IRS Employment Records Retention Requirements

The IRS requires employers to maintain certain records for a specified period of time. To begin, you must keep all records of employment taxes paid for at least four years. The four-year period is measured from the due date of the tax (or the date the tax is actually paid) for the return period for which the taxes apply. However, with respect to tax returns or information statements that relate to employee’s personal income tax return, records must be retained for at least four years from the later of the due date of the tax to which the return relates or the due of the employee’s tax return (April 15).

Records retained must also include, at a minimum, the following:

• The employer’s federal identification number;
• Amounts and dates of all wages, annuity and pension payments;
• Amounts of tips reported;
• The fair market value of in-kind wages paid;
• Records of allocated tips;
• Dates of employment;
• Periods for which employees and recipients were paid while absent due to sickness or injury, and the amount and weekly rate of payments the employer or third-party payers made to them;
• Names, addresses, social security numbers of employees and recipients;
• Any employee copies of W-2, Wage and Tax statement, that were returned to the employer as undeliverable;
• Copies of employee’s and recipients income tax withholding allowance certificates (W-4, W-4p, W-4s, W-4v, Voluntary Withholding Request; and form W-5, Earned Income Credit Advance Payment Certificate);
• Dates and amounts of tax deposits made;
• Copies of returns filed and;
• Records of fringe benefits provided, including any supporting documents required to substantiate those benefits as being tax exempt.

In addition, employers should keep detailed records showing all earnings and deductions used in arriving at net pay, including any pretax deductions (e.g. Section 125 elective contributions, 401(K) salary deferrals).

Next week I will post other retention records requirements such as I-9, Family Medical Leave Act, Title VII of the 1964 Civil Rights Act requirements (Discrimination) and a few others. Stay tuned!!!