Being audited is stressful—and receiving IRS Form 4564 can make the situation feel even worse. Form 4564, Information Document Request, includes an extensive list of documentation that the IRS needs from the taxpayer.

A prompt and accurate response is necessary to avoid further issues with the IRS and to ensure that they get a full understanding of your tax compliance. To get help now, contact us at Seattle Legal Services.

  • Form 4564 – IRS requests for documents during tax audits.
  • Type of documents – financial statements or records to prove compliance with tax laws.
  • Extensions – may be available on request but are rare.
  • How to respond – Gather requested documents and get ready to give them to the IRS.
  • When to seek help – if you’re confused, overwhelmed, or unsure of how to respond.

What Is IRS Form 4564?

During the course of an audit, the IRS will go to great lengths to uncover discrepancies in your tax returns and other tax documents. They send Form 4564 to formally request specific information and documentation that will help them during an audit.

Often, this form requests financial statements or receipts, but the IRS may also request that you complete Form 4564 if they are investigating specific issues. For example, the IRS may use this form to determine whether or not a 501(c)(3) nonprofit has taken a position of supporting or opposing a candidate in an election or whether or not a car dealership has filed Form 8300 to report cash transactions.

Information gathering is, per the IRS, the most time-consuming part of an examination or audit, and the information the agency may request is extensive. Under IRC Section 7602, the IRS has the legal authority to examine any books, records, papers, or data that may be relevant to the tax return or determination at issue.

How the IRS Uses Information From This Form

The IRS uses the information from Form 4564 in a variety of ways. First, they may already have the information they need to assess penalties against you or even pursue criminal charges. However, the documentation you provide with this form may confirm the information they already know to be true.

They may also be investigating specific transactions that do not fit a pattern or that appear to be fraudulent. Documentation can either prove or disprove their suspicions.

If the IRS is conducting an audit, Form 4564 may be your chance to prove that your tax forms are accurate and complete. For example, if the IRS believes that you wrongly claimed a deduction or credit, the records you provide can be used to clear you of any wrongdoing. Whether the information you provide clears your name or indicts you, the IRS is simply looking for the truth.

Why You Might Receive an Information Document Request

A number of errors or misunderstandings may lead the IRS to send you Form 4564.

Inconsistencies in Tax Returns

The IRS uses automated procedures to track discrepancies and patterns in tax returns. When a tax return falls significantly outside of normal patterns for their area or industry, the IRS may look deeper and decide to audit the taxpayer in question.

For example, if you submitted a tax return with only a W-2 job as your source of income but someone submitted a 1099 for freelance work you did, that may indicate to the IRS that you are hiding a source of income. If the credits or deductions you have claimed do not match other aspects of your tax return, that may also trigger a Form 4564 request.

Large Cash Transactions

One common reason a business, whether in the business of selling goods or services, may receive Form 4564 is if the IRS believes that they have not been reporting cash transactions in excess of $10,000.

In order to prevent money laundering, the IRS requires that businesses report $10,000 in cash spent on one single transaction or across multiple related transactions on Form 8300. If a business fails to do so, they may receive Letter 2277 with Form 4564 attached. The letter says that you need to meet with the IRS for a Form 8300 exam, and the 4564 form outlines the documents you need to bring.

Reported Depreciated Assets

If you’ve claimed depreciation on business assets or real estate and it is automatically flagged by the IRS, they may send Form 4564 for further proof that the information included on your tax return is accurate.

Large Charitable Contributions

Taxpayers who itemize their deductions and make tax-deductible contributions may receive Form 4564 if the IRS needs proof of the contributions. This is a common way for people to claim deductions they have not actually earned, so it’s not uncommon for the IRS to request verification.

The Right Way to Respond to an Information Document Request

The IRS takes these requests very seriously, so you must handle them appropriately to avoid unintentionally escalating your current tax situation. Taking the following steps can help you collaborate with the IRS and avoid more aggressive enforcement:

  • Review the IDR: The IRS is very thorough in its Information Document Requests, outlining what they are investigating, why they are investigating it, and what they are asking for from you. Before you take any further action, you want to know exactly what you’re up against.
  • Collect the requested documentation: Use the list included in your Form 4564 to gather the documents and forms that the IRS is asking for. We recommend starting this process as soon as possible after receiving the letter so you have time to reach out to any financial institutions or colleagues to get the necessary documentation.
  • Submit the documentation by the deadline: After you have collected the requested documents and verified that you are submitting everything the IRS is asking for, send it to the IRS before the deadline. If you’re under investigation, you want to cooperate with the IRS as much as possible.
  • Communicate with the IRS: Maintain an open line of communication with the IRS agent handling your case. If they request any further documentation or need clarification regarding any of your documentation, respond promptly, completely, and concisely.
  • Consider contacting a tax attorney: If you become overwhelmed at any point, it may be time to talk to the team at Seattle Legal Services. Knowing that the IRS is examining your tax compliance is stressful, and there’s nothing wrong with needing professional assistance.

