IRS Reports 1st AFSP Numbers

The IRS announced that roughly 44,000 tax return preparers earned a record of completion after participating in the first Annual Filing Season Program. As previously reported, those individuals obtaining the record of completion are now listed in the IRS.gov Directory of Federal Tax Return Preparers with Credentials and Select Qualifications, aims to help protect taxpayers and tax preparers alike.


Another benefit to completing the AFSP is to earn the right to represent clients before the IRS, starting in 2016. The deadline for earning a record of completion this year is December 31, 2015; more information about the program can be found here.

Source: Internal Revenue Service

Tax Tips for Students with Summer Jobs

IRS Special Edition Tax Tip 2015-13, June 18, 2015    
                                              
Students often get a job in the summer. If it’s your first job it gives you a chance to learn about work and paying tax. The tax you pay supports your home town, your state and our nation. Here are some tips students should know about summer jobs and taxes:

• Withholding and Estimated Tax.  If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated tax directly to the IRS on set dates during the year. This is how our pay-as-you-go tax system works.
  
  
• New Employees.  When you get a new job, you will need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use it to figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
  
  
• Self-Employment.  Money you earn doing work for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction can cut taxes.
  
  
• Tip Income.  All tip income is taxable. Keep a daily log to report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.
  
  
• Payroll Taxes.  You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
  
  
• Newspaper Carriers.  Special rules apply to a newspaper carrier or distributor. If you meet certain conditions, you are self-employed. If you do not meet those conditions, and are under age 18, you may be exempt from social security and Medicare taxes.
  
  
• ROTC Pay.  If you’re in ROTC, active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training is not taxable.
  
  
• Use IRS Free File.  You can prepare and e-file your tax return for free using IRS Free File. It is only available on IRS.gov. You may not earn enough money to be required to file a federal tax return. Even if that is true, you may still want to file. For example, if your employer withheld income tax from your pay, you will have to file a return to get a tax refund.

Visit IRS.gov for more about the tax rules for students.
Additional IRS Resources:

• Student's Page - High School
• Student's Page - Higher Education

IRS YouTube Videos:

• Part-Time and Summer Jobs – English
• IRS Withholding Calculator – English| Spanish | ASL

IRS Podcasts:

• IRS Withholding Calculator – English| Spanish

 Source: Internal Revenue Service

Don’t Overlook the Child and Dependent Care Tax Credit this Summer

IRS Special Edition Tax Tip 2015-12, June 15, 2015               
                                  
Day camps are common during the summer months. Many parents pay for them for their children while they work or look for work. If this applies to you, your costs may qualify for a federal tax credit that can lower your taxes. Here are the top ten tips to know about the Child and Dependent Care Credit:

1. Care for Qualifying Persons.  Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 usually qualify. For more about this rule see Publication 503, Child and Dependent Care Expenses.
   
   
2. Work-related Expenses.  Your expenses for care must be work-related. This means that you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care.
   
   
3. Earned Income Required.  You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care. This rule also applies to you if you file a joint return. Refer to Publication 503 for more details.
   
   
4. Joint Return if Married.  Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.
   
   
5. Type of Care.  You may qualify for it whether you pay for care at home, at a daycare facility or at a day camp.
   
   
6. Credit Amount.  The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income.
   
   
7. Expense Limits.  The total expense that you can use in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
   
   
8. Certain Care Does Not Qualify.  You may not include the cost of certain types of care for the tax credit, including:
   
   • Overnight camps or summer school tutoring costs.
   • Care provided by your spouse or your child who is under age 19 at the end of the year.
   • Care given by a person you can claim as your dependent.
   
   
9. Keep Records and Receipts.  Keep all your receipts and records for when you file your tax return next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit on Form 2441, Child and Dependent Care Expenses.
   
   
10. Dependent Care Benefits.  Special rules apply if you get dependent care benefits from your employer. See Publication 503 for more on this topic.
    

