Hi Folks,

We will be closed Christmas Week from Monday 12/24/12 through Friday 12/28/12.

However, we will be open Saturday after Christmas 12/29/12.

We will be open again on Monday 12/31/12 (New Year’s Eve Day) but closed on New Year’s Day 1/01/13.

So, here’s a summary:

• Closed Monday 12/24/12
• Closed Tuesday 12/25/12
• Closed Wednesday 12/26/12
• Closed Thursday 12/27/12
• Closed Friday 12/28/12
• Open Saturday 12/29/12
• Closed Sunday 12/30/12
• Open Monday 12/31/12
• Closed Tuesday 1/01/12
• Back to normal Wednesday 1/02/12

All phone calls roll over to my Cell Phone so I may be answering calls intermittently throughout the week.

Happy Holidays,

Mike
Head Shredding Guy
Total Secure Shredding
(619) 295-5474

How Long Should I Keep My Income Tax Records?

by David W. Taklender, CPA

Every so often, a client will ask me how long they should retain their tax documents.

I usually respond by stating “Probably not as long as you think.”

I smile when I say this because I would usually think of the client who once told me she still had her and her family’s tax returns from twenty years earlier and wanted to know if it was finally safe to throw them away!

The rules on document retention vary depending on whether you are talking about taxes  (Federal, State, Income, Employment), insurance policies, bankruptcies, creditors, etc.

For purposes of this column and based on my background, I will give you guidelines concerning your income tax documents.

According to the Internal Revenue Service:

The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return run out.

The period (or statute) of limitations is a period of time that governs two events:

1. the taxpayer’s ability to file/amend their tax return to claim a credit/refund, and
2. a window of time where you are eligible for an examination or audit and the possibility of being assessed additional tax.

So, the first part of the answer would be that you should hold your tax documents until the statute of limitations for that tax year expires.

Sounds simple, now we just need to know how long that is, right? What is the number?

Nothing can ever be that easy when dealing with congress, so please….walk with me just a bit further.

The second part of our answer, in order to determine the statute of limitations, is that all-time favorite response, “it depends.”

It really does depend because there exists a “grey area” here in the periods depending on three circumstances,

1. the tax agency you are filing with;
2. what “type” of taxes you are filing; and
3. what the situation/event is.

Answering these three circumstances one by one…

FIRST: The IRS oftentimes will have a different statute of limitations than some state taxing agencies. For example, California has a four-year statute compared to the IRS, which at its lowest level has a three-year statute of limitations. So we have to determine if we are talking about State tax returns or Federal (IRS) tax returns.

SECOND: In this article we are talking income tax returns. But for other tax returns, such as payroll taxes, the retention period may vary. For example, the IRS period of limitations for payroll taxes is different from the one for income taxes (four years vs. three years, respectively).

THIRD: Different events can extend the statute for additional years, and a situation like fraud can extend it indefinitely – meaning the return may be examined, and additional taxes may be imposed at any time in the future.

The following represents a list from the Internal Revenue Service of the various periods of limitations that pertaining to your income tax returns, and unless otherwise stated, the years refer to the period after the return was filed:

1. If you file a timely filed return, or one where you owe additional tax and situations (2), (3) and (4) below, do not apply to you; then keep records for 3 years.
2. If you do not report income that you should report, and it is more than 25% of the gross income shown on your return; then keep records for 6 years.
3. If you file a fraudulent return; then keep records indefinitely.
4. If you do not file a return at all; then keep records indefinitely.
5. If you file a claim for credit or refund after you file your return; then keep records for 3 years from the date you filed your original returns or 2 years from the date you paid the tax, whichever is later.
6. If you file a claim for a loss from worthless securities (Section 1244 stock) or a bad debt deduction; then keep records for 7 years.
7. Regarding payroll taxes, you should keep all employment tax records for at least 4 years after the date that the tax become due or is paid, whichever is later.

NOTE: Regarding conformity issues at the state level, the California Franchise Tax Board makes clear on their website that an extended statute period, beyond the standard four years, may apply if your federal return is under audit.

Finally, when your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. As briefly mentioned earlier, you insurance company or creditors may require you to keep them longer than the IRS does.

If you have any questions concerning document retention or are interested in a consultation for your business or personal tax situation, please feel free to email me at david@dtakcpa.com or visit my website at www.dtakcpa.com.

Yes, I actually do care…

About making sure your documents are properly shredded to your satisfaction.

Does that mean others who sell shredding services don’t care?

Well I’ll let you decide.

