How Long to Keep Payroll Records: IRS, Labor and State Rules

How long do I need to keep payroll records?

The IRS requires employment tax records for at least four years, and other rules run their own clocks on the same records. Keep each record until the longest clock that applies to it has run out (IRS).

For a payroll register, the IRS clock is usually the longest federal one: it runs from the fourth-quarter return filed early the next year, so it outlasts the three years wage-hour, three years age discrimination and three years family leave periods. Credit records, a long-serving employee's Form I-9, a state period, and an open audit or claim can stretch it.

A case is not simple when any of these is true:

• A payroll return was never filed. The IRS has no time limit to assess tax on a return that was never filed (26 U.S.C. 6501(c)(3)), so records for those periods matter until the returns are filed and the assessment period runs out. See behind on payroll taxes.
• Your state keeps records longer than the IRS does, as New York does, and as California does for some payments to service providers.
• Some workers were paid in cash or on Forms 1099 and no payroll records exist. There is nothing to export or rebuild from a provider, and the first question is which returns should have been filed; see contractors who may be employees and behind on payroll taxes.
• The only copy of the records sits in a payroll provider's account that may close.
• An IRS or state audit, a wage claim, or a discrimination charge from the EEOC or a state agency is open or arriving, and the files have gaps.
• A current or former employee in California has asked for payroll records. The answer is due within 21 calendar days of the request; see the California sections below.

Gather before you discard or cancel anything: payroll registers, W-4s, Forms I-9, deposit confirmations, filed returns with confirmation numbers, W-2 and W-3 copies, and time and benefit records.

What payroll records does the IRS require, and which are kept longer?

The IRS says to keep all employment tax records at least four years after filing the fourth-quarter return (Form 941) for the year (IRS). The regulation counts the same period from the later of the tax's due date for the return period or the date the tax is paid (26 CFR 31.6001-1(e)). In practice, count from the latest of the fourth-quarter return's due date, the date it was filed and the date the last tax for the year was paid. A Form 944 filer counts the same way from the annual return. If you file a claim for refund or credit of employment tax, keep its supporting records at least four years after the claim is filed (26 CFR 31.6001-1(e)(2)).

The IRS list of records includes:

• Your employer identification number.
• Amounts and dates of all wage payments, and the fair market value of in-kind wages.
• Amounts of tips employees report to you, and records of allocated tips.
• Each employee's name, address, Social Security number and occupation, and dates of employment.
• Copies of Forms W-4, and employee copies of Forms W-2 returned as undeliverable.
• Periods an employee was paid while absent because of sickness or injury, with amounts.
• Dates and amounts of tax deposits, with the acknowledgment numbers for electronic deposits.
• Copies of returns filed, with confirmation numbers.
• Fringe benefits and expense reimbursements, with substantiation.
• Documentation to substantiate any credits you claimed.

Credit records last longer. For qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021, keep the records at least six years. For employee retention credit wages paid after June 30, 2021, keep them at least seven years (Publication 15; Form 941-X instructions). The IRS employment tax recordkeeping page still says six years for both, so use the longer figure. By statute, the IRS can assess an improperly claimed retention credit until six years after the latest of the return's filing date, its deemed filing date and the date the credit or refund claim was made (26 U.S.C. 3134(l)). A later claim therefore extends the period; keep the records through that date and any open exam. If you never claimed these credits, this does not apply.

How long does federal wage-and-hour law require payroll records and time cards?

Federal wage-and-hour law (the Fair Labor Standards Act) requires an employer it covers to keep payroll records at least three years from the last date of entry, and time cards, wage rate tables and similar wage-computation records at least two years (29 CFR 516.5; 29 CFR 516.6; DOL Fact Sheet #21).

For an employee covered by the minimum wage or overtime rules, the payroll record shows identity, hours worked each day and each week, pay rate, straight-time and overtime pay, additions to and deductions from wages, total wages and the pay date.

The full list is in 29 CFR 516.2. The records may be kept at the workplace or at a central records office; from a central office they must be available within 72 hours of notice (29 CFR 516.7).

The two years period for time cards is a minimum, not a safe discard date. A claim for unpaid minimum wage or overtime under this law can be filed within two years after it arises, or three years for a willful violation (29 U.S.C. 255(a)). A time card discarded at two years can leave a gap when a claim reaches back further.

Which other federal clocks run: Form I-9, age discrimination, hiring records and family leave?

Form I-9, the Age Discrimination in Employment Act (ADEA), the federal personnel-record rule and the Family and Medical Leave Act (FMLA) each have their own starting point and their own coverage. The periods are in the first table.

A smaller private employer may fall outside the age discrimination and family leave rules, but its state may have its own. Federal contractors and subcontractors have a separate personnel-record rule that can run longer (41 CFR 60-300.80). Form I-9 and personnel records are counted per employee, from that employee's own dates, not from the end of a year. If you run a retirement or health plan, the plan's records run on their own clock (29 U.S.C. 1027); ask the plan administrator. The six years period covers support for plan reports only. An employer must also keep records sufficient to determine the benefits due or that may become due to its employees (29 U.S.C. 1059(a)(1)), so do not discard old payroll and service records of a plan participant on the report clock alone.

