01 Jul 2009
Individual Taxpayers and Businesses Should Prepare for Hurricane Season, Thomson Reuters Tax Expert Advises
The 2009 hurricane season officially began June 1. Says Anne Wagenbrenner, Senior Tax Analyst of the Tax & Accounting business of Thomson Reuters “While taxpayers are aware of hurricanes’ potential for devastation, they frequently don’t think of the importance of securing financial and tax records in case of such a disaster.”
According to Wagenbrenner, the IRS has laid out tangible steps that will help you safeguard your personal and business tax and non-tax records during hurricane season, and will aid in recovery, should a hurricane occur. These include:
- Create a Backup Set of Electronic Records. IRS recommends that taxpayers keep a set of backup records in a safe place, stored away from the original set. Now that many financial institutions provide statements and documents electronically and much financial information is available on the Internet, this is easier to accomplish than in the past. Also, keep in mind that original records that are on paper can be scanned into an electronic format and then downloaded to a backup storage device, like an external hard drive, or copied to a CD or DVD.
- Document Your Valuables with Photographs. It’s advisable to also photograph or videotape the contents of your home, especially items of high value. A photographic record helps prove the market value of items for insurance and casualty loss claims.
- Update Business Continuity and Disaster-preparedness Plans. If your business doesn’t have a business continuity plan or disaster-preparedness plan, be sure to create one (note: households should also have one). Such plans should be reviewed annually, and new employees should be made aware of the plan. And when a company or organization moves its premises or makes other changes, plans must be updated accordingly and employees must be informed of the changes.
Says Wagenbrenner, “For example, if a business that currently sells widgets also begins servicing widgets, its disaster preparedness plan must be amended to reflect location of off-site record storage, responsible persons, etc. for the new business, its employees, and premises.”
In addition to IRS’s suggested steps related to tax and non-tax records, IRS has a tip for employers who use payroll services, which is to ask the payroll service 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.
If disaster strikes, taxpayers with questions about filing deadlines, penalties, etc. can call 866-562-5227 to speak with an IRS specialist in disaster-related issues. Back copies of tax returns and all attachments, including Forms W-2, can be requested by filing the appropriate IRS form, or by calling 800-829-1040. There is no fee for a transcript or tax return copy for a taxpayer in a federal disaster area, and those affected should put the assigned Disaster Designation in red ink at the top of the request form.
“By following these straight-forward suggestions, taxpayers can help to preserve both tax and non-tax records, thereby reducing some of the possible damage and recovery costs that might result from a hurricane,” says Wagenbrenner.
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