Safeguard your data and implement preparedness plans during National Hurricane Preparedness Week and National Wildfire Awareness Month.
05/24/2023 3:10 P.M.
3 minute read
As National Hurricane Preparedness Week and National Wildfire Awareness Month come into focus, it’s crucial to recognize the importance of protecting your tax and financial information as part of a comprehensive emergency preparedness plan.
So far in 2023, the Federal Emergency Management Agency (FEMA) has declared disasters for mudslides, landslides, severe storms, tornadoes and more. Disasters can have a profound and lasting impact on individuals, organizations and businesses, making year-round preparation essential.
In recognition of this period, the Internal Revenue Service has provided valuable tips to help taxpayers safeguard their personal financial and tax information, ensuring a complete preparedness plan.
Keep Key Documents Safe and Make Extra Copies
To protect crucial documents such as tax returns, Social Security cards, birth certificates and deeds, the IRS recommends placing them inside a waterproof container stored in a secure location. Additionally, creating copies of these vital documents and storing them in a secondary location, such as a safe deposit box or with a trusted person residing in a different area, adds an extra layer of security. Scanning important documents and saving them on a flash drive allows for easy portability.
Create a Record of Valuables and Equipment
To support insurance claims or tax benefits in the aftermath of a disaster, it’s important to record all property, especially high-value items. A simple list accompanied by current photos or videos can provide valuable evidence. The IRS disaster loss workbooks, found in Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) and Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook, can assist individuals and businesses in making comprehensive lists of belongings or business equipment.
If disaster strikes, it may become necessary to reconstruct or replace records for tax purposes, claiming federal assistance or obtaining insurance reimbursement. Accurately estimating the loss is crucial, as it impacts the amount of available loan and grant money. Taxpayers who have lost some or all of their records during a disaster should visit the IRS’s Reconstructing Records webpage as a first step toward recovery.
Employers Should Check Fiduciary Bonds
Employers who rely on payroll service providers should ensure that their provider has a fiduciary bond in place. This bond can protect the employer in case of default by the payroll service provider. It is essential for employers to carefully choose their payroll service providers to mitigate potential risks.
IRS Provides Tax Relief After a Disaster
Following a major disaster or emergency measures declaration by FEMA, the IRS may grant certain tax filing and payment deadline extensions for taxpayers residing or conducting business in affected counties. For a detailed list of states and counties eligible for relief, taxpayers can refer to the IRS disaster relief page. It is worth noting that taxpayers located in covered disaster areas are automatically identified by the IRS for filing and payment relief. In case of any inquiries related to tax matters during a disaster, individuals can contact the IRS at (866) 562-5227 to speak with a specialist trained in handling such issues.
Seeking Disaster Tax Relief and Exploring Options
Protecting tax and financial information is an essential component of any comprehensive emergency preparedness plan. Using these tips, business owners can evaluate their readiness and take necessary steps to safeguard their crucial documents, create comprehensive records of valuables, and understand the options available for reconstructing lost records.