HOW LONG SHOULD TAX RECORDS BE KEPT? BETTER TO SAVE THAN BE SORRY!
HOW LONG SHOULD TAX RECORDS BE KEPT? BETTER TO SAVE THAN BE SORRY! NEW YORK, Nov. 27 /PRNewswire/ -- How long tax records should be kept is a question without an easy answer. With tax matters, the "burden of proof" is always on the taxpayer. "The best rule of thumb is to keep all tax returns forever," says William J. Goldberg, national director of personal financial planning for KPMG Peat Marwick. "Any records that support an item of income or deduction should be retained at least until the statute of limitations on tax assessment expires," says Goldberg. The IRS can typically question your return for up to three years after it is filed. Other statutes of limitations vary with the claim. To accommodate these exceptions: -- Keep records of your completed tax returns indefinitely; -- Retain documents verifying the basis of properties (such as real estate or stocks) until recognition of gain or loss from sale of the property plus the three-year statute of limitations on the income tax return reporting the sale; -- Retain records relating to a claim for refund or credit based on bad debts or losses on worthless securities for at least seven years; -- Because a net operating loss can be carried back three years and carried forward 15 years, it is important to keep records until all losses are used to offset income and/or the carryforward term expires, plus the three-year statute of limitations on the income tax returns using the carryforward; -- The statute of limitations is extended to six years if the IRS finds that you have understated your gross income on your return by more than 25 percent; and -- In cases where a fraudulent return was filed or no return is filed, assessment may be made at any time. These statutes of limitations provide minimum guidelines. Records may be retained longer depending on the individual. "Occasionally, new tax legislation that benefits the individual is made effective retroactively, providing the opportunity to file an amended tax return and collect a refund -- but only if you have the appropriate records," says Goldberg. KPMG Peat Marwick provides accounting, auditing, tax, and management consulting services to leading businesses, governmental, private institutions, and individuals through 135 offices in the United States. It is the U.S. practice of KPMG, which has operations in more than 120 countries and posted 1990 revenues of $5.4 billion. -0- 11/27/91 /CONTACT: Barbara Kraft of KPMG Peat Marwick, 201-307-7286/ CO: KPMG Peat Marwick ST: New York IN: FIN SU:
GK-JT -- NY025 -- 7747 11/27/91 13:00 EST
|Printer friendly Cite/link Email Feedback|
|Date:||Nov 27, 1991|
|Previous Article:||/C O R R E C T I O N -- BENIHANA NATIONAL CORPORATION/|
|Next Article:||PANCANADIAN ANNOUNCES FILING OF U.S. $300 MILLION DEBT OFFERING|