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Subject: Home Owners Association has not filed Non Profit tax forms in years
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GeorgeS19
(Florida)

Posts:12


06/26/2016 2:46 PM  
I recently found out that my Florida home owners association has not filed any tax forms with the IRS in probably 20 years or more. When I sent a certified letter to the Association asking for back tax records, I was informed that the Association did not have to pay taxes, and therefore was not required to file any tax forms. I did some research and found that this is absolutely not true. I informed the Association board of this fact, and I have simply been ignored. I told them that they risk losing their non-profit status by not filing the forms, but my accountant says that I should tread lightly on this subject. Should the forms, all of a sudden, be filed, the IRS may take a look back and see that they have not been filed in many years and take issue with it. Of course, losing our non-profit status would mean serious accounting costs for the community, which only has 89 homes in it. What can I do?
LarryB13
(Arizona)

Posts:4099


06/26/2016 3:52 PM  
George,

If your association is incorporated as a non-profit it is because someone filed the appropriate articles of incorporation with the state of Florida. The IRS has no say in how associations are incorporated nor does the IRS have the authority to revoke an association's incorporation as a non-profit.

What, exactly, is the penalty for failing to file a tax return if no tax is owed? Here is a hint: Anything times zero equals zero.

What are the authorities you relied on that led to your conclusion that the association must file a return even if no taxes are owed and that the association would lose its non-profit status if it failed to file tax returns?

TimB4
(Tennessee)

Posts:17852


06/26/2016 4:16 PM  
George,

There are different types of non-profits.
I believe you are referring to charitable non-profits vs. other types.

You are correct that, as a corporation, they are required to file tax returns even if there are no taxes owed.
The good thing is that if there are no taxes owed, there are likely no penalties.

If your Board won't listen, then force the issue by contacting the IRS directly.
They will decide if it's an issue to look into or not.

Tim
SueW6
(Michigan)

Posts:814


06/26/2016 4:55 PM  
Are you perhaps thinking of the Annual Report to the State - which may not have been filed? That would take you off the roles as operating as a corporation in your State. (Our HOA didn't file for a few years and it was caught when we were taken to court on another matter. For shame!! We didn't exist!)

Also, if your 501(c)(4) homeowner's corporation has revenue under the radar,the IRS isn't that interested in you anyway.
JonD1


Posts:0


06/26/2016 5:15 PM  
I have to wonder George what is it exactly you are trying to accomplish? What purpose does you inquiry serve? How about how does this in any way serve your community's interest?

I would guess you might have an mis understanding as to what requirements are necessary for IRS compliance. In my view that would fall on the board and the MC.

Under no circumstances would I contact the IRS and report your concerns. This might bring on some difficulties for your community in the way of cost and the need for professional representation. It just might hold personal consequences for you.
RichardP13


Posts:0


06/26/2016 6:31 PM  
This is the penalty if this were to happen in California, BUT it is triggered by the state, not the IRS. I would imagine Florida is similar.

http://www.davis-stirling.com/MainIndex/SuspendedCorp/tabid/1383/Default.aspx
GeorgeS19
(Florida)

Posts:12


06/27/2016 6:17 AM  
For Jon:

This inquiry serves the board in a number of different ways. First of all, this is a Corporation, and has specific rules it is supposed to follow. I own a corporation and am bound by the same rules, and follow them. Is is proper and fair that this corporation should not, just because? The fact that the Treasurer of going on three decades now has LIED to me and the community is grounds alone for his dismissal. This guy is not a bad person. I do not dislike him. He is, however, incompetent in his position, and eventually, someone else is going to have to pay the price. Secondly, by allowing things like this to continue, the Association members are deluded into thinking that all is well, and that the person, or persons in charge are doing their duty as Association representatives, which could not be farther from the truth. Finally, this leaves a wide open door for legal issues down the road. Say, for example, I get on the Board next year, and the tax issue is found out by the State, our non-profit status is revoked, and now we have to spend untold amounts of extra money to hire a regular accountant to file standard corporate tax returns instead of the simple 11120-H. And then who gets the blame? Me? I was the one to expose the problem, not create it. Simply not right, and simply not fair.
CarolF
(Florida)

Posts:435


06/27/2016 12:10 PM  
George there is a difference in a Not For Profit corporation (term used in FL) and a Non Profit Corporation. Non Profits are generally charitable organizations and must qualify to get that designation from the IRS.
Why would your Homeowners Association qualify as a Non Profit?
I believe most Homeowners Associations in FL are "Not For Profit" and file 1120 H for federal taxes, or possibly an 1120 if they don't meet the standards for the 1120 H.



