Have you lost receipts, and now the IRS wants proof?
Being audited is stressful. However, being audited without receipts is a nightmare.
So, what happens if you get audited and don’t have receipts? Does that mean you’re in trouble? Will the IRS throw out all your deductions? Can you still prove your expenses? This article breaks down what really happens during an audit like this.
This blog guides you through the audit process, outlining what to expect if receipts are missing, alternative methods for providing proof, and how to stay safe going forward.
Let’s break it down.
Understanding IRS Audits and Recordkeeping
The IRS audit checks if the information on your tax return is accurate and adequately supported by records. They want to know if you earned what you said and spent what you claimed.
The IRS uses a system that spots errors or red flags. So, not every audit means you did something wrong. Many are random, while others happen because someone reported you, or the IRS has found missing details.
Typically, the IRS audits less than 1% of taxpayers every year. However, if you are audited, your records and receipts are your best defense. The IRS follows a strict list of requirements, known as the IRS substantiation requirements, and receipts are often at the top of that list.
Why Does the IRS Conduct Audits?
There are several reasons why the IRS might audit a taxpayer:
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If anything seems inconsistent or underreported, the IRS may ask you to provide supporting documents. The primary goal is to verify that your return is accurate.
The Importance of Keeping Receipts
Receipts are your defense. They report to the IRS what was purchased, its cost, the time of purchase, and the reason behind it. Without the details, the IRS may suspect that your expenses are fabricated.
Keeping receipts helps prove:
- Business meals and travel
- Office supplies
- Mileage
- Medical bills
- Donations
The IRS accepts digital copies of receipts, provided they are accurate and clearly display the transaction details.
What Happens If You Don’t Have Receipts for an IRS Audit?
Here comes the big question: What happens if you get audited and don’t have receipts?
Potential Consequences of Missing Receipts
The consequences of no receipts in audits are as follows
- The IRS may reject some or all of your deductions.
- Your tax bill may go up.
- You may owe interest and audit penalties without receipts.
- In serious cases, the IRS may think you were dishonest. This could result in fines or even lead to fraud investigations.
These penalties can range from 20% of your tax debt (for accuracy-related penalties) to 75% (for fraud).
IRS Guidelines on Recordkeeping
As of 2025, the IRS recommends keeping all tax documents for at least three years, but up to seven if fraud is suspected
The IRS says you must keep proof of income, deductions, and credits. While receipts are best, they also accept other types of taxpayer records for IRS review.
This includes:
- Bank statements
- Invoices
- Contracts
- Checks
- Logs and calendars
- Digital records
But what if you lost all that, too? The IRS allows you to reconstruct your expenses.
Know More → What to Expect During an IRS Audit and How to Prepare
Alternative Ways to Prove Expenses Without Receipts
You can still show the IRS you’re telling the truth, even without receipts.
The IRS acknowledges that not all expenses are accompanied by paper receipts. There are other ways to prove you spent the money. These are referred to as alternative documentation for IRS audits.
Here are some options:
Bank and Credit Card Statements
You can track your expenses with bank statements for IRS audits. If you paid for supplies or business meals using your card, the transaction should appear on your statement.
The IRS may want more than just a name and amount. You’ll need to explain what the purchase was for, how it relates to your work, and why it matters.
Canceled Checks and Invoices
If you paid someone by check, your bank likely has a record of it. That check, paired with an invoice, is strong proof. It shows who got the money and why.
If the check has a note (like “car service fee”), it adds context.
Mileage Logs and Travel Itineraries
If you are claiming car expenses, you’ll need a mileage log. Even if it’s handwritten, it helps.
For business travel, the IRS needs to know when you traveled, where, and why. If you have lost your receipts for gas or tolls, you can show a mileage log or calendar entry as an alternative.
Sworn Statements and Other Documentation
Sometimes, you can write a sworn statement. This is a written letter explaining the expense. It works better if you add a note from someone else (like a vendor or coworker) who can confirm it.
This is helpful when you’re reconstructing expenses for an IRS audit. The more backup you have, the stronger your case becomes.
IRS Cohan Rule: Can It Help You?
The Cohan Rule is a court decision that helps when records are missing.
Here’s how it works.
Understanding the Cohan Rule
The Cohan Rule is based on George M. Cohan’s (a Broadway producer) case.
The court stated that you (the taxpayer) can still deduct reasonable expenses, even without receipts, as long as you demonstrate that the expense likely occurred.
This rule helps people during audits if they don’t have receipts, and can give solid estimates.
In simple words, if you spent money but don’t have exact proof, the IRS can estimate the amount.
| For example, a self-employed consultant who lost meal receipts due to a phone app crash was still allowed partial deductions after providing calendar invites, bank charges, and client names. The IRS will accept these estimates under the Cohan Rule, recognizing the expenses were real and work-related. |
When the IRS Accepts Estimated Deductions?
The IRS may allow estimated expenses if:
- You have a clear pattern of spending
- You have a strong explanation of what the expense was
- The expenses make sense for your work or business.
- You give some form of supporting info (like calendar entries or credit card summaries)
The IRS often reduces the amount claimed when applying the Cohan Rule.
