How long should busi­ness­es keep delivery notes? Retention periods explained

Delivery notes do not generally have a separate federal retention period of their own in the US. Instead, a delivery note may need to be retained when it forms part of the sup­port­ing doc­u­men­ta­tion for a business trans­ac­tion, ac­count­ing entry, expense, purchase or tax return.

Key Takeaways ⓘ

Retention of delivery notes in the US depends on what the document supports:

• Delivery notes generally do not have a separate federal retention period of their own. What matters is what the document is used to sub­stan­ti­ate.
• For federal income tax purposes, sup­port­ing records are generally kept until the period of lim­i­ta­tions expires, which is generally three years after the return was filed.
• Longer periods can apply, for example six years when more than 25% of the gross income shown on the return was not reported.
• Digital delivery notes are generally subject to the same record­keep­ing re­quire­ments as paper ones, so busi­ness­es should ensure they stay readable, re­triev­able and linked to the trans­ac­tion.
• A struc­tured document man­age­ment system, including AI-based tools, can help busi­ness­es store and classify delivery notes.

There is no universal federal retention period that applies specif­i­cal­ly to every delivery note.

The IRS requires busi­ness­es to maintain records that sub­stan­ti­ate income and expenses reported on their tax returns. Sup­port­ing business documents can include invoices, receipts, paid bills and other records relating to purchases and sales. A delivery note can serve a similar sup­port­ing function when it helps document a par­tic­u­lar trans­ac­tion.

How long do busi­ness­es need to keep delivery notes in the US?

The ap­pro­pri­ate delivery note retention period depends primarily on what the document is being used to sub­stan­ti­ate.

For federal income tax purposes, busi­ness­es generally need to keep records sup­port­ing income, de­duc­tions and credits until the period of lim­i­ta­tions for the relevant tax return has expired. In ordinary cir­cum­stances, this period is generally three years after the return was filed.

However, longer periods can apply in certain sit­u­a­tions. For example, the IRS generally applies a six-year period when a taxpayer fails to report more than 25% of the gross income shown on the return and a seven-year period for claims involving worthless se­cu­ri­ties or bad-debt de­duc­tions. There is no lim­i­ta­tion period if no return is filed or a fraud­u­lent return is filed. Em­ploy­ment tax records generally need to be kept for at least four years. Records relating to property may also need to be retained until the period of lim­i­ta­tions expires for the year in which the property is disposed of.

Delivery notes may be relevant, for example, when they:

• confirm that goods were delivered or received,
• support purchase or sales records,
• provide evidence for business expenses,
• help sub­stan­ti­ate inventory purchases,
• support entries reported on a federal tax return.

If a delivery note supports an item reported on a tax return, it should therefore be retained for the ap­plic­a­ble period.

There is therefore no universal federal retention period that applies specif­i­cal­ly to every com­mer­cial delivery note. Busi­ness­es should determine what the document supports and which federal, state, con­trac­tu­al or industry-specific re­quire­ments apply before disposing of it.

Why should busi­ness­es keep delivery notes?

Delivery notes can help busi­ness­es demon­strate that goods were supplied or received. They are par­tic­u­lar­ly useful when checking invoices, resolving dis­crep­an­cies and sub­stan­ti­at­ing business trans­ac­tions.

A delivery note may contain in­for­ma­tion such as supplier or customer details, delivery dates, de­scrip­tions and quan­ti­ties of goods, and ref­er­ences to purchase orders or invoices.

Keeping these documents together with related invoices and ac­count­ing records can make trans­ac­tions easier to trace and provide sup­port­ing evidence if the IRS examines a tax return.

What is the retention period for paper delivery notes?

There is no separate federal retention period specif­i­cal­ly for paper delivery notes. If a paper delivery note supports in­for­ma­tion on a federal tax return, it should generally be retained for as long as the un­der­ly­ing record is required.

For many ordinary federal income tax records, this means keeping the document for at least three years after the relevant return is filed. Longer periods may apply depending on the cir­cum­stances.

Busi­ness­es should ensure that relevant delivery notes are complete, easy to locate and connected to the cor­re­spond­ing trans­ac­tion. Before de­stroy­ing records, busi­ness­es should also check whether state law, con­trac­tu­al oblig­a­tions, insurance re­quire­ments or other reg­u­la­tions require them to be retained for longer.

