Category: Tax Returns, Examinations & IRS Procedures
Subject: Retention of Return Information by Tax Preparers
Title: Length of Time Preparers Must Keep Information
IRC Sections: 6107
Filename: 1229.html
Date Produced: 05/95 Copyright 1998, The Tax Resource Group. All rights reserved. Telephone
800-578-3498. Internet: www.taxresourcegroup.com Issue
Paid preparers of tax returns are required to retain certain information
regarding those returns for specified period of time. What must be kept
and for how long? Answer
The preparer must either retain a copy of the return or as an alternative,
maintain a list showing the name, taxpayer identification number, type of
return, and tax year for each return prepared. The return copies or the
list must be retained for three years after the "return period"
which runs from July 1 to June 30. Discussion
Section 6107 provides requirements for tax return preparers with respect
to retaining copies of the returns or alternatively maintaining lists of
returns prepared. Section 6107(b) provides as follows. 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--
6107(b)(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, and
6107(b)(2) make such copy or list available for inspection upon request
by the Secretary. Per Section 6107(d) and 6060(c), the return period runs from July 1
through June 30. For a calendar year return due without extensions prior
to June 30, a copy of the return or a list containing the appropriate information
about the return must be kept until fourth June 30 falling after the end
of the tax year in question. If the return in question is extended, and
the extended due date falls after June 30, the return copy or list must
maintained through the fifth June 30. Example 1
A tax return preparer prepares Form 1040 for the calendar year 1994. The
return is not extended and is presented to the taxpayer for signature on
April 1, 1995. The preparer must retain a copy of this return until June
30, 1998. Example 2
A tax return preparer prepares Form 1040 for the calendar year 1994. The
return is extended to August 15, 1995 and is presented to the taxpayer
for signature on August 1, 1995. The preparer must retain a copy of this
return until June 30, 1999.
The applicable regulation section is set forth below. §1.6107-1 Income tax return preparer must furnish copy of return
to taxpayer and must retain a copy or record.-- Paragraph (b) Copy or record
to be retained.
The person who is an income tax return preparer of any return or claim
for refund shall--
(1)(i) Retain a completed copy of the return or claim for refund; or
(ii) Retain a record, by list, card file, or otherwise of the name, taxpayer
identification number, and taxable year of the taxpayer (or nontaxable
entity) for whom the return or claim for refund was prepared and the type
of return or claim for refund prepared;
(2) Retain a record, by retention of a copy of the return or claim for
refund, maintenance of a list or card file, or otherwise, for each return
or claim for refund presented to the taxpayer (or nontaxable entity) of
the name of the individual preparer required to sign the return or claim
for refund pursuant to §1.6695-1(b); and
(3) Make the copy or record of returns and claims for refund and record
of the individuals required to sign available for inspection upon request
by the district director.
The material described in this paragraph (b) shall be retained and kept
available for inspection for the 3-year period following the close of the
return period during which the return or claim for refund was presented
for signature to the taxpayer (or nontaxable entity). However, in the case
of a return which becomes due (with extensions, if any) during a return
period following the return period during which the return was presented
for signature, the material shall be retained and kept available for inspection
for the 3-year period following the close of the later return period in
which the return became due. For the definition of "return period" see section 6060(c).
If the person subject to the record retention requirements of this
paragraph (b) is a corporation or a partnership which is dissolved before
completion of the 3-year period, then all persons who under state law are
responsible for the winding up of the affairs of the corporation or partnership
shall be subject, on behalf of the corporation or partnership, to these
record retention requirements until completion of the 3-year period. If
state law does not specify any person or persons as responsible for winding
up, then, collectively, the directors or general partners shall be subject,
on behalf of the corporation or partnership, to the record retention requirements
of this paragraph (b). For purposes of the penalty imposed by section 6695(d),
such designated persons shall be deemed to be the income tax return preparer
and will be jointly and severally liable for each failure.
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