According to IRS guidelines, how long should documents substantiating employment tax returns be retained?

The correct answer is based on IRS guidelines that stipulate how long businesses should retain documents supporting employment tax returns. Specifically, employers are required to keep these records for four years from April 15 of the year following the tax year for which the returns were filed. This retention period ensures that sufficient documentation is available in case of an audit or inquiry regarding employment taxes.

Retaining records for this length of time allows the IRS to verify tax returns and ensure compliance with tax obligations. The four-year period aligns with the general statute of limitations for the IRS to audit tax returns.

Other options do not align with the IRS's guidelines. Two years from the date of hire may not be sufficient time to cover audits or discrepancies related to the employment taxes filed for those employees. Five years from December 31 of the tax year extends the period too long, while three years from April 15 does not meet the established four-year requirement. Hence, the choice of four years from April 15 is the correct timeframe for document retention as outlined by the IRS.