Mark Pestronk
Q: I am an aging baby boomer, and I have struck what I think is a good deal with another agency. I will retire, and the agency will take over my client base. It will be easy for me to transfer all of our computer files to the new agency, but what about the old paper files? We stopped making paper files about four years ago. Can I throw them away, or must we legally retain some of them? If so, for how long? For those files that we can throw away and that contain personal information, are we legally required to shred them?
A: If you have an ARC appointment, the ARC agreement requires you to keep the following documents for at least 39 months after issuance or submission, in paper or electronic form: voided traffic documents, completed universal credit card charge forms (aka UCCCFs), discount certificates and vouchers, debit and credit memos, value coupons associated with refunds and exchanges and "other supporting documentation as may be required by ARC or a carrier."
The IRS requires you to keep your records of revenue and expenses for three years after you file your tax returns. There are several exceptions to the three-year rule. Withholding tax records must be kept for four years after the date the tax is due or is paid, whichever is later.
If you claim a bad-debt deduction, you need to keep the records for seven years. When you buy assets, you need to keep the purchase records until three years after you sell or finish depreciating them, whichever is later.
For other contracts and amendments thereto, you need to retain the records until expiration of your state's statute of limitations on written contracts. Statutes of limitations vary by state, from as little as three years in Maryland to 10 years in Illinois, but the average is about five years.
Generally, you can start counting the years when the contract ends. However, correct counting can be tricky, especially if several states are involved, so you should consult a lawyer to see when the statute expires.
Remember that a travel supplier can try to collect on a debt up to your state's statute of limitations on contracts. Therefore, you are probably better off keeping the records required by ARC for more than the required 39 months so that you can defend against debit memos and the like. It is no defense to say that you don't have records because ARC allowed you to throw them away.
Your state's statute of limitations on contracts should also be your non-mandatory guideline for other business papers, such as bank statements, office leases, equipment leases, GDS contracts, payroll records, personnel records and all correspondence.
Finally, here are business records that you need to keep permanently: real estate purchases, incorporation documents, stockholders' or equity owners' agreements, minutes of owner meetings, stock certificates and stock ledger.
If you throw away records, you don't need to shred any of them except for card information, which you must "shred, incinerate or pulp."