When Disaster Strikes: Tips for Your business

business disaster

When your business is affected by a disaster, there are many agencies and programs ready to provide aide to assist in your recovery. Let’s look at some of the resources available to business owners before and after disaster strikes.

Who Is Affected By Disaster?

  • taxpayers whose residence or place of business is located in the disaster area
  • taxpayers whose business has records stored in a disaster area

How Do I Know If I'm Affected?

When the President declares a federal disaster, the IRS issues a disaster announcement to list the state(s) and counties eligible for relief, the disaster dates, and the different types of tax relief granted to affected taxpayers. Additionally, the IRS regularly sends out letters with Publication 3067 enclosed to zip codes in affected areas advising taxpayers that since their address of record is located in a federally declared disaster area, the IRS has automatically granted them disaster relief.

Taxpayers that store records in affected areas may not have a physical address registered with those storage locations to be notified and as such those taxpayers would need to self-identify as being affected by calling the IRS at 866-562-5227 to request available disaster relief.

Calculating Your Loss:

The IRS provides Publication 584-B Business Casualty, Disaster, and Theft Loss Workbook. This workbook is designed to help you figure your loss on business and income-producing property in the event of a disaster, casualty, or theft.

Emergency Relief Available On Your Tax Return:

Businesses in a federally declared disaster area can get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return.

Can I Still Claim a Casualty Loss If I Get an SMB Disaster Load to Help My Business?

The Small Business Administration offers low interest disaster relief loans to eligible affected businesses. See more information here: https://www.sba.gov/funding-programs/disaster-assistance. Since these loans are required to be repaid, they do not affect the amount of casualty loss eligible to be claimed by the taxpayer.

What About My Taxes?

Special tax law provisions can help businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area. The IRS may grant additional time to file returns and pay taxes. See more information here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

How Do I reconstruct My Business Records?

The IRS offers some steps to take after a disaster so taxpayers can reconstruct their records and prove loss of business property. Your business may be denied loans or recovery funds without necessary business records. Reconstructing records after a disaster may be essential to your efforts in getting federal assistance or insurance reimbursements. The IRS provides guidance to help business owners who have lost or damaged business records. More information is available here: https://www.irs.gov/newsroom/reconstructing-records-after-a-natural-disaster-or-casualty-loss

Federal Agencies with Disaster Information:

IRS Disaster Assistance Hotline at 866-562-5227 — Monday through Friday from 7 a.m. to 10 p.m. local time

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