Relevant IRS Procedures and Rulings Pertaining to Records
The procedures and rulings here are not all-inclusive but should provide an information resource and direction for IRS-related records questions.
Revenue Ruling 71-20
States that computerized records are books and records as defined by the IRS.
Revenue Procedure 81-46
Provides the conditions and requirements within which microfilm can be used to reproduce an institution's records. States that microfilmed records are books and records as defined by the IRS.
Revenue Ruling 83-6
Clarifies that microfilm reproductions of Forms W-6 and W-7 are considered books and records as defined by the IRS.
Revenue Procedure 97-22
Provides guidance to those institutions that maintain electronic records utilizing scanning or imaging hardcopies or that transfer electronic records to an electronic storage media.
In essence the institution's computer system must:
1) be accurate and reliable,
2) insure integrity and provide reasonable controls to prevent alterations,
3) be inspected periodically,
4) reproduce a legible hardcopy or computer monitor view that is at least as legible as the original paper version,
5) be indexed,
6) have an audit trail from original entry to the tax return, and
7) at the time of an exam, audit, evaluation, etc. by the IRS, resources must be provided to the IRS for retrieval of information.
Also note that these rules apply to those institutions or firms who have subcontracted their records management to a third party.
Revenue Procedure 98-25
Provides the basic requirements to those institutions that utilize computerized records.
1) states that computerized records are books and records as defined by the IRS.
2) states that these rules apply to those institutions or firms who have subcontracted their records management to a third party.
3) provides definitions of a computer system, computer records, computer processing, etc.
4) states that records must be retained to provide a proper audit trail from original entry to the tax return
5) states that a computer record is sufficient evidence and does not require a duplicate paper record copy
6) the institution must provide proper documentation of the computer system, file names, indexes, etc.
7) At the time of an exam, audit, evaluation, etc. by the IRS, resources must be provided to the IRS for retrieval of information.