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Changes made by the Internal Revenue Service

If the Internal Revenue Service has made changes to your federal income tax return, you must file an amended North Carolina return to report the changes that apply to your North Carolina return.

You must report the changes to the State by filing an amended return within six months from the date you received the report from the Internal Revenue Service. You are subject to the late filing penalty of 5 percent per month (maximum 25 percent) for not filing an amended return to report federal changes in a timely manner. If you do not amend your State return to report federal changes and the Department of Revenue receives the report from the Internal Revenue Service, an assessment may be made by the Department within three years from the date of receipt of the report and you forfeit your right to any refund which might have been due by reason of the changes.

Under G.S. 105-241.10, the Department may assess additional tax that results only from adjustments related to the federal determination if the tax year is otherwise barred by Statute and you timely report the changes.

For tax years beginning on or after January 1, 2012, North Carolina determines your taxable income based upon your federal adjusted gross income and in prior years your North Carolina taxable income was determined based on your federal taxable income. Therefore, it is very important that you report to the Department any changes made to your federal return as soon as possible to receive any refund due or pay any additional tax owed to avoid a penalty.