CarolF
(Florida)

Posts:435


06/27/2016 12:38 PM  
This explains it a bit more....will cite this reference in a second reply

If you want to be a tax exempt organization in Florida, you apply for the exemption first with the IRS. Once you have received your federal tax exemption, then a simple note or phone call to the Florida Department of Revenue declaring your 501c3 status, and you will be off their tax roles. Pretty amazing, but you will likely go to ‘the big house’ and pay restitution if you commit fraud by claiming a corporate tax exemption that is not real.
CarolF
(Florida)

Posts:435


06/27/2016 12:41 PM  
The above is from http://www.northwestregisteredagent.com/how-to-start-a-non-profit-organization-in-florida.html

JonD1


Posts:0


06/27/2016 12:47 PM  
Posted By GeorgeS19 on 06/27/2016 6:17 AM
For Jon:

This inquiry serves the board in a number of different ways. First of all, this is a Corporation, and has specific rules it is supposed to follow. I own a corporation and am bound by the same rules, and follow them. Is is proper and fair that this corporation should not, just because? The fact that the Treasurer of going on three decades now has LIED to me and the community is grounds alone for his dismissal. This guy is not a bad person. I do not dislike him. He is, however, incompetent in his position, and eventually, someone else is going to have to pay the price. Secondly, by allowing things like this to continue, the Association members are deluded into thinking that all is well, and that the person, or persons in charge are doing their duty as Association representatives, which could not be farther from the truth. Finally, this leaves a wide open door for legal issues down the road. Say, for example, I get on the Board next year, and the tax issue is found out by the State, our non-profit status is revoked, and now we have to spend untold amounts of extra money to hire a regular accountant to file standard corporate tax returns instead of the simple 11120-H. And then who gets the blame? Me? I was the one to expose the problem, not create it. Simply not right, and simply not fair.





George are you a tax accountant? Domyoumhave any expertise in this area.

You mentioned your own accountant advised you to tread lightly. Any idea why they might suggest that?

Perhaps,Mathis is not your place or role to investigate HOA tax filings.

My opinion would be to investigate the situation WITH the board. With FACTS! Not maybes or could bes.

Seems you don't have an exact understanding of the filing requirements.

Does the Treasurer handle this sorts of things himself or ismthere an MC and or accountant being used?

I would ask questions. Collect what you know to be the facts and then attend a board meeting and present your findings formthemboard's consideration.

Your corporate taxes and those of an HOA you might find are different. Not knowing how Florida operates best to move forward after you understand what is is you are talking about. I would never self report the HOA.
RichardP13


Posts:0


06/27/2016 1:46 PM  
For those who essentially say bud out of association affairs, here is what the OP provided.

1) Via a certified letter, they asked for back tax records, which as a homeowner, they should be entitled to.
2) The association told the person they didn't have to pay taxes or file tax returns. Upon investigation, they found this to be untrue. I am sure that HOA Boards are correct 100% of the time.
3) When the Board was informed, they simply ignored them.

There may be consequences for having your corporate status suspended. It does in California.

So, for posters from Florida, does your HOA have to file tax returns and/or file anything with the State of Florida to maintain their Corporation status?



DouglasK1
(Florida)

Posts:1689


06/27/2016 1:51 PM  
Posted By RichardP13 on 06/27/2016 1:46 PM

So, for posters from Florida, does your HOA have to file tax returns and/or file anything with the State of Florida to maintain their Corporation status?


No Florida tax returns are required. We do have to renew our corporation filing annually with the department of state (sunbiz.org), that runs around $70, I think.

Escaped former treasurer and director of a self managed association.
RichardP13


Posts:0


06/27/2016 2:25 PM  
Posted By DouglasK1 on 06/27/2016 1:51 PM
Posted By RichardP13 on 06/27/2016 1:46 PM

So, for posters from Florida, does your HOA have to file tax returns and/or file anything with the State of Florida to maintain their Corporation status?


