The N.C. Department of Revenue?s policy of reviewing tax returns from large families to weed out cheating has gained the notice of tax officials in Kentucky, public records show.
According to e-mail correspondence obtained by Carolina Journal, a supervisor with the Kentucky Department of Revenue expressed interest in learning more about the review method, potentially for use in her own state.
?I am particularly interested in knowing what documentation was used to prove the dependents claimed were in fact legitimate dependents,? wrote the official in an e-mail dated June 25, 2009. ?This is a problem that has concerned many at the [Kentucky Department of Revenue] for several years. Your help would be greatly appreciated.?
North Carolina?s review of families with eight or more dependents has drawn criticism in recent weeks.
Revenue Department Secretary Kenneth Lay says the verification is meant to cut down on cheating, but some taxpayers feel the review unfairly targets them because of their family size.
?To us this represents a subtle but major shift from our founding American philosophy,? said one parent.
This is the first time the Revenue Department has taken such an action. Another e-mail obtained by CJ gives some background on why the Department chose to take this course:
The Department has identified erroneous filing status and inflated exemptions as a compliance problem. However, in prior years, the Department did not have the resources to conduct an audit on each individual that potentially could have filed a tax return using the wrong filing status or included dependents in the tax return not entitled to them.
As part of our effort to become more efficient in addressing this non-compliance issue, we implemented a plan to verify filing status and dependents prior to issuing a refund in lieu of subjecting the taxpayer to an audit.[Emphasis in original.]