If you’re in the middle of an IRS audit and realize you’re missing receipts for some of the expenses they’re reviewing, you’re not alone — and you’re not necessarily doomed.

Here’s the deal: The IRS expects you to substantiate every deduction you claim on your return. If you can’t provide documentation — like receipts, invoices, or logs — those deductions can be disallowed, potentially increasing your tax liability, plus interest and penalties.

But there’s an important (and often misunderstood) exception that may help:
The Cohan Rule.

🧾 What is the Cohan Rule?
Named after Broadway legend George M. Cohan, the Cohan Rule stems from a 1930 court case where Cohan couldn’t produce exact records for his business expenses. The court ruled that if a taxpayer can prove an expense likely occurred, but can’t establish the exact amount, the IRS (or more likely, the Tax Court) may allow a reasonable estimate.

This rule can be a lifesaver when records are incomplete, but it’s not a free pass. You still need credible evidence — such as bank statements, calendar entries, emails, or travel logs — to show that the expense was real and had a legitimate business purpose.

❌ Important Caveat:
The Cohan Rule does NOT apply to everything. For certain deductions like meals, travel, entertainment, and vehicle use, IRS Code §274 requires strict substantiation. No receipts = no deduction — no matter how convincing your estimate.

✅ What You Can Do Without Receipts:

• Reconstruct missing records by contacting vendors or pulling bank/credit card statements.
• Gather supporting evidence: calendars, emails, appointment logs, etc.
• Provide a detailed, good-faith estimate — especially if expenses were recurring or predictable.
• Include written statements or affidavits where appropriate.
• Consider working with a CPA or tax professional to help present your case clearly.

💡 Best Practice Going Forward:
Always digitize your receipts, store them by category, and back everything up — especially for any expense tied to tax deductions. Tools like QuickBooks, Expensify, or even a dedicated receipts folder in your phone can make this easy.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.