What to Do When the IRS Asks for Supporting Documents

Woman gathers the supporting documents requested by the IRS

Receiving a letter in the mail from the IRS can be nerve-wracking—especially if that letter is an IRS request to send supporting documentation. When you encounter a request for supporting documents, it’s typically due to an ongoing IRS investigation.

This doesn’t always mean the IRS is auditing you—though certain IRS supporting documents requests are sent out to inform you that your tax forms are being audited. The IRS does need to gather additional information from taxpayers in an audit, but may also request supporting documents in other circumstances, such as for evaluating an Offer in Compromise or investigating the validity of claimed tax credits.

Gathering supporting documents can be stressful, but if you’re prepared, you can keep your cool and resolve the situation smoothly. Cooperating with the IRS by providing the requested documents in a timely and accurate manner improves your chances of a quicker and more favorable resolution.

Find out when and why you may receive an IRS supporting documents request, what a supporting document is, and best practices for dealing with these requests so you can minimize the pressure of these situations and increase your likelihood of a better outcome.

When and Why You Receive IRS Requests for Supporting Documents

There are many reasons a taxpayer might receive an IRS supporting documents request, and not all of them are as potentially nerve-wracking as an audit. For example:

  • You may have been selected for an audit, and a detailed examination of your tax return by the IRS is necessary to verify the accuracy of the income, credits, deductions, and expenses reported on your return.
  • The IRS suspects identity theft or fraud is occurring for one reason or another, and they are requesting documents to verify your identity before processing your tax return or issuing a refund to ensure it goes to the right person.
  • You have filed an amended return, and the IRS wants you to send relevant documents they can use to verify the changes you made to your originally filed return, especially if those changes significantly affect tax calculations.
  • You have claimed certain tax credits, such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or education credits, and the IRS is looking for documentation to ensure your eligibility for these credits.
  • The IRS needs additional documents to determine your ability to pay unpaid back taxes.
  • If you did not file a return but the IRS suspects you should have, they might request supporting documents such as your W-2s or 1099s to determine whether or not you indeed had a filing requirement.
  • You are applying for an Offer in Compromise or Partial Payment Installment Agreement and the IRS needs additional information to verify your financial status and decide if the suggested terms for repayment are sufficient.
  • The IRS needs to assess the value of an estate or gifts you received to determine appropriate estate or gift taxes.

As you can see, an IRS investigation that requires them to ask you for additional supporting documents does not necessarily mean you are being audited. However, regardless of the situation prompting their request, you need to respond to their request as soon as possible to streamline their investigation and improve your chances of a favorable result. IRS agents are people, too, and as impartial as they are, making sure you don’t keep them waiting helps you stay in their good graces.

Common Questions About IRS Supporting Documents Requests for Deductions

One of the more common reasons for the IRS to request supporting documents is regarding deductions and write-offs. Some of the common questions we see from taxpayers about IRS investigations for deductions include:

Does the IRS check your deductions?

Yes, the IRS checks your deductions to ensure they are valid and accurately reported. This is especially true of tax credits or deductions that are more likely to be incorrectly applied or abused. Here, the IRS often errs on the side of caution.

What are the red flags for IRS deductions?

Red flags for IRS deductions include unusually high deductions compared to income, rounding numbers on deductions, or claiming 100% business use of a vehicle.

Do I need receipts for tax deductions?

Yes, you need receipts for tax deductions to provide proof of the expenses in case of an IRS audit. As a rule of thumb, if you plan to deduct something from your taxes as a business expense, we recommend making sure you save the receipts and keep them organized for easy access.

Understanding and Responding to IRS Supporting Documents Requests

When you’ve received a request for supporting documents due to an IRS investigation, first take a close look at which documents they ask for. Depending on the reason for the investigation, they will likely require a different set of specific documents.

Audits and IRS investigations often include income documents such as W-2s and 1099s, expense receipts, or bank statements. Identify verification requests, on the other hand, usually request photo identification or Social Security information. Investigations into collection actions typically ask for detailed listings of monthly income and expenses or asset information. Estate and gift tax issues typically ask for information regarding appraisal or donation records.

For example, if you receive a CP75 notice in the mail, it means the IRS supporting documents request is specifically about verifying your eligibility for claimed Earned Income Credit (EIC), Additional Child Tax Credit (ACTC), Recovery Rebate Credit (RRC), or Premium Tax Credit (PTC) portions of your tax refund. In this case, the notice includes enclosed IRS forms that list which documents the IRS needs from you for their investigation.

How to Respond to IRS Supporting Documents Requests

When dealing with a detailed examination of a tax return by the IRS, here are some tips to keep in mind:

  • Don’t panic. The IRS will always be clear about what they need from you, so make sure to examine their notice to see what you need. Since the language surrounding tax documents can often be a bit difficult to understand for everyday taxpayers, consult a tax expert if you need help.
  • Gather and organize all requested documents clearly and systematically so the IRS can browse them and get the answers they need as easily as possible.
  • Double-check all documents for accuracy and completeness before sending them.
  • Always keep copies of everything you send to the IRS for your records.
  • Send your documents via certified mail to ensure they are received and to track their delivery.
  • Make sure to meet any deadlines provided by the IRS to avoid potential penalties or additional interest charges.
  • An ounce of prevention is worth a pound of cure—to deal with potential IRS supporting documents requests in the future, start keeping detailed and organized records so you can quickly and easily present supporting documents on command.

Even if you’re not dealing with an audit of your tax return, finding the right documents to comply with an IRS supporting documents request can be stressful and frightening, especially if you’re having difficulty tracking down the right documents.

If the IRS needs more information from you about your tax situation, don’t delay. Contact the tax law experts at Wiggam Law for help today.