Quick overview
An IRS request for third‑party records can arrive as a letter, a notice accompanying an audit, or as the result of a third‑party summons. These requests are typically looking for documentation that corroborates items on a return—payments, receipts, contracts, or bank records—that you or a third party produced during the tax year under review. Responding promptly, accurately, and in a clear format is the fastest way to resolve the inquiry.
Authoritative guidance: the IRS explains taxpayer notice types and how to respond on its “Understanding Your IRS Notice or Letter” page and provides recordkeeping guidance for businesses and individuals on its recordkeeping pages (IRS, 2025).
I have helped clients through hundreds of these requests over 15+ years. Below is a practical, tested process you can follow, plus legal rights, formatting tips, and follow‑up best practices.
Step‑by‑step: Practical response process
- Read the notice carefully and identify the exact request
- Locate the notice or letter number and read all enclosed instructions. The IRS letter typically states what records are requested, the date range, and the deadline for response. Keep the original notice and note the response deadline in your calendar.
- Identify whether the request is directly to you or to a third party
- If the IRS requested records from a third party (bank, employer, vendor) you might get a copy of that request or a related notice. If you receive a direct request, treat it as binding and respond. If the IRS issued a summons to a third party, that party usually must comply, but you should still gather and provide copies of materials you have.
- Pause and consider privilege or confidentiality issues
- Before turning over records that include third‑party personal data, internal legal advice, or privileged communications, consult your tax attorney or CPA. There are narrow circumstances where privilege or privacy law limits disclosure (e.g., attorney‑client communications), and you should assert those rights with proper legal support if applicable.
- Gather the requested records systematically
- Start with your own records: accounting software reports, bank statements, copies of checks, invoices, contracts, and canceled checks. If you don’t have a document a third party holds, contact that third party immediately and request a certified or bank‑issued copy.
- Organize the response and create an index
- Produce a cover letter that lists each document you are submitting and maps it to the item in the IRS request (e.g., “Item 3 — Bank statements Jan–Dec 2022: Docs 1–12”). In my practice, including a one‑page index reduces follow‑up questions by more than half.
- Format documents for clarity and security
- Combine related pages into single PDF files, name files clearly (e.g., “SmithInvoice2023‑03_Invoice123.pdf”), and number pages. If sending paper, use tabs or a simple numbered workbook. If sending digital files, follow any format requirements stated on the notice. Keep original signed documents; send certified or notarized copies only when requested.
- Use the correct submission method
- Follow the notice instructions for where and how to send records. Many correspondence audits accept mail or fax; some allow secure portals. Always keep proof of delivery (USPS Certified Mail Return Receipt, FedEx tracking, or an IRS e‑delivery confirmation). If you have a secure portal option, use it and retain the portal confirmation email.
- Communicate with the IRS if you need more time
- If the deadline is impossible to meet, request a reasonable extension in writing before the deadline. Explain the reason and propose a firm date. Extensions are discretionary but often granted when justified. I typically advise clients to ask for 15–30 days, depending on the complexity.
- Keep a detailed log of what you sent and when
- Track dates, file names, the number of pages, and the method of delivery. Save all communications with the IRS and third parties. This log is often invaluable if the IRS later says they never received your submission.
- Follow up and confirm receipt
- Call the IRS representative listed on the notice after a reasonable interval (usually 7–10 business days for mailed packages) to confirm receipt. If you have a representative (CPA, EA, or attorney), include their contact information and Form 2848 (Power of Attorney) or a written authorization so they can follow up on your behalf.
Timelines and legal background
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Deadlines vary by notice: correspondence audits commonly require a response within 30 days (some letters list 20 or 10 days). If the IRS issued a third‑party summons under Internal Revenue Code Section 7602, a third party generally must comply unless they have a valid legal basis to object. Always check the notice for the specific date, and don’t assume a uniform 10–30 day window applies to every situation.
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The IRS has statutory authority to issue summonses and to request documents in an audit. Knowing that they can seek records directly from third parties underscores why maintaining good records and quick communication with vendors and banks is essential.
