Check Imaging & Electronic Bill Payments – Don’t Do It !
Some banks are trying to save money and offering to send you copies of your cancelled checks. The idea is that you won’t have to sort your cancelled checks and you will have less work.
Unless you want to spend the rest of your life with an Internal Revenue Agent, don’t have your checks imaged. The reason is very simple. The IRS must see the endorsement on the back of the check and since this procedure only copies the front of the checks, it will cost you a bank fee to obtain the actual copy of the check.
Secondly, the copy you will receive from the bank will be a miniature size of the check, making it very difficult to read. Third, you are depending on the bank to find your original check and make a decent copy of it.
Do not pay your bills electronically, since you will be required to produce them upon an audit. Besides the IRS requiring the back of the check for endorsement purposes, you will need the check for other purposes if you have to prove payment to any company you are having a dispute with or with whom you must prove payment.
Finally, the name of a company appearing on your bank statement may be a different name than the company you due to electronic processing procedures. Look at your credit card statement and you will notice that many times the name of the company appearing on your statement is not the same name of the merchant where you purchased the product. This is due to electronic processing procedures. Since it costs the merchant extra fees to process your payments under different names, they will use their main name (of which you are not aware of) for these purposes.
REMEMBER – NOT MATTER HOW YOU PAY FOR AN ITEM, THE INTERNAL REVENUE MUST SEE AN ACTUAL BILL OR INVOICE.