Electronic Records Retention Requirements for Auto Dealerships
Is your dealership at risk for additional penalties if under audit?
The auto dealership industry has recently been identified by the IRS for concerns of non-compliance with electronic records retention requirements. Generally under IRS Revenue Procedure 98-25, all businesses with assets of $10 million or greater must meet electronic records retention requirements or risk IRS penalties if the business is under audit. Dealers with assets greater then $10 million must maintain electronic records that are:
- capable of being processed;
- can be retrieved, manipulated, printed, and;
- contain sufficient transaction level detail.
Your dealership may utilize a computer system that meets the manufacturer requirements but not the requirements of the IRS. The IRS Computer Audit Specialists (CAS) has developed a generic list of common files found in your dealership that must be available under the IRS requirements.
- General Ledger Master File
- General Ledger Transaction File
- Accounts Payable Distribution File
- Vendor Master File
- Inventory/LIFO File
In order for your dealership to meet the IRS requirements these files must be made available to the IRS until the expiration of the period of limitations for audit have passed.
In certain instances some information needs to be maintained longer, for example fixed asset and LIFO inventory records.
The IRS’s electronic record retention requirements, as well as other record retention requirements, can be complex. Please contact us if you have any questions.
