Six Common Documents You Should Retain for the IRS

While the IRS may feel omnipotent and all-knowing, they are, on some occasions, completely incorrect. But do not despair - you can fight the Taxman through proper documentation. Being savvy with your document retention (including electronic documents), you can avoid costly discrepancies and errors in the future.

The following is a non-exhaustive list of documents you should hold on to in case the IRS comes calling.

1. Receipts and Documentation Showing Postmark Date
   Generally, the date a document or payment is mailed is considered the date of filing or paying. Taxpayers should retain all receipts, tracking information, and copies of postmarks to prove filing^[1] and payment dates^[2].
   
   When documents arrive on or after the due date, personnel must manually inspect the postmark to accurately determine filing ^date[3]. Because this process is manual, there are instances where the postmark date is overlooked, leading to incorrect penalties or the denial of claims by the IRS based on date of receipt rather than date of mailing.
   
   
2. Cancelled Checks, EFTPS, Direct Pay, and Other Payment Receipts
   To be considered paid, you must not only mail payments timely but also make sure they are received and accounted ^for[4]. Unfortunately, the IRS may “lose” or misapply a payment, especially if the taxpayer does not follow IRS instructions when making the payment. Cancelled checks and mailing receipts can help the IRS locate lost payments.
   
   
3. Entity Formation and Set Up Documents
   Taxpayers should retain copies of all state incorporation documents, as well as name changes, domestication, and any other documents affecting a taxpayer’s entity status. The IRS may require these documents in the future if there are questions about ownership, unpostable returns, or entity type.
   
   Additionally, taxpayers should retain all documents regarding entity formation and set up. This list includes, but is not limited to:
   • Letter 147c, EIN Verification Letter
   • Form SS-4, Application for Employer Identification Number
   • Notice CP-575, EIN Confirmation Letter
   • Form 2553, Election by a Small Business Corporation
   • Form 8832, Entity Classification Election
     
     This will help avoid confusion over entity type in the future.
     
     
4. Electronic Filing Receipts
   Taxpayers should retain electronic filing submissions and confirmation of acceptance or rejection of all extensions, returns, and payments to ensure proof of timely filing^[5] as well as timely payment.
   
   If an e-filed return, extension, or similar submission is rejected and cannot be corrected, you or your preparer should promptly investigate the reason to determine the issue causing the rejection. Often, an e-file rejection signals inconsistent information on file with the IRS that should be corrected as soon as possible.
   
   
5.  Final Return or Other Claim Documents
   Taxpayers should always retain all executed, e-signed, dated, electronically stamped, or otherwise final document permutations. In the future, you may need copies of final documents, and unsigned draft copies are not ideal as it can be difficult to tell the final and draft apart years later.
   
   
6.  Employee and Vendor TINs
   On occasion, taxpayers must prove the information on and date of collection of various payroll and vendor form. Among others, this includes form W-4, Employee’s Withholding Certificate; form I-9, Employment Eligibility Verification, and form W-9, Request for Taxpayer Identification Number and Certification.
   
   Taxpayers should make sure they collect and review these documents prior to employment and payment to avoid monetary and other penalties.

The Importance of Documentation

The above is a limited list of common documents that business and individual taxpayers should retain “just in case.” When in doubt, don’t throw it out. Scan it or save it. Let it live uncluttered in the cloud.

One day, the IRS may say the statute of limitations on your refund claim has expired or that your return was filed late. You will then need to simply scroll through your records to obtain proof and correct the error.

[1] I.R.C. Sec. 7502 states if any return, claim, statement, or other document required to be filed on or before a

prescribed date is delivered by United States mail (or approved designated delivery service) to the IRS after such date, the date of the United States postmark (or ship date by approved private delivery service) is deemed the date of delivery. Treas. Reg. Sec. 301.7502‐1(e)(2) emphasizes that other than the direct proof of

actual delivery, proof of proper use of registered or certified mail or private delivery service are the

exclusive means to establish prima facie evidence of delivery.

[2] See I.R.C. Sec. 7502(e) for deposit exceptions.

[3] See I.R.M. 20.1.2.2.1 (03-09-2022)

[4] See I.R.C. Sec, 7502(d).

[5] This is especially important when returns are re-submitted electronically or mailed during the error correction “Perfection Period” Publication 4163 (Rev. 12-2022) (irs.gov)