How to Handle Lost Documents in an IRS Audit

Facing an IRS audit can be scary. I always advise clients to first, do not panic if you receive a notice of audit. Second, start compiling all the necessary records to prepare, such as financial statements to prepare your audit response. That being said, some San Francisco business owners may find that some crucial documents are missing. Whether it’s due to a simple oversight or unforeseen circumstances, missing essential paperwork during an audit can definitely raise anxiety levels. However, there are steps you can take to address the situation effectively and ensure a smoother IRS audit process. 

Stay calm and assess the situation. The initial shock of realizing that documents are missing can be overwhelming. However, panicking will not solve the issue. First off, identify which documents are missing and try to determine the potential impact on your tax return. Make a list of the lost items and gather any available copies or duplicates you may have. 

Communicate with the IRS. Open communication is key in these situations. The IRS is aware that documents can be lost or destroyed, and they may be able to provide guidance on how to proceed. You can reach out to the IRS by calling their helpline or visiting your local IRS office in person. Additionally, you were likely assigned an auditor for your audit. If that’s the case, let that individual know what documents are missing. Be prepared to provide your audit notice details and explain the circumstances surrounding the lost documents. 

Reconstruct lost documents. Begin by gathering any available copies, bank statements, receipts, or digital records that can help recreate the missing information. If the lost documents were digital, check your email, cloud storage, or any other backup sources you may have. For lost receipts, credit card statements or other financial records, try contacting the banking institution to obtain duplicates.

Provide affidavits and statements. In cases where certain documents cannot be fully reconstructed, providing affidavits and/or sworn statements can be a helpful alternative. This involves creating a detailed written account of the missing documents, explaining why they are unavailable, and documenting the accuracy of the information to the best of your knowledge.

Seek professional assistance. Handling lost documents in an IRS audit can be complicated. The best recommendation I have is to seek help from an experienced tax attorney who can guide you on how to proceed. Professional tax experts have the expertise to navigate audit challenges and can provide valuable guidance. An experienced tax attorney can help you communicate effectively with the IRS and ensure that you’re taking the right steps to minimize the impact on your audit.

While losing documents during an IRS audit is undoubtedly stressful, it does not mean your audit will not go in your favor. Take proactive steps to retrieve the items and document the circumstances surrounding such missing pieces. Whatever you do, don’t panic. While it can be stressful, an experienced San Francisco tax attorney or tax professional will help you with your documents and remedy the situation so that you, the business owner, is protected and receives the best possible outcome.

Allison Soares is a partner and tax attorney at Vanst Law LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego. 

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Allison Soares

Allison Soares, a renowned tax attorney, excels in representing clients before the IRS, FTB, EDD, and CDTFA. With a Bachelor of Arts in Finance from the University of Wisconsin, Milwaukee, and a transformative teaching stint in Brazil, Allison’s diverse background enriches her legal expertise. She pursued law at St. Thomas University School of Law, Miami, complementing it with an MBA in accounting and forensic accounting. Further honing her skills, she obtained a Master of Laws in Taxation from the University of San Diego School of Law. As an adjunct professor at San Diego State University, Allison imparts her knowledge in tax procedures, practice, and ethics. Her accolades include being named Best of the Bar by the San Diego Business Journal and multiple Super Lawyer recognitions. Committed to community service, she volunteers with Forever Balboa Park and Friends of Balboa Park. Allison’s authoritative contributions in tax law are showcased through her publications and speaking engagements.

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