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    Recordkeeping for Individual Taxpayers

    May 15, 2013 | Tax Compliance

    Recordkeeping for Individual Taxpayers

    One of the best ways to be able to prove your case in a criminal or civil tax audit is through your financial records. Unfortunately, most taxpayers are unaware that they have a legal responsibility to keep these documents for a specific time period and as IRS NYC tax attorney’s that is where we can help.

    The statute of limitations for how long a taxpayer must retain their tax related documents varies by state government, and the federal government has their own set limit. Certain states such as Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not have any income taxes. The other states vary in how long documents must be retained, from three to five years.

    The minimum document retention guidelines can change. They are extended if the taxpayer files an amended return or if the taxpayer is self-employed, because they will need to retain their individual income tax return for a longer period of time for their business records.

    Taxpayers will also need to retain documentation for longer if there is potential of a tax crime or requested by IRS office NYC. If a taxpayer omits income from their tax return, files a fraudulent return, or does not pay income taxes owed, they may face a criminal investigation. If a taxpayer does not file, does not pay tax debts, or falsifies documents, the state tax department and/or the IRS will want to see records proving the information on the return for a long period of time.

    For example, in New York State, the minimum document retention guideline is three years. However, if the taxpayer’s return is being questioned under civil litigation, they may be asked to produce tax documents for the previous five years. In addition, if the New York State Department of Taxation and Finance believes that the tax returns filed are false or fraudulent, the taxpayer might be required to provide tax documents for more time.

    Even if a taxpayer does not file their returns, they should still try to keep any tax records or documents for safekeeping. If the taxpayer keeps their tax documents, it is easier to prepare returns without having to go to the IRS NYC or State Tax Department.

    As a tax attorney, once we have a Power of Attorney document signed, which gives us written authorization for representation, we can request from IRS office NYC the IRS Wage and Income Statements for the taxpayer for the previous ten years if the client did not keep their records. We can also contact the New York State Department of Taxation and Finance and request the New York State Taxes withheld so we can prepare an accurate tax return.

    Keeping complete and accurate records is the best defense to any IRS or State audit. In my experience as an attorney with extensive tax law training, having the ability to prove the numbers on your return are accurate makes an audit easier to work with and the best clients are the ones who keep adequate records.

    By: Timothy S. Hart

    Attorney Timothy Hart

    Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]