Thousands Receive N.C. Revenue Notices That Look Like Bills | Eastern North Carolina Now

    Publisher's note: The author of this political post Barry Smith, who is an associate editor to the Carolina Journal, John Hood Publisher.

Department mailed nearly 150,000 computer-generated 'assessments'

    RALEIGH     A stint as a prosecutor in a South Carolina county ended up earning Eric Rowell a notice of failure to file a North Carolina income tax return for 2008. Rowell neither lived nor worked in North Carolina that year. But that didn't keep the N.C. Department of Revenue from sending him an automated notice of intent to assess taxes for that year.

    As it turns out, Rowell isn't the only person who received such a notice. His wife got one too, as did another acquaintance of his.

    In fact, a Department of Revenue spokeswoman says that 147,800 "Notices of Intent to Assess" have been mailed since the department began sending out such notices in 2010.

    "It's not an actual bill," Beth Stevenson, a spokeswoman for the N.C. Department of Revenue said.

    But the notice does not declare that it is not a bill. Nor were the letters reviewed by Revenue Department employees before they were mailed.

    "I believe that if a private business sent consumers a notice that looked as much like a bill as the 'Notice of Intent' does, it would violate unfair and deceptive trade practices and other consumer protection laws," said Jeanette Doran, executive director of the N.C. Institute for Constitutional Law. "The Notice of Intent lists a total amount due and a due date. People would have a very hard time recognizing that the notice is not actually a bill they have to pay."

    The notice tells the recipient that the N.C. Department of Revenue has obtained information from the federal IRS regarding the recipient's income. It details the income information, including income from W2 and 1099 forms.

    In a section titled "Substitute for a Return," the form calculates taxable income, deductions, late payment interest, and penalties. The last line in that section lists the "Total Amount Due."

    The bottom of the page provides a payment voucher for the recipient to fill out.

    The second page offers options for paying the due amount, tells the recipient that action is required with in 30 days and lists four different actions the recipient can take. Those actions are:

    1. Pay the total amount due, if the recipient agrees with the statement.

    2. Fill out an appropriate form and make a payment if the recipient agrees that a return is due, but disagrees with the amount due.

    3. Furnish a copy of the recipient's tax return (or the exact name, address, and Social Security number) if the recipient has filed a return.

    4. Attach an explanation of why the recipient isn't required to file a return to a copy of the notice and return it to the Department of Revenue.

    Rowell questions why he should have to go to such great lengths to respond when he wasn't required to file a return.

    "Why is the burden placed on the innocent party to justify the error of the state Department of Revenue?" Rowell asked.

    He also wonders how many of the notices go out in error.

    Stevenson said that of the 147,800 notices sent out, 81,300 cases have resulted in billed assessments.

    "How many of those payments represent excessive payments or duplicative tax payments?" Rowell wonders.

    Revenue Secretary Lyons Gray declined to be interviewed for the story.

    Stevenson said that she was responding on Gray's behalf.

    "We are always willing to evaluate our practices and find ways to better communicate with our taxpayers," Stevenson said. "Altering the heading in our Notice of Intent to Assess, in this case, would fail to communicate the importance of the document to a taxpayer. However, these notices do include detailed explanations, instructions, and contact information for a taxpayer to speak directly with our staff to resolve the situation."

    Doran said she disagreed that inserting a statement, such as, "This is not a bill," would make the document any less important.

    "Common sense would tell you that any notice that you get from the Department of Revenue is important," Doran said.

    Stevenson continued. "We receive large volumes of data from the IRS ... allowing us to identify revenue rightly due the state of North Carolina. We generate thousands of notices each month. We do spot checks of those documents to ensure accuracy; however we do not have the resources or employees to manually review each notice before mailing.

    "Each individual, business, company, etc. ... in North Carolina should file and pay their fair share of taxes as the law dictates. These notices are a tool to make sure everyone is held to the same standards and accountability in their tax obligations."