When we are in conversation about automated billing and expense claims processing , we are frequently asked about the retention requirements for paper invoices, receipts and payment slips after they have been scanned.
Basically, the Internal Revenue Service states that you keep data in original form, which would mean that after scanning, you have to archive the paper original. Out of date, and fortunately that's not all the IRS says about it.
The brochure "Your computerized records and the tax retention obligation" paragraph 3.2 Conversion states the following:
"You may want to store data from your records in a different way. If you transfer data to another data medium, this is conversion. This is the case, for example, when you scan a received paper document [...]. If you verifiably meet the conditions, you do not have to keep the original data after conversion. [...]
Terms of conversion
The IRS sets the following conditions:
- You transfer all data content correctly;
- The new data carrier is available throughout the retention period;
- You ensure that verification of the converted data can be performed within a reasonable time;
- You keep the results of the internal audit. For example, the reconciliation with the original data and any discrepancy analysis.
The most important thing for the IRS is that you pay attention to the authenticity features. You must always be able to ensure the authenticity of the origin and the integrity of the content by the method of storage throughout the retention period.
Pre-approval
Before you throw out your entire paper filing system, it is wise to consult with your local tax office. Your tax inspector may grant your organization an exemption from the paper retention requirement. In our experience, the tax inspectorate is basically always cooperative about this. Sometimes we experience some different interpretation of the regulations, but with some persistence you will benefit from lower operational costs, better retrieval and improved compliancy. So worth the effort.
Interested or need some help, please let us know. For example, we have sample correspondence with the Internal Revenue Service to get you started. The road to success begins with the first step.
