Thanks for visiting my blog. Hope you find some helpful hints for organizing your time and space. My passions are to help you make home a refuge instead of a crisis center, and to help you function in peace rather than chaos - at home or at work. I have switched my main blog to 1-2-3 ... Get Organized on WordPress, so please visit me there.

Friday, February 6, 2009

Getting Organized for Taxes - Are Scanned Receipts OK?

We've spent the last couple of days getting ready for our first house of girls this month who arrive this afternoon after school. In the meantime we'll take a CPR class today, required every year. Now on to our blog:

You may have heard of or own Neat Receipts, a device that scans your receipts onto your computer. I've heard many laud this device because it reduces the paper clutter. However, I recently read an IRS report that states that the IRS requires original receipts if they audit you. Just thought you'd like to know.

The report also suggested that you photocopy receipts printed on the kind of paper that fades over time. Staple the copy and original together, and keep with your records.

I guess this is one area in which decluttering is not in our best interest!


SetFree said...

Thanks for the tips on receipts. I had no idea!


1-2-3...Get Organized said...

Not something you want to discover during an audit, is it?

Anonymous said...

Hello. I'm an employee of The Neat Company and according to Rev. Proc. 97-22, the IRS allows one to prepare, record, transfer, index, store, preserve, retrieve, and reproduce books and records by either electronically imaging hard copy documents to an electronic storage media, or transferring computerized books and records to an electronic storage media that allows them to be viewed or reproduced without using the original program.

I'm aware of a number of NeatReceipts users who used scanned images of receipts during an audit without issue.

Would it be possible for you to provide information on the IRS report that states original receipts are necessary? We want to make sure that we always provide the most up to date and accurate information to customers.

Jenn Choi

1-2-3...Get Organized said...

Recordkeeping for SBSE Individuals 2008

Q13. Will scanned documents be accepted as substantiation for expenses in an

audit? If not or if there are further requirements, please explain and cite the

reference. Also, please relate to Revenue Procedure 98-25 & 97-22.

A. Scanned documents are not accepted as substantiation for expenses. A record is the

actual document, such as a receipt or invoice that proves an expense was incurred. If an

auditor is presented with only scanned documents, he will be obligated to at least sample

these documents for accuracy and substantiation. This will include tracing back to the

original source document through a third party source such as your distributor/wholesaler.

Revenue Procedure, 98-25 prescribes basic requirements that the Internal Revenue

Service considers essential in cases where your records are maintained within an

Automatic Data Processing system. Rev Proc 98-25 section 11.01, Hardcopy Records,

says, "These procedures do not relieve you of your responsibility to retain hardcopy

records that are created or received in the ordinary course of business as required by

existing law and regulations.”

Recordkeeping for SBSE Individuals

Questions and Answers from the IRS October 2008 National Phone Forum 4