N.C. Tax Reforms Prevent Fraud, Protect Families’ Refunds From Identity Theft

Raleigh, N.C. – Fraud prevention laws recently enacted by the North Carolina General Assembly are guarding against identity theft and protecting millions in state revenue from scammers this tax season.

The state Department of Revenue (DOR) attributed an 18% uptick in cases of identified fraud and a 20% uptick in savings for the 2016-2017 Fiscal Year to the legislature’s tax compliance reforms that are in place to protect refunds again this year.

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 anyone’s favorite time of year,” said House Speaker Tim Moore (R-Cleveland), “but the North Carolina House has worked to make it less painful and a lot safer for our citizens.” 

In 2015 the state General Assembly passed the North Carolina Competes Act, which requires businesses to submit their employees’ wage forms electronically to DOR by January 31st.

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 North Carolina Competes Act also strengthened compliance reporting requirements for alcohol transactions, cash intensive businesses, lottery winners, licensing boards, and contractors.

“The General Assembly has kept a bipartisan commitment to reduce fraud, identify theft, and other tax avoidance activities,” Speaker Moore continued.

The state General Assembly and DOR also initiated a Pilot Audit Program in 2015 to augment the department’s advanced analytical modeling with resources previously unavailable to its staff.

In addition to increased revenues from the pilot compliance initiative, DOR also increased its operational and financial efficiency.  The program improves the state’s capability to identify discrepancies in tax filings, improve audit selection and allocate resources effectively.

The pilot program provides DOR’s field staff with new insights, 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 2017, the legislature passed Senate Bill 628 Various Changes to the Revenue Laws to strengthen transaction reporting requirements on debit and credit card processors and further reduce fraudulent income claims.

The state Department of Revenue pursued 43,000 cases of refund and identity theft fraud in the 2016-2017 fiscal year, saving taxpayers $57 million.

The agency 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 for $1.6 million in savings; and 4,000 cases against home-based businesses in the 2016-17 fiscal year for $18.1 million in taxpayer savings.

Refunds may take a little longer under the fraud prevention process and filing early can further protect against identity theft.  North Carolinians should file their tax returns as soon as possible.


This week marks the start of the 2018 tax filing season for the North Carolina Department of Revenue (DOR). All citizens and business are reminded that filing and paying 2017 taxes is a civic duty essential to delivering core services from the North Carolina state government .

The DOR is now accepting personal income tax, corporate income tax, partnerships, S-Corp, and Trusts at www.ncdor.gov. Citizens that qualify can file their taxes for free online at https://www.ncdor.gov/ncfreefile.