Are you giving your documents to a business or organization that only does shredding?

There are quite a few places in San Diego where you can simply drop off your documents with the expectation that at some point in the future they will be successfully shredded.

One type of business you may find offering shredding drop off  are “postal stores.”

Typically, these stores provide you the opportunity to drop off your sensitive documents with the promise that they will be stored securely and that a shredding company will come by one day in the future for shredding.

There are also very large national  ”charities” that allow you to drop off documents for eventual shredding.

But here are the things you MUST consider:

• How long are your documents going to sit there before shredding?
• Are the documents being stored securely?
• Who exactly has access to your documents?
• Who has been subcontracted to shred your documents?
• Where exactly is the location of eventual shredding?

In my mind, these are some of the most important questions you should be asking when it comes to taking your documents for shredding. And honestly, if you have to ask, I would consider going somewhere else!

But there is one more question:

Is a business or charitable organization that provides a variety of services not related to handing and destroying sensitive documents a good fit for your document shredding situation?

Is it just me or do the dots not quite connect that you would, at the same time, drop off some old clothes at a charity along with a box of sensitive documents for shredding? I for one do not care who may or may not be trying on an old pair of pants that I’ve donated. But the same most certainly CAN NOT be said for my old check books, tax returns, and bank statements!

Is it just me or am I the only one who just is a bit skeptical of the person behind the desk at the local postal store. Hell, I’m not even sure I trust them to get my package to its final destination much less hold onto my sensitive documents until some un-vetted shredding company decides to swing by.

Maybe you’re just not as paranoid as I am when it comes to shredding sensitive documents… 

If that’s the case, then my Shredding Service is most definitely NOT for you!

But if you’re just a fraction as paranoid as I am, then my service is the most perfect solution you’ll find just about anywhere.

Here is what we DON’T DO:

So if you’re looking for a shredding company that takes handing of your documents seriously, you’ve found the right place.

Your friend,

Mike
Head Shredding Guy

P.S. My comments about who pays taxes and who doesn’t is most definitely directed at the multitude of  ”non-profits” that have decided to delve into the for-profit world of shredding. That a “charity” would use its beneficial tax status and their relative high regard in society to artificially lower prices in order to “compete” is reprehensible. But if that wasn’t enough, they then employ individuals with disabilities where the state will subsidize a portion of their hourly wages; again to unfairly compete in an industry where there is vigorous for-profit competition. This is more than reprehensible, this is the height of moral depravity. So, yes, shredding non-profits, and you know who you are, as a small local business that has to compete against you and your government subsidies, I find your business deplorable. The comment section is open below!

Hey Folks,

I would imagine that there isn’t too many still walking around with a PDA. Better yet, how many people even remember what a PDA is? Do you remember the Palm Pilot?

Well here’s a little story…

Once upon a time, long long ago (at least in terms of computing) back in 1986, the very first portable hand held electronic device know as Personal Digital Assistants or PDAs was released upon the public.

These devices were designed to get rid of those old fashioned paper day planners in which you would right down all your appointments and important contacts. And perhaps, if you were so inclined, you would also annotate your own personal information (just in case someone found your day planner – they could return it) and other important information like account numbers and pins.

So these PDAs were able to perform all the same functions as a paper day planner or organizer, but just not as easily or conveniently.

They often included such functions as:

• Appointment calendar
• A to-do list (everyone loves a “to-do” list!)
• An address book
• A Calculator (a very novel idea indeed)
• A memo or “note” program.

These PDA’s would save infinite amounts of time required every year copying all the information over from last years planner. From the busy executive to the average stay at home mom, this was manna from heaven not to mention digital efficiency at its finest. Perfect organization; never again late for an appointment; and no more forgetting important dates like birthdays or anniversaries.

At first, you needed a little stick, known as a stylus, to write on the PDA’s glass screen in order to input your information. These PDAs tried to recognize your handwriting, but as you could probably guess, it never worked as well as writing on paper. After all, half the time we can’t even read our own writing, how in the world is a computer going to read it!

So a virtual keyboard was designed that would appear on the screen and you would tap each virtual key one at a time with your little stick to input your data. Of course this took forever, but at least once that data was put in, you never had to input it again.

Then, a brilliant engineer came up with the idea of adding button onto the face of the PDA in order to facilitate data entry. It didn’t take very long until a full mini keyboard was included on the front of the PDAs to streamline data entry.

Everything was going along just fine until one day someone realized that they were carrying both a cell phone and a PDA. And, as luck would have it, the cell phone had many of the same features as the PDA including contacts and the ever present, tool for all occasions: A Calculator.