No Florida tax returns are required. We do have to renew our corporation filing annually with the department of state (sunbiz.org), that runs around $70, I think.



Douglas

I know there are no personal income taxes. I assume that may apply for HOA's as well?
DouglasK1
(Florida)

Posts:1689


06/27/2016 3:31 PM  
Posted By RichardP13 on 06/27/2016 2:25 PM

Douglas

I know there are no personal income taxes. I assume that may apply for HOA's as well?


I certainly hope so, we've never filed one! Just to be sure I did a quick check. According this page:
http://dor.myflorida.com/dor/taxes/corporate.html
HOAs that file 1120-H do not need to file a Florida return. HOAs that file standard 1120 do need to.

Escaped former treasurer and director of a self managed association.
AllisonD
(Florida)

Posts:447


06/27/2016 4:12 PM  
Posted By RichardP13 on 06/27/2016 1:46 PM
For those who essentially say bud out of association affairs, here is what the OP provided.

1) Via a certified letter, they asked for back tax records, which as a homeowner, they should be entitled to.
2) The association told the person they didn't have to pay taxes or file tax returns. Upon investigation, they found this to be untrue. I am sure that HOA Boards are correct 100% of the time.
3) When the Board was informed, they simply ignored them.

There may be consequences for having your corporate status suspended. It does in California.

So, for posters from Florida, does your HOA have to file tax returns and/or file anything with the State of Florida to maintain their Corporation status?



In Fl we have only Federal tax returns to file and for some HOA's that do have amenities they can charge fees for, they may have to pay sales tax to the Dept of Revenue. An example would be an HOA that also runs a golf course that is open for non-hoa memberships. This HOA would collecting money above the amount expected for HOA fees so filing tax returns would be necessary. Also any HOA that has employees has to file taxes. So this is not a black and white issue. I would say that the HOA is opening itself up to a multi-year audit if it does not file year after year. When you renew your corporate status, there are no questions about whether or not you filed your taxes but of course we do not know if the IRS scans Secretary of State websites to make sure all corporations are paying taxes (or filing returns).

FYI, there is really no difference between a nonprofit and not for profit corporations. Some organizations might label themselves as not-for-profit to make sure the public knows they are not interested in making profits to distribute to members. But they can make a profit or 'surplus'. Alternatively, nonprofit is an umbrella term that includes government, charities, civic organizations and others.
CarolF
(Florida)

Posts:435


06/27/2016 4:29 PM  
Allison - If I write a check for a contribution to a Non Profit 501C3 Corporation in FL I can take a
deduction for this on my personal income tax. It is a charitable contribution.
I cannot do this for a FL Not For Profit Corporation, like my Homeowner's Association.
NpS
(Pennsylvania)

Posts:4216


06/27/2016 4:40 PM  
Posted By CarolF on 06/27/2016 4:29 PM
Allison - If I write a check for a contribution to a Non Profit 501C3 Corporation in FL I can take a
deduction for this on my personal income tax. It is a charitable contribution.
I cannot do this for a FL Not For Profit Corporation, like my Homeowner's Association.


HOAs are typically tax exempt under sec 528.

Some may be exempt under 501c4 and 501c7.


Sikubali jukumu. Read all posts at your own risk.
RichardP13


Posts:0


06/27/2016 5:09 PM  
Posted By NpS on 06/27/2016 4:40 PM
Posted By CarolF on 06/27/2016 4:29 PM
Allison - If I write a check for a contribution to a Non Profit 501C3 Corporation in FL I can take a
deduction for this on my personal income tax. It is a charitable contribution.
I cannot do this for a FL Not For Profit Corporation, like my Homeowner's Association.


HOAs are typically tax exempt under sec 528.

Some may be exempt under 501c4 and 501c7.




How is a HOA tax exempt?

My former association last year paid $2500 in federal taxes.
NpS
(Pennsylvania)

Posts:4216


06/27/2016 5:53 PM  
Posted By RichardP13 on 06/27/2016 5:09 PM
Posted By NpS on 06/27/2016 4:40 PM
Posted By CarolF on 06/27/2016 4:29 PM
Allison - If I write a check for a contribution to a Non Profit 501C3 Corporation in FL I can take a
deduction for this on my personal income tax. It is a charitable contribution.
I cannot do this for a FL Not For Profit Corporation, like my Homeowner's Association.


