CORPORATE TRANSACTIONS & COMPLIANCE BLOG

The Challenges of Tracking Annual Report Due Dates

By: Terri Lennon, COGENCY GLOBAL INC. on Tue, Dec 30, 2014

As a follow-up to a previous blog posting, E-File or Bust!, today’s post will address anotherAnnual Report daunting task associated with tracking and filing annual reports (sometimes referred to as “periodic reports”, since some states do not require annual filing). It has become very difficult for businesses to keep track of their entities’ periodic report due dates, since they vary greatly between entity types and states. It’s also becoming increasingly difficult for businesses to rely on reminders from state offices to ensure their reports are filed on time.

As state filing offices become more technologically advanced and cost conscious, many are abolishing the practice of using “snail mail” to send report due date reminders. Instead, many states now offer options to subscribe to e-mail notifications for specific business entities. For the states that still send reminders via the U.S. Postal Service, some send the notices directly to the principal place of business or mailing address on file, while others will mail notices directly to the company’s registered agent on file. Some states even send notifications to different addresses based on what type of entity the company is. 

 

Which states do not mail notifications of annual/periodic report due dates?
Colorado, Kansas and North Carolina no longer mail out notifications reminding companies of their upcoming report due dates. These deadlines must be managed by the companies themselves. 

Colorado Secretary of State provides an e-mail notification service that a company can sign up for. This will provide the company with e-mail notifications sent to the e-mail address specified for the specific entity.

Kansas Secretary of State does not provide notification of any upcoming report requirements.  Instead, on the state’s website they ask businesses to perform a business entity search to find the annual report due date. Businesses may also contact the Secretary of State's office at (785) 296-4564.

North Carolina Department of the Secretary of State is required, according to N.C.G.S. 57D-2-24(b), to immediately notify limited liability companies of the annual report filing requirement.  This statutory requirement is fulfilled by providing the limited liability company, at the time of creation, a notice of when the first annual report is due and by providing the registered agent, at the address of record, with a mailed or e-mailed notice (depending on the agent’s preference) stating that LLC annual reports are due on or before April 15th of each year.

Notification to corporations in the State of North Carolina is not required.

 

Where are notifications sent?
More subtle issues can arise in many states because of where the state sends notification of annual report due dates. 

Some states, such as Delaware and Illinois, will send notification to the registered agent’s address on file. The registered agent will then forward the notices to the contact and address they have on file for the given company. This is one of the reasons why it is very important to make sure your registered agent is notified as soon as there is any change in contact or address information.

Other states, such as California, Connecticut and Maryland, will mail notifications to the mailing address (sometimes called the principle office address) on their records for the business entity. For this reason, it is important to keep the state offices, as well as your registered agent, updated regarding contact or address changes.

New Mexico takes a different approach. An initial report is required to be filed with the Office of the Secretary of State of New Mexico within 30 days of an entity’s formation/qualification. This initial report requests a mailing address to be listed and this is the address to which the state will send biennial reports, unless changed in subsequent filings.

 

Watch Out For Misleading Compliance Solicitations!
There is an additional hazard to businesses if they rely solely on paper notices to file annual/periodic reports. Over the last couple of years, deceptive solicitations have been circulating throughout many states. These “notices” look official and appear to come directly from the state, but they are not. The scams generally request a fee for services that are often not needed or required. Many states have warnings on their websites regarding these misleading solicitations. COGENCY GLOBAL INC. continues to maintain a list of these types of scams on the Misleading Annual Report and Compliance Solicitations page of our website.

 

Despite Challenges, Companies Need to Ensure Reports Are Filed On Time
The idiosyncrasies between jurisdiction due dates, when, where and how report notices/reminders are sent and the potential to receive misleading solicitations can sometimes make it challenging for businesses to ensure their required entity reports are filed on time. Companies have a number of options to choose from for ensuring their entities’ annual/periodic reports are filed on time:

1)     Develop In-House System for Tracking Report Due Dates – Some companies develop their own “tickler” systems internally to ensure they receive reminders of report due dates. While this is certainly a viable option, many companies don’t have the time or resources to accurately set up such a system themselves.

2)     Utilize Your Registered Agent’s Entity Management System – Most professional registered agents offer online entity management systems, like Entity Central®, that will track compliance due dates and send e-mail reminders to help you stay on top of your report due dates.

3)     Outsource the Tracking and Filing of Annual/Periodic Reports – For companies lacking the time and resources to handle the tracking and filing of annual/periodic reports on their own, outsourcing the filing of these reports is an excellent option. Many professional registered agent companies offer this service, which can minimize or eliminate the chances of your company missing an important due date.

 

Regardless of how you do it, it is important to ensure that your state corporate compliance requirements are met. Failure to file your annual/periodic reports on time can result in a loss of good standing, late fees and, in some cases, involuntary dissolution and your name possibly becoming available for others to use.


This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Annual Report Compliance, Delaware Corporate, UCC and Compliance