Disaster
Strikes: Tips
for Recovering Lost Data
Disaster
Strikes. Your world comes crashing down. All your books and records
are ruined and gone. But your still have to file your tax returns.
What now?
The first
place to start is to salvage what records you can. Assuming you find
nothing helpful, here are some tips to get your started.
- Get
copies of previous year’s tax returns. You might be able to get
these from your tax preparer or if you did them yourself, you
can order them directly from the IRS. Use IRS form 4506 to request
a copy of returns.
- Get
copies of bank statements from your bank. You can use this to
determine deposits and withdrawals. You might not know what you
sales are exactly, but if you file on a cash basis, you can at
least work from total deposit subtracting obvious non-taxable
items such as loans from banks, shareholders, transfers from other
accounts etc.
-
Seek information from suppliers and customers. Many of them will
have accounting records that show how much you paid them or how
much they paid you during the year.
-
Use the ratios from the previous year’s returns to help fill in
the blanks. Most businesses have fairly steady cost of sale ratios.
Thus if you can determine sales you should be able to reasonably
approximate cost of good sold.
-
Contact your state’s revenue department. They should have records
of sales tax returns filed and state withholding and unemployment
reports.
-
Your own employees may be of help too. Ask for check stubs they
may have kept to recreate your payroll records. If you used a
payroll service, they can probably help you too.
-
When all else fails, use the best possible estimates you can.
When you sign a tax return, you are stating that the return is
based on the best available information. The IRS and your state
tax department will probably be understanding of your situation.
The
most important thing is to start early. It will take time to gather
together the information to get your accounting back under control.
Banks and other people will need time to pull together records you
need.
-Mark
Edgar, CPA
