By Lora Ament, CPA, MBA
Former Tax Director at Louis Plung
Many state governments require entities organized under its laws to file an annual or biennial report confirming the existence of that entity. Instead, Pennsylvania has only required a decennial filing (once every ten years) to confirm the existence of any entity that has not made some other type of filing with the Pennsylvania Corporation Bureau during the preceding ten years.
PA House Bill 2057 Enacts an Annual Reporting Requirement
The Pennsylvania legislature recently passed and approved PA House Bill 2057, amending Title 15 of the Pennsylvania Consolidated Statutes, which now requires an annual report filing for various entities organized or authorized to do business in Pennsylvania. The bill was signed into law as Act 122 of 2022 on November 3, 2022. Therefore, the Pennsylvania Department of State will be replacing its current decennial filing system with an annual report filing system. This reporting requirement will apply to for-profit and nonprofit corporations and entities, including limited liability companies, limited partnerships and foreign associations registered to do business in the state.
Annual Report Due Dates
While Act 122 becomes effective at the beginning of 2023, the annual report requirements do not become effective until one year later, in 2024. The Act provides for differing filing deadlines depending on the type of entity:
- before July 1st for nonprofit and for-profit corporations;
- before October 1st for limited liability companies; and
- on or before December 31st for any other entity or association.
Required Annual Reporting Information
The annual report must be signed by the entity and provide the following minimum information:
- entity’s name, address of its principal office, and jurisdiction of formation;
- entity’s registered office in Pennsylvania;
- the name of at least one “governor” (i.e. director, manager, member, partner, etc.);
- names and titles of the entity’s principal officers, if any as determined by its governors; and
- its entity number or similar identifier issued by the PA Department of State.
Annual Report Filing Fees
Nonprofit corporations as well as limited partnerships and limited liability companies with a not-for-profit purpose will not be required to pay an annual report filing fee but other entities will be assessed a nominal $7 reporting fee. However, additional fees will be assessed if an entity is requesting reinstatement after dissolution. Entities will have the option to file their annual report electronically or by mail.
Failure to File an Annual Report
Entities failing to file an annual report within six months after it was due will be subject to the following sanctions:
- administrative dissolution if it is a domestic filing entity;
- administrative cancellation if it is a domestic limited liability partnership or electing partnership (not a limited partnership); or
- administrative termination of its registration if it is a foreign association, with the penalty that it will lose the right to its name.
An entity may file for reinstatement at any time after its administrative dissolution and will regain the right to its name unless it has been used by another entity during the period of administrative dissolution.
Any domestic filing entity that is administratively dissolved continues its existence as the same type of entity but may not carry on any activities except as necessary to wind up its activities and liquidate its assets or to apply for reinstatement. A domestic limited liability partnership or electing partnership that is not also a limited partnership and whose statement of registration or statement of election is administratively canceled continues its existence as a general partnership but not as a limited liability partnership or electing partnership.
However, because the annual reporting requirement represents a major change in Pennsylvania law that will affect all existing entities, the Pennsylvania Department of State will not start taking administrative steps until 2027 for an entity’s failure to file an annual report. This should give adequate time for Pennsylvania businesses to get familiarized with the reporting requirements before they may be subjected to the possibility of losing their names and/or registration with the state.
Please contact your Louis Plung advisor with any questions about the upcoming change in filings for PA entities related to Act 122 or email [email protected].