IRS Offers Four Steps for Hurricane Protection

By Ken Berry
 
Now that hurricane season is arriving, the IRS has posted fair warning to taxpayers who may be affected by natural disasters and is encouraging both individuals and businesses to take the appropriate steps to safeguard themselves against a potential catastrophe (IR-2013-56, 5/29/13).
 
What should you do? Pass along this important information to clients who reside in traditional danger zones. The IRS suggests that taxpayers take the following steps:
 
1. Create backup electronic records. Start by keeping a set of backup records in a safe place far away from the original set. It's now easier to keep backup records – for example, bank statements, tax returns, insurance policies, etc. – because many financial institutions provide statements and documents electronically. Also, much of the financial information is available online. Even if the original records are only provided on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers may download them to a backup storage device, such as an external hard drive, or burn them to a CD or DVD.
 
2. Document valuables. Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially those items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help you compile a room-by-room list of belongings. In addition, taking photographs can help prove the market value of items for insurance and casualty loss claims. The photos should be stored with a friend or family member who lives outside the area.
 
3. Update emergency plans. Emergency plans should be reviewed annually. Personal and business situations often change over time as do the needs for preparation. When employers hire new employees, or when a company or organization changes functions, you should update the plans accordingly. Don't forget to inform employees about any changes.
 
4. Check on fiduciary bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond may protect the employer in the event of default by the payroll service provider.
 
If a hurricane strikes, taxpayers can call (866) 562-5227 toll free to speak with an IRS specialist trained to handle disaster-related issues. Back copies of previously filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 5406, Request for Copy of Tax Return. Alternatively, transcripts showing most line items on these returns can be ordered by calling (800) 908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or Form 4506-T, Request for Transcript of Tax Return.
 
Related articles:
 

You may like these other stories...

By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...
FASB mulling a revamped income statementDavid M. Katz of CFO wrote on Tuesday that the Financial Accounting Standards Board (FASB) is in the early stages of researching whether to launch a project aimed at improving and...
Renaissance avoided more than $6 billion tax, report saysThe Senate Permanent Subcommittee on Investigations said on Monday that a Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6...

Upcoming CPE Webinars

Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.