So again, one day, another brilliant engineer came up with the idea of combining the PDA and the cell phone. After many years of careful thought, a new device was created to replace the cell phone and the PDA. This device was called the Smart Phone!

Today, it is very hard indeed to find a mere cell phone or a PDA… They are all but extinct. However, it is equally rare to find someone without a Smart Phone. These Smart Phones can now browse the internet, send personal messages, play music, and even play games for hours on end.

Of course Smart Phones can still make phone calls, create a “to-do” list, be used as a calculator, contain an appointment calendar, and create a memo… however they just don’t perform these functions very well. Many times, instead of using your Smart Phone, we still use the old fashioned methods of paper and pen for data functions. And if you want to make a quality phone call where you can actually hear the other person talk, it’s often best not to use your cell phone.

So although PDAs, and now Smart Phones, have not made us any more efficient or less likely to forget an important birthday or anniversary, there is a high likelihood that you did try to input some important sensitive information into that old PDA or even a new Smart Phone.

If that is the case, it might be worth while to get that old PDA shredded to make sure none of that information falls into the wrong hands.

Until next time…

Keep Totally Secure!

Mike
Head Shredding Guy

Fabrice Touree is the now the infamous Goldman Sachs mortgage trader who has suddenly become one of the sole scapegoats for the 2008 financial disaster.

So how does a midlevel 28 year old thrust himself into the limelight as a target for SEC investigators?

Although there doesn’t seem to be any admission by the SEC or Goldman Sachs that Touree was the ringleader who masterminded the creation of billions of dollars of dubious mortgage backed securities, he did do something to put himself into the hotseat.

It appears Mr. Touree simply threw out an old laptop that was later found “discarded in a a garbage area in a downtown apartment building” as indicted in a recent New York Times article.

The laptop was still receiving emails when the eventual user of this “recycled” laptop recognized the name in the emails, Touree, was also a name finding it’s way into news headlines.

An article by the Huffington Post points out that the e-mails received between Touree and his lawyer “discussed how to handle accusations that he and his employer, Goldman Sachs, had played a key role in engineering a near-financial apocalypse.”

This indeed has played out to be quite unfortunate for Mr. Touree since his case is apparently the only one being prosecuted by the SEC.

I would guess that Touree never thought for a second about the open email client on this casually discarded laptop.

Unfortunately, we often forget how much “stuff” is left sitting on those old computers. Most folks are replacing their computer every 2 to 3 years. And let’s be honest, 2 years is not that long ago!

You’re very likely to be using the same online email account, with the same bank with the same bank account number, and still living at the same address.

And, as we see in the case of Mr. Touree, we’re also not very likely to safeguard the information on our computers with passwords.

The above mentioned Huffington Post article goes into some of the current debate over the best way to dispose of the data on our hard drives from using software tools that “wipe” a hard drive to “the most surefire way to discard data” by actual physical destruction.

If you decide to read farther down the article to the comment section, you see the debate rage on about whether reformatting your disk drives is enough, to dropping your computer in salt water, to taking a hammer and giving your hard drive a few good whacks.

Personally, what I recommend is physical destruction. And to take it a step further, shredding so the hard drive is in multiple pieces.

Is this overkill?

Maybe. Although I still get questions as to whether the pieces are small enough.

(I won’t even get into the conversation I’ve had about the NSA and electron microscopes theoretically being able to read individual 0′s and 1′s off hard drive fragments!)

Anyway, when it comes to the secure destruction of hard drives, including my personal hard drives that need disposal, I feel 100% confident when all I have left is hard drive rubble.

Check out the video I took of the very first hard drive I shredded.

The cost of ensuring that the information held on your hard drive will never ever be seen by anyone else again is only $10 per hard drive when you bring the hard drive down to our secure shredding facility. You can stand by our view window while we run the hard drive through the shredder and then take a look at the pieces when we’re all done! (For an additional $10, we will remove the hard drive from your laptop or desktop computer and recycle the computer for you.)

Our secure drop-off shredding facility is located at:

3584 Hancock St.
San Diego, CA 92110

Hours of Drop-Off:

Mon through Fri: 8am to 5pm
Sat: 10am to 1pm

You don’t need to make an appointment. Just drop by whenever you’re ready.

If you have any further questions, please feel free to give me a call: (619) 295-5474

Until Next Time… Keep Totally Secure,

Your friend,

Mike
Head Shredding Guy