By Attorney Jacquelyn M. Yeakle
March 1, 2024
Two new laws have recently been enacted that may affect your business. The laws are directed at compelling disclosure of the current ownership interests in your business. More importantly, both carry significant penalties for non-compliance. The first new law likely requires your business to file an annual report with the Pennsylvania Department of State. The second law likely requires your business to file a report with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury. Below is a brief overview of both laws.
Annual Report to the Pennsylvania Department of State:
In 2022, Governor Wolf signed into law Act 122 of 2022, which created an annual reporting requirement for domestic and foreign filing businesses. The following types of business must file this annual report: Domestic business corporations, limited liability companies, nonprofit corporations, limited liability (general) partnerships, electing partnerships that are not limited partnerships, limited partnerships (including limited liability limited partnerships), professional associations, business trusts, and all registered foreign businesses.
The deadline for this initial report is not until 2025. Specifically, the deadline for: (1) domestic and foreign business and nonprofit corporations is June 30, 2025, (2) domestic and foreign limited liability companies is September 30, 2025, and (3) all other associations is December 31, 2025, and annually thereafter. Each year, the Department of State will send you a notice of the filing requirement at least two months before the annual report is due. To ensure that you receive this reminder, please make sure that the registered address for your business is correct. The annual filing fee is $7 for all for-profit businesses and $0 for all non-profit businesses.
Report to FinCEN:
In 2021, Congress passed the Corporate Transparency Act, which creates a new beneficial ownership information reporting requirement as part of the U.S. Government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. The following types of businesses must file this report: Corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States. Twenty-three types of entities are exempt from filing this annual report, such as many non-profit entities.
If your business existed on or before January 1, 2024, then you must file the initial report by January 1, 2025. If your business is created or registered to do business in the United States on or after January 1, 2024 and before January 1, 2025, then you must file the initial report within ninety days after receiving actual or public notice that its creation or registration is effective. The filing fee is $0. This report is not an annual requirement, and it only needs submitted once, unless you need to update or correct the initial report.
Please feel free to give us a call if you would like us to help you navigate these new State and Federal reporting requirements.
