Many North Carolina taxpayers will have to wait a little longer this year to receive their federal tax refund than in previous years. A federal law passed in late 2015, the PATH ACT, aims to prevent tax identity fraud, one of the fastest growing types of fraud. Because of this law, the IRS will delay issuing refunds for taxpayers claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until February 15. It should be noted, however, that the share of tax returns that incorrectly claim the EITC, the noncompliance rate, is lower than various other parts of the federal tax code.
As North Carolina taxpayers prepare to complete and file their tax return, here are some facts and resources that are available to help taxpayers keep more of their tax refund dollars in their pockets.
- North Carolina taxpayers can have their tax returns completed and filed free of charge at Volunteer Income Tax Assistance (VITA) sites located across the state. VITA tax preparers are trained and certified, and so tax filers can be confident that their tax return is completed and filed accurately. To find a VITA location, visit the IRS site (click here) and use the VITA/TCE Locator Tool near the bottom of the webpage, or call 1-800-227-7669.
- The IRS also has a Free File Program, which provides online tax preparation software that helps qualifying individuals with an income of $64,000 or less file their federal taxes free of charge. Taxpayers are encouraged to use these services – the Free File Program and VITA sites – to help them navigate this year’s delay and keep 100 percent of their federal refund. These free tax preparation services help consumers avoid alternative tax preparation services that offer quicker refunds but cost more as the result of high-interest payday loans or costly short-term advances.
- Tax filers should be sure to know how much they are charged by tax preparers to complete and file their taxes, prior to performing the services. Tax preparer entities are required by law to inform customers of the charges and fees associated with their respective services – these costs should be provided prior to performing the services. If this information is not publicly available, tax filers can contact the North Carolina Department of Justice, Consumer Protection Division and report this issue.
Nearly 1 million North Carolina tax returns claimed the federal EITC and more than 715,000 claimed the ACTC, according to the most current available IRS data. Helping taxpayers reduce the risk of falling victim to tax identity fraud is important, which can be detrimental to taxpayers in the long run. Furthermore, ensuring that tax returns are filed accurately is important to upholding the integrity of our federal tax system. Using free tax preparation services such as VITA sites and the IRS Free File Program helps in meeting these goals, while allowing taxpayers to keep more of their tax return.