How long do you need to keep work papers and file regarding the 1099 and escheat processes? Also, are there any regulations referring to record retention on 1099 and escheat processes?


Regarding 1099 reporting records, the IRS instructs that "generally" you must retain most 1099 records for 3 years from the due-date of the return, 4 years for 1099-C and 4 years if backup withholding was imposed. We confirmed this with agent Schroff (ID# 1005950). You can find this in print in IRS 2003 Instructions for Forms 1099, page GEN-8.

Regarding escheatment, a state audit can require all historic records without time limitation. Most states, however, will accept a lookback period of 10 years or less rather than reviewing a company's entire history.

If you are in compliance and report annually, and your question is how long must you retain your unclaimed property reporting documents, the Unclaimed Property Holders Liaison Association (UPHLC) says that while the laws indicate a period of 10 years, in fact some states put the onus on the holder to prove compliance further back than that when the state cannot locate evidence in its own records. In other words, if the state record keeping is poor, they will require you to prove compliance with your records. Therefore the UPHLC recommends that unclaimed property reporting records be retained indefinitely.

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