Discussion:Save client records -how long?
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| {{ForumReplyPost|UserID=Davidrayjr|Date=3 November 2009|Text=I want to ensure we have things just in case. I know we sometimes have to refer to a file to figure things out sometimes. I just want to know what others may have done with similar situation I am in.}} | {{ForumReplyPost|UserID=Davidrayjr|Date=3 November 2009|Text=I want to ensure we have things just in case. I know we sometimes have to refer to a file to figure things out sometimes. I just want to know what others may have done with similar situation I am in.}} | ||
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Revision as of 22:22, 3 November 2009
Discussion Forum Index --> Business Growth Community --> Save client records -how long?
| 15 January 2007 | |
| How long do tax preparers have to save copies of tax returns prepared, electronic or paper? | |
| 15 January 2007 | |
| I do not think the tax preparer MUST ever save them. You must give taxpayer a copy. You need to save E File authorization form signed by taxpayer for 3 years. Its just good business sense to save returns for at least 3 years. In CA you must be able to produce a list of the returns you prepared. | |
| 15 January 2007 | |
| Oregon practitioners must save return copies and workpapers for at least four years. I wouldn't be suprised if OR and CA weren't the only two states to even address the issue. | |
| 16 January 2007 | |
| We retain the tax returns for 3 years and include this statement in the client engagement letter. The engagement letter also states that the client is expected to retain all original backup/source documents for the tax return we prepared as well as the return. | |
Michaelstar (talk|edits) said: | 16 January 2007 |
| I have a client records retention schedule that is included in the AICPA Management of an Accounting Practice Handbook and it suggests that for present clients - the last 3 years tax returns are to be retained in the office and all other returns are kept in storage for all returns prepared. If you consider that to long, you might want to keep at a minimum the last 7 years. I myself would never think about destroying documents until after 10 years for former clients and would wait at a minimum 15 years for present clients.
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| 16 January 2007 | |
| If you've got any sort of license at all, y'all are covered under the Circular 230 rules. That includes CPAs, DZCPA. It's three years, in either electronic or paper format. Some states may require more.
I save pretty much forever, just to be safe. | |
| 16 January 2007 | |
| Lizzit is absolutely right - Circular 230 dictates the minimum period. | |
| 16 January 2007 | |
| I keep copies of the returns for 7 years (starting to do everything electronic so there won't be issues with space).
I did just get a call from a former client of the CPA I purchased the business from stating that the State of California was asking questions about his 1993 tax return and he wondered if we had a copy. | |
| 16 January 2007 | |
| I know that the rule says three years, but, be careful about date return was actually filed, and any basis information. We keep old clients 5 years, then send notice that they should pick up by a certain date or they will be destroyed. Current clients are all saved. We do not keep any original information, all original documents are returned to client when they pick up their returns.(except efile authorization). We scan clients documents, returns, etc. so storage is not a big problem. | |
| 16 January 2007 | |
| Code Sec 6107(b) says that "Any person who is an income tax return preparer with respect to a return or claim for refund shall, for the period ending 3 years after the close of the return period." Circular 230 has no such requirement. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
Death&Taxes (talk|edits) said: | 16 January 2007 |
| I was beginning to think I was the crazy one when I could not find the three year rule in 230. Thank you, Larry, for restoring my sanity. I would only add this: If you practice in a state not based on Federal tax law like NJ, you almost need to compile an 8606 type format giving both deductible and non-deductible IRAs. Ditto Keogh, SEP, Simple contributions for they are not deductible on the NJ-1040, yet your basis will be taxed if you don't know it. | |
| 16 January 2007 | |
| Where is the rule????
Return copy appear not to be required according to sec 6107(B). A listing of who was prepared is enough. Could not find it in rule 230. Larry, You left off the rest of the sentence. 1) retain a completed copy of such return or claim,............................................................... ..or retain, on a list, the name and taxpayer identification number of the taxpayer for whom such return or claim was prepared | |
| 16 January 2007 | |
| It is not addressed in the Circular. DZ or SD: How long does CA require you to keep a list of returns? Just three years? | |
| 16 January 2007 | |
| I think 3 years. We do keep copies for over 3 years. I just do not think there is a rule that you MUST do it without any other options. | |
| January 16, 2007 | |
| And as far as document destruction goes, watch your state rules. Hawaii just passed a law that states any personal information (SS#s qualify) needs to be shredded if in paper or disc form and wiped clean if on a computer. | |
| 16 January 2007 | |
| I have a written record retention policy for each type of document I have in my office. For active clients (those who I still work on), I keep copies of tax returns indefinitely. For inactive clients, I keep copies of the tax returns for 7 years.
