Prepare for Hurricanes, Disasters by Safeguarding Tax Records

The 2011 hurricane season starts today, and the Internal Revenue Service
encourages individuals and businesses to safeguard themselves against natural
disasters by taking a few simple steps.

Create a Backup Set of Records Electronically

Taxpayers should keep a set of backup records in a safe place. The backup
should be stored away from the original set.

Keeping a backup set of records –– including, for example, bank statements,
tax returns, insurance policies, etc. –– is easier now that many financial
institutions provide statements and documents electronically, and much
financial information is available on the Internet. Even if the original
records are provided only on paper, they can be scanned into an electronic
format. With documents in electronic form, taxpayers can download them to a
backup storage device, like an external hard drive, or burn them to a CD or

Document Valuables

Another step a taxpayer can take to prepare for disaster is to photograph or
videotape the contents of his or her home, especially items of higher value.
The IRS has a disaster loss workbook, Publication 584, which can
help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items
for insurance and casualty loss claims. Photos should be stored with a friend
or family member who lives outside the area.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business
situations change over time as do preparedness needs. When employers hire new
employees or when a company or organization changes functions, plans should be
updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if it
has a fiduciary bond in place. The bond could protect the employer in the event
of default by the payroll service provider.

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