RALEIGH — The North Carolina State Auditor’s Office has found more than a thousand state employees with out-of-state W-2 forms, according to a special report issued on May 8.
The Rapid Response Division of the State Auditor’s Office (OSA) conducted the special audit after the OSA found an employee who lived out of state and was not commuting to work. The OSA then initiated an investigation in partnership with the state controller’s office to see if other employees had a similar situation.
According to the special report’s findings, the OSA found 13 state agencies with employees who have out-of-state addresses on their W-2 forms, totaling 1,011 individuals. Of that total, 317 were located “beyond the neighboring states of South Carolina, Tennessee, and Virginia.”
The OSA recommended that agencies regularly update employee address information and annually verify tax forms for their employees.
Since an employer must file and pay tax and insurance on all employees, out-of-state employees with incorrect W-2 forms can impact state and federal taxes.
An employee who resides outside the state where they work can also be hit with paying taxes in both states, as North Carolina does not have an applicable reciprocity agreement with other states.
The N.C. Department of Revenue’s website has a frequently asked questions section with answers regarding taxes, withholding and filing.