HOAs are typically tax exempt under sec 528.

Some may be exempt under 501c4 and 501c7.



How is a HOA tax exempt?

My former association last year paid $2500 in federal taxes.




An organization can have taxable income and non-taxable income. 528 and the 501 sections identify what is TAX EXEMPT.

Obviously, your HOA has income that isn't tax-exempt and therefore pays $2500 on the portion of income that is TAXABLE.


Sikubali jukumu. Read all posts at your own risk.
RichardP13


Posts:0


06/27/2016 7:06 PM  
We paid $2500 because we had earned substantial interest on our reserve funds.

Most HOA's don't have the luxury of earning that type of income, thus they don't pay income tax on the minimum amount of interest they might make.

IF HOA take in more than they expense, they could be paying tax on that excess income. This is called poor budget planning.
LarryB13
(Arizona)

Posts:4099


06/28/2016 3:56 AM  
Going back to the original question of whether federal tax returns are required when there is no tax due, here is an experience I had on that very subject.

Around 2004 I formed an Arizona business (for-profit) corporation and almost immediately obtained an EIN for the corporation from the IRS. Somewhere along the line I also applied for status as a Sub-Chapter S corporation, which would permit me to treat corporate profits and losses as if it was my personal income.

I ended up doing no business under the corporate umbrella for several years and I filed no tax returns for either state of federal. When I did get started on a couple of ventures I had plenty of expenses and no significant income; there were no profits. Again, I did not file returns as no tax was owed. Then one year I had some significant expenses, not much income, and a huge taxable personal income from another source. That year I did file an 1120 so that I could use the business loss to offset the personal income. I filed no returns after that and eventually dissolved the corporation.

Of note is the fact that the IRS never questioned why I had filed only one return in the six years my corporation was active. They knew I was there because of the EIN. There were no letters, phone calls, or visits and no penalties were ever imposed.

I also never filed a state tax return, even in the one year where I filed the federal return. The state did request that I file a return for that year but I saw no compelling reason to do so. The state pursued no further action.

My experience has been that the IRS does not pursue a corporation for not filing a return when no tax is due.

MarkM31


Posts:0


06/29/2016 12:03 PM  
Posted By LarryB13 on 06/28/2016 3:56 AM


My experience has been that the IRS does not pursue a corporation for not filing a return when no tax is due.





Yes.

To the OP, what kind of yearly income are we talking about, as separate from dues received?
ArtT5
(Illinois)

Posts:84


06/29/2016 7:51 PM  
An HOA doesn't qualify under section 528 unless "such organization elects (at such time and in such manner as the Secretary by regulations prescribes) to have this section apply for the taxable year." The way you elect is to file Form 1120-H. If you haven't filed a return, section 528 doesn't apply, and the HOA is treated as a regular taxable corporation. The main consequence of this is that you potentially have taxable income any year you collect assessments in excess of expenditures. That's the big benefit of section 528: excess assessments aren't taxable income to the HOA. Off the top of my head, I believe there's a limited grace period in which an HOA can correct its failure to file Form 1120-H and after that period expires you're stuck and have to file Form 1120.

While as a practical matter it may seem unlikely that the IRS will discover and pursue this situation, It would be irresponsible to let it continue. Something could trigger an audit that could lead to seriously ugly consequences. There's no statute of limitations on failure to file a tax return. For older years, it's probably easier for the IRS to determine the association's income than for the association to document its expenditures. Penalties and interest build up over time.

A good tax lawyer might hope to resolve this problem by explaining the situation to the IRS without identifying the HOA. The goal would be to get them to agree the HOA can be treated as compliant if it files Form 1120-H for the three most recent years. I think there's a good chance the IRS would buy this idea or something similar. Of course, before proposing it you have to confirm the HOA qualifies for Form 1120-H and there aren't any nasty surprises, such as nonqualifying income. You'd incur some costs in legal fees, but clean up a mess that could be a lot more expensive if not properly addressed.
MarkM31


Posts:0


06/29/2016 8:57 PM  
I hope the OP is able to talk some sence into his board and they follow Art's advice, it really sounds like Art may be our local expert on IRS stuff
LarryB13
(Arizona)

Posts:4099


06/30/2016 1:05 AM  
Can anyone cite the section of Internal Revenue code that requires filing a return when no taxes are due?

