If you are a neat-nick and your tax return for last year has been completed and filed, you are probably thinking about getting rid of the tax records related to that return. On the other hand, if you are afraid to dump old records, you are probably looking for a box to put them in so you can store them away. Well, you do have to keep them for a period of time but not forever.
Generally, tax records are retained for two reasons: (1) in case the IRS or a state agency decides to question the information on your tax returns or (2) to keep track of the tax basis of your capital assets, so that you can minimize your tax liability when you dispose of those assets.
With certain exceptions, the statute of limitations for assessing additional taxes is three years from the return’s due date or its filling date, whichever is later. However, the statute in many states is one year longer than that of federal law. In addition, the federal assessment period is extended to six years if more than 25% of a taxpayer’s gross income is omitted from a tax return. In addition, of course, the three-year period doesn’t begin elapsing until a return has been filed. There is no statute of limitations for the filing of false or fraudulent returns to evade tax payments.