ACTIVITES

Started by LaverneB • 10 replies • 944 views

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LaverneB (Florida)
Posts: 79

Posted:

In our community of 216 homes we have a committee doing partys, showing a movies, etc.all volunteers who live here. They charge a fee for these things, which is OK. My question is? They pay no taxes, is run under our community's name at bank. Now the money made used to be given back to the residents by holding small get togethers all "free" events. Now they are saying they can do what they want because the BOD gives them no money.Even though we pay to go to their events. Any thoughts on this.It used to be given back by Jan 1 ..to have zero balance in bank....thanks

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Lav

As the BOD does not give them any money and it appears the events are voluntary, I say they can do whatever they want with the money including spend it on themselves.

TimB4 (Tennessee)
Posts: 21,061

Posted:

I agree with John.

However, the funds collected also need to be identified as income to the Association (since the committee is part of the Association). These funds would be taxable.

Now, if the committee applied for their own EIN and filed their own tax returns, then the committee would be autonomous and can certainly do as they desire.

TimB4 (Tennessee)
Posts: 21,061

Posted:

If you really want to be a pain in the behind to the committee and Association, report the issue to the IRS. The IRS will investigate, charge back taxes and, possibly, assess penalties. Since you reported the issue, you will gain a portion of the recovered funds as a finders fee (so to speak). However, as a member of the Association, you will also share in any expenses defending an audit and for paying penalties/taxes.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Heres a link from the IRS:

https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity

LaverneB (Florida)
Posts: 79

Posted:

Not when they use all of the clubhouse, kitchen, etc..also the HOA supply's all paper products, cups, plates, etc..and workers have to set up and take down tables, chairs, etc..the HOA pays for this..not activites people

LaverneB (Florida)
Posts: 79

Posted:

They have never filed any tax return. At the end of the year, monies was given back to community in like a luncheon, cook-out. Or but something for the clubhouse, so that Jan 1 there was a small start up for the next year

LaverneB (Florida)
Posts: 79

Posted:

They have never filed any tax return. At the end of the year, monies was given back to community in like a luncheon, cook-out. Or buy something for the clubhouse, so that Jan 1 there was a small start up for the next year

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't see any real violation. Matter of fact, them returning the money was part of spending as much as you collect back into the HOA. Which is what the HOA is to do. Spend as much as it collects. The activities committee sounds like they are following that same method. They charge what it costs them. Any extra money, then they may spend it on another activity. Nothing wrong with that.

Former HOA President

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By LaverneB on 02/18/2018 7:35 AM
In our community of 216 homes we have a committee doing partys, showing a movies, etc.all volunteers who live here. They charge a fee for these things, which is OK. My question is? They pay no taxes, is run under our community's name at bank. Now the money made used to be given back to the residents by holding small get togethers all "free" events. Now they are saying they can do what they want because the BOD gives them no money.Even though we pay to go to their events. Any thoughts on this.It used to be given back by Jan 1 ..to have zero balance in bank....thanks

Quote:

Posted By LaverneB on 02/18/2018 9:08 AM
Not when they use all of the clubhouse, kitchen, etc..also the HOA supply's all paper products, cups, plates, etc..and workers have to set up and take down tables, chairs, etc..the HOA pays for this..not activites people

Your HOA Board is incompetent. You are justified and then some in reporting this to the IRS. But the quickest solution may be to get a group of like-minded HOA Members and at the next election, take majority control of the Board.

JeffT2 (Iowa)
Posts: 880

Posted:

Time to go back to basics. Review your governing documents for how your committees are set up and how committee members are appointed and removed. The board needs to exercise some leadership and create a new charter for this committee that details this committee's make up, purpose, duties, responsibilities, advising the board, getting board approval, as well as reporting to the treasurer and the board.

Maybe you can help your board by presenting a committee charter, or at least the suggestion for one, to the board for their discussion and approval. Your treasurer also has responsibility for the finances and should exercise some control over the finances. This is a good opportunity for improvement of both the committee and the board's oversight of the property.

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