What prevents taxpayers from submitting fake receipts during an IRS audit?

But how would they know which vendors to contact? I mean, if I submitted receipts from random office supply stores across the state, would they really check all of them? And what about cash purchases? There wouldn't be a withdrawal record for those specifically tied to the purchase.

They use a risk-based approach to determine which receipts to verify. Unusually large purchases, round numbers, or receipts that look different from standard vendor formats often get flagged for verification. For cash purchases, they look for consistency in your overall financial picture. If you claim $20,000 in cash expenses but only withdrew $5,000 in cash all year, that discrepancy would be obvious. The IRS also has access to Bank Secrecy Act data, so they can see patterns of cash withdrawals that might indicate attempting to hide transactions.

Does it actually tell you which specific receipts might look suspicious to the IRS? My bookkeeping is kind of a mess and I'm worried about my deductions for my side business.

I'm skeptical about these tax tools. How exactly does it know what the IRS looks for? Seems like they're just selling peace of mind for something that might not actually help if you get audited.

It uses a risk scoring system to evaluate each deduction based on IRS audit patterns. It'll flag things like unusually large expenses in certain categories or expenses without proper documentation backing them up. The tool works by analyzing historical audit data and IRS guidelines to identify what typically triggers additional scrutiny. It's not just selling peace of mind - it provides specific guidance on what documentation you need to keep and how to properly categorize expenses to reduce audit risk.

How does this actually work? Does it just keep redialing until it gets through? I'm confused how a third-party service can get priority access to the IRS phone lines when the rest of us are stuck on hold forever.

Yeah right. Sounds like a scam to me. There's no way some random service can magically get through to the IRS faster than everyone else. The IRS phone system is notoriously understaffed - how could this possibly work?

It doesn't redial or have any special access. The system uses automated technology to navigate the IRS phone menus and then literally just waits on hold for you. When a human agent finally picks up, it calls your phone and connects you directly to that agent. It works because most people can't afford to sit on hold for 3+ hours during a workday. The service just handles the waiting part for you so you can go about your day. It doesn't get you through faster than anyone else - it just saves you from having to personally wait on hold.

Do you know if the IRS has a threshold for how much fraudulent deductions would trigger criminal charges vs. just paying the taxes owed plus penalties? Like if someone faked a $200 office supply receipt vs someone who created $50,000 in fake business expenses?

There's no published threshold I'm aware of, but they tend to focus criminal prosecution on cases involving substantial amounts of money, repeated patterns of fraud, or particularly egregious violations. For smaller amounts like your $200 example, they typically just disallow the deduction and impose financial penalties rather than pursuing criminal charges. However, even small fraud can trigger extended audits where they'll scrutinize everything much more carefully. The civil fraud penalty is 75% of the underpayment, which can add up quickly on top of the taxes owed, interest, and other penalties.

What happens when someone legitimately loses a receipt? I have some business purchases from last year but the receipt paper faded completely (those thermal receipts are terrible). I have the credit card statement showing the purchase amount and vendor, but no itemized receipt.

That's interesting but also a bit concerning for privacy. Do you know if they're using this AI to analyze everyone's returns or just ones they've already flagged for audit? I'm not trying to hide anything but the thought of algorithms scanning through all my financial data feels invasive.

From what my cousin explained, they run everyone's returns through automated systems that look for statistical anomalies and red flags - it's part of how they decide who to audit in the first place. The system compares your deductions to averages for your income level and profession, looking for outliers. It's not really a privacy issue since they already have all your tax data - they're just analyzing it more efficiently. The AI doesn't create new privacy concerns, it just makes them better at spotting unusual patterns in the data they already have. The good news is that if you're honest on your returns, the system is actually less likely to flag you for an unnecessary audit.

This is really helpful insight! I never thought about them potentially visiting the business location or asking to see actual equipment during an audit. That makes a lot of sense - you can't fake having a $5,000 computer sitting on your desk. Do you know if they typically give advance notice before showing up for a business visit, or can they just arrive unannounced? I'm thinking about organizing my home office better just in case, since I run my consulting business from there and have claimed some office equipment deductions.

Thank you for sharing your actual audit experience - this is incredibly valuable insight! I'm curious about the timeline aspect you mentioned. When they were cross-referencing your expenses with bank records, how far back did they go? I'm wondering if I should be keeping more detailed records of the business purpose for every single expense, even small ones. Also, did they accept digital copies of receipts or did they want physical originals? I've been moving toward a paperless system but now I'm second-guessing whether that's audit-safe.

@b32aa47aa7e1 Your experience really highlights how comprehensive IRS audits can be! I'm curious - during your audit, did they ask about the business relationship or context for your client meetings when you claimed meal deductions? I do a lot of networking events and informal client meetings over coffee, but I'm realizing I should probably be keeping better records of who I met with and what we discussed for business purposes. Also, when they questioned expenses that didn't have corresponding bank records, were you able to resolve those issues by providing additional documentation, or did they just disallow those deductions entirely? I'm trying to understand how flexible they are when there are genuine documentation gaps versus when they suspect something fishy.