IRS Tips on Preparing for a Disaster

Part of being prepared is having a plan in place in case of a disaster.  It only makes good sense for taxpayers to safeguard their records.  Some simple steps can help taxpayers and businesses protect financial and tax records in case of a disaster.  Consider the following tips:

1. Recordkeeping - Take advantage of paperless recordkeeping for financial and tax records.  Many people receive bank statements and documents by e-mail.  This method is an outstanding way to secure financial records.  Important tax records such as W-2s, tax returns and other paper documents can be scanned into an electronic format.  They can be copied to a ‘key’ or ‘jump drive’ periodically, so the electronic records can be kept in a safe place.

When choosing a place to keep your important records, convenience to your home should not be your primary concern.  Remember that if a disaster strikes your home, it is likely to affect other facilities nearby, making a quick retrieval of your records difficult and maybe even impossible.  A number of companies provide online file storage services or you can have a friend or relative in another state hold on to CDs or other forms of back up.

2. Document Valuables and Business Equipment - The IRS provides disaster loss workbooks for individuals (Publication 584) and businesses (Publication 584B) that can help you compile a room-by-room list of your belongings or business equipment.  This will help you recall and substantiate the market value of items for insurance and casualty loss claims.

Another option is to photograph or videotape the contents of your home and/or business, especially items of greater value.  Store the photos with a friend or family member who lives away from the geographic area at risk.

3. Check on Fiduciary Bonds - Employers who use payroll service providers should ask the provider if they have a fiduciary bond in place.  The bond could protect the employer in the event of default by the payroll service provider.

4. Continuity of Operations for Businesses - How quickly your company can get back to business after a disaster often depends on the emergency planning done today.  Start planning now to improve the likelihood that your company will survive and recover.  Review your emergency plans annually.  Just as your business changes over time, so does your preparedness needs.  When you hire new employees or if there changes to how your company functions, you should update your plans and inform your people of the new changes.

There are real benefits to being prepared for disasters.  The following preparedness strategies are common to all disasters.  You need to plan only once, and your plan can be applied to all types of hazards.

• Get informed about hazards and emergencies and learn what to do for specific hazards.

• Develop an emergency plan.

• Learn where to seek shelter from all types of hazards.

• Back up your computer data systems regularly.

• Decide how you will communicate with employees, customers and others.

• Use cell phones, walkie-talkies, or other devices that do not rely on electricity as a back up to your telecommunications system.

• Collect and assemble a disaster supplies kit.  Include a portable generator.

• Identify the community warning systems and evacuation routes.

• Include required information from community and school plans.

• Practice and maintain your plan.

5. Update Emergency Plans - Emergency plans should be reviewed annually. Individual taxpayers should make sure that they are saving documents, such as W-2s, home closing statements and insurance records.  Make sure that you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it.  Also be prepared to handle threatening weather if it approaches.

If you need help figuring out what records need to be maintained and for how long, please call this office.  For those that have already suffered a casualty or disaster loss, be sure to contact this office for assistance in documenting and reporting the loss and taking advantage of the tax benefits associated with casualty and disaster losses.

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