Document Retention Policy

Definition

A document retention policy is a formal written plan that specifies how long a firm must keep client records, tax documents, and business files before they can be archived or destroyed. For CPA firms, IRS guidelines require retaining certain client records for at least seven years, while records related to fraud or open tax years may need to be kept indefinitely. A documented policy protects the firm during audits and ensures compliance with federal and state recordkeeping requirements.