Authoritative sources: see IRS pages on recordkeeping and notice response procedures (IRS, 2025).
Common scenarios and what to do
- Missing bank statements: Request digital copies from your bank and include an email or statement from the bank confirming the copy request if possible.
- Contractor/vendor disputes: Provide contracts, invoices, proof of payment, and a short explanatory memorandum if dates or amounts are unclear.
- Third‑party reports (Form 1099s or W‑2s): Cross‑check the IRS’s reported amounts with your records and provide reconciliations showing differences and supporting documentation.
Real‑world tip: For a small business client, we prepared a reconciliation spreadsheet that matched vendor 1099‑MISC amounts to bank payments and invoices; submitting that plus source docs closed the matter within one round of correspondence.
Document checklist (starter)
- Cover letter/index mapping docs to the IRS request
- Copies of bank statements and canceled checks
- Copies of invoices and paid receipts
- Contracts, engagement letters, or vendor agreements
- Reconciliations and summary schedules
- Proof of delivery (certified mail receipt or tracking numbers)
Privacy, privilege, and third‑party communication
You do not automatically waive privilege by producing documents, but disclosing privileged communications to third parties can erode protection. If records include sensitive third‑party personal data (SSNs, bank account numbers), redact nonessential personal identifiers where possible and provide unredacted records only under secure conditions or by request.
If a third party claims they will not release records without a subpoena or court order, consult a tax attorney promptly. In many cases, the IRS can compel production with a lawfully issued summons.
How a tax professional can help
- Interpret the notice and prioritize requests
- Communicate with third parties to obtain records quickly
- Prepare a clean, indexed submission and cover letter
- Enter a formal extension request or represent you in appeals if necessary
In my experience, involving a tax professional early reduces back‑and‑forth and shortens resolution time. If you authorize representation, file Form 2848 so the IRS will deal directly with your representative (IRS guidance).
Follow‑up and what to expect after submission
Once the IRS receives complete documentation, they will review and either close the inquiry, request clarifications, or propose adjustments. Keep monitoring the mail and your tax account online. If adjustments are proposed, you can respond with additional documents or a written explanation.
If the IRS claims non‑receipt despite proof of mailing, use your delivery proof and request a transmittal confirmation from the IRS office listed on the notice.
Penalties and risks of non‑response
Failure to provide requested documents can lead to penalties, sustained tax adjustments, or enforcement actions. If you legitimately cannot obtain a document, explain the efforts you made, provide substitute evidence, and propose alternatives. Honest, documented attempts to comply usually mitigate penalties.
Additional resources and internal guides
- For tips on organizing a complete audit package, see our guide: How to Organize Supporting Documentation for a Tax Audit.
- For long‑term recordkeeping best practices to avoid future requests, see: Best Practices for Recordkeeping to Survive an Audit.
- If you received a formal audit letter and need a quick checklist, our resource How to handle an IRS audit letter? provides practical next steps.
Authoritative sources: IRS recordkeeping and notice pages (see IRS.gov – “Understanding Your IRS Notice or Letter” and the IRS recordkeeping guidance) and the Taxpayer Bill of Rights (IRS, 2025).
Final professional tips (from practice)
- Don’t over‑send: provide requested items and a clear index; extra unrelated documents create confusion.
- Timestamp everything: note when you contacted third parties and when documents were mailed or uploaded.
- Preserve originals: keep original signed documents and provide clear copies unless originals are specifically requested.
- Build a single audit folder (digital + physical) for each tax year so future requests are faster to fulfill.
Disclaimer
This article is educational and does not constitute legal or tax advice for your specific situation. For tailored advice, consult a licensed CPA, EA, or tax attorney. The guidance above reflects professional practice and general IRS procedures current as of 2025, but rules and timelines may change. Always verify details on IRS.gov.
References
- IRS, “Understanding Your IRS Notice or Letter” (https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter)
- IRS, “Recordkeeping” (https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping)
- IRS, “Taxpayer Bill of Rights” (https://www.irs.gov/taxpayer-bill-of-rights)