NC-3 Updates from NC Department of Revenue

As was posted yesterday, we have been in frequent contact with the Department of Revenue regarding incompatibility of tax-filing software with the NC-3 online portal. We posed a number of questions to DoR yesterday afternoon, and have just received the following responses from them (view this PDF for additional Q&A).

o   Is there any possibility of a blanket penalty waiver again this year? DOR will not issue a blanket waiver this year.

o   If not, will you please provide guidance to our members as to what types of circumstances will constitute penalty relief? Refer to the penalty waiver form, NC-5501, as there are reasons listed on the form for the taxpayer to select why they are requesting a penalty waiver.  The list is not all inclusive, however, DOR will consider these types of reasons when considering a penalty waiver.

o   Is there any possibility this year’s employee threshold can be adjusted?  North Carolina state law requires that all employee wage and income statements must be electronically filed with the Department. Therefore, an employee threshold does not exist for the filing of these forms.

o   DoR has been communicating with Thomson Reuters, and TR said they would roll out an update this week to allow for proper file conversions. Can we get confirmation from DoR on this? Similarly, have there been any updates made to the QuickBooks desktop version?  DOR is still waiting to hear back from Thomson Reuters to get an update. In regards to QuickBooks, the current product only supports the W-2 text files. At this time, QuickBooks has not communicated any updates to their desktop version.

o   Our members have said the Excel template DoR provided (which will convert an Excel to a .TXT file for them to upload to the NC-3 portal) still requires a lot of manual entry, and is essentially like starting from scratch. Can DoR confirm this, or if our members are missing an important instruction for how to do this correctly. The Department realizes the Excel template may not be ideal for CPAs with a large number of clients because a separate template must be created for each taxpayer.  The information must be entered into the excel template, including the option to copy and paste information if the information exists in another document in a similar format.  The Excel option is most ideal for a small mom-and-pop company that does not have the software to create the .txt file but has too many employees to use the manual entry option.

As we also shared, a number of these issues are statutory in nature, and can only be modified by the North Carolina General Assembly. With the assistance of our members, we will work diligently to address these matters when the session reconvenes in January.

In addition, we will continue our conversations with both the Secretary of Revenue and other DoR leaders directly, and keep you all aware of updates as they are received.