Annual Report Filing Mandate
The below information is a brief overview of the annual report filing mandate created by Act 122 of 2022. It is only a summary and is neither intended to constitute legal advice nor should it be construed as legal advice. Our attorneys are prepared to provide guidance and clarification to associations in fulfilling its obligations as it relates to the completion and filing of annual reports with the Pennsylvania Department of State. Our goal with this summary is to help our clients become aware of certain significant legal requirements associated with annual report filings.
Why did the Commonwealth enact a law that requires annual report filings with the Department?
Several states already require for profits and non-profits to file annual reports with its state agency or department tasked with collecting and maintaining entity records. The Commonwealth has historically collected a decennial filing/report from business entities generally. The annual report will replace that filing/report. The Commonwealth has now joined these other states that have already implemented a mandatory annual report filing requirement.
When did this section of the Act take effect?
The section of the Act detailing the annual reporting requirement took effect on January 3, 2024.
Who must file and does the annual report filing mandate apply to my business or non-profit?
It is imperative to highlight at the outset that this section applies to both domestic and foreign associations. For example, if a for profit or not-for-profit was formed in the Commonwealth, the annual reporting mandate applies to that business or nonprofit. With that said, any foreign association that is registered to do business in the Commonwealth must likewise be aware of and comply with the annual report filing requirement. Domestic business trusts are likewise required to file an annual report.
What is an annual report?
The annual report requires that the filer provide certain information to the department, including its name, jurisdiction of formation, the address of its registered office (subject to section 109), the name of at least one governor (for example, the director, member, or partner), the name and titles of the persons who are its principal officers as determined by the governor(s), the address of its principal office, and its entity number or similar identifier issued by the department. It should be noted that the department is collecting additional information about the officers with this annual report filing. If the filing does not contain all of the information required, the department has made clear it will reject the filing. If the filing is rejected, the department will promptly notify the filer of the rejection and return the report for correction. The information contained in the report must be entirely accurate and current as of the date the report is delivered to department for filing.
Is electronic filing of the annual report available?
Yes, the Commonwealth will be accepting annual reports electronically.
Is there a cost associated with the annual report?
In most cases, a filing fee will apply. The majority of filers will pay a $7 fee. A nonprofit corporation or a limited partnership or limited liability company with a not-for-profit purpose will not be charged a filing fee.
Will I get a reminder of this annual report filing mandate?
The section of the Act addressing annual reports requires the department to deliver a notice annually to each association required to file the annual report at least two (2) months before the annual report is due. However, caution must be exercised as the department has made clear that the failure of receipt of the notice does not release the filer from its obligation to deliver its annual report.
When must the annual report be delivered?
An annual report must be delivered to the department for filling each and every year, beginning with the calendar year after which an entity or association becomes subject to the section, and before July 1st in the case of a domestic or foreign corporation (both for profit or not-for-profit corporations), October 1st in the case of a domestic or foreign limited liability company (LLCs), and December 31st in the case of any other form of domestic or foreign association. The department has unambiguously stated that the annual report filing requirement begins in the calendar year 2025. Do not wait to update your information with the department if it’s not current to ensure receipt of notices delivered by the department. Moreover, do not delay in calendaring the applicable deadline(s).
What if I fail to file?
The failure to file will result in legal consequences. Per the Pennsylvania Department of State’s website, “[b]eginning with annual reports due in 2027, associations that fail to file annual reports in the 2027 calendar year will be subject to administrative dissolution/termination/cancellation 6 months after the due date of the annual report.” This consequence is significant indeed. If failure to file would occur, reinstatement might be available to the association but additional fees will apply.
(Jonna Stratton works closely with businesses as they navigate the challenges from start up to wind down, as well as those arising in daily operations. She assists corporate clients with contract drafting, asset purchases, leasing, transfers of business interests, trademark and copyright protection, and residential and commercial real estate transactions. In her nonprofit practice, Jonna counsels clients on how to obtain and maintain federal tax exempt status, as well as addressing other general nonprofit matters applicable to nonprofits and B Corporations.)