When the IRS examines a cash business, the fight is over how much cash never reached the bank. BankXLSX converts the deposit and expense side of the statements into Excel or CSV with date, description, amount, and running balance in their own columns, so you can build the deposit analysis, the cash-T, and the markup check on real numbers instead of retyped ones. Start free, no credit card.
Last updated July 2026
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In a cash intensive business audit the examiner assumes some receipts were never deposited, so a plain bank deposit analysis is not enough on its own. Following the Cash Intensive Businesses Audit Techniques Guide, the agent interviews the owner about how cash moves, then runs indirect methods: a bank deposit analysis, a cash-T that lists cash in against cash out, a percentage markup that grosses cost of goods sold up to expected sales, and a source and application of funds test. Each method needs the deposits and expenses off the statements as clean data, which is the step BankXLSX handles.
Every indirect method the ATG describes starts from the same place: a complete, categorized picture of what went through the accounts. Getting there by hand is the bottleneck.
A card batch settlement and a cash deposit both show as credits. Separating them matters, because the examiner treats undeposited cash very differently from banked card sales.
A cash-T lists cash available against cash spent. Building the spent side means reading every check, card payment, and withdrawal across the period, not sampling them.
Owners of cash businesses often run personal and business money through one account. Untangling that requires the full transaction list, tagged line by line.
A percentage markup grosses up cost of goods sold. Pulling supplier payments cleanly out of the debits is what makes the audited-sales figure credible.
Living costs paid from the business tell the examiner how much the owner actually had to spend. Those payments have to be found among hundreds of debits.
A gap in the statement set looks exactly like a period where deposits fell, which in a cash case reads as undeposited receipts.
Upload the statements and get the structured rows every indirect method is built on.
Deposits and debits come out as dated rows with full descriptions, so you can filter, tag, and total instead of retyping.
Descriptions carry through, so card settlements, cash deposits, and transfers can be told apart for the deposit analysis.
Each row keeps the printed balance, so every month foots and you can show the statement set is complete.
Older paper statements are usually image-only. OCR tuned for statement layouts reads them instead of returning blank rows.
Identical columns across accounts make commingled money a sort-and-tag exercise rather than a page-by-page hunt.
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Upload all business and personal accounts for the audit period, including any account cash was moved through, so nothing is missing when the examiner asks.
Tip: A gap at a month boundary reads as dropped deposits, so fill the set before the exam, not during it.
Filter to credits and mark each as cash, card settlement, transfer, or nontaxable, then tag the debits into supplier payments, payroll, personal, and other for the cash-T and markup.
Tip: Separate card settlements from cash deposits early, because the examiner focus is on cash that never arrived.
Build the deposit analysis, the cash-T, and a markup check side by side, and reconcile them so a single defensible number, not three conflicting ones, goes back to the agent.
Tip: Document the support for every reclassification while the statement row is still open.
Practitioners representing the operators the IRS flags most often.
Food and drink operators are a core ATG target. Rebuild deposits and a markup on food and beverage cost before the examiner does.
Service and small retail businesses with heavy cash draw scrutiny. A clean deposit and cash-T analysis answers the undeposited-receipts theory.
Test the examiner indirect method, find the personal deposits counted as sales, and document the nontaxable and transfer credits that were swept in.
Reconstruct true sales for a diligence, partnership, or divorce matter where one party ran a cash business.
The Cash Intensive Businesses Audit Techniques Guide tells examiners not to rely on the books, because the concern is receipts that never reached them. Instead the agent runs one or more indirect methods and reconciles the answers. Each one is a spreadsheet built from the statement data.
| Method | What it tests | Data it needs |
|---|---|---|
| Bank deposit analysis | Deposits versus reported sales | Every credit, split into cash, card, and nontaxable. |
| Cash-T | Cash available against cash spent | Cash in and every cash and card outflow. |
| Percentage markup | Cost of goods grossed up to expected sales | Supplier and inventory payments, cleanly separated. |
| Source and application of funds | Spending and saving versus known income | All outflows plus year-end balances. |
Because a cash intensive business by definition holds back some receipts, the ATG warns that a bank deposit analysis alone understates sales. That is why the cash-T and the markup exist: they reach the cash that never hit an account. Answering the exam means running the same methods first, on the same converted data, so you know where the numbers land before the agent tells you.
In a service business where everything is banked, deposits are a good proxy for sales. In a cash business they are a floor, not the answer. The examiner will estimate undeposited cash from the markup and the cash-T, then ask you to explain the gap. The defense is built the same way the case is: a complete deposit schedule, an honest cash-T, and a markup grounded in the client actual purchases rather than a blanket industry ratio.
The build is four tabs, the same discipline as any deposit case.
The deposit side of this work is the bank deposit analysis in full, and the asset-growth angle is the net worth method, which examiners sometimes run in parallel. Restaurants and food service have their own build in the bank statement converter for restaurants. If the matter reaches collection, the bank statement converter for tax resolution feeds Form 433, and disputed-sales matters pair with forensic accounting bank statement analysis. Start from the PDFs with the bank statement converter, prove completeness with running balance extraction, and speed the tagging with transaction categorization.
Firms that see these audits regularly keep the intake automated so the analysis time goes into judgment, not data entry. Teams tracking the client ongoing spending to keep the next year clean lean on expense management software, and those handling the wider document set at volume use enterprise document OCR.
The examiner assumes some cash was never deposited, so instead of trusting the books they run indirect methods from the Cash Intensive Businesses Audit Techniques Guide: a bank deposit analysis, a cash-T of cash in against cash out, a percentage markup on cost of goods sold, and a source and application of funds test, then reconcile the results.
Any business that receives a significant share of its receipts in cash. Restaurants, bars, salons, laundromats, convenience stores, car washes, and similar operators are common examples, and they draw extra scrutiny because undeposited cash is easy to leave off a return.
Because a cash business by definition holds back some receipts, deposits are a floor for sales rather than the full figure. The ATG has examiners add a cash-T and a markup analysis to estimate the cash that never reached an account, so answering the exam means running those methods too.
A cash-T is a two-sided schedule listing all cash available during a period on one side and all cash spent, including personal living expenses, on the other. If cash spent exceeds cash from known sources, the difference points to unreported income. It is built from the outflows on the statements.
A markup analysis takes verified cost of goods sold, usually supplier payments, and grosses it up by an expected markup to estimate what sales should have been. Comparing that audited-sales figure to reported sales exposes a shortfall, which is why clean supplier data off the statements matters.
An examination usually opens on one year and can extend to a second or third if adjustments are found, or six years where a substantial understatement of income is asserted. Prepare the full set of accounts for every year in play, since a gap reads as dropped deposits.
No. It converts the statement PDFs into accurate Excel or CSV rows with dates, descriptions, amounts, and running balances so the deposit analysis, cash-T, and markup can be built and reconciled. Classifying transactions, choosing markups, and reaching conclusions stay with the CPA, EA, or attorney on the case.
Assemble every bank and card statement for the period, convert them to structured data, tag cash versus card deposits and personal versus business outflows, then run the deposit analysis, cash-T, and markup yourself. Knowing where the numbers land before the examiner does is the difference between negotiating and reacting.
The deposit method in detail.
The asset-growth indirect method.
The funds-flow indirect method.
Built for cash and card heavy operators.
Feeds IRS Form 433.
Reconstruct disputed sales.
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