Posted on June 4, 2013

Prepare for Natural Disasters: Safeguard Your Tax Records

In light of the recent tornadoes in Oklahoma and as another hurricane season begins, the IRS is encouraging business and individuals to safeguard themselves against natural disasters by taking a few simple steps:

1. Create a backup set of records electronically
Taxpayers should keep a set of backup records in a safe place. The backup should not be stored with the original set.

Keeping a backup set of records, such as bank statements, tax returns and insurance policies, is easier now that many financial institutions provide statements and documents electronically, and a lot of financial information is available on the Internet. Even if the original records are provided on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive or CD.

2. Document valuables
Another step a taxpayer can take to prepare for a disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos can be backed up electronically or 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 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.

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 could protect the employer in the event of default by the payroll service provider. Paycor clients can rest assured knowing that we are bonded, we reconcile your tax deposits and returns and share quarterly tax reports with you.

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. Alternatively, transcripts showing most line items on these returns can be ordered online, by calling 1.800.908.9946 or by using Form 4506T-EZ or Form 4506-T.

Source: Internal Revenue Service