NATIONAL CENTER FOR LIFE AND LIBERTY · 2019. 2. 13. · (fringe benefit plans that allow employees to use salary reductions to pay for fringe benefits) RETIREMENT AND SPECIAL OCCASION

FEBRUARY resourceof the month

NATIONAL CENTERFOR LIFE AND LIBERTY

NCLL

DOCUMENT & RECORD RETENTION POLICIESA well-written and well-maintained record-keeping system or document

retention policy is one of an organization’s best assets. The implementation of such

a system will not only help a ministry monitor its progress and identify areas of needed

improvement, it will also provide solid and accurate information for preparing tax and

financial statements as well as protect the ministry against costly litigation. It will ensure

that anyone charged with retaining or destroying records will have clear guidelines as to

what records need to be kept and for how long. It will also prevent haphazard storage and

destruction of records, which could negatively impact an organization in any number of

ways. Your document retention policy should contain the following items:

1. A description of all categories of records kept by the organization 2. How long each category will be maintained 3. A regular schedule of review during which obsolete records are removed and destroyed

Maintain a journal of all destroyed records that lists the title of the record, a brief

description of the nature of the record, and the date of destruction.

**In general, the IRS can audit tax returns filed within the last three years. However, if

substantial errors are found during the initial audit, the IRS may extend its audit back to

six years. Therefore, the time frames listed in the charts below (other than the ones listed

as “permanently”) are the minimum amount of time for which records should be kept so

long as an audit is not initiated against the ministry during that time. If the ministry is

audited or notified of a forthcoming audit before the end of the time frame listed, add

another three years for which the documents should be retained, since the auditors may

require the ministry to produce several more years of records.**

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DOCUMENT/DESCRIPTION

ARTICLES OF INCORPORATION AND CERTIFICATE OF INCORPORATION (documents establishing

corporate status)

CONSTITUTION AND/OR BYLAWS (document setting forth

internal operational guidelines)

MINUTES(summaries of activities

of board business meetings and membership meetings;

this includes any resolutions passed during these meetings)

ANNUAL CORPORATE REPORTS(annual reports required by some states to retain

corporate status)

CERTIFICATE OF GOOD STANDING(document issued by secretary

of state confirming corporate compliance)

RETENTION MINIMUM

PERMANENTLY

PERMANENTLY

PERMANENTLY

PERMANENTLY

PERMANENTLY

ORGANIZATIONAL AND OPERATIONAL RECORDS

Annual Corporate Reports

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FORM 1023 APPLICATION FOR RECOGNITION OF EXEMPTION

(churches may request this formal acknowledgment of the church’s tax-exempt status from the IRS,

although it is not mandatory since churches are automatically

assumed to be exempt)

FORM 5578 ANNUAL CERTIFICATION OF RACIAL NONDISCRIMINATION (annually filed by all private

schools—unless they file a form 990, in which case the school

doesn’t have to file Form 5578—to certify compliance with racial

nondiscrimination tax-exempt requirements).

ATTENDANCE RECORDS OF CHILDREN AND YOUTH MINISTRIES

(Sunday school, nursery, youth group, vacation Bible school, etc.)

PROPERTY DOCUMENTS (deeds, titles, mortgage

documents, contracts and leases, stock and bond certificates)

RETENTION MINIMUM

PERMANENTLY

A MINIMUM OF FOUR YEARS AFTER FILINGTHE TAX RETURNFOR THE YEARFOR WHICH THECERTIFICATE APPLIES

PERMANENTLY

PERMANENTLY


Annual Corporate Reports Continued

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FORM 8282(used by exempt organizations

to report the sale of donated property originally valuedat $5,000 or more within

two years of the donation)

CONTRIBUTION STATEMENTS (receipts issued to contributors

acknowledging contributions)** this includes written

acknowledgments of short-term mission trip expenses of

church participants, since those expenses are deductible if

substantiated by the church

OFFERING ENVELOPES(numbered envelopes assigned to a particular donor or unnumbered

envelopes used specifically for offerings/tithes)


