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Subject: HOA does not include all revenue on their IRS filing
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Author Messages
JeffW6
(Florida)

Posts:19


12/17/2018 7:53 PM  
Over the past 34 months our HOA has net income of $530K+! They did not include all of their revenue on their IRS forms for 2016 and 2017. They said 2017 was caused by a Developer adjustment of $270K! But, on the B/S the due to Developer went from $26K to $102K in December 2017! How in year 11 of an HOA should we owe the Developer anything? The Developer is still in control of the HOA! This is in Florida!
MelissaP1
(Alabama)

Posts:7813


12/17/2018 8:21 PM  
This is all unclear. Not sure what your asking or wanting to know. Revenue of a HOA is typically dues collection or special assessments. If it's still developer controlled, then that may be the sell of lots/homes? However, once a HOA is owner owned it's limited to dues/special assessments for revenue.

So I don't understand why your saying you owe the developer money? Can you clarify a bit more?

Former HOA President
GenoS
(Florida)

Posts:2580


12/17/2018 8:27 PM  
Yeah, not clear at all. 11 years and the developer is still in control? A bit unusual but not THAT unusual. If the developer is still in control then that's where the answer to "how do we still owe the developer anything?" will be found.
JeffW6
(Florida)

Posts:19


12/17/2018 8:47 PM  
Why in the 11th year of a HOA would the HOA owe the Developer anything?
The Balance Sheet reflects the HOA oweing the Developer $102,000?
The HOA is NOT filing IRS forms with ALL of their revenue reflected on it?
MelissaP1
(Alabama)

Posts:7813


12/17/2018 9:05 PM  
A bit clearer but not completely.

The HOA is still under developer ownership/control. It's not owner. So not sure how your getting to view their balance sheet or know what the IRS situation is.

What do you identify as revenue to say they are not reporting it? What do you think is missing?

Not a full idea of if your HOA has built out homes or still have empty lots. Unsold lots are not producing "revenue" for the HOA/Developer. A developer makes their money by selling those and then collecting the dues from them once sold. Otherwise unsold lots may reflect differently on the ledger.


So need more details here. Not getting the full picture or exact concerns.

Former HOA President
JeffW6
(Florida)

Posts:19


12/17/2018 9:51 PM  
It is the HOAs B/S! In 2017 they didn’t report approx. $300K on IRS form 330 for the HOA! The property managers explanation was there was an Due to Developer adjustment of $270K! However, the B/S only reflects Due to Developer of $102K!

The development is built 615/920! In2017 they added 300 lots!

Over the last 34 months the net income has been $530K+! Somehow they are going to try to pay the developer the bulk of the income over the last 34 months!
MelissaP1
(Alabama)

Posts:7813


12/18/2018 4:25 AM  
Huh? Who is "They"? exactly? Still clear as mud. Not really seeing an issue here. Sounds a bit correct to me. Developer doesn't usually pay dues on property they own during development. So there would be no revenue to report.

I am not a tax expert here but still not seeing an issue. Others here understand the tax filings requirements of HOA's. Which when are under the owner's control not developer. They would be reported differently by developer than owner. It's still the Developer's corporation. Once they turn over then it is the owner's corporation. You all ain't there yet.

Maybe I am missing the point here you want to make? Do you want to report that your HOA's Developer is doing Tax Fraud? Would that make you feel better if they were?

Former HOA President
TimB4
(Virginia)

Posts:16092


12/18/2018 5:34 AM  
Jeff,

If that concerned, and I do understand the concern, report the issue to the IRS and let them sort it out.
JeffW6
(Florida)

Posts:19


12/18/2018 6:17 AM  
There are 3 parties:
Residents
HOA Property Manager controlled by Developer
Developer

I would say “They” is the property manager!

The IRS filings are made under the HOAs name not the Developers! The Developer has went bankrupt 3 times in 11 years! Thus, the IRS filings should include ALL of HOAs Revenue! The Property Manager admits they shorted the IRS filings due to an Adjust of Due to the Developer. However, the Due to Developer in 2017 went from $26K to $102K in 2017! That is only an increase of $76K not $$270K!

Why would a HOA owe the Developer in year 10 or 11?

Also, the HOA has been paying $65K a year in Master Dues to another Property Manager and after I request financial information the 2019 Master Dues are reduced to $6.5K due to large carryover balance!

I believe Master Dues were funneling money back to Developer. The Master Dues were for lake management! They do nothing to manage our small lakes.
JeffW6
(Florida)

Posts:19


12/18/2018 6:21 AM  
I am probably going to have to. But, I don’t want to hurt the residents.

Also, they have been charging us homeowners $75/month for Spectrum cable and internet, but, the HOA is only paying $35-$40 per month. Thus, they have accumulated net income over the last 34 months of $530K and nothing going into reserves!
GenoS
(Florida)

Posts:2580


12/18/2018 1:38 PM  
There's an HOA about a mile away from where I live that was started in 2004. That's 18 years ago. They're still building. They're on their 4th developer since the first 3 went bankrupt. Construction came to a near halt after the great financial crisis in 2008. There are people who live there who have been in a developer-controlled HOA for 18 years. Every place is different, Jeff, but your situation doesn't sound all that unusual. Maybe the tax situation isn't 100% on the up-and-up. You'd probably need a professional opinion on that. 20% of parcel owners in an HOA can petition (and force) the board to have a full financial audit done. If that hasn't been done recently, you could start there.
GenoS
(Florida)

Posts:2580


12/18/2018 1:39 PM  
14 years from 2004 to 2018, not 18, sorry.
JeffW6
(Florida)

Posts:19


12/18/2018 7:48 PM  
That is what happened here! It opened in 2007 and the Developer has filed for bankruptcy 3 times. They just keep changing their name. Plus we had a separate golf course right beside the community go belly up in 2011.
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