As a new tax season begins, the South Carolina Department of Consumer Affairs (SCDCA) and the South Carolina Department of Revenue (SCDOR) want to remind taxpayers to be vigilant against identity theft and tax refund fraud. Knowing what to look for and how to protect yourself can keep your refund out of the hands of criminals.

During Fiscal Year 2023, the SCDOR’s Discovery and Enforcement section saved taxpayers more than $65 million by preventing the filing of fraudulent state Individual Income Tax returns.

Overall, the SCDOR’s Discovery and Enforcement section stopped 5,765 fraudulent returns from being filed.

“There is no greater responsibility for the SCDOR than protecting compliant taxpayers and their personal information,” said SCDOR Director Hartley Powell. “Each year, our Discovery and Enforcement section pours through millions of tax returns to spot fraud. Their keen eyes and quick minds saved taxpayers $65 million last year and offer a great example of our commitment to enforcing our state’s tax laws.”

Analysts within the SCDOR’s Discovery and Enforcement unit look for two types of fraudulent returns:

• Completely fraudulent returns – This is commonly known as identity theft, where criminals steal the personal information of a taxpayer, then use that info to file a return and attempt to receive a refund.
• Legitimate returns that include fraudulent information – These are cases where actual taxpayers file their own returns using bogus information. This includes employers failing to pay Withholding Tax, taxpayers filing bogus W-2 wage statements, and those filing fraudulent expense deductions.

During the fiscal year ending June 30, 2023, the Discovery and Enforcement unit referred five cases for criminal prosecution.

The South Carolina Department of Consumer Affairs (SCDCA) has tips for protecting your personal information and identity:

• When filing online, use anti-virus software and ensure your computer is connected to a secure internet connection. Use strong and unique passwords and enable multi-factor authentication whenever possible. Do not use public Wi-Fi to file your return.
• Don’t respond to requests for personal information from phone calls, texts, emails, or social media messages.
• Fraudsters often pose as the IRS or SCDOR to scare and trick you into disclosing personal information or sending them money. Remember, the IRS and SCDOR will not call about taxes without sending a notice through the mail first.
• Consumers who believe they are the victim of a security breach, scam or identity theft are encouraged to seek guidance from SCDCA’s Identity Theft Unit. Call (844) TELL DCA (835-5322) or fill out an ID Theft Intake form by visiting consumer.sc.gov and clicking on Report Identity Theft.
• Use trusted, well established tax preparation websites. Don’t just choose a site because it is cheap. Many South Carolinians are eligible to file online for free with easy-to-use tax preparation software. Visit dor.sc.gov/iit-filing to view all your filing options.
• Use a qualified tax preparer. Taxpayers should make sure their preparer has a Preparer Tax Identification Number (PTIN) from the IRS. You can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to help find a preparer.

Taxpayers may interact with the Discovery and Enforcement section through the SCDOR’s identity verification process. When fraud is suspected, the SCDOR may mail taxpayers an Identity Verification Notice with information to help taxpayers validate their identity. Last year, the SCDOR sent more than 54,000 of these letters to taxpayers. Learn more about the identity verification process here.

Most taxpayers who receive an Identity Verification Notice aren't expecting it, but it's an important step in fighting tax fraud and ensuring taxpayers get the correct refund. If you receive one of these notices, be sure to respond promptly so the SCDOR can resolve the issue and send you your refund.

If you suspect or know of anyone or a business that has committed a state tax crime, such as tax evasion or tax fraud, contact SCDOR Criminal Investigation and submit a CID-27, Tax Violation Complaint Form to FraudAdvisor@dor.sc.gov or mail it to:

South Carolina Department of Revenue
Attn: Fraud Advisor
2070 Northbrook Blvd, Suite B7
North Charleston, SC 29406

About SCDCA

Established in 1974, DCA has nearly fifty years of experience in protecting South Carolina consumers while recognizing those businesses that act honestly and fairly. Cultivating a marketplace comprised of well-informed consumers and businesses prevents deceptive and unfair business practices, allows legitimate business activity to flourish, resulting in the promotion of competition and a healthier economy.