Did you realize that we have a "National Preparedness Month?" As the father of 1 Eagle Scout and 1 “soon to be Eagle Scout,” “Be Prepared” has long been in our vernacular. Whether it is planning for a campout, high adventure trip, the drive to school or a big storm, we are fairly well prepared as a family (we may not have been fully prepared for a pandemic, however).
Since September is "National Preparedness Month," the IRS recently released a bulletin “urging everyone to update and secure their records to prepare now for natural disasters.”
With the hurricane season beginning to brew, constant wildfires, droughts, Murph’s tornado alley and the rolling thunderstorms that have hit the South on a very regular basis, now is the perfect time to act so that you can “Be Prepared.”
And since you are your clients' trusted advisor, you should strongly encourage your clients to do the same thing.
In addition to ensuring you have food, water, flashlights, and of course – toilet paper and hand sanitizer (among other necessities), there are three key areas the IRS recommends for businesses and individuals to focus on that will help in the aftermath of a disaster:
- Securing and duplicating essential tax and financial documents
- Creating lists of property
- Knowing where to find information once a disaster occurs
Having updated documents and other information readily available can help you and your clients apply for the relief available from the IRS and other agencies. 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.
Secure Your Valuable Documents
Original documents like tax returns, birth certificates, deeds, titles, insurance policies, marriage certificates, passports and other similarly important items should be kept inside waterproof containers in a secure space. Copies, paper or digital, should be kept in a separate and secure location with the digital versions being in a secure cloud storage “application.”
Document valuables
Maintain a detailed inventory of your property and 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 individuals and businesses compile lists of belongings or business equipment.
Employer fiduciary bonds
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 also is easy to track tax payments and receive email alerts through EFTPS. Any business that doesn’t have one can create an EFTPS account by visiting EFTPS.gov.
Having updated documents and other information readily available can help you and your clients apply for the relief available from the IRS and other agencies.
Know where to go
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, visit IRS's Reconstructing Records.
IRS is ready to help
Following a federal disaster declaration, the IRS may postpone various tax filing and tax payment deadlines or provide other relief. For a list of localities qualifying for relief and details on relief available, visit the IRS Tax Relief in Disaster Situations webpage or Around the Nation on IRS.gov.
The IRS identifies taxpayers located in the covered disaster area and automatically applies filing and payment relief. This means taxpayers whose IRS address of record is located in the disaster area do not need to contact the IRS to get disaster tax relief.
In addition, many taxpayers living outside the disaster area may also qualify for relief. This includes those assisting with disaster relief and taxpayers whose records necessary to meet a filing or payment deadline postponed during the relief period, are located in the disaster area.
Eligible individuals and businesses located outside the disaster area can request relief by calling the IRS disaster hotline at 866-562-5227.
In addition, a special rule allows both individuals and businesses to choose to deduct uninsured or unreimbursed disaster losses on either the tax return for the year the disaster occurred, or the return for the previous year. For more information, see Publication 547, Casualties, Disasters and Thefts, available on IRS.gov.
For more information about "National Preparedness Month," CLICK HERE.
Gary DeHart has worked in media for more than 25 years and has been instrumental in developing new revenue streams and business opportunities for the companies he has worked for.
Prior to launching Insightful Accountant (formerly Intuitive Accountant), Gary was the Associate Publisher of Accounting Today. Prior to working in media serving the public accounting market, he worked in media for employee benefit managers and brokers, automotive design, textile manufacturing and recreational boating.
In addition to being the Publisher and Managing Partner of Insightful Accountant, Gary works with select clients within the accounting market on channel development and growth. He is an Assistant Scoutmaster with the Boy Scouts of America, enjoys fly fishing, time on the beach, cooking on the Big Green Egg and spending time with his family.
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