There is no guarantee that the IRS will accept this file in your situation.In the world of financial management and accounting, efficiency and accuracy are paramount. Thus, I cannot say for sure what the IRS position will be regarding a file created using the new Period Copy feature. If the scope of an audit is expanded, the IRS may request another backup file that was created prior to the date the company file was condensed or request a copy of the archive file created during the condensing process.ĭISCLAIMER: This is a new, changing and evolving requirement from the IRS. However, if you choose, the company data file can be condensed (through the clean up or purge feature) for dates prior to the year(s) under audit, as long as they do not include transactions created or changed for time periods under audit, or for transactions from prior years that have an effect on the years under audit. If you do not have a complete understanding of your software’s condensing feature, please contact your software provider for additional guidance before using it.Ĭondensed data is not acceptable for the tax year(s) under audit. However, during the condensing process, the software creates a backup or archive copy of the company data file and this archive copy provides the original detailed records of each old transaction. The ongoing data file (working file) will no longer have the details of old, closed transactions which occurred prior to the manually selected date. The process essentially removes the details of those transactions from the data file and replaces them with summary journal entries, allowing monthly financial statements to be created for old years if needed. Often this is done to reduce the size of the company data file. For example, the closing of a prior year. Can a taxpayer or representative condense or “clean up” the electronic accounting software data file before submission?Ī: Many accounting software programs will condense old, closed transactions occurring prior to a manually selected date. Question #13 indicates that a company file may have prior year data condensed. The Internal Revenue Service (IRS) recently updated () the Use of Electronic Accounting Software Records Frequently Asked Questions & Answers. The QuickBooks Period Copy appears to meet the requirements of the IRS requests for the QuickBooks data file during an audit. KC Adrieyel, Pro Balance IRS Position for QuickBooks Files We long for success and we could not have achieved it without your help. Now we have a smaller faster and more manageable file and our entire company accounting history is not longer at risk. We even upgrade our QuickBooks three times hoping the next version would fix the problem and it did not. We could not clean the file, condense it, or do anything to make the problem better. We had a very large and slow file with a glitch in it for the past 10 years. Here’s what they had to say about their new, smaller file (97% smaller): This client had been using QuickBooks for over 15 years. The name and desktop color of the old file will be changed to help clearly identify it. There will be an archive copy of the old file which can be opened for reference purposes if needed. NOTE: The new file will require QuickBooks 2012 to open it. Usually there is a quick (24-48 hour turn around). If you are interested in us creating a new Period Copy file for you, contact us. The lists can be cleaned up during the process as well. The audit trail for the remaining transactions will remain intact. Older period transactions will be condensed and deleted from the file and the audit trail. The new file will contain transactions just for the time frame specified. Issues with the list limits of QuickBooks Pro or Premier.We can create a new file for the following situations: Do you need a QuickBooks file with just a certain year of data? Did the IRS request your QuickBooks file for an audit? Do you need a specific period copy of the QuickBooks file for legal or other purposes? Is the file too large or approaching list limits in QuickBooks Pro or Premier?
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