What is the retention period for digital delivery notes?

For federal tax purposes, relevant business records can generally be stored elec­tron­i­cal­ly. The IRS applies record­keep­ing re­quire­ments to elec­tron­ic business records as well as paper records.

An elec­tron­ic record­keep­ing system should preserve a complete and accurate record and make the in­for­ma­tion ac­ces­si­ble to the IRS when required.

When storing delivery notes digitally, busi­ness­es should therefore ensure that:

• documents remain readable through­out the ap­plic­a­ble retention period,
• records can be retrieved when required,
• files ac­cu­rate­ly reproduce the in­for­ma­tion in the original records,
• documents can be linked to the relevant business trans­ac­tion.

Busi­ness­es that convert paper records into elec­tron­ic form should use a system that reliably indexes, stores, preserves, retrieves and re­pro­duces the in­for­ma­tion.

How should busi­ness­es store delivery notes?

Many busi­ness­es receive large numbers of delivery notes, es­pe­cial­ly when dealing with regular suppliers. A struc­tured document man­age­ment system can make these records easier to store and retrieve.

Useful practices include:

• storing delivery notes together with related invoices,
• using con­sis­tent file names,
• or­ga­niz­ing documents by supplier, date or project,
• backing up digital records regularly,
• applying retention rules based on the purpose of each document.

Automated document man­age­ment systems can also help extract in­for­ma­tion from delivery notes and assign documents to the ap­pro­pri­ate trans­ac­tion.

Busi­ness­es operating in more than one state should also consider whether state-specific tax, corporate or other record­keep­ing re­quire­ments apply in addition to federal rules.

How can AI help with archiving delivery notes?

Manually reviewing large numbers of delivery notes can be time-consuming, par­tic­u­lar­ly for small and medium-sized busi­ness­es. Busi­ness­es may not always have the resources to check each document in­di­vid­u­al­ly to determine what trans­ac­tion it relates to and how long it should be retained.

AI-based systems can help automate this process. Spe­cial­ized document man­age­ment systems can extract in­for­ma­tion from delivery notes, classify documents and apply pre­de­fined retention rules. Systems that use tamper-resistant storage can also help protect archived documents against sub­se­quent changes and support reliable digital record­keep­ing.

For example, an SMB that receives numerous delivery notes each day could use a spe­cial­ized AI system as follows:

1. A new delivery note is au­to­mat­i­cal­ly detected in the archive and its contents are extracted.
2. The AI system analyzes in­for­ma­tion such as the supplier, goods, quan­ti­ties, invoice ref­er­ences and relevant ac­count­ing in­for­ma­tion.
3. The system clas­si­fies the document according to pre­de­fined document types.
4. Based on pre­de­fined rules, the system can suggest an ap­pro­pri­ate retention period or apply one au­to­mat­i­cal­ly and archive the document ac­cord­ing­ly.

Au­toma­tion like this can be par­tic­u­lar­ly useful for SMBs because different federal, state and internal retention re­quire­ments may apply to different documents. A digital archive with pre­de­fined com­pli­ance rules can help make archiving processes more efficient. However, re­spon­si­bil­i­ty for complying with ap­plic­a­ble legal and tax re­quire­ments remains with the business.

What happens if busi­ness­es do not keep delivery notes?

A business does not generally face a penalty simply because a par­tic­u­lar delivery note is missing. The more important question is whether the business can sub­stan­ti­ate the trans­ac­tion or tax item that the document supported.

If a business cannot provide adequate records during an IRS ex­am­i­na­tion, it may have dif­fi­cul­ty sub­stan­ti­at­ing income, expenses, de­duc­tions or other items reported on its tax return. This can result in de­duc­tions being dis­al­lowed or ad­just­ments being made to the tax owed, depending on the cir­cum­stances.

Busi­ness­es should therefore regularly review which delivery notes need to be retained, how long the un­der­ly­ing records should be kept and whether the documents can be retrieved when needed. A clear process for retaining delivery notes can help busi­ness­es maintain reliable ac­count­ing records and meet federal tax record­keep­ing re­quire­ments.

Please note the legal notice for this article.