Remember that this credit is not just a summer tax benefit. You may be able to claim it for qualifying care that you pay for at any time during the year.
Additional IRS Resources:

• Tax Topic 602 - Child and Dependent Care Credit
• Frequently Asked Questions - Child Care Credit
• Publication 926, Household Employer's Tax Guide
• Publication 907, Tax Highlights for Persons With Disabilities

IRS YouTube Videos:

• Summer Day Camp Expenses - English | Spanish | ASL

Source: Internal Revenue Service

How to Handle Cash Intensive Businesses

This was an article from: 
Ben A. Tallman EA

The purpose of this article is to explore the methods for analyzing cash-based businesses.  We will explore techniques for uncovering unreported income.  I will take you into the new digital world for hiding cash transactions through cellphone transfers, EFTs, PayPal, and WebMoney.  We’ll discover how barter and bit-coins are finding common alliances.  Reference is made to the IRS Auditors’ Study Manual known as the Audit Technique Guide.  So strap yourself in and prepare to learn something about cash-based businesses.
 

What is a cash-based or cash intensive business?

A cash intensive business is one that receives the majority of its revenue from a non-traceable source, such as, cash currency, money orders, barter, or some form of digital cash.  Non-traceable means there is no way of tracking it “into” or “out” of the business (unless it was  properly reported on the books).  Herein lies our dilemma.  How do we as tax professionals exercise “due diligence” in determining the proper reporting of income? 
Every business has procedures, books, and records and that is a good place to start.  You must determine what your taxpayer is reporting in order to run comparisons.  So you need to ask your taxpayer questions about their books, records, and procedures.  The only way to understand the taxpayer’s record keeping system is to have them explain it to you.  Once you have the taxpayer’s figures and an understanding of how they were determined, you are ready to apply some indirect methods for determining accuracy.

You might be asking “Why is this my job?”  I am not being paid to audit the taxpayer.  You are right!  You are not being paid to do that, but under Circular 230, §10.22, you are asked to verify the accuracy of the information appearing on the tax return that you prepare.  Are we now auditors?  No, but we are verifiers. This became one of those subtle changes that Circular 230 dropped on us about 4 years ago, when we went from being preparers to verifiers of the taxpayer’s information.  So where do we go from here?

Signs and Indications of Unreported Income

What are we looking for? 

The most recognizable form of unreported income is seeing a consistent pattern of losses or low profits that clearly are not sufficient to sustain the livelihood of the business or its owners.  An example of these cases is listed below:

• A life style or cost of living that can’t be supported by the income reported.
• A business that continues to operate despite losses year after year, with no additional income or infusion of capital.
• A Cash-T Analysis that shows less income coming in than money spent during the year.
• Bank balances, debit card balances and liquid investments increasing annually in spite of low net profits or losses.
• Accumulated assets increase even though the reported net profits are low or a loss.
• Debt and credit card balances decrease, remain relatively low or don’t increase, while low profits or losses are reported.
• A significant difference between the taxpayer’s gross profit margin and that of their industry.
• Unusually low annual sales for the type of business the taxpayer is running.

Ways a Business Under-reports Income

Cash transactions are anonymous, leaving no trail to connect the purchaser to the seller, which may lead some individuals to believe that cash receipts can go unreported and escape detection.
There are three main ways to misappropriate cash from a business:

• It can be skimmed from receipts, for example, pocketed before it is recorded.  If this happens, auditing the books will not reveal it.
• It can be stolen after it has been recorded at the point-of-sale, for example, cash removed from the cash register or goods/inventory that are taken out of the business.
• A fraudulent disbursement can be created, for example, creating a payment for a supplier that is actually switched and cashed by the taxpayer or a relative.

Is There Anything Obvious to Us?