Contribution Records

RETENTION MINIMUM

a minimum of four years after the due date of the donor’s tax return for theyear the donationwas made



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FORM 941(federal quarterly employer tax

return for reporting payroll taxesand deposits)

FORM 990-T(tax return for exempt organizations to report unrelated business income)

FORM W-2(report of employee wages paid and

taxes withheld)

FORM W-4 (employee’s statement of

withholding allowances for use by employer to determine proper

withholding amounts)

FORM 945(form used by employer to report

backup withholding)

FORM 1099-MISC(reporting form for

nonemployee/independent contractor compensation of $600 or

more in any calendar year)

RETENTION MINIMUM

four years after end of tax period or after date tax paid, whichever is later

four years after end of tax period or after date tax paid, whicheveris later

four years after filing the return to which the form applies




Payroll Records


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FORM W-9(request for taxpayer identification number)

FORM 8274(election of exemption from

the payment of the employer’s portion of social security/Medicare taxes—FICA)

HOUSING ALLOWANCE DESIGNATIONS(resolutions, budget notations, or other

written evidence or amounts designated for minister’s allowance)

HOUSING EXPENSE FORM(expense worksheet provided by the minister that is used to calculate the

housing allowance)

DOCUMENTS DEFINING COMPENSATION(usually in minutes or church board

meetings and includes salary, expense reimbursements, fringe benefits, housing

allowance, and retirement plan)

ACCOUNTABLE REIMBURSEMENT POLICY(policy that reimburses employees’

substantiated business-related expenses; usually located in an employee handbook)

ACCOUNTABLE REIMBURSEMENT POLICYRECEIPTS AND RECORDS

(evidence of reimbursable expenses as well as records of payments made under an

accountable reimbursement plan or policy)

RETENTION MINIMUM

four years after the filing deadline for the independent contractor’s tax return

PERMANENTLY

four years after the filing deadline for the pastor’s tax return indicating the designation

four years from the filing deadline for the pastor’s tax return

four years from the filing deadline for the employee’s tax return

permanently; retain copies of all editions and/or amendments along with dates of amendments

four years after the end of the year in which the designationwas made

Payroll Records Continued



EMPLOYEE BENEFIT PLANS(employer-sponsored plans stating

the terms and conditions of employer-provided benefits, including group

life insurance, accident/health insurance, medical insurance, medical reimbursements, group legal services, educational assistance,

dependent care, and qualifiedtuition reduction)

TAX-SHELTERED ANNUITY; SALARY-REDUCTION ANNUITY AGREEMENTS

(salary reductions that are placed into retirement accounts)

CAFETERIA PLANS(fringe benefit plans that allow

employees to use salary reductionsto pay for fringe benefits)

RETIREMENT AND SPECIAL OCCASION GIFTS(usually a board resolution or vote of the membership authorizing a retirement or

other type of gift to a staff member)

RETENTION MINIMUM

four years after the filing deadline for the independent contractor’s tax return

four years after the filing deadline for the pastor’s tax return indicating the designation

four years from the filing deadline for the pastor’s tax return

four years from the filing deadline for the employee’s tax return

Payroll Records Continued


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JOB DESCRIPTIONS FOR NON-PASTORAL STAFF (summary of duties and responsibilities

of paid and volunteer positions in the organization)

JOB DESCRIPTIONS FOR PASTORAL STAFF (summary of duties and responsibilities of paid and volunteer pastoral staff positions

in the organization)

EMPLOYMENT APPLICATIONS—HIRED(applications completed by prospective

employees who were ultimately hired)

EMPLOYMENT APPLICATIONS—NOT HIRED (usually a board resolution or vote of the membership authorizing a retirement or

other type of gift to a staff member)

