IRS PERMITS FAXES AND E-MAIL AS SUBSTANTIATION

Moving into the electronic age, more and more proof of transactions never reaches paper form. The good news is that IRS recently ruled to recognize this new paperless environment in document substantiation.

An example of these paperless transactions is electronic ticketing now offered by some airlines. A travel agent electronically books the flight, and prepares an itinerary which is then transmitted to the customer via e-mail or fax. The customer never receives a paper ticket or a receipt, and submits a copy of the fax or the e-mail message with an expense report to obtain reimbursement.

In a recent letter ruling, the IRS analyzes this transaction and opined that the copy of the itinerary is sufficient substantiation to meet the requirements of IRC section 274, which requires documentary evidence of travel and entertainment expenses.

Source: LTR 9805007.