something seems amiss

The developer started the asociation in late 2008. Papers were filed with the county clerks office. Federal 1120h and Illinois 1120 were filed for 2009 and 2010 taxes. Turn over was in mid year of 2011. I filed the 2011 taxes using the same accountant. The lawyer said to use the same fein number but he could not find were the developer registered with the state for non profit status, so he registerd us using me as the registerd agent but stating that we were formed on the day of the turnover. Something seems not right or am I imagining things. I am very concerned.

Michael,

First, you need to find out who the EIN was issued to. It may have been the developer or his company. You can check with the IRS or look at last year's tax return. Or, you can look for the IRS document that assigned the EIN. If the EIN does not belong to the association, you will need to apply for a new one.

Technically, the association starts when the first buyer closes, not at turnover. However, that really depends on state law. It may be simply that the developer never bothered to incorporate the association. The IRS will issue EINs to corporations, individuals, partnerships, or whatever. An individual can have both a SSN and an EIN.

Second, I wouldn't recommend being a registered agent. The registered agent is the one who is served papers in a court action. What if you want to take a trip on vacation, especially abroad? It is best to file a change to someone (or a firm) that's always around, such as a law firm or a property management company. Also, there are firms whose primary business is to be a registered agent for several organizations.

The fein number was assigned to the association in 2009. Taxes were filled (1120H for Fed, 1120 for state)for 2009, 2010 and 2011 using that number. My question is if the developer failed to incorporate the association what happened to the tax forms for the state of illinos for the two years. The lawyer did file the incorporation papers for the association using the middle of 2011 as the starting date. My question is "Does anyone see a big problem ahead or am I concerned for nothing?
I will also look into having some one else be the registerd agent.

Michael,

If you change the name of the organization you do not need a new EIN, although you should inform the IRS.

If you incorporate, you need to apply for a new EIN.

See IRS publication 1635, "Understanding Your EIN". You can download P1635 from the IRS website. The document exceeds the limit for attachments or I would attach a copy for you here.

Bruce,
I have a copy of the corporation file detail report for Illinois) that states the incorportation date as of 7/20/2011. I have no clue if there was one filed in the beginning which should of been in 2009. I will go to the IRS office and the accountant that did the taxes. The accountant had a copy of the report but may not have got the date. Her boss is a CPA, may have to talk to him. Problem that I am having is the bod does not want to stir the pot, they want to wait see if we get any letters asking what is going on. ( the taxes were filled last week using the original FEIN that the lawyer said to use.) What do you think would happen if nothing was done?

A story but also a lesson. Many exacting details left out but I think the gest of the story is here.

My long term business/personal tax CPA has done business/personal taxes (federal and state) for 20 years and was the same CPA the business/personal owner used before I bought the business. Thus the CPA has over a 35 year history in my business. The prior owner and myself are very happy with things as done.

My personal, golfing, and CPA buddy (not my business/personal CPA) says he would not feel comfortable doing things (to my advantage) the way my CPA did.

You decide the lesson/moral here.....LOL

Michael

What am I getting at?

One can hire two certified professionals in the same field and get two difference answers/opinions.

While I am ultimately responsible for the decision I make (especially with taxes no matter whom does/signs them), I choose to go along with the one whom offers more advantages to me.

Now the tough love part. If I cannot justify/pay/sleep with my decision, then it is time for me to get out of that decision making role.......LOL

Michael,

As I suggested earlier, you should download IRS publication 1635 from the IRS website and read it. It's in very simple language.

Here's what it says on page 3 (see the second bullet):

You will need a new EIN if any of the following are true:
• You file bankruptcy under Chapter 7 (liquidation) or Chapter 11 (reorganization)
of the Bankruptcy Code
• You incorporate
• You are a sole proprietor and take in partners and operate as a partnership
• You are establishing a pension, profit sharing, or retirement plan

If I had done the tax return for a client the previous year and that client returned again this year, the first thing I would have done is sit down with the client and find out all the things that had changed (if any) since last year. In your situation, I would have learned that the HOA was turned over from the developer and was incorporated during the year. I would then know that I would have to obtain a new EIN and file two returns: one covering the period before incorporation, and one covering the period following incorporation.

This should not really be a big issue. Since you've already filed a return, you've already paid any taxes that were due (and most likely there were none). So, it's simply a paperwork correction. The IRS generally does not penalize anybody for fixing the paperwork. All they really care about is the money. Most IRS penalties are based on a percentage of any tax owed, and since there likely is none, the would be no penalty because any percentage of zero is zero.

You could leave the 2011 tax return alone, obtain a new EIN for the corporation and use it when you file the 2012 taxes. The IRS may never notice nor care. But, technically, that's not the correct way to do it and I don't recommend it. Some firms might do it that way, but I doubt ours would. We have refused to file returns that we felt were improper for clients in the past.

As far as your Declaration and bylaws go, the fact that you've incorporated should have no effect. All you have done by incorporating is create a legal entity that has certain rights and responsibilities according to your state's laws.

Michael,

I've been giving this some thought and it might be that you only need a single return, but should use the new EIN. I'm thinking it might be similar to people getting married. A couple can file a joint return for the entire year, even if they got married at the end of the year. In other words, you file based on your situation at the end of the year. If that's the case, you would only need to correct the EIN on the return you filed. It could go either way.

As for the old EIN; what happens? Nothing. It just never gets used again. It won't (or shouldn't) cost your developer anything.

Well, there you have it.

The advice your CPA got from the IRS seems to contradict whats in publication 1635, but, you've at least checked. Maybe I'm reading 1635 wrong. Maybe there's circumstances neither of us are aware of. If it turns out later that the person from the IRS gave you bad advice, you can at least blame them (It wouldn't be the first time that's happened.).

Sit back and relax. At least, you're off the hook.