Our members have sent several questions regarding the NC-3 online portal process with the NC Department of Revenue. The following update should provide clarity on many of the questions posed, and the DoR will have an additional update for us to share with members by the end of this week.
In September/October, the DoR gives file specifications to accounting software providers to ensure the software is updated. The provider is encouraged to test their product through the DoR, and vetted providers get listed on the DoR’s website (new for 2019). Note that software providers may test and meet all requirements but choose not to go through DoR’s review process. Those providers will not be listed but the software may still meet DoR’s specifications.
On Quickbooks, the desktop version of the software will not support the NC-3 as a file upload, but will accept the W2. DoR will work with Quickbooks to see if this can be implemented next year. To go around this, you can upload a W2 through the software, and manually enter the NC-3. The DoR recognizes manual entry presents challenges for practitioners with many clients, but they encourage practitioners to do as much as they can electronically.
If a payroll provider submits W2s with an NC-3 and a CPA needs to file 1099s with no withholding, there is no need to file an NC-3 for the 1099s. If the 1099s have withholding, the CPA should submit the 1099s with an NC-3 with the best information available at the time of filing (i.e. include wage withholding if known). The Department is prepared to handle these scenarios. Importantly, an account ID is not needed to file 1099s with no withholding.
Many file formatting issues have arisen as practitioners try to convert PDFs generated by software, or Excel documents, into the required .TXT format. The DoR has released an Excel template for W2s that automatically converts the Excel file to .TXT.