Guide to IRS Information Document Request (IDR) 

What to Expect if You Get Form 4564 During an Audit

If the IRS wants information before or during an audit, the agency may send you Form 4564 (Information Document Request). If you receive an IDR, you should answer the request within the prescribed timeline, but you also need to be careful in framing your responses. The IRS may use this information to adjust your tax return, which could lead to a tax liability.

To that end, this article will first provide an overview of what an IDR is. We will also discuss how to respond to an IDR, the potential consequences for failing to respond to an IDR, and who can help you respond to such requests.

Key takeaways 

• Form 4564 – Information Document Request
• IDRs – used to request information during audits.
• How to respond – respond honestly and promptly.
• What if you don't respond – the auditor may adjust the return without your input or summon the info they want from you or third parties.
• Why get help – to ensure the requests are legitimate, to protect your rights, and to minimize the risk of facing an unwanted tax bill as much as possible.

What is an IDR Request?

An IDR, information document request, is the primary tool for the IRS to obtain information from a taxpayer under audit. The IRS will typically issue such information requests on Form 4564.

Revenue agents use IDRs to understand taxpayer positions better and develop factual records. In other words, auditors request information to back up the information reported on your tax return – they may request a wide variety of documents, which vary significantly based on the scope and type of audit. 

Generally, the IDR is not the first notice you receive. You'll receive an audit letter that kicks off the process, and then, the auditor will start asking for more details.

IDR Request – Analysis From a Former IRS Revenue Agent

Check out this video to see what a former IRS revenue agent has to say about IRS information document requests. Here, Herb Cantor explains what to expect, the types of documents the auditor is likely to request, and why you may get multiple IDRs during the course of an audit.

You can find Herb Cantor's profile, an IRS audit specialist, here. If you're under audit, hiring a former IRS employee can be extremely helpful – they know exactly how the IRS audit process works and how to best defend clients so that they don't face an unexpected tax liability. 

How to Respond to an IDR

You need to cooperate with the IRS, but on the other hand, you don't want to provide information that you're not legally required to provide. An audit attorney can be critical for helping you figure out the best way to respond. 

Whether you're working with a pro or navigating the audit process on your own, keep these tips in mind as you respond to Form 4564.

• Ask follow-up questions if you don't understand the requests – IDRs may ask for all kinds of very specific accounting records – for example, trial balances, balance sheets, or journal reports. If you're unsure of what anything means, ask the auditor or reach out to a tax professional.
• Provide honest responses – You should be honest and candid in your responses. Ideally, you want to maintain a positive working relationship with the IRS audit team to prevent an examination from escalating into something more.
• Respond on time – If you miss the deadline, the auditor may move forward without your response. That can lead to an unwanted tax liability and audit penalties. You can request an extension, but there's no guarantee that the IRS will approve your request.
• Draft responses carefully – Remember, the IRS may use your answers to adjust your tax return. For example, if you've claimed a deduction and they ask for proof, but they don't agree with the information you provide, they may remove the deduction from your return.
• Make sure the requested information is within the scope of the audit – You and your tax attorney/tax professional should vet whether the requests are protected by attorney-client privilege and/or whether they are relevant to the scope of the examination. If not, you may have the legal right to deny the request. However, this isn't a decision that you should make on your own. Additionally, the IRS faces certain limitations on what type of information they can request in an IDR. 

What to Expect After You Respond to an IDR

When you respond to an IDR, the auditor will review the information you provided. If it supports what you claimed on your tax return, they'll accept that part of the return as filed. If not, they'll either adjust the return or reach out to you for additional information. 

Often, especially for complex audits, the auditor may send several rounds of Form 4564. That's just because their initial questions often lead to follow-up audits. If it's a relatively simple audit, you may only get one or two IDRs.

Audit conclusion

Audits can conclude in a few different ways:

• No change – the auditor agrees with your return as filed; they don't make any changes, and you don't owe any additional tax. 
• Change and you agree – the auditor makes changes to your return; you agree with the changes, so you pay the tax liability in full or request payments.
• Change and you don't agree – the auditor makes changes to your return; you don't agree with the changes, so you file an appeal. 

