Referencing the beginning of the 2011 hurricane season, the Internal Revenue Service encourages individuals and businesses to safeguard their tax and business records against natural disasters by taking several simple steps discussed below.
It’s ironic that the IRS is referencing hurricane season when the significant devastation from deadly tornadoes has been most prominent in the news lately. Our hearts and, hopefully, our charity goes out to those who have lost family, friends and homes to tornadoes in 2011, making this the deadliest year for US tornadoes since 1950 according to the Christian Science Monitor.
In any event, the IRS’s suggestions for protecting records are valuable and practical. We can all benefit from a review and an assessment of how prepared we are to access important personal and business records. The IRS recommends:
Create a Backup Set of Records Electronically
The backup should be stored away from the original set! Some of us forget that it doesn’t help to store the computer information on a backup disk if the whole house is destroyed. There are services that will store them in “the cloud.”
Photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.
While the IRS may recommend that photos should be stored with a friend or family member who lives outside the area, consider that most are digital today. Store them in “the cloud.”
Update Emergency Plans
Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.
Check on Fiduciary Bonds
Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.
IRS Ready to Help (yes, that’s what they say…they are here to help us!)
If disaster strikes, an affected taxpayer can call 1-866-562-5227 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 4506, Request for Copy of Tax Return.
We hope you never need to put this plan into action, yet you’re encouraged to plan ahead!