Document Retention Requirements

Man at iPad

Similar to the whistleblower protections enacted after Enron’s destruction of key documents, the federal government enacted laws to discourage destruction of documents. While the law does not require the adoption of a document retention policy, it is a recommended best practice.

The Sarbanes-Oxley Act (SOX) requires boards to be aware of and accountable for the acts of an organization. Also, the adoption of a document retention policy sets guidelines and facilitates directors’ fulfillment of the duty of care, establishes transparency and ensures compliance.

Legal Authority

It is a crime to intentionally or knowingly alter, destroy, conceal or falsify any record or document with intent to impede, obstruct, or influence a federal investigation or the administration of any other federal matter according to section 802 of SOX. 18 USCA 1519 (2009). Other state and federal laws, such as the Fair Labor Standards Act, require certain records to be retained for a certain period of time. Some states, such as California, have adopted nonprofit integrity statutes that set out specific document retention measures. In Minnesota, there does not appear to be such a statute or legislation. However, statutes of limitations on various legal claims may provide meaningful guidance on retention length for documents.

Form 990 Disclosure Requirements

On the IRS Form 990 nonprofit information return, Part VI, Section B, includes the following question:

Question 14: Does the organization have a written document retention and destruction policy?

A document retention policy generally sets out the length of time certain organizational physical and electronic documents must or should be retained, held in organizational files, and the manner of disposal of such documents. The adoption of this type of policy serves to provide notice to employees and the board of the types of documents to be retained and for how long. It also helps guard against preemptive destruction or inappropriate disposal ahead of an investigation.