New Treasurer - Help!!!

I just became the new treasurer of our HOA. It's a small group of 11 homeowners. We collect $50 per month to pay for the streat lights (about $30/month) and to build a fund for repairs to a common road. The HOA has only been in existance since last January. When I took over the position last week, the previous treasure gave me all the documentation he had. Apparently the Credit Union he used to set up the checking account last year let him establish it under his SS# and the name of the HOA. He received a 1099-Int this year...but as I said, it was listed as the HOA under his SS#. I'm going to let him deal with that since he will need to claim that on his personal taxes.

I went ahead and got a seperate tax ID number for the HOA and set it up as a non-profit organization and opened a checking account with that ID. My real question (unless someone has input on any of the above) is should I now set us up as a 501(c)(4) tax-exempt organization? If so how is that done. This would be for the purpose of not having to pay taxes on the interest earned from our road fund. Also, I assume at the end of the year, I would file a 1120-H tax form to the IRS.

Finally, the HOA is in Ohio. Is there anything I have to do for the state?

Any help would be appreciated.

Thanks,

Les

After I posted this I discovered via other articles that we probably can't be set up as 501(c) tax exempt organization. However, when you say HOAs can't be set up as tax exempt organizations, why is it I read about HOA's being set up as 501(c)(4), such as in http://realtytimes.com/rtcpages/20040331_hoataxman.htm. Just curious.

Also, since the old account was really set up under the previous treasure's SS# and the new ID number wasn't established until last week, how would we correct that? Wouldn't he need to claim the 1099-Int on his personal takes. It's only $36 interest...so the amount isn't the concern as much as doing the right thing. Should we file a 1120-H with his SS# this year and use the correct tax ID # next year.

Thanks for the quick response...this site is great help!!!!

Les

I agree on the road expense. We have a homeowner looking into that. We still have some discussions with the developer who put the road in originally. We feel it wasn't done correctly...so we're in a minor dispute with him right now.

As for the accounting issue, I think I'll do the following. What does everyone think of this? I'll fill out a 1120-H for last year. I won't include the 1099-Int and not claim the interest to the HOA, since the account was under the previous treasurer's SS#. I'll then deduct the interest from the money from last year and give it back the the old treasurer and let him deal with the 1099-Int on his taxes. He can use the money for food/drinks for our next HOA meeting.

The issue on the interest earned is that it was earned under an individual's SS# and for tax purposes, it's listed under his SS# on the 1099-INT. Everyone is OK with carrying the money over in the account. My issue is from a tax reporting standpoint and trying to figure out how to fill out the 1120H. I'm trying to fix it from a tax standpoint. If the money from the HOA was kept in an indivdual's account last year, I don't think the HOA can claim the interest. Bad mistake on the previous treasurer's bank when they set up the account. They shouldn't have set up the account using the HOA's name and his SS#. If I claim the interest, it won't be listed under our next tax ID number. Also, if he doesn't claim the interest on his taxes, he may have an issue if he gets audited. The amount isn't the issue, only $36, it's how do I do it correctly from an IRS standpoint.

That sounds like the best answer, I'll inlcude the interest in the HOA's tax return and include a note. Thanks for the advice.