As part of Hurricane Preparedness Week, the IRS has issued guidelines for taxpayers to prepare your finances for natural disasters.
The best leaders set a good example for the rest of us. Congressman William Jefferson of New Orleans, a member of the tax-writing House Ways and Means Committee, is a case in point. We will review the IRS guidelines and note how well he complies with them in his own financial life.
The IRS says:
Take Advantage of Paperless Recordkeeping
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.
It appears that Congressman Jefferson falls short in this area:
William Jefferson, a Democratic congressman from New Orleans who is being investigated for bribery, was caught on camera taking the money in $100 notes from an FBI informant, according to the document. His conversations were also recorded.
"All these damn notes we’re writing to each other as if we’re talking, as if the FBI is watching," he allegedly told the informant posing as a businesswoman, who was wearing an FBI recording device.
Far too much paper under the circumstances. Of course, he may have scanned his notes into digital format later. And it's entirely possible that he made sure that no records existed, on paper or otherwise.
The IRS says:
Document Your Valuables
One option is to photograph or videotape the contents in your house, especially items of greater value. The IRS has a disaster loss workbook (Publication 584) that can help you compile a room-by-room list of your belongings.
Give the Congressman an inadvertent A+ here:
A Louisiana congressman, said by the government to have been videotaped accepting $100,000 in $100 bills from an informant, said Monday he would not resign. He called an FBI search of his Capitol office “an outrageous intrusion.”
“I believe that it's totally inappropriate to use the police powers of the federal government to come into the office of a congressman. This hasn't happened before,” Democratic Rep. William Jefferson told reporters.
Jefferson, under investigation for bribery, declined to talk about the videotape or other details alleged in an FBI affidavit presented to a judge as evidence for a warrant to search his office Saturday night and Sunday.
Not only were his valuables videotaped, but his videotape was secured offsite. Well done.
The IRS says:
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.
No evidence that Mr. Jefferson did anything like this. Would such a search have turned up the government informant who is causing the Congressman so much trouble?
The IRS says:
Update Emergency Plans
Emergency plans should be reviewed annually. Personal and business situations change over time and so do preparedness needs.
One important aspect of emergencies is to make sure you have enough emergency cash, and that your refrigerator is stocked. Hat's off to the congressman on this score:
The dilemma was complicated by new details contained in an 83-page affidavit unsealed on Sunday, including allegations that the FBI had videotaped Jefferson taking $100,000 in bribe money and then found $90,000 of that cash stuffed inside his apartment freezer.
Mr. Jefferson also had a backup plan for dealing with his house in Louisiana during Hurricane Katrina:
Amid the chaos and confusion that engulfed New Orleans after Hurricane Katrina struck, a congressman used National Guard troops to check on his property and rescue his personal belongings — even while New Orleans residents were trying to get rescued from rooftops, ABC News has learned.
Finally, the IRS has comforting advice:
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.
I think that in the coming months, Mr. Jefferson truly can count on some attention from the IRS.
So how does the congressman stand up? A B, I'd say. He kept his refrigerator full, had solid backup plans to secure his property in an emergency, and had his valuables videotaped; his failure to get bonding for his associates and his excessive use of paper records keep him from getting full marks. We can all learn from his fine example.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to