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JohnH

NC Payroll Reporting - Copy 1 of W2

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If anyone happens to be preparing payroll reports with NC withholding, there's a new wrinkle this year.  For the past 2-3 years, NC has been requiring that the Copy 1 of W-2 (accompanied by the NC3) be filed electronically by Jan 31.  However, around mid-December they have been granting waivers from the electronic filing requirement because their portal wasn't ready for filers of small quantities of W-2.  As of Dec 24, 2018, there has been no waiver granted for 2018 forms.  This means that there's a $200 penalty for filing paper copies of NC3/W2 even if you only file a small number of the forms.  

The NCDOR is still working on a way to manually enter the W2/NC3 information using a specially-designed spreadsheet.  The 2018 spreadsheet was available for trial use until a couple of weeks ago, when they took it down for "maintenance", stating that now it won't be available until Jan 2, 2019.  Assuming they get it back up and going, this will mean that employer data and individual NC withholding data will need to be entered manually if the filer uses the spreadsheet (unless of course they grant another waiver in the upcoming week).   

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Thanks for the heads-up John. I have two clients that I will be compiling the required documents to file the enc3 and this information is very helpful. I did see where they have closed down the enc3 filing until Jan 2. 

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Terry:  I've mentioned this issue to a half-dozen people involved in payroll report processing for small employers.  None of them knew about it.  That's a small sample size, but still it makes me question how well NCDOR has publicized the change.  Once could argue that they've telegraphed the change by having put the requirements in place and then issuing a waiver for 2-3 years.  However, it could also be argued that the repeated issuance of the waiver puts people to sleep.  

A couple of reactions I got were that paper is still OK if you only file "a few" forms.  In one case I asked if they were confusing the "over 10" requirement for electronic filing that the Employment Security Commission announced via email within the past couple of weeks.  That person immediately realized that was the basis for their assumption about the NC3/W2 filing requirement. 

In any event, unless another waiver is issued in the coming week or two, I think there are going to be many small employers and accountants being hit with the $200 penalty after they paper file.  (NCDOR already has an after-the-fact waiver request form for that specific situation BTW, which may actually be a part of their overall implementation plan).  

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I tried the NCDOR site to upload W-2s without success. Also, cannot go from .pdf to (flat) .txt. as required, even after downloading various freeware. I'm stuck with rich rtf; docx; etc. It can't be this difficult. Also, I don't see where I can manually enter payroll. I contacted NCDOR but was read a script. Thoughts?

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Great news!  They finally relented and are now allowing paper filing of the NC3/W2 Copy 1.  The penalty waiver is in effect for another year.  I had already finished filing for my clients through their portal, so I learned a lot about how it works.  The process really is as tedious as it first appears, and I don't see how they're ever going to make it user friendly.  But at least they have another year to figure it out.  This task of turning tax preparers into uncompensated data entry clerks marches forward. If I'm still preparing payroll reports next year, my clients are going to see a large increase just to cover this specific task.

For now, you can paper-file as usual for the 2018 forms.  The due date is still Jan 31, 2019, though. There's a pretty stiff per-form penalty for missing the deadline.  

Here's the notice:

https://www.ncdor.gov/documents/important-notice-automatic-waiver-penalty-failure-file-form-nc-3-format-prescribed-secretary

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I just created a Enc3 application file and each file format was accepted successfully. Here is what I think the catch is. We should download (which I did) the .txt file format template for the Enc3 W-2 file. If you use the template correctly, there won't be any problems. However, I suggest running the test within the website first. I am using Drake Accounting and figured out that Drake will save the NC-3 form in the proper format with the proper form extension. With that said, the problem may very well be with software companies for processing payroll aren't allowing the end user to save the file properly. I looked everywhere on NC's site for a template for the NC-3 or how to save the form from there to no avail. I hope this helps a bit. I guess if all else fails, submit the packet manually or mail the forms in. As John sated above the penalty for not filing electronically is waived. 

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