Remember the fact, that the taxpayer does not want to be discovered or caught in this unlawful act, but there are ways he/she does stand out in plain sight.  So let’s mention a few of these:

• Living in an affluent area that does not add-up to the income they report.
• Buying new vehicles or jewelry that they cannot afford on their income.
• Taking expensive vacations that should be outside of their price range.
• No recent influx of funding from inheritance, gifts, or trust funds.
• Living a life-style that most people in their income position could not afford.

How do we Uncover Unreported Income?

Comparative Analysis & Ratios

Comparative analysis can be as simple as dividing sales taxes paid by the sales tax rate.  For example, if the business paid $14,282 in sales tax for the year and the rate is 7%.  By dividing the 7% into the sales tax paid this should get you back to gross sales of $204,028.57.  If the taxpayer only reported $172,000 in gross sales, we have a discrepancy.  Some taxpayers do not think analytically and can be caught with “their hand in the cookie jar”.  Other analysis may require going to the Bureau of Labor Statistics for statistical information before calculating a gross profit percentage.  If this term sounds familiar, it is.  You use the same process for Installment Sales on Form 6252.  The Audit Technique Guide is full of comparative analysis ideas if you want to learn more.

Charts and Other Ideas

The most common chart is the “Cash-T Analysis” which IRS uses quite regularly in audits these days.  The large ”T” which shows cash received on the left-side as debits; and then cash expended on the right as credits.  If you work with accounting it’s like running a Trial Balance. If your expenses are larger than your cash received; you could be dealing with unreported income, unless the taxpayer received non-taxable gifts or inheritance (child support, VA compensation, loan proceeds, cash advances, or other non-taxable funds).  Other charts include Net Worth Analysis or just plain old Bank Deposit Summaries for the year.

Electronic Money and Digital Cash

The New Non-Bank Accounts

For those of us over age 50, banks have always been involved with monetary transactions including checking, savings, travelers & cashier’s checks, credit & debit cards, and even wire transfers.  In today’s world, things have changed.  We look at Electronic Funds Transfer (EFT), e-money, electronic cash, digital currency, direct deposit, PayPal, and E-gold funds.  So how does this affect us?  Electronic money and digital cash allow many transactions to go undetected by the banks.  So why should this matter?  Simply put, our tracking has always been done with banks.  This is no longer the case since funds are now transferred through cellphones, anonymous money orders and wire transfers, PayPal (into and out of 103 countries/regions), and even from stolen credit cards.  Users can hide their identity and transact cash transfers from a position of anonymity.  Even Western Union which is low tech can provide the anonymity from the IRS.

E-gold lets anyone fund an account with cash or a cashier’s check. The funds can be moved to other digital accounts or used for payment without revealing the payer’s identity.  It can have an untraceable check issued to a payee in any currency or be transferred to a debit card and then withdrawn anonymously at any ATM.  This takes a cash business to a whole new level.

Digital Currency

Since digital currency is not issued by a sovereign government or country is has never been elevated to the status of “legal tender;” however, on the internet it exists as a form of payment much like “barter.”  In fact to establish its value, you must use a barter technique to figure its worth.  What is the value of the “service” being-paid-for with this digital currency?  This is the same way you determine the value of barter.

Let’s look at an example.  The most common internet currency today is the “Bit-coin.”  If you were to trade 30 million Bit-coins for a $3,000 used vehicle, you would divide the 30 million by $3,000 to establish a value of 10,000 Bit-coins = $1.  If you were reporting this transaction for a business on their tax return, you would use the same valuation method.  You might be smiling while thinking, this is not any of my customers, but at least you know how it works.

Parting Remarks

I hope you will take the time to look into the entire ‘Audit Technique Guide’ for Cash Intensive Businesses.  It can be found on irs.gov along with a myriad of other audit topics.  Someone took the time to file a Freedom of Information Act request thus opening these guides for our inspection.  Don’t overlook this valuable resource the next time you are called on to represent a taxpayer in an audit.  You have the oppositions “playbook.”  Use it!

