For how many years must records for Federal employment taxes be maintained and available for IRS review?

The correct answer is that records for Federal employment taxes must be maintained for four years. This requirement is based on the IRS guidelines, which state that employers must keep records for at least four years from the date the tax becomes due or the date it was paid, whichever is later.

This duration allows for sufficient time for the IRS to audit a taxpayer or for a taxpayer to respond to any claims or inquiries regarding employment taxes. Maintaining accurate records for this timeframe ensures compliance and protects against potential penalties.

The other options do not align with IRS regulations. For instance, maintaining records for three or two years would not be sufficient, as it could lead to potential legal issues or failure to meet compliance standards. Similarly, five years would exceed the required period and may not be the most efficient use of recordkeeping resources. Understanding the specific timeframes for retaining employment tax records is crucial for contractors to avoid issues related to audits and compliance.