Ever Vigilant

North Carolina (and probably ever other state) shares tax information with the IRS. This is a huge benefit because the IRS is larger, better funded and has a lot more resources to examine returns. The IRS sends us completed audits and also regular tax returns that have a North Carolina address. The federal return is then matched against a state return. If no state return is found it is assigned to our non-filer section. There are a lot of legitimate reasons why a federal return would have a NC address but there is no state return (active duty military, college students...) so we send out a letter requesting information first. I'm heavily involved with the non-filer project and spend a lot of time on the phone answering questions. It usually goes something like this...

Ted "Did you live or work in NC in 2004?"
Taxpayer "Yes and I always file my taxes"
Ted "OK, I'll need to see your return and W-2's"
TP "I don't have them I (moved, apt fire, flooding damage, sent my only copies, filed electronically, shredded my return...)

but sometimes taxpayers just respond to the letter with the information required. So I was sitting at my desk going over correspondence when I noticed that we sent a letter to Kevin McPeek requesting information about 2003. He sent back his 2003 Indiana state return. For those that dont know, Kevin is my cousin Kat's husband, and they have never lived or worked in North Carolina. It took me a second, but I realized that this was someone else and checked it for no further action before continuing on.