LarryB13
(Arizona)

Posts:4099


06/30/2016 1:19 AM  
According to the instructions for form 1120-H, "The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $135."

If tax due is zero then the penalty for late filing is zero.

ArtT5
(Illinois)

Posts:84


06/30/2016 6:00 AM  
Larry, that's just the minimum penalty for late filing of this form. The problem is that if you haven't filed, your tax is calculated under regular corporate income tax rules, not under section 528, and that means there is tax due for every year in which you didn't spend every dollar collected in assessments. Then there's the little matter that intentional failure to file a required return is a misdemeanor punishable by fine up to $25,000 and a year in prison (section 7203 of the Internal Revenue Code). If there were no consequences for failing to file, it would be standard advice for HOAs not to bother filing, but I'm pretty sure you'll never hear anyone giving that advice.
LarryB13
(Arizona)

Posts:4099


06/30/2016 6:31 AM  
Posted By ArtT5 on 06/30/2016 6:00 AM
Then there's the little matter that intentional failure to file a required return is a misdemeanor punishable by fine up to $25,000 and a year in prison (section 7203 of the Internal Revenue Code).


My question remains unanswered. Where is the requirement to file a return when no tax is due? What you provided would be applicable if a return is required, which would be the case if tax is owed.


ArtT5
(Illinois)

Posts:84


06/30/2016 7:14 AM  
For the third time, there is no basis for the assumption that this HOA owes zero tax. It may have zero tax when filing Form 1120-H, but as it has not filed the form, its tax is not calculated under section 528.

But even if it has zero tax, it is legally required to file an annual tax return. This is from the instructions for Form 1120: "Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income."

As a technical matter, a corporation that has been formed under state law is treated as if it doesn't exist for tax purposes until the first year in which it has shareholders, holds assets, or does business, which is one reason the IRS doesn't automatically go after every corporation that exists under state law but fails to file a return. The HOA holds assets and does business, so it is legally required to file an annual return, if not on Form 1120-H, then on Form 1120.
BonnieG1
(Nebraska)

Posts:1186


07/01/2016 7:45 PM  
Posted By ArtT5 on 06/30/2016 7:14 AM
For the third time, there is no basis for the assumption that this HOA owes zero tax. It may have zero tax when filing Form 1120-H, but as it has not filed the form, its tax is not calculated under section 528.

But even if it has zero tax, it is legally required to file an annual tax return. This is from the instructions for Form 1120: "Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income."

As a technical matter, a corporation that has been formed under state law is treated as if it doesn't exist for tax purposes until the first year in which it has shareholders, holds assets, or does business, which is one reason the IRS doesn't automatically go after every corporation that exists under state law but fails to file a return. The HOA holds assets and does business, so it is legally required to file an annual return, if not on Form 1120-H, then on Form 1120.




This response sounds good to me. We file a tax return every year. Some years no taxes are owed but we file the return. Our CPA figures the taxes two ways. One is figured using just the interest income we have and the other way is figured using our Association fees minus our maintenance cost. I read somewhere that the President can go to jail if taxes owed are not paid. I can't remember where I read this, but I am not taking any chances.
GeorgeS19
(Florida)

Posts:12


07/02/2016 8:39 AM  
Well, Some very good information friends. I will pass it on to the Board. But they will most likely ignore it. As for me, I just hope I move from here before anything is found out!
GeorgeS19
(Florida)

Posts:12


07/07/2016 7:47 PM  
So, I went to the monthly Board meeting tonight with a written explanation of the need to file the 1120-H form and handed a copy to each of the Board Members present. The President of the Board threw my explanation in the garbage, right in front of me and all the Board members and Association Members at the meeting.
MarkM31


Posts:0


07/07/2016 8:47 PM  
I hope you asked that giving your info to the board appears in the minutes. You either need to give up, you've done plenty, or talk to other members of the HOA and start a recall. Either choices are reasonable.
TimB4
(Tennessee)

Posts:17852


07/07/2016 9:17 PM  
George,

The point of doing this was to make the entire Board aware of the issue.
Now the entire Board is aware that the President is an ass.
SheliaH
(Indiana)

Posts:4290


07/08/2016 4:21 AM  
It's one thing to disagree with someone, but being disrespectful is never appropriate. It's a shame the other board members didn't speak up right then and there and apologize for the president's behavior. I hope others were at that meeting - if they didn't appreciate the man's behavior, that's the group you need to contact to start the recall.

