501(c)3 Requirements for Townhome Owners Association.

Started by KeithM • 5 replies • 1966 views

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KeithM (North Carolina)
Posts: 2

Posted:

We are a 27 unit non-profit corporation,22 years old, with No taxable income. Our total function is collecting Maintenance Fees,paying utility and scheduled and unscheduled emergency maintenance on grounds and exterior home maintenance. My specific question is: Since we are non-profit and conduct No business other than collecting fees and paying bills, have no taxable assets, Is there any requirement for us to apply for 501C tax exemption, which is a timely and costly process ? What, if any, are the advantages/disadvantages of simply not applying ? Are there
alternative procedures to meeting IRS requirements such as Section 528 and
filing our taxes on form 1120-H "U.S. Income Tax Return for Homeowners Associations" ? We are certified by The North Carolina TownHome Owners Association, but have received no response to this inquiry. Any information/advice would be appreciated . Please address to EMAIL:
[email protected] . Thank You, KRM.

DonN (Michigan)
Posts: 357

Posted:

I suggest a search of prior discussion topics with the search "501(c)".

Don Nordeen
Governance of Property Owners Associations

SusanW1 (Michigan)
Posts: 5,202

Posted:

501(c)(3) are for CHARITIES. Your association will be a 501c4 or c6.

To find out, go to the IRS web site and log in to non-profit - OR goggle non-profit taz designations.

SusanW1 (Michigan)
Posts: 5,202

Posted:

That's google

RogerB (Colorado)
Posts: 5,067

Posted:

Keith, you should file IRS form 1120-H. Probably your TOA's only applicable taxes are investment income, less standard deduction of $100, times 30%.

RaymondC (Minnesota)
Posts: 64

Posted:

You should be considering a reserve fund, and that is seen as a profit. As a 501(C) it would be precluded except in the smallest amounts. Second, you would probably lose your tax-free status should you maintian such a reasonable fund for any length of time.

You are a not-for-profit corporation, and that's what you should be. You are permitted to make a profit, though it is not your primary intent, and use it as you see fit (eg reserve fund). You pay taxes on your profit.

A non-profit found to be making a profit can be fined, taxed at a very high rate, and lose the status.

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