CCPA: Record Retention Guidelines for 2025
One of the most common questions we get around here is "How long do I have to keep [insert tax document type] for?" That makes it worth revisiting our Record Retention Guidelines on a yearly basis. With Tax Season in full swing (friendly reminder to be sure you've scanned and uploaded all your tax documents to Harmony's client portals), there's no better time of year to brush up on this topic.
For clients who like original source material, you can read all about the requirements in spellbinding IRS publications like Rev. Proc. 81-46, 83-6, 97-22, 98-25, and, our personal favorite, IRC Section 6001. For our friends and clients who aren’t in search of a melatonin substitute, however, we've outlined retention periods for different types of records for businesses:
Tax Returns, Legal Correspondence, Audit Reports, etc.: Keep for 7 years after liquidation of the entity.
Bank Statements, Sales Records, Other Revenue-Related Records: Retain for 6 years.
Canceled Checks, Paid Vendor Invoices, Employee Payroll Records: These should be kept for 3 years.
Inventory, Depreciation Schedules, Other Capital Asset Records: Inventory records for 3 years; Depreciation schedules and other capital asset records for the tax life of the asset plus 3 years.
Partnership Agreements, Operating Agreements, Appraisals: These should be retained permanently.
For individual taxpayers, the retention requirements are somewhat different. The full guide can be found in IRS Publication 552, but key retention guidelines include:
Retain records that support income, deductions, and credits shown on tax returns until three years from the date the return was filed or two years from the date the tax was paid, whichever is later.
For some situations, such as when a return omits more than 25% of gross income, keep records for six years.
If a claim is filed for a loss from worthless securities, keep records for seven years.
For documents like purchases of large assets (your house, stocks, capital improvements to houses, etc.), we recommend keeping them permanently, if possible.
Retain employment tax records for at least four years after the date the tax becomes due or is paid.
These retention guidelines should be counted from the later of the tax return due date or the filing date of the return. Organized, complete digital records are generally an acceptable substitute for the paper versions - and will stay intact for much longer than faded receipts.
tl;dr
The minimum length of time you have to keep a particular record is specific to the type of record. Almost everything has to be kept for at least 3 years after the date of filing of a return (let’s call that 5 years from transaction date, to be safe), but we recommend that you err on the side of caution and approach your tax recordkeeping like you want to win this year’s superlative as the dream Harmony CPA client: be organized, keep thorough records, and keep them organized and completely intact. If you can digitize them and keep them forever, you’ll always be in great shape.