Compensating board members

Andrea,

There are a few issues with that idea.

1) Being a volunteer offers certain protections under the law. Being a paid professional (or paid volunteer) removes those protections.

2) There would be tax implications for the Association as the Association would now have employees. Things like workers compensation, issuing of W-2s, withholding taxes, employer taxes, etc.

3) You can not simply waive assessments. The individuals would need to pay their assessments and have the Association issue a check back to them for the same amount. Even if you did simply choose to waive their assessment, the Association would still be obligated by law to report that forgiveness of debt to the IRS.

4) Insurance (D&O specifically) may increase in cost.

Here are some articles on the subject that may be of interest:

Should Board Members Receive Compensation? from an attorneys web site.

To pay or not to pay? A closer look at board compensation 2014 article in Chicago Tribune

Should HOA and Condo Association Board Members be Compensated? 2012 article from the management trust

Independent Contractor (Self-Employed) or Employee? from the IRS website

Payroll Taxes, Costs & Benefits Paid by Employers from Accounting Coach website

Can Board members be paid? The answer is yes, providing it's done properly. However, there are consequences with that decision (as there are consequences with all decisions). Therefore, such a decision should only be made after you are informed of those potential consequences.