This is for my convenience only - in my engagement letter I tell clients that they are responsible for retaining all of their records, rather than me. Each year I have a shredding truck come to my office & destroy documents according to my policy, keeping a record of what documents were destroyed and when. This will all get easier as I phase in my transition to paperless files. This may seem over the top, but I think it's the way of the future. | |
| January 16, 2007 | |
| Technically, DZ is correct, you merely are required to keep a list. Practically, we keep three years for ex-clients, a lot more than that for current. Depends on file cab space! | |
Death&Taxes (talk|edits) said: | 16 January 2007 |
| I think the big city refund shops use the list method! As if their 'clients' are still living there. | |
| 16 January 2007 | |
| I want to dump ALL of mine...but I keep the records at this point as long as I have been in business for myself...so far 3 years...hopefully will continue to count!!! | |
| January 16, 2007 | |
| Current clients' file folders stay in the file cabinets. Every year, in early January or before, I'll pull out the prior clients' folders and store them in two boxes on one side of my laundry room. Every year, I'll shred the folders in the oldest two boxes, to free up room for the current prior clients. I keep all acct records for my monthly accounting clients for at least seven years. For current tax clients, every few years, I'll shred a few older year copies, when their folders are getting too thick. And I always worry about my son having to deal with all of these client files, if I should die before I retire and have already discarded everything. | |
Death&Taxes (talk|edits) said: | 16 January 2007 |
| When I moved from upstate NY in 2003, I had storage boxes with returns and papers back to 1986 for some clients. I sent out a mailing three months prior to moving telling clients all but the last six years would be shredded and offered them for a small charge. Had about 40 responses. I had two people running a shredder that takes 20 sheets a time and then I had to take the bags to the dump. I lost count; I thought we even burned out the shredder motor, a German machine that ran about $500. This year we shredded 1996-97-98 and this time we got smart and called a shredding company. About 30-40 minutes is what it took. Neat truck too. It cost $128. And they did not care about staples etc. | |
| 16 January 2007 | |
| WOW Deb...I could not work out of my home...not disciplined enough for me...I would rather watch "Court TV"...hehe | |
| January 16, 2007 | |
| Sometimes, it can be difficult, especially in the off-season, when I don't want to answer the phone for nine months and want nothing to do with tax returns until January, which I dread every year. I didn't used to feel this way, though, years ago. My current interest (since 08/04) is watching movies I've recorded on Tivo and copied to DVDs (some days, five movies a day). I'm missing that right now, while I'm stuck down at the desk in my office for the next three months. I can't believe how many good movies I've missed by being addicted to the computer from 1989 through mid-2004. | |
| 17 January 2007 | |
| There is no 3 year rule in Circular 230 relating to client records. There is only a rule relating to us retaining records showing whose tax returns we completed and the type of return (1040, 1041, 990, 1120, etc), and the tax ID number of the taxpayer, AND the holding period starts July 1st. This can be accomplished by a simple list, a copy of the front page of the return, electronically (pdf etc files), or a complete copy of the return. | |
Death&Taxes (talk|edits) said: | 17 January 2007 |
| Deb: Our dvd/vcr collection is more than 500....people ask why not netflix and I tell them because we don't want to give them back.... Today Pam watched three; I only got to see the last one. If I had to keep more than 3 years in my files, we'd have no room for these movies. | |
Michaelstar (talk|edits) said: | 17 January 2007 |
| What I would like to find is a cost effective method of storing these documents on DVD's. I have probably 100+ bankers boxes of files (yes in my house and garage) and would like to cut it down a little. Only 3 years of back files is not in my make up so that will not cut it nbo matter what the "rules" are. Maybe should start a post on that subject. | |
| January 17, 2007 | |
| Now that you mention it, on 12/30/06, I had watched 936 movies since 08/01/04 (very few of these were during the tax seasons), plus 78 that I started to watch and rewrote over the dvds, and 611 movies on dvds still to watch. Since 12/30, I've copied at least five movies from Tivo onto dvds every day, while Tivo records usually more than five movies per day, but I've gotten behind on adding more movies in Tivo lately. In the last nine or ten days, I've only watched two or three movies. Each one has taken about three days to watch. Guess what I was doing to pass the time during those days? I've never considered Netflix, since I paid for a lifetime membership for Tivo 2 1/2 years ago, have all the cable movie channels, and have upgraded the hard drive in the Tivo unit twice (the last time I added two large drives). Sorry for my long messages...where's the chat forum? or a movies forum? :) | |
| January 17, 2007 | |
| I can add a "chat" forum if you'd like...