Hopefully, the rest of the board will seriously consider censuring the guy and contacting the association attorney and accountant to clarify the issue once and for all. If they don't, their behavior is as bad as the president's and they should either resign or be recalled. And since you tried to do the right thing and bring this to the board's attention, I think you should seriously consider running for a spot because you already have the right attitude and know that one should strive to do things the right way (easier and faster than cleaning up BS later)
JonD1


Posts:0


07/08/2016 4:35 AM  
Something tells me there is more to this situation than we are being told.

I would wonder what if any history exists between the OP and this board.

I have to wonder why the extreme reaction from the board president. And why the other board members followed along.

You can have the most valid point in the world but if your presentation is wrong no one will be willing to listen.

My guess the president and this OP have interacted before and not in a good way.

Perhaps, the OP has worn out their welcome with this president and this board?

Seems the ball is now in the OP's court.
BonnieG1
(Nebraska)

Posts:1186


07/08/2016 6:22 AM  
Posted By GeorgeS19 on 07/07/2016 7:47 PM
So, I went to the monthly Board meeting tonight with a written explanation of the need to file the 1120-H form and handed a copy to each of the Board Members present. The President of the Board threw my explanation in the garbage, right in front of me and all the Board members and Association Members at the meeting.




I wonder if the information I received about the President of an HOA going to jail if tax liability is ignored. Maybe you could research this for your state and if you have a PM request that the PM give this information to the President if indeed this may happen. I would certainly document everything that has happened giving the date and time of each event.

As I mentioned before I am not taking any chances.
JonD1


Posts:0


07/08/2016 6:47 AM  
Posted By BonnieG1 on 07/08/2016 6:22 AM
Posted By GeorgeS19 on 07/07/2016 7:47 PM
So, I went to the monthly Board meeting tonight with a written explanation of the need to file the 1120-H form and handed a copy to each of the Board Members present. The President of the Board threw my explanation in the garbage, right in front of me and all the Board members and Association Members at the meeting.




I wonder if the information I received about the President of an HOA going to jail if tax liability is ignored. Maybe you could research this for your state and if you have a PM request that the PM give this information to the President if indeed this may happen. I would certainly document everything that has happened giving the date and time of each event.

As I mentioned before I am not taking any chances.




I would be interested in reading where you got the information a board president alone would be held liable and face jail time should and HOA owe back taxes. My guess this is not the case.
MarkM31


Posts:0


07/08/2016 6:54 AM  
I doubt that this would ever go to the criminal phase, much less Federal bone-you-in the-... prison. The Prsident is a fool and an ass, but personal enrichment isn't at play here.
BobD4
(up north)

Posts:957


07/08/2016 7:00 AM  
Posted By GeorgeS19 on 07/07/2016 7:47 PM
So, I went to the monthly Board meeting tonight with a written explanation of the need to file the 1120-H form and handed a copy to each of the Board Members present. The President of the Board threw my explanation in the garbage, right in front of me and all the Board members and Association Members at the meeting.



GeorgeS19 Fla : whether or not your view is correct, what occurred isn't too different from what sometimes happens when an owner or stakeholder alerts to a potentially substantial problem. Something like proof of periodic elevator inspections - dangerously overlooked - or ignored estoppelling-type disclosures. How easy it is to ignore or even punish Cassandras.

If your organization has a professional auditor and /or legal counsel, you might wish to provide a similar proven input, because you have no control of the Board Minutes.

Governance may face some complications down the road, & future owners may - may - eventually have to fund some omissions by long departed owners. But those who were present have the power which you do not. You seem to have developed the issue & allowed the Board to make its current decision.