Appendices, Bibliography, & References

IRS Publications & the Audit Technique Guide for Cash Intensive Businesses
Reference material applies to pages 1-4.

© Ben A. Tallman EA

May 2015

IRS Security Summit

The IRS announced that it will increase the amount of information shared between the tax preparation industry and the government to safeguard taxypayers from identity theft and tax refund fraud. The IRS, states, and industry leaders agreed to form three separate groups that would improve taxpayer authentication, fraud identification, information assessment, cybersecurity frameworks, and communication with taxpayers.


These strategies are expected to improve security for the 2016 tax season. When speaking about the Security Summit, Commissioner Koskinen said, “We’ve made tremendous progress, and we will continue these efforts. Taxpayers filing their tax returns next filing season should have a safer and more secure experience.”

Source: Internal Revenue Service

Don't Miss Filing Deadlines Related to Foreign Income and Assets

IRS Special Edition Tax Tip 2015-11, June 10, 2015

All U.S. citizens and residents must report worldwide income on their federal income tax return. If you lived outside the U.S. on the regular due date of your tax return, the extended filing deadline for your 2014 tax return is Monday, June 15, 2015. Similarly, the deadline to report interests in certain foreign financial accounts is the end of June. Here are some important tips to know if these reporting rules apply to you:

• FATCA Requirements.  FATCA refers to the Foreign Account Tax Compliance Act. In general, federal law requires U.S. citizens and resident aliens to report any worldwide income. You must report the existence of and income from foreign accounts. This includes foreign trusts, banks and securities accounts. In most cases you must report the country where each account is located. To do this file Schedule B, Interest and Ordinary Dividends with your tax return.
  
  You may also have to file Form 8938, Statement of Special Foreign Financial Assets with your tax return. Use the form to report specified foreign financial assets if the aggregate value of those assets exceeds certain thresholds. See the form instructions for details.
  
  
• FBAR Requirements.  FBAR refers to Form 114, Report of Foreign Bank and Financial Accounts. If you must file this form you file it with the Financial Crimes Enforcement Network, or FinCEN. FinCEN is a bureau of the Treasury Department. You generally must file the form if you had an interest in foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2014. This also applies if you had signature or other authority over those accounts. You must file Form 114 electronically. It is available online through the BSA E-Filing System website. The FBAR filing requirement is not part of filing a tax return. The deadline to file Form 114 is June 30.
  
  
• View the IRS Webinar.  You can get help and learn about FBAR rules by watching the IRS webinar on this topic. The title is “Reporting of Foreign Financial Accounts on
  the Electronic FBAR.” The presentation is one hour long. You can find it by entering “FBAR” in the search box of the IRS Video Portal home page. Topics include:
  • FBAR legal authorities
  • FBAR mandatory e-filing overview
  • Using FinCEN Form 114; and Form 114a
  • FBAR filing requirements
  • FBAR filing exceptions
  • Special filing rules
  • Recordkeeping
  • Administrative guidance

You can access IRS forms, videos and tools on IRS.gov at any time.

Additional IRS resources:

• Comparison of Form 8938 and FBAR Requirements
• International Taxpayers
• International Tax Topic Index
• FBAR Reference Guide
• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• IRS Tax Map
• Treasury Department End-of-Year Exchange Rates

IRS YouTube Videos – International Taxpayers:

• Introduction to the International Taxpayers Webpage
• Filing Requirements
• Filing Status If Married to a Nonresident Alien
• Foreign Earned Income Exclusion
• Individual Taxpayer Identification Number (ITIN)

 Source: Internal Revenue Service

Reconstructing Your Records

FS-2006-7, January 2006

Reconstructing records after a disaster may be essential for tax purposes, getting federal assistance or insurance reimbursement. Records that you need to prove your loss may have been damaged or destroyed in a casualty. While it may not be easy, reconstructing your records may be essential for:

• Tax purposes – You may need to reconstruct your records to prove you have a casualty loss and the amount of the loss. To compute your casualty loss, you need to determine: 1) the decrease in value of the property as a result of the casualty and 2) the adjusted basis of the property (usually the cost of the property and improvements). You may deduct the smaller of these two amounts, minus insurance or other reimbursement. See Publication 547 for further information on figuring your casualty loss deduction.