Notice of Proposed Adjustment (NOPA)

After all appeals have been completed or you indicate that you agree with the audit, the IRS will send a Notice of Proposed Adjustment (Form 5701). At that point, you have additional appeal rights if you disagree – but to appeal, you must meet strict deadlines and follow certain procedures, so again, you should strongly consider working with a professional.

What Happens if You Don’t Respond to an IDR?

When the IRS issues an IDR, Form 4564 should have a date by which you need to respond. If you fail to respond to an IDR, the IRS has the statutory power to issue a summons to compel your testimony or the production of documents requested in the IDR. If you do not voluntarily comply with the summons, the Service can file a lawsuit in the applicable U.S. District Court to enforce the summons.

The IRS can also summon information from third parties. Say, for example, that you refuse to provide information on your sales report – the agency may summon those details from your payment processing company. They may also send summons to banks, clients, shareholders, or any else related to you or your business.

When can the IRS issue a summons?

The Service’s summons authority is not unlimited, as with other IRS powers. Generally, revenue agents need to abide by the following principles outlined by the U.S. Supreme Court in United States v. Powell, which have also been incorporated in the Service’s Internal Revenue Manuals:

• The investigation must have a legitimate purpose.
• The inquiry must be relevant to the purpose.
• The information sought must not already be within the Service's possession; and
• All administrative steps required by the Code have been followed.

Still, in light of the IRS’s summons authority, you should make every effort to respond to an IDR (unless you believe the information requested is protected by the attorney-client privilege or not relevant to the scope of the examination). 

Who Can Help with this Type of Request?

If you receive an IDR from the Service, you should work with a tax attorney or a tax practitioner well-versed in IRS examinations and procedures to help you respond to Form 4564.

Your tax professional can help you with an IDR in a few important respects. 

• Audit representation – First, IRS audits can be a very complex process. Your tax professional can explain and help guide you through an examination, including what to expect beyond the IDR requests.
• Careful responses – Perhaps more importantly, your tax advisor can help you get a sense of the focus and direction of the audit and appropriately frame your responses within this context, including any applicable defenses. 
• Objections – Your tax advisor can help you raise objections to any requests protected by the attorney-client privilege and/or not relevant to the scope of the examination.
• Minimizing tax liability – As already mentioned above, revenue agents can use the information from IDRs as the basis to adjust your tax return. Your tax pro works on your behalf to minimize that risk and keep your tax liability as low as possible.

The Takeaway

As described above, an IDR is an essential tool for the IRS during an audit. Revenue agents primarily use IDRs to develop an audited taxpayer’s factual record and, if applicable, to build a case for issuing a NOPA. Additionally, while a taxpayer is not required to respond to an IDR initially, the Service has the authority to issue a summons to force you to comply with its request potentially.

FAQs about IDRS

Why does the IRS have the right to issue IDRs?

Internal Revenue Code Section 7601 gives the IRS the legal right to request information from taxpayers that relates to their tax situations. If you feel like a request is out of scope, consult with a tax professional.

Why did I receive Form 4564 IDR?

You received this form because the IRS wants information to back up what was reported on your return. That's because you were selected for an audit due to discrepancies on your return, red flags, or just randomly.

What's on Form 4564?

The form lists the taxpayer, the subject, and the dates of any previous requests. Then, it has a large blank space for the auditor to list the documents they want. Finally, the bottom of the form notes the due date, the name and title of the requester, their IRS employee number, office location, and phone number.

Which type of documents does the IDR request?

The IDR may request anything related to the audit – for example, receipts to back up expenses, balance sheets, sales records, corporate meeting minutes, mileage logs, etc.

Should I provide the documents in person or mail them?

The bottom of the form notes if you should bring the documents to the next appointment or mail them to the IRS. Ask your auditor if you're unsure.

Get Help With Audit Requests

You should work closely with a tax attorney or practitioner experienced in IRS audit matters to help you respond to an IDR within the prescribed time frame. A tax attorney or practitioner can demystify the examination process for you and help you develop strategic responses to the IDR. At TaxCure, you can find local tax professionals that can help with IDR requests and tax audits. You can start your search for a tax audit professional here.