Sooner or later someone opens a storage closet full of bank boxes and asks whether any of it can go. The honest answer is that no single federal schedule covers every church record. The IRS gives minimum periods for some records, says outright that the law sets no period for others, and reminds readers that other parties may want records kept longer. This guide sets out what the IRS actually says, then how to turn it into a policy.
What the IRS says churches must keep
IRS Publication 1828 says all tax-exempt organizations, including churches, are required to maintain books of accounting and other records necessary to justify their claim for exemption in the event of an audit, and the records needed to accurately file any federal returns that may be required. It says there is no specific format, and that the types of required records frequently include:
- Organizing documents (charter, constitution, articles of incorporation) and bylaws
- Minute books
- Property records
- General ledgers, and receipts and disbursements journals
- Payroll records
- Banking records and invoices
The minimum periods the IRS gives
On how long, Publication 1828 begins with a caution: the law does not specify a length of time that records must be retained. It then gives guidelines for records that may be material to the administration of federal tax law:
- Records of revenue and expenses, including payroll records: at least four years after filing the returns to which they relate.
- Records of acquiring and disposing of property (real and personal, including investments): at least four years after the filing of the return for the year in which the disposition occurs.
Publication 15, the employer's tax guide, gives the same figure for payroll: keep all records of employment taxes for at least four years. It lists what those records include, among them amounts and dates of wage payments, employee names, addresses and Social Security numbers, dates of employment, copies of Forms W-4, dates and amounts of tax deposits, copies of returns filed, and records of fringe benefits and expense reimbursements, including substantiation.
The IRS page "How long should I keep records?" is written for income tax filers and ties its periods to the date a return was filed. It says to keep employment tax records for at least four years after the tax becomes due or is paid, whichever is later, and to keep property records until the period of limitations expires for the year the property is disposed of.
Why those minimums are not the whole answer
Three things keep the IRS figures from being a complete schedule.
- They count from a filed return. A church that files payroll returns has a clear starting date for payroll records. Most churches file no annual information return, so for much of the general ledger there is no filing date to count from. Ask the church's CPA how to set the starting point.
- The IRS says others may require longer. The same IRS page says not to discard records no longer needed for tax purposes until you check whether they must be kept longer for other purposes, and gives insurance companies and creditors as examples.
- Federal tax is one rulebook among several. State law, a mortgage lender, an insurer, a grant maker, a retirement plan provider and the church's denomination can each set their own periods. Those are not listed here because they differ from church to church; the church's attorney or denominational office is the place to ask.
Records with no natural end date
Some records never stop being needed, and a policy should say so. The IRS does not publish a permanent list for churches, but these are the ones a later treasurer, lender or examiner asks for regardless of age:
- Articles, constitution, bylaws and their amendments
- Minutes of the congregation and the governing board, including each year's housing allowance designation
- The church's EIN letter and any IRS determination or group exemption letter
- A Form 8274 election, if one was made
- Deeds, titles, loan documents and records of major building projects
- Terms of restricted gifts, endowments and bequests, for as long as the restriction lasts
- Year-end financial reports and any audit or review reports
Housing designations are a good example of why. See what the church has to put in writing.
Giving records
Count sheets, deposit records, giving detail by giver and copies of contribution statements are records of revenue, so the four-year guideline in Publication 1828 is the floor. Givers sometimes ask for a duplicate statement well after the year has closed, which is a practical reason to consider a longer period. What the statements have to say is covered in year-end contribution statements.
Paper, scans and the accounting file
Most of a church's records now live in software: the accounting file, the giving platform, the payroll service, the bank's website. Retention applies to those too, and they fail in their own ways.
- Banks and payroll providers limit how far back statements and reports can be downloaded. Save them as you go.
- When the church changes accounting or giving software, export full detail from the old system first.
- Keep receipts and invoices attached to the transaction or in dated folders, not in one person's email.
- Make sure more than one authorized person can reach the files, and that access is removed when roles change.
Whether a scan may replace a paper original for a given record is a question for the church's CPA or attorney.
Write a retention policy and have it approved
The workable answer to "how long" is a policy the church's leadership has adopted. A useful one:
- Lists each record type the church keeps, in plain words
- States how long each is kept, with the IRS minimums above as the floor and any longer requirement noted
- Says where each is stored and who is responsible for it
- Says how records are destroyed, and who signs off
- Suspends all destruction if the church learns of an audit, claim, dispute or investigation
- Is reviewed by the church's CPA or attorney, approved by the board, and dated
The periods in this guide are IRS minimums with their sources, not legal advice, and a bookkeeper is not the person to set the church's schedule. A bookkeeper can keep the monthly records in a form that makes the policy easy to follow, which is part of how an engagement is set up.
