Reversing a Board Decision

What kind of decision?

By a 5 to 2 decision the Board voted to proceed with an effort to have the HOA seek tax-exempt status under IRC 501(c)(4). They have paid a CPA $9000. to do this and on the CPAs advice have not paid 2017 taxes of $169,000. The Association sold two units that we had previously collected rental fees from. Many of the members feel that we are now throwing good money after bad money. I am a member of the finance committee and oppose this decision.

Back to the original question, I don't know if CA law provides any way for membership to override a board decision, if not then check your governing docs. Most likely there is no mechanism to overrule the board directly, the next option would be a recall vote for the board members that voted in favor so they can be replaced by other board members. The repopulated board could then change the decision.

Here is an option if... Report the CPA to the IRS for this filing decision. It is not correct. You can then gather enough votes to recall the board. You may want to check with the BBB to see if there are any reports about this CPA.

It should be understood your HOA is a non-profit corporation but does not mean one can count it as a "charitable" one. So your HOA is also most likely on the hook for the taxes on the sell of those 2 homes. This is one of the reasons I advocate a HOA should never own or rent out such property. It becomes a huge burden on the HOA.

It does sound like a scam, though. The only thing I can think of (that would apply to FL anyway) is a hair-on-fire recall of the board tout de suite unless your documents provide for some other way for the owners to overturn a board decision.

Thank you all for your insight and opinions. I and the Board are aware of the disciplinary actions taken by the California Accountancy Board against this CPA. It is public information that is posted on their web site. I am aware of HOAs that have gained tax-exempt status under IRC 501(c)(4), however, they are unique in the services they provide to the surrounding communities. I have also sought opinions by two other CPAs and one HOA Lawyer. As you might imagine, their opinions do not support the decision of the Board. The problem is that it seems there is no published way, either in our CC&Rs or in the CA. law, to overturn a decision by the Board. The problem is that each day this continues the Association is accumulating interest and penalties due on a approximately 169K tax bill.

Warren, if you think the law (tax law?) has been broken, you can either (in no particular order):

(1) send a letter of demand to the HOA, threatening a lawsuit. Have as many members as possible sign it. For this one, I think you want to consider an attorney to get the law correct.

or

(2) if you feel confident about the law here, report fraud to the IRS. Google and you will find the contact info for the fraud division of the IRS.

or

(3) report the CPA to the CPA-regulatory authority in California. Every state has one.

or

(4) recall the directors, per what the other posters here say.

or

(5) a combination of the above.

"In California, if a HOA Board makes a decision that is opposed by a super majority of voting members, is there a process by which the members can reverse that decision.'

SCENARIO:

The board passed a motion. The members don't want the (board motioned and passed) decision to be implemented.

What can members do? How members can call a special meeting should be in the bylaws. Generally, they can call a special meeting with the stated purpose to be to RECIND the motion that the Board made. 2/3 vote is needed. They can also do a recall of the Board at the same time. The purpose of the meeting MUST be in the notice. Only these subjects would be allowed to be discussed.

(I find it very unusual for the Board to apply for an IRS status without a bringing it before a vote of the homeowner Members. That was not a decision the Board should have done by itself.)

It is a Special Member Meeting, not Special Board Meeting.