IRS Records in the Digital Age

Published Categorized as Tax Audits, Videos

Small business taxpayers often pay more to the IRS because of one thing. Paper.

The IRS still relies on paper records.

It wants you to e-file your tax return, but what is the first thing the IRS agent will ask you for at the start of the audit?

You guessed it. A paper copy of your return.

This video addresses the IRS and how paper will cause you to pay more in tax.

Technology & Paper Records

While it’s true that technology has revolutionized the way we do business, the IRS still expects to see tangible documentation.

The IRS wants to see your bank statements, checks, and even receipts. In paper.

That is what the agent will tell you.

You’ll get a different story from the IRS if you actually produce paper records.

The truth is. The IRS doesn’t want to see a lot of records. The agent knows that you don’t have detailed paper records. The agent is asking for them because they know that you don’t have this type of record.

The IRS wants to see your bank statements, checks, and even receipts– and they want to see them in paper.

The IRS agent doesn’t want to dig through your email to find attachments or wait for you to do so. They don’t want to wait for you to go back to third parties to gather this information.

What the IRS Wants to See

There are several things the IRS wants to verify with paper records.

1. Your income. They want to add up the deposits and see if you reported the deposits as income on your return.

2. If you are a business owner, your travel expenses and your meals. The tax law imposes a higher standard for records for these expenses. The IRS knows this and knows that you will not have the receipts that are required.

3. Mileage. If you drive a car or claim mileage, the IRS wants a mileage log. They want to see an actual paper log.

Of course, you don’t have these records from one or 2 years ago, which is exactly the point.

This allows the IRS to increase your taxable income and deny quite a lot of your expenses.


In the next video, we will explain how you handle this situation. How to use it to your advantage.

You can also read our book about IRS audits. You can get a copy online, at Again, winyourirsaudit .com.

You can also give us a call to see how we can help with your IRS audit.