If you repair damage caused by the casualty, or spend money for cleaning up, keep the repair bills and any other records of what was done and how much it cost. You cannot deduct these costs, but you can use them as a measure of the decrease in fair market value caused by the casualty if the repairs are actually made, are not excessive, are necessary to bring the property back to its condition before the casualty, take care of the damage only, and do not cause the property to be worth more than before the casualty.

• Insurance reimbursement.
  
  
• Federal Emergency Management Agency (FEMA) and Small Business Administration aid – The more accurately you estimate your loss, the more loan and grant money there may be available to you.
  

The following tips may help to reconstruct your records to prove loss of personal-use or business property:
Personal Residence/Real Property

• Be sure to take photographs as quickly as possible after the casualty to establish the extent of the damage.
  
  
• Contact the title company, escrow company or bank that handled the purchase to obtain copies of escrow papers. Your real estate broker may also be able to help.
  
  
• Use the current property tax statement for land vs. building ratios, if available; if not available, get copies from the county assessor’s office.
  
  
• Check with appraisal companies to locate a library of old multiple listing books. These can be used for “comps” to establish a basis or fair market value.
  “Comps” are comparable sales within the same neighborhood.
  
  
• Check with your mortgage company for copies of any appraisals or other information they may have about cost or fair market value.
  
  
• Tax records – Immediately after the casualty, file Form 4506, Request for Copy of Tax Return, to request copies of the previous four years of income tax returns. To obtain copies of the previous four years of transcripts you may file a Form 4506-T, Request for Transcripts of a Tax Return. Write the appropriate disaster designation, such as “HURRICANE KATRINA,” in red letters across the top of the forms to expedite processing and to waive the normal user fee.
  
• Insurance Policy – Most policies list the value of the building to establish a base figure for replacement value insurance.
  
  • If you are unsure how to reach your insurance company, check with your state insurance department. http://www.naic.org/state_web_map.htm
    
    
• Improvements – Call the contractor(s) to see if records are available. If possible get statements from the contractors verifying their work and cost.
  
  • Get written accounts from friends and relatives who saw your house before and after any improvements. See if any of them have photos taken at get-togethers.
    
    
  • If a home improvement loan was obtained, obtain paperwork from the institution issuing the loan. The amount of the loan may help establish the cost of the improvements.
    
• 
  Inherited Property – Check court records for probate values. If a trust or estate existed, contact the attorney who handled the estate or trust.
  
  
• No other records are available – Check at the county assessor’s office for old records about the property. Look for assessed valued and ask for the percentage of assessment to value at the time of purchase. This is a rough guess, but better than no records at all.

Vehicles
Kelley’s Blue Book, NADA and Edmunds are available on-line and at most libraries. They are good sources for the current fair market value of most vehicles on the road.

• Call the dealer and ask for a copy of the contract. If not available, give the dealer all the facts and details and ask for a comparable price figure.
  
  
• Use newspaper ads for the period in which the vehicle was purchased to determine cost basis. Use ads for the period when it was destroyed for fair market value. Be sure to keep copies of the ads.
  
  
• If you’re still making payments, check with your lien holder.

Personal Property
The number and types of personal property may make it difficult to reconstruct records. One of the best methods is to draw pictures of each room. Draw a floor plan showing where each piece of furniture was placed. Then show pictures of the room looking toward any shelves or tables. These do not have to be professionally drawn, just functional. Take time to draw shelves with memorabilia on them. Do the same with kitchens and bedrooms. Reconstruct what was there, especially furniture that would have held items — drawers, dressers, shelves. Be sure to include garages, attics and basements.

