Does the IRS Accept Scanned Documents?
I’ve spent a good bit of time digitizing paperwork over the past couple of years. My primary weapon in this battle has been a sheet-fed scanner, though I sometimes snap pics with my iPhone and turn them into “scanned” pdfs using JotNot.
While it feels to good to be working toward a paperless financial world, however, the issue of whether or not these scanned documents would be acceptable has always bothered me. Having a store refuse a return because I didn’t have the original receipt would be annoying; having the IRS reject my documents could be a disaster.
So… Does the IRS actually accept scanned documents?
As it turns out, yes… They’ve actually accepted electronic documentation since at least 1997, when they issued IRS Revenue Procedure 97-22, which states:
This revenue procedure provides guidance to taxpayers that maintain books and records by using an electronic storage system that either images their hardcopy (paper) books and records, or transfers their computerized books and records, to an electronic storage media, such as an optical disk. Records maintained in an electronic storage system that complies with the requirements of this revenue procedure will constitute records within the meaning of § 6001 of the Internal Revenue Code.
Section 6001 of the IRC essentially requires you to keep and make available sufficient records to show whether or not you’re liable for taxes. It further states that such records must be retained “so long as the contents thereof may become material in the administration of any internal revenue law.”
The general requirements of the “electronic storage system” referenced in the quote above are that it:
…must ensure an accurate and complete transfer of the hardcopy or computerized books and records to an electronic storage media. The electronic storage system must also index, store, preserve, retrieve, and reproduce the electronically stored books and records.
There are some additional requirements, but the essence is that you can digitize your documents as long as they’re clearly legible (both on-screen and in hard copy) and easily retrievable. Just be sure to keep your data safe. In our case, we maintain both local and online backups of our data, so our digital documents are probably safer than hard copies.
And don’t forget to secure your files to protect them from prying eyes. The last thing you need is for your cache of sensitive data to fall into the wrong hands.
Of course, I’m not a tax pro, so I suggest that you check out the details and decide for yourself. The relevant guidelines can be found in this document from the IRS. The pertinent section (Rev. Proc. 97-22) starts on page nine.
Published on January 27th, 2012 - 9 Comments
Filed under: Productivity, Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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9 Responses to “Does the IRS Accept Scanned Documents?”
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January 27th, 2012 at 2:37 pm
I was audited for my 2009 return. The IRS explicitly instructed me to supply photocopies of all of my documentation, and for me to keep all the original paperwork.
January 27th, 2012 at 7:30 pm
Thanks for pointing to the relevant IRS codes. Digital copies are indeed acceptable to the IRS.
January 27th, 2012 at 11:27 pm
Thanks for this information. I’ve always wondered about the law on digitized files as I’ve been wanting to scan my old documents too. It’s a great way to save space and money on storage.
January 27th, 2012 at 11:43 pm
Great, thanks for letting me know. I’ll make sure to keep the ScanSnap purring this year!
January 28th, 2012 at 12:36 am
I bet after reading this a bunch of tax payers just took a huge sigh of relief! Dealing with the IRS can be nerve-racking and intimidating. Continue working towards being paperless, it saves time and keeps things organized.
January 28th, 2012 at 10:37 am
My tax paperwork is stored in original paper form. Paper can’t get accidentally deleted, safe from hackers, and is guaranteed to be readable in the future.
January 28th, 2012 at 11:29 am
@BG: Does this guarantee protect against fire, flood and burglary? Seems to me both methods carry risk but having multiple backups can prevent against all of these issues.
January 28th, 2012 at 9:21 pm
ngetchell) If you think those are significant risks, then store it in a physical (fireproof) safe in your house or a bank safety deposit box.
Nickel trusts online backups of his financial records – absolutely no way I would trust that sort setup (it is an additional attack vector for hackers).
If you have that type of data on your PC, then not only the files are available, but (unencrypted) copies are probably in the Windows indexer and Google Desktop databases too. There are malware ’sniffers’ that specifically search for files that contain numbers in the format of SS numbers, credit card numbers, etc. You get that malware on your box, then you just handed a hacker everything they needed to pull off identity theft.
Digital security is very hard to do correctly. I’d rather take my chances with paper (and potential IRS audit after a fire), than spending years trying to clean up after identify theft.
January 30th, 2012 at 5:07 am
Glad to see that a process that can require a lot of paperwork is able to take advantage of our technology today to speed things up and use less paper at the same time!