The IRS has released a reminder to taxpayers, ahead of the peak of the hurricane season, to have an emergency preparedness plan in place (IR 2023-161, 9/5/2023).
The IRS urges taxpayers to prepare by:
- Securing and duplicating essential tax and financial documents.
- Creating lists of property.
- Knowing where to find information once a disaster occurs.
Having the updated documents and other information readily available can help victims apply for the relief available from the IRS and other agencies after a disaster. Disaster assistance and emergency relief may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.
Securing and duplicating documents.
Taxpayers should keep critical original documents inside waterproof containers in a secure space. These include tax returns, titles, insurance policies and other similarly important items. The IRS also recommends that taxpayers retain duplicate copies of these documents at a location outside the potentially impacted disaster area. Taxpayer are advised to scan paper documents into a digital format and save those files in a secure digital location, such as cloud-based storage.
Document property.
Business taxpayers should also maintain a detailed inventory of their business contents. Taxpayers can take photos or videos to record their possessions but should also write down descriptions including year, make and model numbers, where appropriate. After a disaster hits, this kind of documentation can help support claims for insurance or tax benefits. The IRS disaster-loss workbooks can help businesses compile lists of belongings or business equipment.
Where to find information.
Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Most financial institutions can provide statements and documents electronically, an option that can aid the reconstruction process. For tips on reconstructing records, information is available on the IRS’s Reconstructing Records webpage.
Payroll considerations.
Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer against a possible provider default.
Most employers already use the Electronic Federal Tax Payment System (EFTPS) to make their federal tax deposits and business tax payments. Because these payments can easily be made either by phone or online, EFTPS offers an especially convenient option when a disaster may displace many businesses and their employees. It’s also easy to track tax payments and receive email alerts through EFTPS. Any business that doesn’t have one can create an EFTPS account.
Disaster tax relief.
The IRS may postpone filing and tax payment deadlines after a disaster. When a taxpayer is identified in a covered disaster area, the IRS will automatically apply filing and payment tax relief. Taxpayers that do not reside in the impacted area may qualify for tax relief if they are assisting in the disaster area or if necessary records are located in the disaster. Taxpayers may contact the IRS at (866) 562-5227 for further information.
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