Eventually audits of suppliers may trigger some questions for which you conscientiously did your best to prepare your Board. A professional auditor may now be in order, but you may have gone as far as you would wisely go.
SheliaH
(Indiana)

Posts:4290


07/08/2016 8:24 AM  
Probably. Earlier in the conversation, George said “The fact that the Treasurer of going on three decades now has LIED to me and the community is grounds alone for his dismissal. This guy is not a bad person. I do not dislike him. He is, however, incompetent in his position…”

When you have bad blood like this, I wouldn’t be surprised if George and the treasurer have yapped inside and outside of board meetings about this (and other issues) and perhaps there’s been some name calling at some point. I would guess the treasurer has given his own spin on this personality clash to the rest of the board and now they’re inclined to ignore whatever George has to say

This is why one should always strive to be hard on the problem and soft on the people (read that in a conflict resolution book once upon a time). That doesn’t mean put up with disrespect, but you have to consider the way you approach people or perhaps ask for someone to mediate between you two to get the problem resolved.

So, George, if you’re reading this, you said you provided the information to the board, and that may be the best you can do. If you want to push it further, consider what I said earlier – persuade other board members to consult the association attorney and/or accountant to settle the matter once and for all, or rally fellow homeowners for a recall. Or letting the matter drop.

If there is beef between you and the treasurer, it may be time for you to be the bigger person, slow your roll, take a breath and apologize if anyone took offense, saying you’re only interested in making sure the association isn’t inadvertently violating the law and it’s not your intent to make stuff personal. If you’re proven right, ok – if not learn from this and move on. If they ignore you and time proves you were right, THEY will learn their lesson.
JonD1


Posts:0


07/08/2016 10:01 AM  
Posted By SheliaH on 07/08/2016 8:24 AM
Probably. Earlier in the conversation, George said “The fact that the Treasurer of going on three decades now has LIED to me and the community is grounds alone for his dismissal. This guy is not a bad person. I do not dislike him. He is, however, incompetent in his position…”

When you have bad blood like this, I wouldn’t be surprised if George and the treasurer have yapped inside and outside of board meetings about this (and other issues) and perhaps there’s been some name calling at some point. I would guess the treasurer has given his own spin on this personality clash to the rest of the board and now they’re inclined to ignore whatever George has to say

This is why one should always strive to be hard on the problem and soft on the people (read that in a conflict resolution book once upon a time). That doesn’t mean put up with disrespect, but you have to consider the way you approach people or perhaps ask for someone to mediate between you two to get the problem resolved.

So, George, if you’re reading this, you said you provided the information to the board, and that may be the best you can do. If you want to push it further, consider what I said earlier – persuade other board members to consult the association attorney and/or accountant to settle the matter once and for all, or rally fellow homeowners for a recall. Or letting the matter drop.

If there is beef between you and the treasurer, it may be time for you to be the bigger person, slow your roll, take a breath and apologize if anyone took offense, saying you’re only interested in making sure the association isn’t inadvertently violating the law and it’s not your intent to make stuff personal. If you’re proven right, ok – if not learn from this and move on. If they ignore you and time proves you were right, THEY will learn their lesson.





Seems like very sound advice. In life the delivery is just as important as the message.

Do we think the volunteer Tresusrer files tax forms and provides accounting for this property? We would never ask a volunteer to do so.

Just who handles the property's finances? Is there an accountant or bookkeeper? How about an MC? My guess they would support following any requirements as to tax filings.

The president's response tells me they were already familiar with the OP's message. Perhaps they have heard it a dozen or more times. Maybe they have been advised otherwise as to the OP's written explanation.

Not sure if the OP has valid concern or opinion on this matter. But at this point it would seem clear the board has no interest in receiving. Messages or advice from the OP. Again, this relationship did not collapse during this last monthly meeting.

Sodas the OP has been advised either take action to remove the board, file legal complaints or move up their plans to relocate.

