Opening summary

A good document index turns a stressful office audit into a controlled, efficient process. It shows the examiner where to find each piece of evidence, minimizes back-and-forth, and helps protect deductions and credits. Below are practical steps, a sample index layout, common pitfalls, and links to related FinHelp resources and IRS guidance.

Step-by-step checklist

  1. Start with the IRS notice
  • Read the audit letter carefully and note the tax years and items under review. Focus your index on the specific items the IRS listed.
  1. Create a cover sheet
  • Include taxpayer name, taxpayer ID (last four digits), tax years under review, contact person, phone/email, and whether a representative (POA) will handle the audit.
  1. Use a spreadsheet as your index (recommended columns)
  • Item number
  • Category (e.g., Income — 1099-NEC; Deductions — Meals)
  • Document title (e.g., 2023 1099-NEC — Client X)
  • Date or tax year
  • Page count
  • Physical location (binder/tab/page) or digital path (folder/filename)
  • Notes (purpose, cross-reference)
  1. Organize documents to match the index order
  • Group documents by category and then chronologically. Number pages and use tabs (physical) or bookmarked PDFs (digital).
  • Label files with a consistent naming scheme, e.g., “2023ExpenseMealsRestaurantName_001.pdf.” This speeds search and reference.
  1. Provide a table of contents and tabbed sections
  • Supply the examiner with the index first, then the binder or a single PDF (bookmarked). For multi-year audits, separate sections by year.
  1. Highlight key substantiation
  • For large or unusual items, include a short one-paragraph explanation and any supporting contracts, invoices, or bank traces that tie the item to your return.
  1. Prepare redaction and privacy controls
  • Redact irrelevant personal data (SSNs of third parties) if not needed. Keep the taxpayer’s SSN visible for examiner use only when required.
  1. Maintain originals and provide copies
  • Keep originals organized but provide clean copies to the IRS. Note where originals are stored in case the examiner requests to see them.
  1. Track document delivery
  • When you hand over documents, include a delivery receipt or email that lists what you provided. Keep a dated copy for your records.

Sample index entry (spreadsheet row)

  • Item #: 12
  • Category: Business Expense — Contractor Payments
  • Document: 2023 Form 1099-NEC — Contractor A
  • Date: 2023
  • Pages: 2
  • Location: Binder A — Tab 3, pp. 45–46
  • Notes: Bank transfer on 4/15/23 matches invoice #452

Digital vs. physical—best practices

  • If sending digital files, create a single searchable PDF with bookmarks that match the index. Use OCR so the examiner can search text.
  • For physical binders, use durable tabs, clear labels, and numbered pages. Consider including a USB with the indexed PDF as a convenience.

Record retention guidance

  • Keep records for at least 3 years in most situations, but certain circumstances may require 6–7 years (for example, substantial underreporting or worthless securities). For official guidance, see the IRS recordkeeping page (IRS, Recordkeeping).

Professional tips I use with clients

  • Deliver the index first: When you meet the examiner, hand over the index and a short cover letter that summarizes what you are providing. That frames the review.
  • Be selective: Provide documents requested. Don’t volunteer extra years or unrelated files unless they help clarify the issue.
  • Use cross-references: If a single invoice supports multiple entries, note all related item numbers in the notes field.
  • Prepare a one-page summary for large cases: A one-page reconciliation (reported amount vs. source documents) saves time.

Common mistakes to avoid

  • Sending unsearchable scans or loose receipts without context.
  • Failing to label or paginate documents; examiners may set aside unlabeled stacks.
  • Overloading the examiner with irrelevant records. Stick to the scope of the notice.

When to get professional help

If the audit involves complex transactions, significant adjustments, or potential penalties, engage a CPA, enrolled agent, or tax attorney. If you appoint a representative, file the appropriate power-of-attorney form so the IRS communicates directly with them.

Related resources

  • For organizing an audit binder, see Preparing an Audit Binder: Documents to Organize Before an IRS Audit (FinHelp).
  • For building a full response packet and templates, see Building an Effective Audit Response Packet: Templates and Organization Tips (FinHelp).
  • If your audit started as correspondence, this guide may help: Preparing for an IRS Correspondence Audit: What Documentation Helps (FinHelp).

Authoritative sources

Disclaimer

This article is educational and does not constitute tax advice. For guidance tailored to your situation, consult a licensed tax professional or attorney.