By Paul N. Gada, Toolkit Staff Writer
With the approach of the hurricane season, the IRS is encouraging taxpayers to safeguard their hard-to-replace tax records and financial documents. According to the IRS, a few simple steps can help taxpayers and businesses protect financial and tax records in case of hurricanes and other disasters.
"With forecasts calling for an active Atlantic hurricane season, the IRS encourages taxpayers to protect tax and financial documents that can be hard to replace," IRS Acting Commissioner Kevin M. Brown said. "A little planning can help safeguard valuable information in case a hurricane or other disaster strikes."
Below are some of the IRS's tips for individuals and businesses on maintaining financial and tax records:
- Paperless Recordkeeping -- An outstanding way to secure financial records is to receive bank statements and documents by e-mail. Important tax records, such as W-2 forms, tax returns, and other papers, also can be scanned into an electronic format. Taxpayers who have all financial records in electronic format can periodically copy their records onto a "key" or "jump drive" and send them to a relative in another city for safekeeping in case the taxpayer's normal computer backup systems are destroyed. Taxpayers can also copy files onto a CD or DVD.
- Documenting Valuables -- In order to recall and prove the market value of items for insurance and casualty loss claims, taxpayers can photograph or videotape the contents of their houses, especially items of great value. The photos or videotape should be stored with a friend or family member who lives away from the geographic area at risk. IRS Publication 584, a disaster loss workbook that can help taxpayers compile a room-by-room list of belongings, is also available.
- Fiduciary Bonds for Payroll Services -- Employers using a payroll service provider should ask if the provider has a fiduciary bond in place. The bond helps protect the employer if the payroll service provider ever defaults.
- Updating Emergency Plans -- Taxpayers should review emergency plans annually. Individual taxpayers should save documents that everyone should keep, including W-2s, home closing statements and insurance records, among others. Employers who hire new employees, and companies or organizations that change functions, should update their contingency plans and inform their employees of the changes.
- IRS Assistance -- Immediately after a casualty, taxpayers can request a copy of a return and all attachments, including Form W-2, by using Form 4506, Request for Copy of Tax Return. Taxpayers who need information from their return can order a free transcript by calling 1-800-829-1040 or using Form 4506-T, Request for Transcript of Tax Return. Transcripts are available for the current year and returns processed in the three prior years.
Nobody should be trying to piece their financial and tax records together while also trying to put their life back together. Following the above steps, however, will help ensure a speedier recovery in the event a hurricane or similar disaster strikes.
- Related items:
- IRS Resources Help Ease Tax Filing Season for Hurricane Victims
- Newly Enacted Tax Laws Aid in Katrina Recovery
- Small Business Resources for Katrina Recovery
Added to the news on July 13, 2007.
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