Life is the best teacher, especially in the tax industry. You can take all the continuing education that your heart desires, but sometimes the information doesn’t seem to really click until you have hands-on experience. That’s how it was for me when it came to Health Reimbursement Arrangements (HRAs). I learned about them in school. I even remember learning about them at the first accounting firm I worked at. But it wasn’t until I was working with a small business owner with his own “insurance” that I got it.
Assessment Statutes and Document Retention Best Practices
Amber Gray-Fenner, EA NTPI Fellow USTCP
When it comes to document retention, my guiding policy is “If I don’t keep it, it can’t be stolen or subpoenaed.” That sounds cynical, but there’s truth in it. The smaller your data “surface area,” the less you have to manage in the event of a data breach (or, if you hold paper documents, in the event of a fire or break in). And, if a client or former client gets really sideways in divorce or criminal court, being able to say “I have a policy in place and I don’t keep records longer than three years” can provide you with a measure of peace. But what should your policy be? It depends, but relevant assessment statutes are a good place to start. This article reviews the IRS rules for assessing tax and provides some best practices for developing document retention policies for return preparation documents in your practice.
