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| Author |
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NelsonN
(North Carolina)
Posts:5
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| 06/27/2008 8:06 PM |
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Good Evening All,
I’m hoping to find people who may have found themselves in a situation similar to mine… Just last night, I was elected to the board of our HOA. It is very clear that I am inheriting a financial mess… With the exception of closings, no dues have been collected from the homeowners since the inception of the HOA (circa 2004). Additionally, I do not believe that any tax returns have been filed either.
Now, I find myself attempting to figure out what has been paid, by whom, and what is owed to the association. Some people that owe dues have since sold their properties to others, complicating the collection of these dues just a bit.
My biggest question at this point, is whether I need to file a form 1120-H for the last few years. Anyone have any information on this matter?
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GlenL
(Ohio)
Posts:1375
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| 06/27/2008 8:53 PM |
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| I would say yes. I'm assuming since you have had no income (assessments) you probably do not have an accountant or CPA. You can do it yourself, the form is easy to navigate and you will not have any tax liability since the HOA has no money. Unless you secretly have tens of thousands in reserves drawing a lot of interest or are making a bundle renting out the clubhouse. If all else fails contact the IRS and ask for assistance, according to one poster here the government does a good job of doing their job (Just kidding M) seriously they can help. |
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MaryA1
(Arizona)
Posts:2243
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| 06/28/2008 8:46 AM |
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Nelson,
Wow, what a can of worms you inherited. Good luck to you!
IMO, the first order of business would be to write a letter to all the members of the assn. Explain the fact that assessments are required (and state why) then inform them that because the board has been so lax in the past the current board has decided the best course of action is to just start from this day forward. There will be no delinquencies sent out for past months/years. However, from this date forward, assessment will be due on the ________ of the month, etc. Include a collection policy and state it will be strictly enforced.
Next order of business, prepare those tax returns or hire a CPA to do it for you. Also, if your state has an income tax the assn is most likely liable for state tax too. Then you might want to check with the State to find out if the assn is liable for any other type annual reporting and fees. In AZ an annual report must be filed witht the Corp Comm along with a fee of $10.
One question: Have the common area been maintained during this period. If so, how, if no assessments have been collected? |
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BruceF1
(Connecticut)
Posts:587
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| 06/28/2008 9:05 AM |
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Posted By MaryA1 on 06/28/2008 8:46 AM
IMO, the first order of business would be to write a letter to all the members of the assn. Explain the fact that assessments are required (and state why) then inform them that because the board has been so lax in the past the current board has decided the best course of action is to just start from this day forward. There will be no delinquencies sent out for past months/years. However, from this date forward, assessment will be due on the ________ of the month, etc. Include a collection policy and state it will be strictly enforced.
div>
Mary,
Shouldn't these decisions and the details of the letter be left up to the board? Shouldn't such a letter be signed by the board president? It's not Nelson's call.
I don't disagree with your suggestions, but I'm not sure Nelson has given us enough information. He's only told us that he's recently been elected to the board and that he's inherited a financial mess, maybe implying that he's the treasurer or the president, but, he hasn't said that. Is he?
Nelson,
Some questions. You say you have just recently been elected to the board:
1. Is the association still under declarant control?
2. How many members on the board?
3. Are you the only homeowner on the board?
4. Are you an officer? What is your position; president, treasurer?
Things do sound like they are in quite a mess, but what you can do about it and what kind of advice to give you depends on us knowing a bit more information. |
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BruceF1
(Connecticut)
Posts:587
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| 06/28/2008 9:11 AM |
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Posted By MaryA1 on 06/28/2008 8:46 AM
IMO, the first order of business would be to write a letter to all the members of the assn. Explain the fact that assessments are required (and state why) then inform them that because the board has been so lax in the past the current board has decided the best course of action is to just start from this day forward. There will be no delinquencies sent out for past months/years. However, from this date forward, assessment will be due on the ________ of the month, etc. Include a collection policy and state it will be strictly enforced.
Mary,
Shouldn't these decisions and the details of the letter be left up to the board? Shouldn't such a letter be signed by the board president? It's not Nelson's call.
I don't disagree with your suggestions, but I'm not sure Nelson has given us enough information. He's only told us that he's recently been elected to the board and that he's inherited a financial mess, maybe implying that he's the treasurer or the president, but he hasn't said that. Is he?
Nelson,
Some questions. You say you have just recently been elected to the board:
1. Is the association still under declarant control?
2. How many members on the board?
3. Are you the only homeowner on the board?
4. Are you an officer? What is your position; president, treasurer?
Things do sound like they are in quite a mess, but what you can do about it and what kind of advice to give you depends on us knowing a bit more information. |
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MaryA1
(Arizona)
Posts:2243
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| 06/28/2008 10:08 AM |
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Bruce,
Yes, I agree it should be a board decision. Guess, by the tone of his message, I was under the impression he might be a board of one. Stranger things have happened, right? |
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RogerB
(Colorado)
Posts:3702
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| 06/28/2008 3:10 PM |
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| Nelson, focus on having your Board establish procedures to collect assessments. Don't worry about not filing taxes since your HOA probably has not had over $100 in 'outside income' and therefore would not owe any taxes. At such time as your HOA gets there finances in order then they can look into filing taxes in the future. |
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