• Get old catalogs. These catalogs are a great way to establish cost basis and fair market value.
  
  
• Check the prices on similar items in your local thrift stores to establish fair market value. Walk through the stores and look at comparable items, especially items such as kitchen gadgets. Look for odds and ends you may have had but forgotten because of infrequent use.
  
  
• Use your local “advertiser” as a source for fair market value. Keep copies of the issues handy and copy pages used for specific items to put with your tax records file on the disaster.
  
  
• Check local newspaper want ads for similar items. Again keep a copy of any you use for comparison with the tax file.
  
  
• If you bought items using a credit card, contact your credit card company.
  
  
• Check with your local library for back issues of newspapers. Most libraries keep old issues on microfilm. The sale sections of these back issues may help establish original costs on items such as appliances.
  
  
• Go to a used bookstore with a tape measure and the diagram of the destroyed property. Measure several rows of used books and count the number of books per shelf. Add up the prices of those books and determine an average cost per shelf. Then count the number of shelves you had in your home and multiply by the average cost per shelf. This will help determine the value of your books before the loss.

Business Records

• Inventories – Get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one calendar year.
  
  
• Income – Get copies of bank statements. The deposits should closely reflect what the sales were for any given time period.
  
  • Obtain copies of last year’s federal, state and local tax returns including sales tax reports, payroll tax returns and business licenses (from city or county). These will reflect gross sales for a given time period.
    
    
• Furniture and fixtures – Sketch an outline of the inside and outside of the business location. Then start to fill in the details of the sketches. (Inside the building — what equipment was where; if a store, where were the products/inventory located. Outside the building — shrubs, parking, signs, awnings, etc.)
  
  • If you purchased an existing business, go back to the broker for a copy of the purchase agreement. This should detail what was acquired.
    
    
  • If the building was constructed for you, contact the contractor for building plans or the county/city planning commissions for copies of any plans.

For assistance and additional information, use these resources:

• IRS Disaster Assistance Hotline at 1-866-562-5227 FREE (Monday through Friday from 7 a.m. to 10 p.m. local time).
  
  
• IRS Publication 2194, Disaster Resource Guide for Individuals and Businesses
  
  
• IRS Publication 584, Casualty, Disaster, and Theft Loss Workbook – This can help individuals make a list of stolen or damaged personal-use property and figure the loss. It has a room-by-room listing to help recreate an inventory and figure the loss on the one’s home and its contents and one’s motor vehicles.
  
  
• IRS Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook – This is available to help businesses list stolen or damaged business or income-producing property and to figure the loss.
  
  
• Your tax professional.

Related Items:

• Form 4506, Request for Copy of Tax Return (PDF 58.1K)
• Form 4506-T, Request for Transcript of Tax Return (PDF 58.4K)
• Publication 2194, Disaster Resource Guide for Individuals and Businesses
• Publication 584, Casualty, Disaster, and Theft Loss Workbook (PDF 147.5K)
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook (PDF 86.1K)
• Federal Emergency Management Agency (FEMA)
• Small Business Administration (SBA) 
   
  Source: Internal Revenue Service

Preparing for a Disaster (Taxpayers and Businesses)

Planning what to do in case of a disaster is an important part of being prepared. The Internal Revenue Service encourages taxpayers to safeguard their records. Some simple steps can help taxpayers and businesses protect financial and tax records in case of disasters.
Listed below are tips for individuals and businesses on preparing for a disaster.

• Preparing for Disasters (Video)

Take Advantage of Paperless Recordkeeping for Financial and Tax Records

Many people receive bank statements and documents by e-mail. This method is an outstanding way to secure financial records. Important tax records such as W-2s, tax returns and other paper documents can be scanned onto an electronic format.
Be sure you back up your electronic files and store them in a safe place. Making duplicates and keeping them in a separate location is a good business practice. Other options include copying files onto a CD or DVD. Also, many retail stores sell computer software packages that you can use for recordkeeping.
When choosing a place to keep your important records, convenience to your home should not be your primary concern. Remember, a disaster that strikes your home is also likely to affect other facilities nearby, making quick retrieval of your records difficult and maybe even impossible.

