We are often asked about considerations with respect to the records and documents our clients should maintain in connection with the preparation of their tax returns. While there is no specific set of rules, the following are some general guidelines to consider when making a decision whether to purge documents.

• Tax Returns and Related Items: All federal and state tax returns and the supporting documents should be maintained for a minimum of three years after the filing date of the return. The more prudent route is to keep these returns and documents for at least six years. The IRS can assess additional taxes within three years of the filing date of a return, but has up to six years in which to make a tax assessment if the IRS determines that a substantial amount of income (more than 25%) has been omitted from the return. In a case of fraud, there is no limit on when the IRS can make an assessment. Note also that California has four years from the filing date to make an assessment. Supporting documents include W-2's, 1099's and deposit records and canceled checks for tax-related items.

• Mailing Receipts: The U.S. Postal Service receipt should be maintained with your file copy of each tax return. This registered mail receipt shows the date the return was mailed. If your return is filed electronically keep a copy of the electronic filing confirmation with a printed copy of the return. In the event the return is misplaced or lost by the government, this documentation will serve as proof of filing and may save you from substantial penalties.

• Residential Property Records: Settlement records from all of your home purchases and sales should be maintained in a permanent file. In addition, keep records (receipts, canceled checks) of the amounts that you spend for home improvements with this file. These records are used to determine cost basis in the case of any future sale calculations.

• Stock and Bond Records: Maintain a record of all your investment purchases including stocks, mutual funds, bonds, etc. Besides providing a date for determining the type of gain (e.g., long term versus short term) these records establish the cost basis used to calculate the gain or loss when you sell the investment. In addition, keep records that show a return of capital on any of your investments. These records should be maintained for at least three years after the asset is sold, or for at least six years in any case that involves a large amount.

• Depreciation Records: For any rental real estate or depreciable business property that you own, keep records of the property's cost, the purchase date, the method used to calculate depreciation, and a schedule of all depreciation claimed on the property in previous years. Maintain these records until you sell or dispose of the property. These records should be maintained for at least three years after the asset is sold, or for at least six years in any case that involves a large amount.

• Retirement Accounts: These documents should be maintained as long-term tax files since earnings are not taxed until withdrawn. Records should be maintained for deductible and non-deductible contributions. Non-deductible contributions can be used to offset otherwise taxable distributions.

• Personal Records: Keep a permanent file for personal records such as deeds, birth certificates, marriage licenses, divorce agreements, death certificates, etc.

• Other Records: Of course, there are other instances when you may benefit from keeping long-term records. For example, a divorce settlement may require income and expense records in connection with support determinations. Receipts and canceled checks supporting the purchase of "big ticket" items may be needed in connection with insurance claims. Prior tax return copies may be used to correct earnings records with the Social Security Administration.

For further information, the IRS has published a guide that is available at their website (www.irs.gov). See Publication 552: Recordkeeping for Individuals.