Audited with no receipts: what actually happens and what to do next

What the letter on your table actually is

Almost every examination of a self-employed return happens by mail. A letter arrives, it names one tax year, it questions one or two specific items on that year's return, and it asks for documents by a date. That is a correspondence audit. You send copies, an examiner reads them, and a report comes back saying what was accepted and what was not.

A field audit is a different animal. An examiner meets you at your place of business or at your representative's office, the scope is the whole return rather than a couple of lines, and it starts with an appointment rather than a form letter. If you are reading this at eleven at night with an envelope in front of you, the far more likely thing is the first kind: a short list of questioned items and a deadline.

So before anything else, read the letter for three facts. Which tax year. Which line items. What evidence would settle them. People lose a week assembling a folder for the wrong year, and it is a week they do not get back.

What is being asked for is narrower than it feels. In most cases it comes down to four things:

• Proof it was paid. A bank or card statement, a canceled check, a payment confirmation.
• Proof of what it was. The itemized receipt, the invoice, the contract, the booking confirmation. A card statement line showing a merchant name and an amount proves money left, not what it bought.
• Proof it belongs to the business. The standard is that a business expense has to be ordinary and necessary for the work you do, and you have to be able to show that connection.
• For some categories, more than that. Travel, meals, gifts and vehicle expenses carry an extra substantiation rule covering amount, date, place, business purpose and business relationship. Publication 463 sets out exactly what those records look like.

Why it arrived, and why now

Selection is mostly mechanical. Forms filed about you by other people are matched against what you reported, and returns are scored against statistical patterns. Neither of those processes has read your intent or formed an opinion about you as a person. A questioned line is a request for evidence, not a verdict.

The timing feels strange because it is. Letters arrive about a year that already felt closed and filed away. The reason is the period of limitations, the window in which a return can still be examined and tax assessed, which runs longer than most people assume and varies with the situation. The IRS keeps the current tables on its recordkeeping page, and that page is worth reading once, calmly, on a day when nothing has arrived in the mail.

That gap is the whole reason this is hard. What you now need is a piece of thermal paper from a year you barely remember, and thermal paper fades in a warm drawer. Nothing in the process assumes you kept it well. It assumes only that you can support the number.

What actually helps when the paper is gone

Start from the uncomfortable part. The burden of proof sits with you, not with the examiner. The guidance on what kind of records to keep is plain about it: nobody has to disprove your deduction, you have to be able to substantiate it.

Missing receipts are a problem, not the end of the conversation. A receipt is evidence, and it is not the only evidence in the world. In practice this is the order that works:

1. Work the letter, not the year. Write down the exact items questioned and their amounts. That list is the entire job. Everything you send should map to a line on it.
2. Pull the money trail first. Bank and card statements for the period. Every questioned expense should appear as a payment somewhere. Mark them clearly rather than sending twelve months of statements unsorted for somebody else to search.
3. Ask the merchant for a copy. Hotels, airlines, chains, utilities and most software companies can re-issue an itemized receipt or an invoice from a date and a card number. It is the single most underused move here, and it costs a phone call or a web form.
4. Search your email. Order confirmations, invoices, shipping notices, subscription receipts, calendar invitations. For anything bought online, the document is almost certainly still sitting in a thread.
5. Rebuild the business purpose. Your calendar, your messages, your project files and your own invoices to clients show why you were in that city or why you bought that tool. Attach the context, not only the amount.
6. Write down what is left, honestly. For whatever has no paper at all, a dated written explanation of what it was, why it was for the business and how you arrived at the amount is weaker than a receipt and a great deal better than silence.
7. Send an indexed package. A cover sheet listing each questioned item, its amount and the exhibit number that supports it. Copies, never originals. Keep a full copy of what you sent and proof of when you sent it.

If the receipts went missing long before any letter showed up, the rebuilding job is the same one, and there is a longer version of it in what to do about lost receipts.

Why the Cohan rule is not the lifeline it sounds like

Somebody always mentions Cohan. It comes from a court decision of the 1930s that allowed a reasonable estimate of an expense where the records were missing but it was clear the money had been spent. The idea is real. It is also a bad plan, for three reasons.

• It is discretionary, not a right. It depends on convincing evidence that the expense happened at all. No evidence, no estimate.
• The estimate is not generous. Where an allowance is made in the absence of records, it tends to land at the low end of what is plausible, and the doubt is resolved against the person who failed to keep the paper.
• The categories you probably need are carved out. Travel, meals, gifts and vehicle expenses fall under a stricter statutory substantiation rule that requires actual records, and an estimate does not satisfy it. Those are exactly the expenses people lose receipts for. Publication 463 is the document that governs them.

How long you are meant to keep things

There is no single answer, and anyone who gives you one number is rounding. How long a record has to survive depends on what it supports and on the period of limitations that applies to that year. Records about property outlive the rest, because they matter until the limitations period runs out for the year you dispose of the asset, and employment tax records run on their own clock. Rather than trusting a figure half remembered from a forum, read the current tables on the IRS recordkeeping page and in Publication 583, the plain guide to setting up and keeping the books of a small business.

One rule of thumb survives contact with reality: if losing it would mean reconstructing it, keep it, and keep it somewhere that is not a shoebox in a warm room.

When to stop and call a professional

There is a point where handling this alone stops being thrift and starts being expensive. Get representation, an enrolled agent, a CPA or a tax attorney, when any of the following is true:

• The proposed change is large enough to matter to your year.
• The questioned items are travel, meals, gifts or vehicle expenses, where the strict substantiation rule leaves very little room to improvise.
• More than one tax year is open, or a second letter arrives about a different year.
• The word penalty or the word fraud appears anywhere in the correspondence.
• You are asked to agree to extend the period of limitations.
• You cannot meet the deadline, or you disagree with the examiner's report and want to take it further.

We build software and we are not tax professionals, so take that boundary seriously. What is safe to say is that the moment to bring somebody in is before you post a reply you cannot take back. A representative deals with the examiner on your behalf, which is worth a lot on a subject where saying more than the question asked is a common and costly reflex.

The bottom line

A correspondence audit is a letter about a short list of items with a date on it. It is not a raid and it is not a judgment on your character. It asks one question about each line: can you support this number.

If the receipts are gone, you rebuild. Statements show the money moved, merchant copies and emailed invoices show what it bought, and your calendar and your client work show why it was business. Answer the letter item by item, send copies rather than originals, and keep a record of exactly what went in the envelope.

Do not build the plan around an estimate. The Cohan idea exists, it is discretionary, it pays badly, and it does not reach the travel, meals, gift and vehicle expenses that people most often lack paper for.

And the version of all this that costs nothing is the one you do in advance: photograph the receipt while it is in your hand, keep the image attached to the amount, and file it under the Schedule C category it belongs to. That is the whole point of a receipt scanner for taxes, and it is the same habit behind a tax write off tracker that keeps the photo next to the figure. If you would rather start with the arithmetic, the 2026 self-employment tax calculator runs in your browser with no signup and no email, and the DeductHound home page explains what the app does and what it deliberately does not do.