However, the Cohan Rule does not apply to expenses that require strict substantiation, such as travel, meals, entertainment, and gifts.
How to Appeal the IRS Audit Decision?
If the IRS doesn’t accept your alternative proof, your deductions may be denied. If the IRS denies your deductions, you can:
- File an appeal
- Request an audit reconsideration
- Get help from a tax attorney or enrolled agent
With the right help, you may be able to reduce or eliminate the IRS penalties.
How to Handle an IRS Audit Without Receipts?
Act immediately if you have received the audit notice and do not have the necessary receipts.
Steps to Take Immediately
If you’re already in an audit and missing receipts, here’s how to take control of the situation step by step.
- Read the audit letter
- Check which year and items are currently under review
Here’s what to do next:
Step 1: Do a Transaction Match Audit On Yourself First
Review your tax return line by line. Open your bank and card statements from the same year and match them against the deductions you claimed. Highlight every entry that supports your case.
This self-audit helps you speak confidently when the IRS questions you. It also demonstrates an intent to comply, which is essential.
Step 2: Recreate the Paper Trail, Not Just Proof
If receipts are gone, recreate the story of the expense.
For example, if you deducted business travel. Show the client emails, calendar invites, Google Maps timeline, airline confirmations, and even Uber receipts.
The IRS doesn’t just want a receipt; they want context.
Step 3: Use “Business Normalcy” to Justify Expenses
Say you run a freelance graphic design firm.
If you claimed $1,200 in software tools but lost the invoices, note that Adobe Creative Cloud costs approximately $60 per month, which is the industry standard.
Use screenshots from the current vendor website to back your claim. This makes your expenses believable and routine in your field.
Step 4: Document Your Reconstruction Process in Writing
Write a brief statement for each significant expense: what it was, why it mattered for work, and how you came up with the amount.
Even better, ask your tax professional to include this as part of your audit response. This extra effort shows transparency and makes your estimated records harder to dismiss.
Step 5: Identify High-Risk Deductions & Flag Them
Not all missing receipts are equal. Business meals, home office deductions, and cash transactions often trigger more scrutiny.
Flag these in your files and be ready with extra backup, even if it means asking clients to verify meetings or writing a sworn statement. This preps you for IRS follow-up letters.
Following these steps helps you build a case, especially when you need tax audit proof without receipts.
Also Read → How to Handle and Resolve IRS Letter Notices
Working with a Tax Professional
If you’re going through an audit without receipts, this is not the time to do it alone. Hopkins CPA Firm can help you defend your case when the IRS starts asking tough questions.
Our team helps you navigate audits with missing records, incomplete documentation, or misunderstood deductions.
Additionally, we help you
- Reconstruct your records from scratch
- Apply the Cohan rule the right way
- Craft a clean, professional audit response
- Negotiate for penalty reductions
- Protect you from further IRS action
- Handle the IRS communication for you
With us, you’ll get expert guidance → Book a Discovery Call with Hopkins CPA Firm today!
How to Prevent This Issue in the Future?
Avoiding the problem starts with building better habits now.
Here are a few ways to protect yourself before the next tax season.
Best Practices for Recordkeeping
When you keep your documents organized from day one, you’re always ready, whether it’s tax season or an unexpected audit.
Here’s what works:
- Use a separate folder or envelope for every tax year.
- Write the purpose of the expense directly on each receipt.
- Create a routine by setting a date every month to update your records.
- Store both paper and digital copies if possible.
- For freelancers and business owners, match receipts to your bookkeeping monthly.
These habits reduce panic when the IRS comes knocking. They also show that you’ve made a reasonable effort to stay tax-compliant.
Digital Solutions for Tracking Expenses
Paper fades or gets lost. That’s why digital tools have become a lifesaver for modern taxpayers.
Use simple, trusted apps like:
- QuickBooks self-employed: Matches receipts with bank transactions.
- Expensify: Scans and stores receipts with just one photo.
- Google Drive or Dropbox: Create labeled folders by month and year.
- Wave or Zoho: Free tools that offer invoicing, receipt storage, and reports.
Review Your Return Before Filing
Most people only look at their return after they receive the audit notice. But checking it before filing can save you from surprise questions later.
- Double-check each deduction and ask yourself, “Do I have proof for this?”
- Review the most significant claims: travel, meals, and home office.
- Confirm that the total matches your supporting records.
This final check prepares you for an audit.
Turn Receipt-less Audits Around with Hopkins CPA Firm
Getting audited without receipts can feel like you’re walking into a storm with no umbrella.
That’s precisely where Hopkins CPA Firm steps in, not with generic advice, but with tailored strategies that actually work.
We analyze your financial patterns, identify potential red flags before the IRS does, and construct a robust narrative supported by alternative evidence.
When the IRS pushes, we push back with facts and logic that hold up. And if the IRS questions your deductions, we give them legal answers they can’t ignore.
“What happens if you get audited and don’t have receipts?” doesn’t have to end badly; with Hopkins CPA Firm, it ends in relief. Contact us now!
