or not at all or just keep a list or do two out of the three or all three.

    Your state requirements may differ.

    HRB would destroy paper returns three years after filed when I worked there.

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      #3
      Record retention and covering yourself

      Originally posted by zeros View Post
      When is it safe to destroy my 2006 paper returns? Need the room. Have a cd on the actual files.
      We might want to check with our malpractice/E&O insurance carriers on this. Or our lawyers. Old tax returns never die or even fade away. One thing we always seem to know is that the item we thought we will never need for future reference will be something we wish we had in a future tax season.

      In some states, malpractice claims can be brought within a set period of time after the date of last service, regardless of the time where the service was delivered in a prior year. If you are still doing taxes for the taxapyer it may be wise to keep your files/workpapers/notes etc around for a while longer, perhaps until 3years after they die or leave your practice.

      Scanning to PDF old, and current client files saves filing space and with proper security and backup is more secure than paper file cabinents anyway. In my practice I do not keep any paper documents once the return is accepted, scanning everything (including 8879's, 8453's and client supporting documents, notes, etc). CD's are not all that secure and can delaminate or otherwise decay.

      Not long ago, I helped another tax office reconstruct their actions in computing the basis of several assets for one of their clients for a 2002 return. IRS had audited the taxpayer's 2009 return, and challenged the depreciation asserting the basis for each asset was overstated, resulting in a substantial deficiency in tax (more then 30% of the original tax). Taxpayer fired the preparer, then sued the preparer while IRS audit was pending (in appeals). Eventually, taxpayer lost the appeal and sued claiming the basis had been made up by the preparer. Had the preparer destroyed their files on the taxpayer from 2002 and earlier, they would have thrown away crucial evidence which supported their calculations and lead to their exoneration. (Should mention here the preparer had dropped his E&O coverage a few years prior to being sued and there were some other issues at the state level. Their calculations were correct based on the information they had which turned out to have been altered by the taxpayer without preparer's knowledge.)

      One never knows.
      Last edited by mastertaxguy; 08-19-2014, 01:31 PM. Reason: typo
      Friends double; family triple. Don't buy an audit for yourself. If someone has to go to jail make sure it is the client. Remember it is only taxes, nothing important.

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        #4
        " One thing we always seem to know is that the item we thought we will never need for future reference will be something we wish we had in a future tax season. "

        I totally agree with this statement. Because the IRS can, under certain circumstances, go back 10 years I keep all client related documents and returns on cd or usb. I have files going back to 1994. Hardcopies are shredded after three years.

        If you, or when you do Oic's you will find that having all these records on disk or usb will be very convenient for you.
        Believe nothing you have not personally researched and verified.

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          #5
          The OP asked when he could shred his PAPER returns that he has stored electronically.

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            #6
            Originally posted by Lion View Post
            The OP asked when he could shred his PAPER returns that he has stored electronically.
            and your point is?
            Believe nothing you have not personally researched and verified.

            Comment


              #7
              My point is all the comments about keep ELECTRONIC returns forever did nothing to tell the OP if and when he can shred his PAPER returns while he has electronic copies. We went off on an unasked tangent.

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                #8
                Destroy them when you are comfortable not having any records for that year. CDs are good for 5-6 years before they fail so those records aren't likely to be available much longer either.
                "A man that holds a cat by the tail learns something he can learn no other way." - Mark Twain

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                  #9
                  Originally posted by taxmandan View Post
                  Destroy them when you are comfortable not having any records for that year. CDs are good for 5-6 years before they fail so those records aren't likely to be available much longer either.
                  Good to know though mine still work. Just to be safe I have transferred them all to USB.

                  Lion...I think the point of the posters was as long as they are reduced to CD or USB one can shred the hardcopies at any time.
                  Believe nothing you have not personally researched and verified.

                  Comment


                    #10
                    If you are e-filing, there is no reason to keep the tax preparer's hard copy of the tax return that was e-filed! Most tax software will allow you to save a pdf of the actual return.

                    I actually scan the signed 8879's to a pdf and save it in my client's electronic folder. The paper copy is shredded at the end of the tax season.
                    Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

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