The legal foundation: The IRS Cohan Rule
Reconstructing lost receipts is explicitly permitted under U.S. tax law through the Cohan Rule, a legal principle established in the landmark 1930 case Cohan v. Commissioner. In this case, the U.S. Court of Appeals ruled that taxpayers may estimate deductible expenses when precise records are unavailable, provided there is a reasonable basis for those estimates. The court acknowledged that absolute certainty in such matters is often impossible and unnecessary, and that tax authorities should make the best possible approximation based on available evidence.
The Cohan Rule remains binding legal precedent nearly a century later. The IRS explicitly recognizes this principle and provides official guidance for taxpayers who need to reconstruct records after natural disasters, theft, or accidental loss. This is not a loophole or gray area—it is an established, court-validated practice that acknowledges the practical realities of record-keeping. When original documentation is destroyed or lost through no fault of the taxpayer, the law allows for reasonable reconstruction to maintain compliance and substantiate legitimate expenses.
When is receipt reconstruction appropriate?
Receipt reconstruction is legally appropriate when original records are lost, destroyed, or otherwise unavailable due to circumstances beyond your control. Common scenarios include natural disasters (floods, fires, hurricanes), theft, computer failures, email deletions, or simple misplacement of physical receipts. The IRS provides clear guidelines for these situations, encouraging taxpayers to gather supporting evidence such as bank statements, credit card records, vendor invoices, photographs, and contemporaneous notes to corroborate their reconstructed receipts.
The key requirement is that reconstructed records must be based on credible evidence and reasonable estimates. You cannot fabricate expenses out of thin air or inflate amounts without justification. The Cohan Rule protects honest taxpayers who maintained proper records but lost them through misfortune—not those attempting to claim fraudulent deductions. Tools like EasyReceiptMaker help ensure your reconstructed receipts include all required fields (date, vendor, items, payment method, totals) and mirror the format of authentic documentation, making them suitable for audits, reimbursements, and compliance reviews.
Important limitations and exceptions
While the Cohan Rule permits estimation for many expense categories, it does not apply to expenses requiring strict substantiation under Section 274(d) of the Internal Revenue Code. These include travel expenses, entertainment costs, business gifts, and certain listed property like vehicles and computers. For these categories, the IRS mandates detailed contemporaneous records, and estimates are generally not accepted even when originals are lost. Taxpayers claiming these deductions must provide precise documentation or risk having the deductions disallowed.
Additionally, the Cohan Rule does not excuse poor record-keeping habits. If a taxpayer consistently fails to maintain adequate records or cannot provide any supporting evidence for their estimates, courts and auditors will be far less sympathetic. The rule serves as a safety net for exceptional circumstances, not a substitute for proper documentation practices. Maintaining organized, digital backups of all receipts remains the best strategy for compliance, and reconstruction should only be used when genuinely necessary.
Why receipt generators are legitimate tools
Receipt generator tools serve a legal and practical purpose in modern financial management. They help individuals and businesses create clean, professional documentation when original receipts are unavailable, ensuring that expense reports, reimbursement requests, and tax filings remain complete and compliant. By providing structured templates with all required fields, these tools make it easier to reconstruct records in accordance with IRS guidelines and the Cohan Rule framework.
Organizations worldwide use receipt generators for legitimate purposes: replacing faded thermal receipts, documenting cash transactions that never generated receipts, recreating lost email confirmations, standardizing expense formats for internal audits, and training staff on proper documentation practices. When used responsibly—with accurate information and supporting evidence—receipt generators help maintain the clear audit trail that tax authorities, finance teams, and compliance officers expect. This is not about creating fake documents; it is about reconstructing legitimate transactions in a format that meets modern documentation standards.
