June 2026 ยท Bookkeeping, Small Business, Taxes
How Long to Keep Business Records (and What to Shred)
The three-year clock, the exceptions that stretch it, and what this June clears
The IRS sets how long each kind of record must be kept, and most periods count from the day the return is filed.[1] With the 2025 return in, and filing season over, June is the month to sort the boxes:
| Records | Keep for |
|---|---|
| Most returns and receipts | 3 years from filing[1] |
| Payroll and employment tax records | 4 years[1] |
| Arizona transaction privilege tax (TPT) records | 4 years[2] |
| Underreported income | 6 years[1] |
| Worthless securities or bad debt | 7 years[1] |
| Property and equipment | Ownership plus 3 years[1] |
| No return, or a fraudulent one | Forever[1] |
The three-year clock
The IRS generally has three years from the day you file to audit a return, and you have the same three years to amend it, so keep the return, and everything supporting it, for three years.[1] Supporting records are the paper behind the numbers: invoices, receipts, deposit records, and canceled checks.[3]
A return filed early is treated as filed on the due date, so a return sent in February started its three years on April 15, like everyone else's.[1]
The reason to keep any of it is the burden of proof. In an audit, deposits are income until you prove otherwise, and a deduction without its receipt does not survive.
The exceptions that stretch it
Four situations lengthen the window:
- Four years: employment tax records must be kept at least four years after the tax was due or paid, whichever is later.[1]
- Six years: a return that left off more than 25 percent of gross income can be audited for six years, so a year with messy income keeps its records twice as long.[1]
- Seven years: records supporting a deduction for worthless securities or a bad debt stay for seven years.[1]
- Forever: a year with no return, or a fraudulent one, stays open forever; there is no time limit on the audit.[1]
Property and equipment records
Records for anything you depreciate, or will someday sell, stay until three years after the return that reports the sale.[1] They prove your basis, which is the cost your gain or loss is measured against, and every year of depreciation you took. The purchase invoice for equipment bought years ago is what proves the machine's cost when you sell it.
Arizona TPT: four years
Arizona requires TPT records to be kept for four years from the return's due date or filing date, whichever is later.[2] The exceptions mirror the federal ones: six years when 25 percent or more of gross income is left off, and no limit at all for a fraudulent return or a missing one.[2]
What can go digital
The IRS accepts electronic records, and every requirement that applies to paper applies to the scan too.[3] Scan receipts before you shred the originals, because thermal paper fades long before its three years are up.
The bottom line
By this June, a 2022 return with nothing unusual on it is past the federal three years. Its payroll and Arizona TPT records need about one more year, and records for property you still own stay. Formation documents, contracts still in force, and current insurance policies stay for the life of the business.
If a year is messy enough that you are not sure which rule it falls under, a free consultation settles what stays and what goes.