RETENTION MINIMUM

four years after the termination of the individual from the position

four years from the filing deadline of the pastor’s tax return

four years after termination of employment or until the final disposition of any legal claims arising out of the employee’s employment; applications that include screening questions or authorizations for reference or background checks should be retained permanently

four years after the application form was completed or until the final disposition of any claim arising out of the failure to hire; applications that include screening questions or authorizations for reference or background checks should be retained permanently

Employment Records



SCREENING FORMS AND BACKGROUND CHECKS (used to determine whether a paid

or volunteer individual is suitable to work with children)

REFERENCE FORMS FOR ADULTS AND MINORS (summary of duties and responsibilities of paid and volunteer pastoral staff positions

in the organization)

FORM I-9(immigration form completed by employers and new employees stating the employee’s

identity and eligibility to work in the US)

EMPLOYEE PAYROLL AND PERSONAL INFORMATION(name, address, date of birth, gender, job

position, pay rate, hours worked each workday and week, and amount earned

each week)

EMPLOYMENT CONTRACTS(agreements stating the terms and

conditions of the employment relationship)

RETENTION MINIMUM

PERMANENTLY

PERMANENTLY

three years after the date of hire or one year after an employee’s termination of employment, whichever is later

four years after the employee is no longer in the position (includes dismissal, death, resignation, retirement)


Employment Records Continued

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PERFORMANCE EVALUATIONS (written evaluations of employee

performance)

DISMISSAL RECORDS (written statements of the reasons for the

dismissal of an employee)

TESTING RECORDS(immigration form completed by employers and new employees stating the employee’s

identity and eligibility to work in the US)

WORK-RELATED INJURY AND ILLNESS REPORTS(OSHA and workers’ compensation reports

noting the dates and circumstances of work-related injuries or illnesses and the

date the injury or illness was reported by the employee to the employer)

EMPLOYEE HANDBOOKS(employer-created documents setting forth

the terms and conditions of employment, benefits of employment, and grounds and

procedures for discipline/dismissal)

EMPLOYEE ACKNOWLEDGMENT STATEMENTS(signed statements by employees

acknowledging that they understand terms and conditions of employment)

RETENTION MINIMUM

PERMANENTLY

PERMANENTLY

four years after the test wastaken or until the disposition ofa discrimination charge against the employer

five years after the end of the year to which the reports relate

permanently; retain copies of all editions and/or amendments along with dates of amendments


Employment Records Continued

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PROPERTY TAX EXEMPTION APPLICATIONSAND CERTIFICATES

(documents reflecting the church’s property tax exemption, issued by the tax authority

recognizing the exemption)

SALES TAX EXEMPTION APPLICATIONSAND CERTIFICATES

(documents reflecting the church’s sales tax exemption, issued by the tax authority

recognizing the exemption)

IRS AND STATE/LOCAL TAX AGENCY COMMUNICATIONS

(letters/emails sent from and notes taken from phone calls with tax agencies)

FINANCIAL STATEMENTS(annual financial statements and audit

reports of accountants)

STUDENT RECORDS(all student records of a Christian school, including enrollment agreements, report

cards, transcripts, etc.)

BANK STATEMENTS, CANCELED CHECKS, REGISTER TAPES, ACCOUNT STATEMENTS, PETTY CASH SLIPS,

CREDIT CARD SALE SLIPS

RETENTION MINIMUM

depends on the law of the jurisdiction granting the exemption

depends on the law of the jurisdiction granting the exemption

PERMANENTLY

PERMANENTLY

permanently; if the school ceases to operate, records must be placed with the local public school district or with the students themselves

four years following the end of

the year in which the document was created

Miscellaneous Records and Communications

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Documents

NATIONAL CENTER FOR LIFE AND LIBERTY · 2019. 2. 13. · (fringe benefit plans that allow employees to use salary reductions to pay for fringe benefits) RETIREMENT AND SPECIAL OCCASION