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HOA filed tax returns

Started by VincentD • 13 replies • 2511 views

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VincentD (New Jersey)
Posts: 10
Posted:
I have ask for the filed copies of my HOA and was told by the Board Oresident, they are not available for review, as mandated by thxBiard rules.

Since I am a member of the community, I fail to see why they would not be made available as
SheliaH (Indiana)
Posts: 6,964
Posted:
Could it be the returns haven't been completed yet? Have you asked for several years worth which may take some time to retrieve?

Usually, HOAs don't have any income to report, so unless there's a tax bill for something, why do you want to review them?
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
VincentD (New Jersey)
Posts: 10
Posted:
hOA elects to be treated a a regular corporation, filing Form 1120 Verus Form of 1120H

Rate for 1120 is less than the flat rate for 1120h

Returns have been filed.

I believe they are holding them back because the election to carry forward excess contributions from members under RR 79-604 applies when filing Form 1120. Raises questions about what they are affard of?
SheliaH (Indiana)
Posts: 6,964
Posted:
I'm not a tax person - assuming you know something about this, would this excess contribution issue impact individual homeowners' tax returns or result in the association paying income taxes that's not in your budget (thus calling for a special assessment from homeowners to take care of it?) Did you ask the board about the excess contributions issue? What was the response? If they don't know, perhaps they can consult the tax preparer who can better explain it.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
VincentD (New Jersey)
Posts: 10
Posted:
When a Budget is prepared and approval, the monthly assessment is either increased or decreased. At the end of the year, if the actual amount is less than the budget, the excess collected can be used as working capital, or to reduce the next year assessment. If the association elects to use the excess as working capital, and it also elects to file as a regular corporation using From 1120, it must make an election under RR 70-604. Failure to do so would subject the association to taxation on the excess collected and not returned to the members. If the association files as an HOA and uses Form 1120H, the excess is not taxable.

JimR24 (Texas)
Posts: 399
Posted:
Quote:
Posted By VincentD on 01/23/2017 7:41 AM
I have ask for the filed copies of my HOA and was told by the Board Oresident, they are not available for review, as mandated by thxBiard rules.

Since I am a member of the community, I fail to see why they would not be made available as

I would say, of course - you are entitled to have a copy of the filed income tax form of an hoa of which you are a member. Your governing documents prevent this?

oljim, in texas
Lovin' life with my honey!
and, President of HOA in Texas
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I would question if the individual owner's get money back if there was extra. It seems more like it would go back to the HOA budget. After that, the a new budget should be set to decide to lower the dues.

Is your HOA not a non-profit? A bit confused on that.
Former HOA President
VincentD (New Jersey)
Posts: 10
Posted:
Yes we are a registered non profit organization as a Home Owners Association.

However, a non profit can elect to be taxed as a for profit organization. The reason it would make an election to be taxed as a for profit organization is because it has income that not tax exempt, such as interest on investments in a Reserve account. So if it filed a 1120H return the tax is a flat rate of 30%. As a for profit organization, the tax rate on the first $50K is 15%. So by electing a regular corporation status, the taxes will be lower.

The danger of filing as a for profit organization is that upon audit, it would be subject to regular taxes on any audit adjustments. A not for profit organization is not subject to the same set of IRS rules when audited. Thus most HOA file as a not for profit to avoid any IRS issues and pay the taxes due on Reserve account interest at the flat tax rate.

VincentD (New Jersey)
Posts: 10
Posted:
Yes, according to my Board president!
SueW6 (Michigan)
Posts: 814
Posted:
Check when the filing is due. I think non profits have a little more time than April.

You are eligible - by law - to look at all the financial statements of your HOA, but it will probably be in the office, by appointment. If you want copies, you will have to pay for them.

I wonder why the President is stonewalling you, unless they just are'nt completed.

DouglasK1 (Florida)
Posts: 2,046
Posted:
It seems to me that questioning Vincent about why he wants to see the docs is irrelevant.

You should check your CCRs/Deed restrictions and bylaws to see what they say about records being open to all members. A board rule/resolution can not override those docs.

I have no idea about NJ association laws, if any, but you should also find and read those. For example, Florida's HOA laws require both open meetings and records and if an owner wanted to see tax returns, the law requires that we provide them.
Escaped former treasurer and director of a self managed association.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Vincent,

Check your governing documents and applicable laws (don't forget corporate law if your Association is incorporated).
Keep in mind that most governing documents and laws specify that you have a right to review the documents, not have copies provided.
If you desire copies, it is typical that the Association may charge a reasonable fee per page (to include the cost of labor).

Then write a letter, citing the applicable sections, requesting the documents.

Example:

Dear xxxx,

I am a member of xxx Association, residing at xxx anywhere street.

In accordance with our governing documents, [document name, article number, section] and State statutes, [identify section], I am requesting to review the following documents:

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