Sullivan & Company - Certified Public Accountants 4709 Montgomery Lane #201 - Bethesda, MD, 20814 Phone: 301-657-8080




Paul Sullivan, CPA

Sullivan & Company


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Feature Articles

- Spring Cleaning: Tax Records You Can Throw Away
- Lost Your Job This Year? There Could Be Tax Consequences
- Cash Management Tips for Small Businesses

Tax Tips

- Last-Minute Tax Advice

- Six Facts about the Alternative Minimum Tax

- Are You Eligible for a Tax Credit?

- Tax Incentives for Higher Education

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- Review Your Retirement Plans
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- Review Budget vs Actuals
- Schedule Estimated Tax Payments
- Review Retirement Contributions



If your CPA isn't providing this type of information to you as a

client each month, maybe it's time to talk with or switch to Paul

Sullivan at Sullivan & Company CPAs.  To set up an appointment to

talk with Paul at 800-652-6521 or in Bethesda call 301-657-8080.

Spring Cleaning: Tax Records You Can Throw Away


Spring is a great time to clean out that growing mountain of tax and financial papers that clutters your home and office.


Here's what you need to keep and what you can throw out without fearing the wrath of the IRS.


Let's start with your "safety zone," the IRS statute of limitations. This limits the number of years during which the IRS can audit your tax returns.


Once that period has expired, the IRS is legally prohibited from even asking you questions about those returns.


The concept behind it is that after a period of years, records are lost or misplaced and memory isn't as accurate as we would hope. There's a need for finality. Once the statute of limitations has expired, the IRS can't go after you for additional taxes, but you can't go after the IRS for additional refunds, either.

The Three-Year Rule


For assessment of additional taxes, the statute of limitation runs generally three years from the date you file your return.


If you're looking for an additional refund, the limitations period is generally the later of three years from the date you filed the original return or two years from the date you paid the tax. There are some exceptions:

  • If you don't report all your income and the unreported amount is more than 25% of the gross income actually shown on your return, the limitation period is six years.

  • If you've claimed a loss from a worthless security, the limitation period is extended to seven years.

  • If you file a "fraudulent" return, or don't file at all, the limitations period doesn't apply. In fact, the IRS can get you at any time.

  • If you're deciding what records you need or want to keep, you have to ask what your chances are of an audit. A tax audit is an IRS verification of items of income and deductions on your return. So you should keep records to support those items until the statute of limitations runs out.

Assuming that you've filed on time and paid what you should, you only have to keep your tax records for three years, but some records have to be kept longer than that.


Remember, the three-year rule relates to the information on your tax return. But, some of that information may relate to transactions more than three years old.


To read the rest of this article that talks about a checklist of the documents you should hold on to, click here.


To read more articles on our web site click here or go to and click on the Newsletter section.



As always you can call our offices if you have any questions about these or any other accounting related issues, at 301-657-8080. 


Regards, Paul Sullivan, CPA





Sullivan & Company, CPAs | 4709 Montgomery Lane | Bethesda, Md. 20814 | email:

Direct: 240-316-3531 | Main no.: 301-657-8080 Ext 102 | Fax: 301-657-9055