Ever spent 15 minutes digging for a receipt to submit for reimbursement? Then you know the annoyance of manual receipt management.
Here's the thing: receipts matter for compliance, but not every transaction needs the same level of documentation. The IRS is actually more flexible than most people think—especially when it comes to smaller purchases. After processing over a trillion dollars in transactions, we've seen what actually trips up finance teams and what the IRS genuinely cares about.
Here's what you need to know about IRS receipt requirements, and how to stop the receipt-chasing madness for good.
BILL’s auto-generated receipts provide documentation for expenses under $75. Depending on the type of expense, additional documentation may be required by the IRS. The burden of proof is on the taxpayer to prove deductibility of their expenses.
What are IRS receipt requirements?
IRS require businesses to document employee spending and prove those expenses are legitimate business costs. This is usually through itemized receipts for the spending. The IRS wants to see that every deduction is real, reasonable, and tied to actual business activity. But here's what most finance teams don't realize: the IRS is more flexible than you think, especially for smaller purchases.
The key is maintaining records that clearly show what was purchased, when, how much it cost, and why it's a business expense. Get those four things right, and you're already ahead of most of the chaos that happens at month-end.
When are receipts mandatory vs optional?
Not every transaction needs the same level of paper trail. The IRS draws a clear line at $75—and understanding that threshold can save your team hundreds of hours each year.
The $75 receipt rule
For purchases under $75, the IRS doesn't always require a traditional receipt. What matters is reasonable documentation that ties the expense to business activity. That could be a credit card statement, a digital record, or even a written log—as long as it's clear and consistent.
For purchases above $75 (and certain expenses like for lodging and gifts), the rules tighten. You need an itemized receipt showing exactly what was purchased, not just the total. This is where most finance teams get stuck chasing down paperwork from employees who've already moved on to the next thing.
What information is required on every receipt?
Whether it's required or just good practice, every receipt should capture four essentials:
- What was purchased: Itemized details matter for purchases over $75
- When it happened: Date of transaction
- How much it cost: Total amount, including any taxes or fees
- Business purpose: Why this expense ties to company operations
The IRS wants proof, not guesswork. The clearer your documentation, the smoother your audits.
Types of business expenses that require receipts
Here's a quick reference for what needs documentation and what level of detail the IRS expects:
How long should you hang on to receipts?
The IRS recommends keeping receipts for at least three years from the date you filed your return, or two years from when you paid the tax, whichever is later. For major purchases like equipment or property, hold onto records for as long as you own the asset, plus three years after you dispose of it.
Storage of receipts: digital vs paper
Paper receipts fade. They get lost and create filing nightmares. Digital storage solves all three problems. The IRS accepts digital copies as long as they're legible and complete, which means cloud-based storage is easier and smarter.
We've seen accounting firms and finance teams cut cleanup time by 80% just by switching to digital receipt management and treating them like data.
How strict are IRS rules?
The IRS is consistent, not unreasonable. If you can prove an expense was ordinary, necessary, and tied to business operations, you're usually in good shape. The problems start when documentation is missing, inconsistent, or clearly incomplete.
Auditors are looking for patterns. Missing receipts for high-value purchases, unexplained charges, or gaps in your records all raise flags. Be sure to remain consistent across your team and processes to keep you audit-ready.
How to avoid issues during audits
Audits don't have to be stressful. Here's what actually protects you:
- Document everything in real time: Don't wait until month-end to hunt down receipts.
- Set clear spend policies: Employees should know what requires a receipt and what doesn't.
- Use consistent categorization: The same expense should always land in the same bucket.
- Keep digital backups: Cloud storage means nothing gets lost or destroyed.
- Review regularly: Catch errors early, before they become audit risks.
The teams that sail through audits aren't the ones crossing their fingers. They're the ones who automated the documentation process months ago.
Common challenges in IRS receipt management
Even with clear rules, receipt management creates friction. Here's what we've seen trip up finance teams most often:
Employees forget to submit receipts. Small purchases slip through the cracks, and by the time accounting asks, the receipt is long gone.
Recurring charges don't always generate receipts. Subscriptions auto-renew, but merchants don't always send itemized documentation.
Internal policies are stricter than IRS rules. Most companies require receipts for everything, even when the IRS doesn't, because auditors and stakeholders expect consistency.
Manual follow-ups waste time. Chasing down a $20 lunch receipt takes the same effort as tracking a $1,200 software purchase. Neither should require three reminder emails.
Best practices for IRS receipt documentation requirements
The best receipt process is the one that runs in the background. Here's how top-performing finance teams stay compliant without creating bottlenecks:
- Automate capture where possible: Let technology handle small, recurring, and low-risk transactions.
- Set dollar thresholds that match your risk tolerance: Not every company needs receipts for sub-$75 purchases.
- Make submission easy: Email forwarding, mobile uploads, and integrations all reduce friction.
- Build accountability into workflows: Receipts should be required before reimbursement, not after.
- Use reporting to spot gaps: Regular reviews help you catch issues before audits do.
How BILL supports receipt capture
BILL is built on real-world financial data from nearly half a million businesses. We've processed millions of transactions, blocked fraud 8 million times last year alone, and used that experience to create tools that work with precision.
Here's how we help finance teams stay compliant without adding manual work:
Manual receipt upload
Employees can upload receipts directly through the app or forward them via email. Simple, familiar, and fast.
Auto-generated receipts
For small purchases, recurring spend, or missing receipts, BILL can automatically generate and attach a receipt to the transaction. This is especially useful for:
- Transactions under $75
- Known recurring charges
- Situations where a receipt wasn't provided
Admins control the settings, including dollar thresholds, so you stay in control of what gets automated and what still requires human review.
Real-time visibility
Every transaction is logged, categorized, and tied to the right employee and department. You get a complete audit trail without the manual data entry.
Reducing cleanup without increasing risk
Auto-generated receipts aren't about cutting corners. They're about cutting busywork. Our system helps teams:
- Reduce follow-ups for small or recurring spend
- Keep transactions documented without chasing employees
- Maintain audit-ready records across the entire organization
- Free up time for higher-value work
For high-risk or high-value transactions, employees still submit receipts manually. Automation handles the noise. Finance teams handle the judgment calls.
Receipts will always be part of running a business. The question is whether you're going to spend your time chasing them down or moving your business forward. With BILL, teams reduce manual follow-ups, improve documentation consistency, and stay audit-ready without slowing down employees or the close. That’s how modern finance teams balance compliance with efficiency—and turn receipt management into a background process instead of a monthly fire drill.
See how BILL Spend and Expense management can help
The information in this article is provided for general information purposes and does not constitute legal, tax, or accounting advice. The best practice is for taxpayers to maintain itemized receipts (showing amount, time, place & business purpose) from merchants to document tax deductibility of expenses. For ease of administration and subject to exceptions for specific expenses, such as lodging or gift expenses, the IRS may allow auto-generated receipts for expenses under $75. The burden of proof is on the taxpayer to prove deductibility of an expense. Itemized receipts from merchants are required for lodging and gift expenses regardless of the amount.The IRS documentation rules summarized here are subject to change and may apply differently based on your particular circumstances. You are solely responsible for determining how IRS rules apply to you and for maintaining adequate records. You should review IRS Publication 463 and consult your own tax, legal, or accounting advisor regarding your specific situation.
Please review IRS Publication 463 or consult with your tax accountant for further information.
