Surviving an IRS Tax Audit : IRS Audit: Proving Expenses

Surviving an IRS Tax Audit : IRS Audit: Proving Expenses

December 10, 2019 3 By Kailee Schamberger


So what happens if your tax return has been
selected for an IRs audit and you’re missing some of the receipts that you need to substantiate
the items that the IRS is looking for during your IRS audit? The information document request
that the IRS is going to send you is going to give a detail of the items that they want
you to bring in. For example, if they’re auditing some car and truck expenses that you might
have claimed on schedule C or a 2106 for business expenses, they might ask you to bring in repair
receipts, inspection slips, or other information to show your mileage. You might not have this
information, but instead you would have some sort of calendar, log book, or something that
you kept information for about the miles that you’ve drove. If this information has been
lost then you need to recreate this information from the best records that you have available.
For example, if you have business receipts that show on a daily basis a product that
you picked up, supplies that you picked up, bank deposits that you made, that would give
you a history of some of the mileage that you drove back and forth to pick up those
supplies, visit customers, or go to different job sites or offices. Other things that they
might ask for is physical inventory sheets if you have inventory. Again, you need to
recreate those from your accounting records if you are unable to locate the original receipts.
You want to try to have all receipts possible. You might also consider contacting some of
your vendors and asking them to provide copies of the receipts. If you’ve lost credit card
statements see if those can be downloaded or obtained on line. If you’re missing bank
statements or canceled checks, usually you can go back to the bank and ask for copies
of those bank statements and canceled checks as well. Because you want to make sure that
you’re going to have the documentation that’s been requested on the information document
request when you go in. You don’t need to go in and point out what you’re missing, but
you need to make sure that the information that you take in is as complete and accurate
as possible. That will help the audit process go quicker, faster, and yield a better result
for you in the end.