As tax season officially begins in the state, House Speaker Rep. Tim Moore (R-Cleveland) released a statement reminding citizens to file their taxes, and announced the effects of recent fraud prevention measures taken by the legislature and the Department of Revenue.
The new fraud prevention laws in effect in the state are to thank for an 18 percent uptick in cases of identify fraud in the state, according to Moore.
Moore said that in addition to the increase in identified cases there is a correlating increase in savings from identified fraud cases of 20 percent for the 2016-2017 fiscal year.
The numbers come from a report released by the Department of Revenue (DOR) on the tax compliance reform changes put in place to protect against fraud during tax season.
The series of laws were aimed at strengthening the DOR audit strategy and improving resources and technology to help streamline the process of identifying fraud.
The program is run through the state Government Data Analysis Center.
“Tax season has never been any citizen’s favorite time of year,” Moore said. “but the North Carolina House has worked to make it less painful and a lot safer for our citizens.”
The series of new laws strengthen DOR’s audit strategy and technology resources while streamlining the process of identifying fraud through the state’s Government Data Analytics Center (GDAC), according to the agency.
“Tax season has never been any citizen’s favorite time of year,” Moore said. “but the North Carolina House has worked to make it less painful and a lot safer for our citizens. The General Assembly has kept a bipartisan commitment to reduce fraud, identify theft, and other tax avoidance activities.”
In 2015 the state General Assembly passed the North Carolina Competes Act. The law requires businesses to submit their employees’ wage forms electronically to DOR by January 31st under the idea that receiving electronic forms from employers earlier in tax season significantly enhances DOR’s ability to detect fraudulent refunds and recover taxes owed to the state.
The act also strengthened compliance reporting requirements for alcohol transactions, cash intensive businesses, lottery winners, licensing boards, and contractors.
DOR also initiated a Pilot Audit Program in 2015 to change the department’s advanced analytical modeling by upgrading the program with resources previously unavailable to the staff.
Moore also said that in addition to increased revenues from the pilot compliance initiative, DOR also increased its operational and financial efficiency at the same time.
The program improved the state’s capability to identify discrepancies in tax filings, improve audit selection and allocate resources effectively.
Moore said the program provides DOR’s field staff to look at new measures that it did not have in previous years, including embedded geographical search capabilities, historical data, and emerging trends.
“These safeguards maintain a fairer economy where every business and citizen is treated equally,” Moore said.
In addition to those reforms in 2017 the legislature passed SB628, which strengthened transaction reporting requirements on debit and credit card processors and further reduce fraudulent income claims.
In fiscal year 2016-1027 DOR pursued 43,000 cases of refund and identity theft fraud saving taxpayers $57 million, Moore said.
DOR pursued 23 cases of fraud against cash intensive businesses last year, saving taxpayers $1.2 million, 34 cases of fraud involving credit and debit card transactions totaling $1.6 million in savings, and 4,000 cases against home-based businesses that year equaling $18.1 million in taxpayer savings.
Due to the more intensive program tax refunds may take a little longer to be paid out and filers are encouraged to file their taxes earlier to receive their returns as soon as possible.
Moore said that with the filing season officially opening this week that he wants to remind all North Carolinians that filing taxes is a “civic duty essential to delivering core services from the North Carolina state government.