My client is facing a paper audit. He paid medical expenses by writing checks from a Charles Schwab account. He has the bills and the Charles Schwab statements showing the payments. He does not have copies of the checks. To get them he will need to ask Schwab to print them out and mail to him. There are a lot of checks. I am wondering if anyone who has had this issue was successful just producing the bills and bank statements.
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I am in the midst of a paper audit now on a business client. The auditor requested only the bank statements as proof.
Auditor has been supplied with all of the bills, and then I made a spreadsheet with bill, date of payment and check # and amount, and notated on the Bank Statements.
Will know more next week, as auditor is reviewing now.
Sandy -
Generally speaking most auditors will accept a bank statement that identified the payee and the amount matches the paid invoice. However for larger amounts they may request proof of payment. I advise my clients to be prepared to obtain copies of checks cleared when they receive an audit notice questioning expenses. Most of them use business accounts that have them available from the beginning of the tax year with 24 hour notice if not already available online.
I too advise the bookkeeper to make a list with Bill/Invoice #, date, amount, Check # paid etc. so that it is summarized. Most auditors will pick a few sample entries and match it and ok the rest if it looks reasonable.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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Getting check copies
It's been my experience that most banks (I cannot speak for Schwab) now make it fairly easy to obtain copies of checks via online banking.
For my "main" personal bank account I can, with a few mouse clicks, view/print copies of any check written or deposited within the past seven years. That should cover most needs. FWIW, I write only a couple of checks a year. . .but that is a different topic.
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