Disaster-Proofing Your Business: IRS Tips for Taxpayers and Businesses

Natural disasters can strike without warning, being unprepared can make a bad situation worse. That’s why the IRS urges individuals and businesses to take proactive steps now to protect their vital financial and tax records. From backing up electronic files to safeguarding important documents, these practical tips can help ensure you’re ready when it matters most.

Take Advantage of Paperless Recordkeeping for Financial and Tax Records
Remember to back up your electronic files. Scan important paper copies. Consider making duplicate records in two separate places or saving everything onto a CD or DVD. Keep track of your usernames and passwords so you won’t get locked out when you need them most.

Document Valuable Possessions and Office Equipment
The IRS offers disaster loss workbooks for individuals and businesses (Publication 584 and 584-B). The workbooks include schedules for each room in your home plus major categories like sporting equipment, men’s and women’s clothing, jewelry and more. If possible, photograph or videotape items and rooms. Use a ruler or include measurements when photographing items like jewelry, artwork or other valuable items. Save receipts electronically. This documentation will help you prove the market value of lost items for insurance and casualty loss claims. (Of course, make sure you have adequate insurance and are current with payments, and updating coverage after significant purchases.)

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.

Plan Ahead
Develop an emergency plan and a continuity of business plans. Update and practice them regularly, and review them with new employees.

Shelter responses for hazards and emergencies differ depending on the situation. It’s important to know where to go and what to do with each situation.

Back up your computer data systems regularly. Develop a plan for how to communicate with your employees, customers, vendors, etc. and make sure each party knows what to expect. Use cell phones, walkie-talkies, or other devices that do not rely on electricity as a backup to your telecommunications system.

Decide if you need to collect and assemble a disaster supplies kit. Businesses with a lot of remote employees may not need to store food and emergency supplies, but others with large populations on location may need to do so. Consider if you need to purchase a portable generator.

Stay in touch with your community’s first responders by text or email. Their websites often contain information about emergency responses. Know what your community’s warning systems sound like and where the evacuation routes are. Known required information from school plans.

Tax Relief
After a FEMA-declared disaster, the IRS may automatically extend tax deadlines for affected areas. No action is needed – relief is applied based on location. Taxpayers (individuals or businesses) with questions or those outside the covered area who were impacted, should call the IRS Disaster Hotline at 866-562-5227.