The North Carolina Department of Revenue announced that it will again automatically waive the penalty for failure to file Form NC-3, Annual Withholding Reconciliation, and

Forms W-2/1099 electronically for calendar year 2019. However, the deadline for filing, whether electronically or on paper, remains January 31, 2020.?(Important notice, changes to filing requirements for Form NC-3 for tax year 2019.)

Under N.C. Gen. Stat. Section 105-236(a)(10)d, the Department is required to assess a $50 penalty against an employer that fails to file an information return with the Department by the date the return is due and in the required electronic format. Under Session Law 2018-5 and effective June 12, 2018, employers are subject to an additional penalty of $50 per day, up to a maximum penalty of $1,000, for failure to file Forms NC-3, W-2 and 1099 by the date the returns are due (January 31) and imposes a new $200 penalty for failure to file informational returns electronically. The $200 penalty for failure to file electronically was also waived for calendar year 2018.

The Department is extending the automatic waiver for calendar year 2019 because some software vendors still do not provide support for the electronic filing of Forms NC-3, W-2 and 1099. This is an automatic waiver — no action is required.

Requirement to file certain Forms 1099-MISC also waived

The notice also includes a waiver from the requirement that a payer file Forms 1099-MISC for calendar year 2019, if the form does not report that the payer has withheld North Carolina state income tax. The reason given for the waiver is again that certain software vendors do not provide adequate support for the electronic filing of Forms 1099-MISC.

As a result, notwithstanding the provisions of Administrative Rule 17 NCAC 06C .0203, for calendar year 2019, the Department will not require taxpayers to submit a paper or electronic copy of any Form 1099-MISC to the Department that does not report North Carolina income tax was withheld. Note, however, that Forms 1099-MISC that report that North Carolina income tax was withheld must be filed with the Department as a part of a payer's annual report filing requirement.

This differs from the federal requirement that Forms 1099-MISC with nonemployee compensation shown in box 7 be filed electronically by January 31, whether or not federal income tax was withheld.

For more information on filing Forms W-2, see the Department's website.

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