When to Shred?

GETTING RID OF YOUR PAPER RECORDS

For Tax Purposes

Per IRS regulations for record retention, the length of time you need to maintain documentation depends upon the action or event that the document records. Generally, records that support income, deductions or credits should be kept for period in which your return can be amended or audited. Here is a summary of the IRS guidelines:

  1. Keep record for 3 years from the date you filed your original return. We recommend rounding up to 4 years from the end of the tax year assuming you filed on time.

  2. Keep records for 7 years if they are related to a clamed loss from worthless securities or a bad debt reduction.

  3. Keep records for 7 years if you do not report income that you should have reported.

  4. Keep records on the purchase of property (ie - real estate, stocks, investments, etc.) until at least 4 years AFTER that property has been disposed/sold. This is true of both business and personal property.

  5. Keep records indefinitely if you do not file a return.*

  6. Keep records indefinitely if you file a fraudulent return.*

    * We do not recommend tax compliance of this type.

Electronic copies comply with record retention standards so there is no need to keep paper copies if :

  • You have uploaded a copy of the document to your accounting team

    AND

  • You have kept an electronic copy for yourself (on your hard drive or secure cloud storage)

For Practice Purposes

For patient records, it depends upon a variety to factors including your state law, the insurance company that was billed and whether it is an adult or child patient. On a super conservative basis, one consultant recommends the following:

  • Adult patients, 10 years from the date the patient was last seen.

  • Minor patients, 28 years from the date of birth.

  • Deceased patients, five years from the date of death.

Since EOBs are not considered to be part of the patient medical records, they fall under financial records laws. Federal law mandates retaining EOBs for a minimum of seven years from the date of last patient visit, but state laws should also be considered.

BEST PRACTICE

Take advantage of the power of digital storage and scan records onto your server (which you back up) or onto cloud storage (that is automatically backed up). Then shred away and reduce the piles of paper sitting around the office.

Jeff Gullickson