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| January 17, 2007 | |
| Michael - You could store the files on CD-R discs after scanning all the documents. Not sure if you can use DVDs, because I haven't researched that. I have 21 file drawers full of current clients' file folders, but there's no way I would take the time to scan everything. I agree with keeping files for longer than three years. There have been many times I had to look back at files much further back than three years. I did that with my first return this year to find a full birthdate for the client's first child several years ago. | |
| January 17, 2007 | |
| I swear, Tim, you must be at your computer 24 hours a day! :)
It would be nice to have an informal chat forum, especially when we are idle and there are few questions to be answered. But see if anyone else favors this idea. I don't want to be chatting with myself. | |
| January 17, 2007 | |
| Well, I was up very early this morning (before 5am - couldn't sleep), and yes, I am here now at 10pm. I find it easier to check in frequently throughout the day rather than keep a strict 9-5 schedule. So although you'll find me here early and late, I am not here all of that time. I take breaks and go play with my puppy, do the dishes, etc.
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Bottom Line (talk|edits) said: | 18 January 2007 |
| Great minds think alike. I've been thinking about a chat forum too. Seems like we frequently regress. | |
| January 18, 2007 | |
| I've added a General Chat area to the Discussion Forum Index.
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Bottom Line (talk|edits) said: | 18 January 2007 |
| Thanks Tim! | |
Davidrayjr (talk|edits) said: | 3 November 2009 |
| I found this when looking into this issue myself and thought I would bring it back up. Has anyone done anything with old paper files specifically? I'm trying to get a best practice of what should be done as we have old paper files and in the past couple years, haven't really added to them at all.
Curious what some have done in an effort to "clean" up files and file cabinets for those moving to a more paperless (or what I say we don't save the paper anymore) system. I thought about maybe scanning the last 3 years and anything else that looks important and maybe boxing up the rest. I may default to just leaving the files as is and not adding anything to it and one day, taking it all and storing it just in case. | |
| 3 November 2009 | |
| boxing up - for what? to shred? or to save? If to save, just scan and then shred.
physical storage is stupid - cyber storage is cheaper | |
| 3 November 2009 | |
| Just signed a new lease today on a faster (32PPM?) copier/color duplex printer/fax/scanner/document storage/stapler/expresso all in one Ricoh machine. Well, the expresso app isn't really attached, but it should be. | |
Davidrayjr (talk|edits) said: | 3 November 2009 |
| Too much to scan, would take a lot of time and effort. I was saying box up the older stuff to store. I agree, physical now is stupid, but we got a lot of old stuff (pre 2007 from who knows when). | |
| 3 November 2009 | |
| and you are considering saving/storing it because........? | |
| 3 November 2009 | |
| For long term cyber storage, be sure to store information in standard formats, such as .pdf, .jgp,...
Application specific formats may not be readable in future versions of the application program or may even read in certain fields incorrectly. | |
Davidrayjr (talk|edits) said: | 3 November 2009 |
| I want to ensure we have things just in case. I know we sometimes have to refer to a file to figure things out sometimes. I just want to know what others may have done with similar situation I am in. | |
| 3 November 2009 | |
| don't make me laugh by bringing up the 'Why did the accountant cross the road?' joke again.
(Because he looked in the file and that's what he did last year) | |