What Happens If You Ignore or Mishandle an IDR

The IRS provides extensive guidance to its agents on how to handle taxpayers who do not comply with information requests or who engage in delay tactics. If you believe that the IRS’s requests are too general, unfair, or irrelevant, this is not the time to argue with an IRS agent;

Instead, you should bring your concerns to a tax attorney, find out if they are valid, and determine your next steps from there. It’s important to note that, while many people believe they can withhold documentation because it is not relevant to the topic at hand, this rarely works in IRS cases. The IRS has broad authority to collect information, whether or not they have substantial proof of a taxpayer’s wrongdoing.

If a taxpayer does not provide the requested information or tells the IRS outright that they will not provide the information, the IRS will move forward with a formal summons. They will also go this route if documentation is not provided by the deadline, as the IRS advises its agents to only grant extensions when special circumstances apply.

What Form 4564 Requests

The information requested in Form 4564 depends largely on the issues being investigated by the IRS. Consider the example given above, regarding a nonprofit supporting or opposing a candidate via an advertisement, in direct violation of the IRC.

In that type of case, the IRS may use Form 4564 to request details about the accounting of expenditures related to the advertisement, written statements to questions regarding the legality of the advertisement, procedures, and protocols regarding campaign intervention, and information regarding who authorized the ad.

In contrast, if the IRS is examining your deductions for work-related expenses, they may request travel documents verifying travel, receipts indicating how each expense was business-related, and verification from your employer that the expenses in question were work-related.

If the IRS wants to verify a sizable charitable donation deduction, they may request proof of completed transactions, receipts from the charitable organization, and proof that the money went to an approved organization.

Generally, the IRS requests only the specific information it needs to aid in the examination or investigation. The agency recognizes the cost, both in terms of money and time, of collecting substantial documentation.

What to Do If You Do Not Have the Necessary Documentation

You should do everything in your power to get the documents and forms requested by the IRS. Any failure to produce documents or ask the IRS for leniency regarding specific documentation may be seen as a delay tactic. The IRS will expect you to take reasonable steps to get the documents listed in Form 4564, even if that means going through years of financial records, contacting your financial institution, or going through other financial documentation to find the records in question.

If you genuinely think you cannot find the documentation requested, discuss your concerns with a tax attorney, including everything you’ve done to attempt to comply with the IRS’s request.

Frequently Asked Questions

What types of documents might the IRS request in an IDR?

The IRS has the legal right to ask for a wide range of documents, as long as they can demonstrate that those documents will assist their investigation or examination. Potential documents they may request include pay stubs, bank account statements, itemized receipts, communication regarding a specific transaction, and business procedures regarding a specific topic.

How long do I have to respond to Form 4564?

Taxpayers usually have a matter of weeks to respond to Form 4564. The due date is based on the volume of documents requested and how long the IRS agent believes you need to gather them.

Can I request an extension if I need more time to gather the requested information?

You can request an extension, but the IRS only grants extensions under special circumstances.

What should I do if I disagree with the information requested in an IDR?

You can dispute the information being requested but know that the IRS has broad legal authority in this area. Agents often view these requests as delay tactics, so you may want to discuss your thoughts with a tax attorney before taking your concerns to the IRS.

How can a tax professional assist in responding to an IDR?

A tax professional can explain why the IRS is asking for specific documents, help you gather and organize them, explain potential outcomes of your current tax situation, and navigate communication with the IRS on your behalf.

Best Practices for Staying Ahead of Audits and Other Tax Issues

Unfortunately, many people only realize their financial and tax records are in disarray when they receive Form 4564 for the first time. While it can be a painful lesson to learn, this can also help you improve your record-keeping and set up your document organization in a way that allows you to respond to IRS requests quickly.

Look into different record-keeping systems that allow you to maintain your financial records, comply with IRS regulations, and find forms easily. You may want to set up both physical document storage and electronic document storage; this ensures that even if one version of a document is destroyed, you have another copy available.

Consider working with a CPA or tax attorney on an ongoing basis to keep your individual or business taxes in order and compliant with all IRS regulations. For many people, Form 4564 is their sign that their knowledge of tax requirements isn’t quite where they’d like it to be, giving them a push to work with an attorney or CPA throughout the year.

If you’ve received Form 4564 from the IRS, it’s important to address it quickly, comply with their requests, and work with the IRS for a favorable outcome. Working with a qualified tax professional at Seattle Legal Services can minimize your anxiety and empower you to address your tax concerns head-on. Call us or schedule a consultation online now.