Several clocks apply to the same record: which one do I follow?

Follow the longest clock that applies to that record. The federal wage-hour rules say they do not excuse compliance with any other federal, state or local recordkeeping rule (29 CFR 516.1(c)).

Start each clock from its own trigger. The IRS clock starts at the latest of the fourth-quarter due date, its filing and the last tax payment, the wage-hour clock at the last entry, and the Form I-9 clock at hire or the end of employment. Filing records by year helps with the IRS and wage-hour clocks. Form I-9 and personnel records run per employee, so keep those in each employee's own file until their clock ends.

The IRS and wage-hour rules cited here set no separate discard date for records tied to an open audit or wage claim, but the hiring and personnel rules keep those records until a charge or action ends. Holding a record past its normal date while a matter is open avoids a gap. For what an audit asks for, see IRS audit of a small business.

In what form can I keep payroll records: paper, electronic or in the provider's account?

The federal rules cited here prescribe no particular form, and electronic records work if they are accurate and can be read and produced on request. A state rule or the Form I-9 rules can add conditions, such as where records are kept. The IRS requires no particular form for employment tax records, provided the records let it work out whether tax is owed and how much (26 CFR 31.6001-1(a)). The wage-hour rules prescribe no form and allow microfilm or data-processing records that are clear, identifiable by date or pay period, and can be transcribed on request (29 CFR 516.1(a)). Family leave records follow the same approach (29 CFR 825.500(b)), except that medical certifications, recertifications and medical histories are kept as confidential medical records in files separate from the usual personnel files (29 CFR 825.500(g)). Forms I-9 may be paper, electronic or microfilm and must be produced for inspection on at least three business days' notice (USCIS; 8 CFR 274a.2(b)(2)(ii)). Electronic Forms I-9 carry more: the system must produce the forms, supporting documents and their associated audit trails on request, and every system used must stay accessible while the forms must be kept (8 CFR 274a.2(e)).

An electronic system must index, store, preserve, retrieve and reproduce the records in legible form. If you replace paper with it, you must keep the system for as long as it is material to the administration of tax law, and paper may be destroyed only after the system has been tested (Publication 583).

A provider's account is a place to store records, not a guarantee. The IRS says the employer remains the responsible party when a third-party provider handles payroll, and can be liable for taxes, penalties and interest the provider fails to pay (IRS). A responsible person who willfully fails to collect or pay over withheld tax can also be personally liable for a penalty equal to the tax (26 U.S.C. 6672(a); see trust fund recovery penalty). A certified professional employer organization is treated differently for employment tax (26 U.S.C. 3511), so check which kind of provider you have. Employment tax records must be accessible to IRS officers and available for inspection at all times (26 CFR 31.6001-1(e)(1)). If the account is the only copy and it closes, nothing is left to produce.

What do states add to the federal payroll record rules?

States can set longer periods and extra records, and each state's clocks run separately from the federal ones. Three examples show how much they differ:

These are examples, not a full list. For any other state, read the recordkeeping pages of the state unemployment insurance agency, labor department and tax department. An employee who lives or works in another state may bring that state's rules; see employees in another state.

How long must a California employer keep payroll records?

A California employer keeps payroll records at least four years for the Employment Development Department (EDD), and several wage-law records at least three years.

The EDD says records must reflect all workers employed, no longer employed, on leave, and independent contractors. For each worker they show the full name, Social Security number, hire and return dates, last date of service, place of work, dates and amounts paid with the pay period, the value of in-kind pay, amounts withheld and disbursement records (EDD guide).

Follow the later date when both personnel-record rows apply: the four years rule can outlast the three years after employment ends. Three cautions. The eight years period applies if you believe you are not a subject employer or your workers are exempt, and the EDD describes it as covering payments to service providers. If you pay workers as contractors, ask the EDD or a professional whether it reaches them; see contractors who may be employees. Each industry has its own wage order, and Order 4-2001 covers the industries it names, and other industries have their own wage orders, so confirm the order that covers your business. And the DIR booklet that reproduces the wage-statement rule is an older edition, so confirm the current Labor Code text before relying on details. For registering with the EDD, see California payroll taxes and EDD setup.

A former employee asks for payroll records: how fast must I answer in California?

In California, an employer that receives a written or oral request from a current or former employee to inspect or copy payroll records must comply as soon as practicable and no later than 21 calendar days from the date of the request. Missing the deadline lets the employee recover a penalty in a civil action (DIR). The employer may take reasonable steps to confirm identity and may charge the actual cost of reproduction (Labor Code 226, as compiled by DIR).

A request for the personnel file is a separate clock: the employer has 30 calendar days from a written request, and a former employee may make one such request a year (DIR).

