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ASK THE EDD LAWYER – HOW TO PROTECT YOUR TAX RECORDS IN AN EVENT OF A DISASTER

By Robert S. Schriebman

June 5, 2015

Introduction

In California we are constantly warned to be prepared for "The Big One." This warning refers to the "Mother of All Earthquakes." 2015 is another drought year. We may be in for the "Mother of All Forrest Fires." Next winter we might see "The Mother of All Floods." On June 5, 2015 the IRS published a bulletin dealing with the preservation of your tax records in the event of a disaster. This article will discuss this latest IRS bulletin.

Use Electronic Records

Many of us do online banking. At least our bank records are stored electronically. The IRS recommends that you scan records and insurance policies onto an electronic format. They also advise you to download important records to an external hard drive. Use a USB flash drive or put your records onto a CD or DVD. I recommend making several sets of these electronic records. Keep a set in your bank safe deposit box or in a fire-proof safe or water-proof container. You should also consider sending copies of your records to someone out-of-state whom you can trust not to look into your financial affairs.

I know a fellow who periodically stores his important records and buries them in his back yard in a large diameter PVC enclosure.

Document Valuables

Most of us have accumulated more items of personal property and stuff than we realize. We have no idea what the nature and extent of our loss would be in an event of fire, earthquake or flood. Insurance companies are going to "low ball" us when it comes to making an insurance claim. The deductible is also going to hurt us. That is why I make it a point every three months or so, to take digital photographs of valuable items in my home and office and store them on a camera memory card. I keep the card "offsite." I send them to a trusted friend or relative to keep them for me.

Tax Return Fees Are Waived In The Event of A Disaster

You can request a copy of a prior filed tax return by completing Form 4506 "Request for Copy of Tax Return." The usual fee is $50 per copy. However, this fee will be waived in an event of a disaster. Tax Return Transcripts are available free of charge by calling 1-800-908-9946.

The IRS Can Help You

The IRS is here to help you in the event of a disaster. They have a hotline number available to you at 866-562-5227. This number can provide special help with disaster-related tax issues.

Additional IRS Resources:

  • Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property)
  • Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
  • Publication 547, Casualties, Disasters, and Thefts
  • Publication 583, Starting a Business and Keeping Records

IRS YouTube Videos:

  • Preparing for Disasters - English / Spanish / ASL
  • Help for Disaster Victims - English / Spanish / ASL

IRS Podcasts:

  • Help for Disaster Victims - English

Conclusion

It's best to be pro-active. After the disaster hits it is too late to inventory your losses. You may be entitled to a causality loss per Internal Revenue Code § 165(c) (3). You are entitled to deduct all casualty losses not covered by insurance, less a small deductible.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure", both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures - A Manual for Practitioners" published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures - A Manual for Practitioners" published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure", both published by Commerce Clearing House.

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