New Pennsylvania and Federal Corporate Reporting Requirements for Incorporated Associations
Pennsylvania Act 122 was signed into law by Governor Wolf on November 3, 2022. Among various updates to Title 15 of Pennsylvania’s Consolidated Statutes (dealing with Corporations and Unincorporated Associations), Act 122 follows a national trend to add transparency to corporate action. Significantly, it replaces Pennsylvania’s decennial reporting requirement with an “Annual Report”, effective on January 3, 2024.
As set forth on the Pennsylvania Department of State website, the new annual report filing is required for:
• Domestic business corporations
• Domestic nonprofit corporations (which includes HOA and condo associations)
• Domestic limited liability (general) partnerships
• Domestic electing partnerships that are not limited partnerships
• Domestic limited partnerships
• Domestic limited liability companies
• Domestic professional associations
• Domestic business trusts
• All registered foreign associations
The annual report requirement begins in calendar year 2025. Similar again to other states, failure to file the annual report will subject the association to administrative dissolution/termination/cancellation and loss of the protection of its name. The annual report will include the following:
• Business name
• Jurisdiction of formation
• Registered office address
• Name of at least one governor (director, member, partner, etc. depending on type of association)
• Names and titles of the principal officers, if any
• Address of the principal office
• Entity number issued by the Pennsylvania Department of State
Although reporting forms do not appear to be available at this time, the Department of State intends to “mail notice to the registered office address of each association required to make an annual report at least two months prior to the respective deadline, reminding it of the need to make an annual report.” For this reason, it is vital that all incorporated Pennsylvania associations verify and update their registered corporate address as soon as practicable. As it is the corporation’s obligation to update its filing records, non-receipt of notice from the Department of State does not alleviate the need to file an annual report, nor appear to relieve the corporation from the penalties of non-compliance (although the Department of State does not intend to impose penalties during a transition period which ends in December 2026). Although effective in January of 2024, annual reports for existing corporations are not due until 2025. For 2025 and each calendar year thereafter, annual reports for all non-profit corporations are due no later than June 30.
Federal Corporate Transparency Act
On September 29, 2022, the U.S. Treasury Department’s Financial Crimes Enforcement Network issued its Final Rule implementing the Corporate Transparency Act’s (CTA) and new reporting requirements. Although intended to fight money laundering and financial crimes, incorporated condominium and homeowners associations do not appear to be exempt from this new reporting requirement.
Each reporting company is required to report:
• Entity name (and any alternative trade or d/b/a names)
• Business street address
• Jurisdiction of formation and, for foreign entities, the State or Tribal jurisdiction of registration
• A unique identification number (such as TIN, EIN, LEI, etc.)
Each beneficial owner must report:
• Full legal name
• Date of birth
• Current residential or business street address
• A unique identifying number from an acceptable identification document (such as a State issued ID or passport) along with an image of the document
A beneficial owner is an individual who, directly or indirectly, either exercises substantial control over the reporting company or owns or controls at least 25 percent of its ownership interests. Absent more specific rulings or guidelines, it would appear that association officers and directors are deemed “beneficial owners”.
The Federal CTA goes into effect in January of 2024, with a one-year filing transition period. Although the consequences of failure to comply are potentially significant (including a maximum civil penalty of $500 per day (up to $10,000) and imprisonment for up to two years), timing is not imminent. Much will be learned in the many months before compliance is mandated.
Please contact us should you need assistance with verifying and updating your incorporated association’s registered office address, or wish to discuss these new filing requirements in greater detail.
This article is not legal advice and is provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction.
