Proper record retention is a critical but often overlooked part of international tax compliance. For taxpayers with foreign income, assets, or ownership interests, documentation is frequently the difference between a smooth resolution and a costly IRS dispute. This guide explains how long international taxpayers should keep records, what documents matter most, and why strong documentation significantly reduces audit risk.
Why Record Retention Is More Important for International Taxpayers
International tax filings are subject to longer statutes of limitations and enhanced scrutiny. Missing documentation can prevent taxpayers from defending positions even when filings were technically correct.
General IRS Record Retention Rules
In general, tax records should be kept for at least three years after filing. However, international matters often require much longer retention due to extended assessment periods.
International Forms That Require Long-Term Documentation
Forms such as FBAR, Form 8938 (FATCA), Form 5471, Form 5472, and Forms 3520 and 3520-A often require supporting documentation to be retained well beyond standard periods.
Foreign Bank Account and Asset Records
Taxpayers should retain bank statements, account opening documents, ownership records, and transaction histories for all foreign financial accounts and assets.
Business Ownership and Related-Party Documentation
Ownership agreements, shareholder records, intercompany agreements, and transfer pricing documentation are essential for defending international business structures.
Documentation for Income and Expense Reporting
Foreign income and expense records should be retained to support income inclusion, exclusions, credits, and treaty positions taken on tax returns.
Recommended Retention Timeframes (Best Practices)
As a best practice, many international taxpayers retain records for seven to ten years or longer, particularly for foreign assets and ownership interests.
How Poor Documentation Increases IRS Exposure
Inadequate records may lead the IRS to disallow positions, assess penalties, or infer unfavorable facts during examinations.
Final Thoughts from Alberto Luna Jr., CPA
Strong documentation is one of the most effective ways to reduce international tax risk. In my experience, well-organized records often resolve issues before they escalate. Treat record retention as part of your overall international tax strategy—not an afterthought.
