How long does an employer have to keep payroll records?

Answer 1

The term "payroll records" encompasses many things....all types of records and accounting logs, payments of all types to different agencies, payments and calculations of pension and insurance, etc. Do you mean how long do they need to keep individual time cards...clearly a base payroll record....but worthless after no time...and it would cost zillions in storage fees to keep them very long.

So, they really need to keep them for as long as anyone involved might care. As a rule of thumb, 7 to 10 years is standard. In todays world of electronic records, many companies are keeping tape files for much longer...but retrieving them is sometimes very expensive...the systems and computer programs from years ago no longer are active, or can run on the platforms they are using...and it takes time, money and more to actually get data in a usable format.

How long a need for any specific record may exist depends on who is asking and what for. If the President of the company asks for something from those records from 25 years ago....he has a right and you better believe everybody will try to find them. If I ask for something from 2 years ago...why? and "do you realize how much time & money it will cost to get it....and it's in 25 boxes....you want to dig through those in the warehouse...have a good time"...is a more likely response.

If the IRS asks for something, generally they have a statute of limitations on audits for withholding of 3 years - although many things can extend it - and they may also want to audit it as part of the company income tax, or something else yet, which has yet a different period. Outside of the period, and the taxpayer doesn't have to provide it.

I suspect your asking about your own payroll records from an employer. They are required to timely (by 1/31 following the year end) to have provided you with your W-2. Once they timely give them to you, it is YOUR obligation to keep them. It is none of your business how long they keep their records on this or other things. And it will be your problem and expense if you claim they didn't comply with making them available to you. (By trying to mail them to your last known address for example, your receipt is irrelevant). Reporting them (by electronic means) to IRS, etc is required by law.