Document Valuables and Business Equipment

The IRS has 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 can help you compile a room-by-room list of your belongings or business equipment. This will help you recall and prove the market value of items for insurance and casualty loss claims.
One option is to photograph or videotape the contents of your home and/or business, especially items of greater value. You should store the photos with a friend or family member who lives away from the geographic area at risk.

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.

Continuity of Operations Planning for Businesses

How quickly your company can get back to business after a disaster often depends on emergency planning done today. Start planning now to improve the likelihood that your company will survive and recover. Review your emergency plans annually. Just as your business changes over time, so do your preparedness needs. When you hire new employees or when there are changes in how your company functions, you should update your plans and inform your people.
There are real benefits to being prepared for disasters. The following preparedness strategies are common to all disasters. You plan only once, and are able to apply your plan to all types of hazards.

• Get informed about hazards and emergencies and learn what to do for specific hazards.
• Develop an 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 devices 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.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time and so do preparedness needs. Individual taxpayers should make sure they are saving documents everybody should keep including such things as W-2s, home closing statements and insurance records. 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.
Make sure you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it. Make sure you know what you should do if threatening weather approaches.

Count on the IRS

In the event of a disaster, the IRS stands ready to help. The IRS has valuable information you can request if your records are destroyed.

Immediately after a casualty, you can request a copy of a return and all attachments (including Form W-2) by using Form 4506, Request for Copy of Tax Return (PDF).

If you just need information from your return, you can order a transcript by calling (800) 829-1040 FREE or using Form 4506-T, Request for Transcript of Tax Return (PDF). There is no fee for a transcript. Transcripts are available for the current year and returns processed in the three prior years. IRS.gov is an indispensable resource as you prepare for and recover from disaster.

Source: Internal Revenue Service

Look to the IRS for Tax Help in the Event of a Disaster

IRS Special Edition Tax Tip 2015-09, June 1, 2015

June 1 marks the start of hurricane season. When a hurricane or other disaster strikes, the IRS wants you to know you can count on us for help. We can help you prepare for, and recover from, the destruction it causes. Here is some of the key disaster-related help and assistance you can get 24/7 on our IRS.gov website:

• Make a plan. Check out our IRS.gov page Preparing for a Disaster. It’s dedicated to help you plan before a disaster hits.
  
  
• Federally declared disasters. Special tax law provisions apply when the federal government declares a major disaster area. These rules can help victims recover financially after a disaster. For instance, the IRS may grant more time to file tax returns and pay tax.
  
  
• Faster refunds possible. You may be able to get a faster refund from losses suffered in a federally declared disaster area. You can claim losses related to the disaster on the tax return for the previous year. You make the claim by filing an amended return in most cases.
  
  
• Disaster declarations. Refer to Tax Relief in Disaster Situations. That page has a list of the latest disaster declarations and any related disaster tax relief.
  
  
• Around the Nation. The Around the Nation section of IRS.gov provides local tax news. It primarily includes IRS tax relief that applies to major disasters.
  
  
• Disaster relief. The IRS has many resources to help those who provide disaster relief. For more on that topic visit our page Disaster Relief Resources for Charities and Contributors.

Additional IRS Resources:

• Publication 2194, Disaster Resource Guide for Individuals and Businesses
• Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property)
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
• Reconstructing Your Records

IRS YouTube Videos:

• Preparing for Disasters – English | Spanish | ASL
• Help for Disaster Victims – English | Spanish | ASL

IRS Podcasts:
Help for Disaster Victims – English

Source: Internal Revenue Service