Their message for whatever reason is falling on deaf ears.
GeorgeS19
(Florida)

Posts:12


07/11/2016 6:50 AM  
If I did not have a personal stake,in this issue I would just as soon ignore it. However, blatantly ignoring tax issues that may have far reaching effects on everyone in the, community is irresponsible and negligent, to say the least. The board has replaced the man who resigned so we have two new members who may listen to reason. Like I said before I do not dislike the current Treasurer I just think that his limited abilities do not make him the best person for the job, especially when he continues to refuse me access to the Association books and just doesn't seem like he wants anyone to have any detailed information about the finances.
GaryJ5
(New York)

Posts:12


07/06/2021 5:34 PM  
In 2017 our non profit was audited by the IRS for the past years. The IRS found 13 infractions including not having sent any return to the IRS. The following is taken from an article that the home owners sent around explaining what the requirements are.

Does an HOA pay taxes? It’s a common question a lot of homeowners associations ask. While an HOA does not technically operate to gain profit, it is still bound by tax laws. Do HOAs have to file tax returns?
Under the eyes of federal tax laws, homeowners associations fall under the category of corporations. So, even though your HOA is not-for-profit, it must still follow corporate rules when it comes to taxes

When it comes to HOA taxes, there are two forms you must take into account: Form 1120 and Form 1120-H. So, what is the difference between these two forms?

1. Form 1120
Most homeowners associations file Form 1120 with the IRS, though it involves a great deal of work. It also requires a ton of important information to fill out. There are both pros and cons to using this form.
For instance, HOAs that file this form experience a lower tax rate (15%) for the first $50,000 of net income. On the downside, though, it subjects all of your association’s net income to taxation. That means any unused money at the end of the period gets taxed as well. Additionally, accomplishing this form calls for more advanced accounting knowledge.
2. Form 1120-H
If you dislike Form 1120, under section 528 of the IRC, you can choose to file Form 1120H instead. It is significantly easier to accomplish, though it does come with homeowners association tax filing requirements. Your HOA can only file this form if it fits the following qualifications:
60% of your revenue must have come from the association’s members(regular and special assessments, interest, late fees
90% of your expenses must have gone to operations and maintenance
85% of units in your association must be residential
The annual residual income must not be spent for the benefit of the community members
In comparison to Form 1120, IRS Form 1120 H has one noticeable benefit. When you file this form, your HOA can choose not to include exempt function income from your gross income. That means your HOA must only pay taxes on non-exempt income.
When Should an HOA Pay Taxes?
For non-profit corporations, the deadline for filing federal tax returns is 75 days after the end of their fiscal year. Most HOAs have a fiscal end date of December 31, the last day of the year. In that case, the deadline falls on the 15th of March.

If your HOA never filed a tax return or has missed paying homeowner association taxes for the past few years, don’t worry. It is not too late. The first thing you should do is check how many years have passed since your last filing. Then, get in touch with the IRS to see whether you can file a Form 1120-H for the years you missed.

Do HOAs file tax returns?
To reiterate, homeowners associations are considered corporations, which means they do need to file federal tax returns. Such HOAs can use either Form 1120 or Form 1120-H when filing their taxes.

I hope this clears up some confusion. The IRS more than likely will only do a field audit if they investigate the HOA before coming to the site and already know what they are looking for. Usually someone or something notifies the IRS. With that being said the HOA is better off making sure they do it correctly from now on. Our HOA is paying a hefty fine and interest on what is owed. The IRS up until the pandemic were beginning to come down hard on HOA's.

The above info came from information newsletter/ad was put out by HOAManagement.com

SteveM9
(Massachusetts)

Posts:3615


07/07/2021 4:54 PM  
Your a not for profit. Not the same classification such as a non-profit like a church or charity. You will not loose any status.

Typically a HOA has no profit.
Thus owes no taxes.
Thus no penalty.
Thus no one at the dept of revenue or irs cares about your HOA.

They only go after people who owe money.

Should a HOA file federal and state tax paperwork. Yes. Its required.
Is there a penalty? Typically No. Unless you make taxable money (rare)

What can you do? Run for president, or treasurer and start filing tax paperwork. The solution starts with "you". You are an owner. Obviously in 20 years no one else is going to do it.
SheliaH
(Indiana)

Posts:4290


07/08/2021 7:38 AM  
The original post was in 2016 - Greg should start a new conversation with his questions because a lot may have changed since then and you won't need to wade through all the old stuff.

That said, it may be best to speak to a tax expert to find out what your options are
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