Get IRS 14157-A 2012

How Long Should a Paid Preparer Keep Tax Returns? Even if your client keeps a copy of his tax returns, you're still obligated to retain his tax records. Internal Revenue Service Bulletin 2012-11 states that tax preparers must maintain tax returns, along with supporting tax documentation, for a minimum of three years.

Most lawyers, accountants and bookkeeping services recommend keeping original documents for at least seven years. As a rule of thumb, seven years is sufficient time for defending tax audits, lawsuits and potential claims.

Good record keeping You are legally required to keep records for a period of at least five years after they are prepared, obtained or the transactions completed (whichever occurs last).

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue and Customs ( HMRC ) may check your records to make sure you're paying the right amount of tax.

The IRS also says that it can come after your business for failing to report income for up to 6 years after filing and for up to 7 years if you took deduction on a bad debt. That's why most accountants recommend that you hold on to your tax return and all supporting documentation for seven years from filing.

Knowing that, a good rule of thumb is to save any document that verifies information on your tax return including Forms W 2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts for three to seven years.

You may hire a professional (for example, an accountant) to help with your record keeping. You must keep records for six years from the end of the last company financial year they relate to, or longer, if: they show a transaction that covers more than one of the company's accounting periods.

By LAW, taxpayers (Companies and Individuals) are required to keep certain tax records for 5 years, however SARS urges us as consultants, to keep records for 7 years. If you don't know which documents and records SARS requires you to keep, then you will find yourself facing penalties.

Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years. The IRS tries to audit tax returns as soon as possible after they are filed.

As a general rule, there is a ten year statute of limitations on IRS collections. This means that the IRS can attempt to collect your unpaid taxes for up to ten years from the date they were assessed. Subject to some important exceptions, once the ten years are up, the IRS has to stop its collection efforts.

The Supreme Court said 3 years was plenty for the IRS to audit. ... The IRS has no time limit if you never file a return or file fraudulently. Even so, the practical limit for the IRS to go back is usually six years. Another scary rule is that the IRS can audit forever if you omit certain tax forms.

The further down the income ladder, the less likely it is that the IRS will come snooping. For example, if you earn $200,000 or more, your chances of getting audited are 1 in 80. Those odds are better than 2011, when the odds were 1 in 25. Individuals, all totaled, had less than a 1-in-160 chance of being audited.

You should be filing your tax returns when they are due, the IRS does not "allow" anyone up to two years without imposing a penalty. If you are due a refund there is no penalty for filing a late Federal return, but you have to file your return within 3 years of the original filing date of the return to claim a refund.

Tax Preparer Liability FAQ Q: Can I sue my tax preparer for making a mistake? A: Yes, provided they have committed negligence, or a malpractice. California's comparative negligence jurisdiction, in a lawsuit, the client is usually in the best position to catch an error, and therefore a 100% recovery is rare.

Tax Preparer Liability In the past, a tax preparer was not liable for gift (Form 709) and estate and generation-skipping (Form 706) tax returns. But a tax preparer was liable for income tax returns. ... Thus, a tax preparer may be liable for all federal tax returns and claims for refund.