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Subject: Sale of Food at Bingo
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Author Messages
WillL1
(Florida)

Posts:4


09/08/2019 8:38 AM  
Hello, New to site. Florida HOA. I have a Q on the subject of selling food and drink at a Bingo game held in our community. The HOA President & Treasurer wants to join the 2 functions under one banner to avoid taxation. Is this legal? Welcome your input.
MelissaP1
(Alabama)

Posts:8768


09/08/2019 9:45 AM  
I would HIGHLY recommend NOT combining the HOA funds with the Bingo funds. The HOA funds are for the OPERATION and MAINTENANCE of the HOA. It is to be funded by DUES. NOT every member wants their Dues funds to be used to buy food for Bingo players.

What could be taxable is IF the bingo money is going to the HOA's funds. The Bingo funds or other sales are subjected to taxation as they are not Dues. Bingo can be a "club" but separate from the HOA. It should fund it's own food and expenses. It just so happens to be HOA members or on the property.

Former HOA President
BarbaraT1
(Texas)

Posts:246


09/08/2019 9:59 AM  
Melissa, I think you misunderstand the OP.

He is not suggesting using HOA funds to buy food to give to bingo players. They want to sell food at the bingo game. Presumably they would buy the food to sell, but also presumably they intend to make a profit.

OP, I admit I’m still not entirely clear as to what is happening. Can you give us more details about the event?
MelissaP1
(Alabama)

Posts:8768


09/08/2019 10:06 AM  
He was saying the HOA wanted to combine BOTH the HOA and the Bingo together. It's okay for the Bingo to sell food and make a profit. It is NOT okay for the HOA to give the Bingo any money or to keep any of the profits. Bingo should be funded just for those who join the Bingo. A HOA is to be funded by Dues only no profiting.

Former HOA President
WillL1
(Florida)

Posts:4


09/08/2019 10:12 AM  
Thanks for the responses! Bingo is stated to separate from the HOA (Not For Profit) but has a appointed Chairperson running it and Bingo supposedly funds itself except that a weekly payment is made to the HOA to purchase Bingo supplies. They now want to combine food sales into it and have the HOA fund it also. My contention to them is that they are actually running the game and now selling food for profit and if the combine the two they are looking at trouble with taxes that as a 501(C) say they don't have to pay. Never mind the last Chair was skimming (whole other story)
WillL1
(Florida)

Posts:4


09/08/2019 10:18 AM  
Melissa, you are correct in the statement except for our prospectus states you can not run a business within our community utilizing our common facilities nor your home. I am not against having Bingo and Food except the Chair wants to run it as a business without oversite of the HOA. She has convinced the Pres & Trea that it is OK to do so.
JohnC46
(South Carolina)

Posts:8904


09/08/2019 10:23 AM  
Tax avoidance is legal. Tax evasion is illegal.
MelissaP1
(Alabama)

Posts:8768


09/08/2019 1:33 PM  
When they mean not to run a business out of your home it's more in regards of "Not putting a shingle up". That means you can't run a place like a Dental office that attracts traffic. It's okay to have like a Tupperware party. We sometimes rent out to those with such businesses for their "shows".

I don't really see an issue if the person is renting the clubhouse for a Bingo gathering. It just can't be the HOA's Bingo hall or connected to the HOA money wise. Renting the clubhouse to someone in good standing in your HOA is okay as long as they are paying the rent and any damages to the HOA.

Again the person should NOT be involving HOA funds. It is their entire responsibility to fund it, pay the rent, and pay for the food within the Bingo Budget.

The HOA is a non-profit but NOT a charitable one. Those funds are not income making for the HOA. The Tax man could come a looking...

Former HOA President
JohnC46
(South Carolina)

Posts:8904


09/08/2019 2:36 PM  
Will

I am still confused. A few questions:

1. Is the HOA (via committee or not) running the Bingo games?

2. Is the HOA receiving a profit from the Bingo games?

3. Is there presently food and beverage being served during Bingo?

4. Who is running the food and beverage service?

5. Is the HOA receiving a profit from the food and beverage operation?

Thanks


BarbaraT1
(Texas)

Posts:246


09/09/2019 9:14 AM  
Posted By WillL1 on 09/08/2019 10:12 AM
Thanks for the responses! Bingo is stated to separate from the HOA (Not For Profit) but has a appointed Chairperson running it and Bingo supposedly funds itself except that a weekly payment is made to the HOA to purchase Bingo supplies. They now want to combine food sales into it and have the HOA fund it also. My contention to them is that they are actually running the game and now selling food for profit and if the combine the two they are looking at trouble with taxes that as a 501(C) say they don't have to pay. Never mind the last Chair was skimming (whole other story)




if the bingo people are just using your space and are not at all affiliated with the HOA, their tax issues are not your problem. Charge them rent for the facility and tell them to buy their own supplies and food to sell.
GenoS
(Florida)

Posts:3380


09/10/2019 9:39 AM  
I don't know how combining Bingo with any other activity will affect your tax status. I think your association should run the Bingo games so that you will be under the auspices of Chapter 849.0931 which makes Bingo legal in HOAs, condos, co-ops, mobile home communities, etc. Under FS 849 you have to pay out all of the money that people pay to play AFTER deducting expenses to run the game (cards, markers, etc.). Any money leftover should then be donated BY THE ASSOCIATION to a charitable, nonprofit, or veterans’ organization which is exempt from federal income tax.

Note that for the association to donate the leftover money (ideally there shouldn't be any) the money would have to belong to the association in the first place. Ergo, the association should run the bingo games.

If you're NOT operating under FS 849 then you're probably in violation of the state's gambling statute.

FS 849 requirements contains language regarding net proceeds, prizes, and business expenses for running the games. Non-bingo related items are not deductible and while you'd need to ask a lawyer to be sure, I don't think food and drink qualifies as a "bingo business expense". The statute seems pretty clear on that.

I'd not have any vending of food and drink anywhere near my FS 849 bingo games, at least not to the point where the comingling of funds might take place. If you choose to do so then that activity would probably subject you to some form of tax liability. Trying to evade that liability by hiding it under your bingo operation is probably a very bad idea.
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