Yes, the IRS accepts digital receipts when they are kept in an electronic storage system that meets Rev. Proc. 97-22: scanned or photographed receipts must be complete, legible, indexed so each one can be found, and retrievable on request. Paper originals may be destroyed only after the system has been tested and procedures keep it compliant.
What the IRS says about digital receipts
The IRS addresses digital receipts through Rev. Proc. 97-22, its guidance for taxpayers who keep books and records in an electronic storage system. An electronic storage system, in the procedure's words, includes "electronically imaging hardcopy documents to an electronic storage media," which covers scanning or photographing a paper receipt.
Rev. Proc. 97-22, published in Internal Revenue Bulletin 1997-13, states its effect plainly: "Records maintained in an electronic storage system that complies with the requirements of this revenue procedure will constitute records within the meaning of § 6001 of the Internal Revenue Code." Section 6001 is the Code section that requires taxpayers to keep records.
The procedure dates from 1997, but it is still the reference. IRS Publication 583, revised in December 2024, says that "All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records," and sends readers to Revenue Procedure 97-22 "For details on electronic storage system requirements."
Two points in Rev. Proc. 97-22 surprise people. First, using an outside service does not shift the duty: a third party providing the system "does not relieve the taxpayer of the responsibilities described in this revenue procedure." Second, the digital copies must be kept as long as the paper would have been. How long that is depends on the return; see how long receipts should be kept for taxes.
What makes a digital receipt acceptable to the IRS?
A digital receipt is acceptable to the IRS when the image is legible, the whole receipt was captured, the file can be found through an index, and the record can be retrieved and reproduced on request. Those four conditions come from section 4 of Rev. Proc. 97-22, which sets the requirements for any electronic storage system.
On legibility, the procedure is specific. Stored records "must exhibit a high degree of legibility and readability when displayed on a video display terminal and when reproduced in hardcopy." It defines legibility as meaning "the observer must be able to identify all letters and numerals positively and quickly," and readability as meaning the observer "must be able to recognize a group of letters or numerals as words or complete numbers."
On completeness, the system "must ensure an accurate and complete transfer" of the paper record. On finding records, it must include "a retrieval system that includes an indexing system." The indexing requirement "will be satisfied if the indexing system is functionally comparable to a reasonable hardcopy filing system." On retrieval, at an examination the taxpayer must "retrieve and reproduce (including hardcopies if requested)" the stored records.
Five-point checklist for a digital receipt archive
This checklist turns those requirements into checks a firm or client can run. It describes what Rev. Proc. 97-22 asks for; it is not a substitute for reading the procedure.
- Every number is readable. Open each file and confirm the vendor, date, total and any item lines can be read without guessing.
- The whole receipt is in the file. Top to bottom, including the vendor name and the total. No cropped edges.
- There is an index. A list or spreadsheet with date, vendor, amount and file name, so any receipt can be found from a bank or card line.
- Records can be produced on request. Someone other than the person who saved them can find a named receipt and print it.
- The system is checked and described. Rev. Proc. 97-22 asks for "periodic checks of electronically stored books and records" and written descriptions of the system and its index, available to the IRS on request.
Point 3 is where most client archives fall short. Schema CPA reads receipts and vendor invoices and exports what it reads to Excel or CSV, which gives a firm a starting point for an index; where the image files live and for how long remains the firm's and the client's decision. The workflow section of the homepage shows how documents are collected and read. For invoices with many lines, invoice line-item extraction covers getting each line out, and invoice data extraction covers the header fields.
Can a client throw away paper receipts after scanning?
A client can throw away paper receipts after scanning only once two conditions in Rev. Proc. 97-22 are met: the client has tested the system and confirmed the scans reproduce the receipts as the procedure requires, and procedures are in place to keep it compliant. Until both are true, keep the paper.
Section 7 of Rev. Proc. 97-22 permits destroying the originals after the taxpayer "(1) has completed its own testing of the electronic storage system that establishes that hardcopy or computerized books and records are being reproduced in compliance with all the provisions of this revenue procedure; and (2) has instituted procedures that ensure its continued compliance with all the provisions of this revenue procedure."
IRS Publication 583 says the same in shorter form: originals "may be destroyed provided that the electronic storage system has been tested." It also notes that the IRS may test the system itself, and that "This test is not considered an examination."
In practice, "tested" means checking a real batch: pick receipts at random, find each one through the index, and confirm every figure is readable. Receipts that fail stay on paper. Rev. Proc. 97-22 names "retaining hardcopies of books or records that are illegible" among its recommended practices.
Paper that is discarded should be destroyed, not dropped in the recycling, since receipts can carry card digits and addresses. The post on secure document destruction for accountants covers the options.
Digital receipt records that fail an IRS review
Digital receipt records fail an IRS review when the image does not show what the paper showed, or when nobody can find or open the file. The common failures are cropped totals, unreadable photos, receipts stored with no index, and files kept in a format or account that is later lost.
Cropped totals. A phone photo that cuts off the bottom of a long receipt loses the total and often the date. The procedure's demand for "an accurate and complete transfer" is not met.
Unreadable photos. Blur, glare and faded print can make a 6 look like an 8. That fails the legibility test of identifying "all letters and numerals positively and quickly."
Files nobody can find. A camera roll of 900 images named by timestamp has no index. The receipt may exist, but the requirement to retrieve it is not met in practice.
Lost systems. Rev. Proc. 97-22 warns that records in a system whose hardware and software the taxpayer stops maintaining "will be deemed destroyed by the taxpayer," unless they remain available to the IRS. A client who closes the app or account that held every receipt may have, in effect, thrown them away.
No fallback. The procedure says penalties for a non-compliant system "may not apply if the taxpayer maintains its original books and records." Keeping the paper until the scans are checked is the simplest protection against every failure on this list.