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Your Bank Records

Tax Audit Report #1

What the IRS Does With Your Bank Records: Tax Audit Report #1
Bank records are what the IRS calls third party source documents. IRS audits almost always ask to see your bank records. The bank records presumably support your financial records. They provide an audit trail for transactions sometimes undisclosed in your books and records.
The IRS has various reasons why it wants to see your bank records during the course of an IRS audit. An examination of your bank records is necessary to determine:

How far will a bank record review go? In other words, how deep will the information river become? The depth of the bank account analysis depends on the circumstances of each examination. The analysis is more important in an examination where the records are inadequate, nonexistent or possibly falsified. If you have the unfortunate luck of falling in one of these categories, you can be sure that the IRS auditor will want to pay careful attention to your bank records during the course of the IRS audit. Many people fall prey to the notion that income can be hidden, until they awake to see what the auditor has found in your bank statements and put into his tax audit report.

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