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Merlo , Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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what happens if you lost receipts

Resolved Question:

what happens if you lost receipts
Submitted: 6 years ago.
Category: Tax
Expert:  Merlo replied 6 years ago.

Hello chip,


If you lost receipts to substantiate deductions that you claimed on your tax return,it is your responsibility to recreate those receipts to the best of your ability. Even in the case of unforeseen events such as a fire or flood where records are destroyed, the IRS still requires that you provide substantial proof to support your deductions.


This may involved getting as many duplicate receipts as you can and/or trying to recreate your expenses through bank withdrawal records and credit card statements. If you lost your records or if they were destroyed due to a catastrophic event, an IRS examiner may be a little more flexible in working with you, but they are still going to require that substantial documentation be provided to document your expenses, otherwise the deductions you claimed will likely be disallowed.


If this was helpful please press the Accept button.


Thank you chip



Customer: replied 6 years ago.
All of our credit card statements came through email and it was for an old email account both the receipts and credit card statements were deleted because of inactivity. We are just devestated. It is almost 20K in travel receipts. We work nationwide. How bad will this be? Will there be so many penalties and interest that this turns into 100K in tax? Can we go to jail for not having them?

He wants our bank statements for 06,07 and 08 for both the business and personal.. We work from home so he wants to come to our home and go through documents and verify our work space here. We have no problem with that but others are telling us this is not normal.

Thank you so much for your help.
Expert:  Merlo replied 6 years ago.

Since you rejected my first answer, I think I will see if someone else here wants to help you with this.


Customer: replied 6 years ago.
I didn't reject it I just wanted to add to it, I have no idea why it didn't let me write my whole question out before submitting to you (may be a tech error?) I will be happy to accept your answer, but I had more question to ask. Do you want to move forward or should I send to some else? I apologize for the cofusion, I am new to Just Answer.
Expert:  Merlo replied 6 years ago.

Hello chip,


I apologize if you are having problems navigating the site. They made some changes recently which I think are confusing to all of us, and I am not sure why, but I received a notice that you had rejected my initial answer, so I thought perhaps you would prefer to work with someone else on this. I am happy to continue helping you, although in your situation there are really limited choices.


First of all, I would not be concerned here about going to jail. The IRS rarely prosecutes people except in cases of obvious fraud. And as far as coming to your home, this is something that they will request if they feel they want to verify the space that you are claiming as home office use, so that again is not something that is uncommon.


Your biggest concern here is the issue of the receipts -- and while this could be costly for you, I can't see where it would mount up to a $100,000 tax bill. If you would end up having all $20,000 in deductions disallowed, then assuming you are in the 25% tax bracket, you are looking at additional taxes of $5,000 plus penalties and interest. And even though no one wants to pay a bill for even that amount, I cannot see where it would be in the $100,000 range if you are only talking about $20,000 in deductions that you cannot substantiate.


But going back to my original post, you really need to try and document everything that you possibly can. Even though your email records were lost of your CC transactions, it should be possible for you to contact the credit card companies and have them send you actual hard copies of statements from prior years. If most of these expenses were travel related, then you might also try contacting the various airlines and hotels that you used to at least try and account for the major portion of those expenses. If you are members of frequent flier clubs or frequent stayer programs with hotels, they should have records of all your travel.


There is honestly not much else I can suggest other than trying some of these options. I would also try to put together some type of chronological log that showed the date of each trip you took, where you went and the purpose of your trip. The more detail you can provide to the examiner, the more it will show him that you are trying to cooperate with his examination of your records. And since ultimately the decision will be up to this examiner as to what he allows, you certainly want to make the very best impression on him that you can and let him know that you will do whatever you can to cooperate to the best of your ability. That sometimes goes a long way in how their decision ends up being made.


Thanks chip and let me know if you have more questions. And again I apologize for any misunderstanding due to site issues.




Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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