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4 Tips to Protect Financial and Tax Records

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The Internal Revenue Service (“IRS”) has released simple steps providing taxpayers and businesses with important tips on preparing for a disaster in order to help safeguard their records.

Important Tips

Outlined below are several tips by the IRS for individuals and healthcare organizations to take in order to protect financial and tax records in case of disasters:

1. Take Advantage of Paperless Recordkeeping for Financial and Tax Records

Taxpayers should not rely on their tax preparer to have all your current tax information. Many individuals currently receive their bank statements and other tax information electronically. The taxpayer should have electronic copies of important tax documents such as W-2s, tax returns and other paper documents. The IRS suggests back up your electronic files and store them in a safe place. There are software companies that offer scanning and record retention software for taxpayers. In addition, taxpayer’s can retain their electronic documents on a USB flash drive or upload to the cloud.

The IRS suggests when a taxpayer is choosing a place to keep their important tax records, convenience of access to the data is not of primary importance. The backup copies should be stored in a safe place like a safe deposit box. You do not want this data to be stored in your home or office because in the advent of a natural disaster, backup data would be destroyed if your home or office were destroyed.

2. Document Valuables and Business Equipment

The IRS offers disaster loss workbooks for individuals (Publication 584, Casualty, Disaster, and Theft Loss Workbook) and businesses (Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook) that will help taxpayer’s and businesses create a detailed listing of belongings and calculate the fair market value for these items.

The IRS suggests taking photos and keeping a backup copy of these items off-site. The disaster loss workbook will help taxpayers and businesses provide the market value of items for insurance claims and casualty loss claims in the event of a natural disaster.

3. Check on Fiduciary Bonds

For businesses that utilize a payroll service provider, the business should ask if the provider has a fiduciary bond in place that could help your business if the provider defaults on payroll.

4. Continuity of Operations Planning for Businesses

The IRS suggests that businesses create an emergency recovery plan. If a business already has one in place, the business should review this plan annually and update it, as needed. After a disaster strikes, how quickly a company will be able to get back to business will depend on their emergency planning. The IRS has provided a list of preparedness strategies that can be applied to all types of disasters:

  • Get informed about hazards and emergencies and learn what to do for specific hazards.
  • Develop and emergency plan.
  • Learn where to seek shelter from all types of hazards.
  • Back up your computer data systems regularly.
  • Decide how you will communicate with employees, customers and others.
  • Use cell phones, walkie-talkies, or other devise that do not rely on electricity as a backup to your telecommunications system.
  • Collect and assemble a disaster supplies kit. Include a portable generator.
  • Identify the community warning systems and evacuation routes.
  • Include required information from community and school plans.
  • Practice and maintain your plan.

Additional resources available from IRS

In the event of a natural disaster, a taxpayer can request a copy of their tax return and all attachments, including Form W-2 by completing and submitting Form 4506, Request for Copy of Tax Return. The taxpayer can also request a free transcript by calling the IRS at (800) 829-1040 or by completing and submitting a Form 4506-T, Request for Transcript of Tax Return. There is no fee for a transcript and transcripts are available for the current year and returns processed in the three prior years.


The IRS continues to inform taxpayers and businesses with important steps they can take to help protect records in the event of a natural disaster. Taxpayers and businesses should utilize IRS.gov to help them prepare for and recover from a disaster.

For questions or more information, please contact a member of our Healthcare Services Group by filling out the form below.
John A. Smith, Jr.


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