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How Long to Keep State Tax Records - Statute of Limitations by State

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Updated April 13, 2014

Generally speaking people should keep their tax returns and supporting documents related to their tax returns (such as Form W-2 and receipts for various tax deductions) for at least as long as the state tax agency and/or the Internal Revenue Service might want to audit the tax return. For most people, that means keeping your tax records for at least three years from the date you actually filed your tax return. Some states have a longer statute of limitations, in that case you should keep your tax records for as long as the statute of limitations is still open for a particular tax return.

The statute of limitations gives the IRS three years to audit your tax return.  Most states follow this federal three-year rule, but there are a few states that have created their own statute of limitations for tax audits.   

Statute of Limitations by State

These states have a statute of limitations that is different from the IRS rules:

  • Arizona, California, Kentucky, Michigan, Ohio, and Wisconsin: Generally four years after a return is filed or required to be filed, whichever is later.
  • Colorado: This state can assess a tax debt within one year after the expiration of the IRS statute of limitations (4 years). 
  • Kansas: Taxes have to be assessed by three years after the latest of: 1) the date the original return is filed; 2) the date the original return is due; or 3) the date the tax due on the return is paid. Taxes can also be assessed up to one year after an amended return is filed, if filed later than the dates above.
  • Louisiana and New Mexico: Three years after December 31 of the year in which the tax is due.
  • Minnesota: Three-and-a-half years from the date the return is filed or the date the return is due, whichever is later.  
  • Montana: Five years after the date the return is filed or the date the return is due, whichever is later.
  • Oregon: Three years after the return is filed, regardless of whether a return is filed on or after the due date. If the return is filed early, the limitations period will end sooner.
  • Tennessee: The state normally has three years to assess taxes, but that is extended to three-and-a-half years if you have filed a claim for a refund, and  five years if the IRS has changed your federal return.

Your Actions Can Affect the Statute of Limitations

The statute of limitations may not cover every situation and every state's statute has its own caveats, even those that generally follow the IRS rules.  For example, if you have amended your federal return or your federal return has been adjusted by the IRS the statute of limitations for your state tax return may be restarted.  Signing any type of payment agreement or offer in compromise with the state can also reset the state statute of limitations. 

The statute of limitations does not apply to fraud or tax evasion.  Also, there is usually no statute of limitations for failure to file a return, so to be safe you may want to keep the first two pages of all of your tax returns as proof that you did in fact file.

 

Source: Larry Tunnell, Cindy Seipel, and Ed Scribner, "Federal and State Tax Record Retention", The CPA Journal

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