The deadline runs from the date of the request, not from the day you find the file. Log the date the request arrives and pull the records from the provider at once.

The federal recordkeeping rules cited here set no deadline for answering an employee's request. Other states may set their own, so check your state labor agency.

My payroll provider or subscription is ending: what do I export first?

Export the records that exist nowhere else first, then everything else for every year still inside any clock. In this order:

1. Ask the provider first. Ask in writing which years and reports it can export, and how long it keeps the account after you cancel. Do this before the last payroll run.
2. Deposit records. Dates, amounts and confirmation numbers for every tax deposit. An employer's own online payment history with the federal deposit system reaches back only 16 months (IRS). For deposits the provider may have missed, see payroll provider did not pay your taxes.
3. Everything else. Filed returns with confirmation numbers, payroll registers by period and by employee, employee files (W-4s, dates of employment, Forms I-9) and pay stubs. If Forms I-9 were completed electronically, a PDF of each form is not enough: also ask for the supporting documents, audit trails and signature records, and confirm where they will sit after the account closes. For what to collect when you move providers, see switching payroll providers.
4. A check. Open each file. Add up each year's wages and withholding and compare them with the filed returns. A mismatch means the export is incomplete, or a return or the books need a closer look.

Keep each year's set in its own folder, with a copy outside the provider's system. Each January, once the fourth-quarter return and W-2s are filed, save that year's set (registers, returns, W-2 and W-3 copies, deposit confirmations) outside the provider. A later request is then a download, not a rebuild. For accounting software, see records to keep when cancelling accounting software.

What if payroll records are already lost or incomplete?

Rebuild from what others hold, label what you rebuild, and find out first whether every return was filed.

1. Ask the IRS. A business tax account can show transcripts. The IRS offers employment tax return transcripts for returns from tax year 2023 on, and a tax account transcript showing federal tax deposits, payments, penalties and the return filing date. A copy of a filed return is Form 4506, with a fee (IRS).
2. Use the bank. Statements and cancelled checks show net pay, deposits and payment dates.
3. Ask the holders. The old provider, the state agency account and the employees (pay stubs, W-2 copies) may each hold part of the picture.
4. Check that every quarter was filed. A return never filed leaves the IRS time limit open; see behind on payroll taxes.
5. Label rebuilt records. Record the date rebuilt and the sources used. Do not make a rebuilt record look original.

What follows from a gap depends on the agency and the claim, and no single consequence applies. A professional is worth involving when a notice or claim is already in hand, when payroll for a whole quarter or more is missing, when workers were paid in cash or off payroll, or when the bank, the provider and the IRS transcripts do not agree.

Example

These examples are illustrative.

A Texas restaurant and a departing cook

A Texas restaurant with 12 employees hired a cook in March 2021, and he left in June 2026. His Form I-9 is kept until the later of March 2024 (three years after hire) and June 2027 (one year after he left), so until June 2027. The payroll register for his 2026 wages is covered by the fourth-quarter 2026 return, filed in January 2027, so the IRS period ends no earlier than January 2031. Wage-hour law requires his time cards for at least two years, and the Texas workforce agency's rule sets four years for wage records. The cards may be the only proof of the hours behind the register, so he keeps them with it.

A California shop and a former employee

A California shop gets an email on 3 March from a former employee asking for her payroll records. The shop must answer as soon as practicable and no later than 24 March, which is 21 calendar days. She also asks in writing for her personnel file; that request has its own 30 calendar days. The shop already keeps wage statements at least three years and payroll records for the EDD at least four.

An owner cancels payroll software

An owner switched payroll providers on 1 July 2026 and she plans to cancel the old software at the end of that year. The old account holds payroll for 2022 through June 2026.

On the IRS clock alone, only 2022 is close to running out, in January 2027. State rules, Form I-9 and the other clocks above can run longer, so she checks each before discarding anything. Every later year still needs its records for years, so before the account closes she exports registers, quarterly and annual returns, W-2 copies and deposit records for all years in it.

Different for you?

• Payroll returns were never filed, or an IRS payroll notice arrived: the records matter until the periods close. See behind on payroll taxes. If the books those returns are built on are also behind, bookkeeping brings them current.
• Records are missing, or sit in a closed or switched provider, and an audit, wage claim or agency letter has arrived: payroll can often be rebuilt from bank records, IRS transcripts and filed returns, which is bookkeeping work done on the books. See bookkeeping and IRS audit of a small business.
• You are the only person on payroll (an S corporation owner paying yourself): the IRS employment tax clock applies to your own wages. Keep the same registers, deposits, returns and W-2 copies. See running payroll yourself.
• You pay workers as contractors who may be employees: see contractors who may be employees and collecting tax IDs from contractors.
• You employ people in California: see California payroll taxes and EDD setup.
• You are closing or selling the business, or need receipts and returns, not payroll: see how long to keep business records.
• You have not set up payroll yet: see setting up payroll.
• You are a Canadian employer: different law applies; see how long to keep business records in Canada.