Rob,
In order to satisfy IRS requirements for EDI data, you must retain the X-12 data if you are the receiver as this is your original source data. Better yet, you need to retain the ability to reproduce the source data and provide a machine formatted transaction (best case) or at least a printed document (satisfies the IRS minimum requirements) in order to provide any such documentation.
If you are the originator, it is assumed that your application would be able to source the EDI interface file or provide a printed facsimile of the transaction (i.e. A paper copy from the application of the original Purchase Order). As the receiver, you should be able to produce from the application a printed copy of the order that is a direct result of the received electronic Purchase Order, however, the source data would be a tremendous help and probably not be a bad idea to have around in the event that the IRS wants to have the information. Being able to produce at least a paper copy of the source data is a safeguard. Besides, there can be a substantial difference between what was requested on the PO and what finally got into the order processing system of the receiver.
As with a paper purchase order, the same statute of limitations does apply to the electronic counterpart as well.
I believe that there is a seven year statute of limitations on this type of data. It's not important unless the IRS calls for the data to be produced and you may want to check this with a representative from the IRS or a qualified attorney, but in the event of a system migration, I would definitely make provisions to keep this around so that the older transactions can be processed and presented on demand in a form that would be acceptable and legal to provide support for your position in an IRS audit.
I would look at the source documents more then the supporting documents in your process as potential candidates to archive and hold for the long term if space is an issue. What I want to say here is that the 850 and 810 are critical documents. The 856 not so much so unless your intent is to show when product changed ownership. That may or may not be the case with the event cycle that would trigger an ASN. If it is the case, then you might want to consider the ASN as a source also, but I would think that this would be dictated by the contractual agreements that you have in place. Other supporting transactions that provide information and are not considered revenue documents are not an issue for the IRS unless a revenue stream is identified with that document. Such transactions as 830 Forecast or 846, 852, and 867 Inventory Report transactions are not normally such documents. If my tax accounting serves my correctly, you're looking at the documentation that would support the U.S. Tax Code, Section: 1504, Like Kind Exchange. This is what determines if a "taxable" exchange has occurred. It does not have to be money, but just consideration. (This is how barter type transactions are also considered taxable by the IRS).
We migrated a system about four years ago and have provisions to allow us to recall and produce in paper printed form of transactions that we received before our move to a new application package for just such an event.
Bottom Line, we archive everything for a period of seven years in the event that there is litigation or we are audited so that we have the information needed. This information is held for system disaster recovery as well as audit or litigation actions. We keep this information off-site for mutual protection and safekeeping.
I hope that this information helps
Regards,
Mark
-----Original Message-----
From: Rob Wickham [mailto:[EMAIL PROTECTED]]
Sent: Wednesday, September 05, 2001 2:18 PM
To: [EMAIL PROTECTED]
Subject: IRS Revenue procedure 91-59
I would like some clarification on retaining EDI data for IRS purposes in the
event of a tax audit. In the event that the 850 is created at a customer site,
passed through a portal (remote) where data is mapped to an ANSI X12 document
and forwarded to a supplier, is it necessary to retain both the original 850 and
ANSI X12 version or is the original sufficient. This would apply to all
documents (856, 810 etc). Is the ANSI X12 version considered a work in progress
document and NOT necessary for the IRS or is it specifically required.
Confirmation of this would be greatly appreciated with any direction on where to
reference this.
Thanks
Rob Wickham
Phone: 651-767-6932
Fax: 651-767-7932
e-mail: [EMAIL PROTECTED]
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