DOR will be reasonable and work with you if your records have been destroyed by natural disaster. This does not, however, exclude you from filing returns or reports or from being audited.
Every effort should be made to find lost records, or partial records that may have "survived" a disaster. If partial records are recovered, they are the best place to begin a reconstruction.
A reconstruction of records is best approached in reverse order. In other words, begin with the end of the year and work backward. The following steps may be helpful in the reconstruction process:
- Determine exactly what has been lost.
- Determine if you lost the only copy of an item.
- For those items where you lost the only copy, rank the relative importance of the lost items, starting with those of highest importance.
- Make a list of the items you determine warrant the time and expense of reconstruction.
- Determine if there is a state, federal, or other agency from which you can request a copy of a lost report. For instance, you can request either a transcript of a filed return or a photocopy of a filed return from DOR. Either can be certified as an actual copy and can take the place of your copy of a lost return. Transcripts are available at no cost by filing a Nebraska Tax Return Copy Request, Form 23.
- For items of public record, contact your local courthouse for a copy.
For bank records, contact your bank. It could be expensive to get copies of canceled checks, but they are available.
In order to continue the filing or audit process, there are options available:
- DOR can get data from a similar business in the area and use that to estimate the taxable percentages for your business.
- A vendor analysis can show the tax generally charged by that vendor – the missing records may be allowed as “tax paid to the vendor.” You can also contact your vendors to get copies of invoices, if necessary.
- Auditors can also work with records that you do have – many times, they can look at current records and project backwards.
- Be sure to check for the existence of electronic records available to be reviewed and tied to items such as asset purchases.
Neb. Rev. Stat. § 77-27,115 provides penalties for willful failure to file or to maintain records. Penalty may be abated if the lack of records was due to a natural disaster or other casualty.