Why the IRS asks for bank records

The IRS commonly requests bank records to verify reported income, substantiate deductions, trace transfers between accounts, or investigate suspected underreporting. Requests can come as part of an audit, an automated review, or through an administrative summons to a bank (see IRS guidance on third‑party information at https://www.irs.gov/individuals/information-from-your-bank).

How requests are typically delivered and the deadline

  • The IRS will send a written notice that explains what documents are required and a deadline—often about 30 days, but you must check the specific notice. If a bank receives a summons, you may be notified that the records were requested.
  • Do not ignore the notice. Failure to respond can result in additional enforcement steps, penalties, or a court‑ordered summons.

Step‑by‑step: a practical response plan

  1. Read the notice carefully. Note the exact date range, account numbers, and types of documents requested.
  2. Confirm scope in writing. If the request is vague or seems overly broad, respond in writing asking the IRS to clarify or narrow the request. Retain a copy. (Taxpayers have a right to be informed—Taxpayer Bill of Rights 1.)
  3. Ask for an extension if you need more time. Request an extension in writing and explain why. The IRS often grants reasonable extensions when justified.
  4. Gather only the requested items. Typical documents: statements, cancelled checks, deposit slips, reconciliation reports, merchant receipts, and third‑party correspondence. Avoid volunteering unrelated records.
  5. Organize and label your response. Provide a short cover letter listing each document and why it relates to the notice. A clear chronology or summary helps the reviewer and shortens the process. (In my practice, a one‑page cover summary often prevents follow‑up questions.)
  6. Protect sensitive data. Provide redacted copies of unrelated account numbers or Social Security numbers, but keep a complete copy for your records. Ask if redactions are acceptable before sending, and avoid sending originals.
  7. Send securely and get proof of delivery. Use certified mail or an encrypted transmission; keep delivery receipts and a complete copy of everything you sent.
  8. Consider representation. If the request is complex or escalation is threatened, retain a CPA, enrolled agent, or tax attorney and file Form 2848 (Power of Attorney) if you want them to communicate directly with the IRS.

Rights and protections to remember

  • Right to be informed and to representation (Taxpayer Bill of Rights) — you can ask questions and have an authorized representative. (See https://www.irs.gov/taxpayer-bill-of-rights.)
  • Right to privacy/confidentiality — tax information is generally protected under IRC confidentiality rules; the IRS has strict rules about sharing taxpayer info.
  • Right to appeal an IRS administrative action. If you disagree with how the request is handled, you have appeal rights.

Common mistakes taxpayers make

  • Over‑providing: sending extra documents that weren’t requested can create additional issues.
  • Missing the deadline or failing to ask for an extension in writing.
  • Sending originals instead of copies.
  • Failing to attach a clear cover letter or index that explains how items relate to the notice.

Quick examples from practice

  • Mixed accounts: a self‑employed client whose personal and business deposits mixed together avoided over‑disclosure by providing bank statements plus a short reconciliation linking deposits to invoices. That clarity resolved the request without additional follow‑up.
  • Large unexplained transfers: when a bank showed a large transfer, providing supporting invoices and a deposit reconciliation clarified the purpose and prevented proposed adjustments.

Frequently asked questions

  • Do I have to respond? Yes. Ignoring an IRS request risks penalties and further enforcement, including summonses. (IRS: Information from Your Bank.)
  • Can I redact account numbers or other private data? You may redact where appropriate, but keep a complete unredacted copy. Confirm acceptable redactions with the IRS or your representative.

Helpful resources and next steps

Professional disclaimer

This article is educational and does not substitute for personalized tax advice. If the request raises legal or significant monetary exposure, consult a qualified tax professional or attorney familiar with IRS procedures.

Authoritative sources

(Last reviewed 2025.)