IRS 501(c)(4) Exemption

I am trying to obtain sales tax exemption in Texas for my HOA. But I need to get the IRS exemption first. I am overwhelmed by the information on the IRS site and need some guidance. Has anyone here gone through the process? Or are there any recommendations for CPAs who have helped with this?

Thank you.

We went through the process of obtaining a 501(c)(4) exemption for a client association five years ago to satisfy a requirement of the city in which the HOA is located to qualify for a city beautification grant.

I strongly recommend you contact the association CPA and have him or her take care of what needs to be done. ISTR the CPA charged $700, there was also a payment of several hundred dollars made to the IRS. The process took about 3-4 months and was quite involved and time consuming even with the CPA leading the process. We also billed our client for 4-5 hours of consultating time as there were forms to be completed and records to be assembled.

A side benefit is that, once the exemption is obtained, you can apply to the Secretary of State for a waiver of the annual no tax due filing requirement. We normally do the filing for our clients for a small charge, if the CPA does it they often charge $100 or more--eliminating the cost of having the CPA file the no tax due report will eventually offset the expense of obtaining the exemption.

You will also be exempt from taxes on interest for investments in a Reserve Fund. That is why we did it. We are saving about $60,000 a year as we have over 9 million invested.

Ken

We are a 501(c)(4) as well. It is a process but in the long run, saves us money. On the flip side, we have been researching actually incorporating as a town for a number of years. Hoa fees would mostly be taxes at that point.

SF, your best bet is to let the CPA run with this. Give him or her what is asked for and step aside. As I mentioned, we took a client through this four years ago, I cannot begin to recall the details of what was involved.

We used Timothy, DeVolt and Company, P.C. in Farmers Branch. (972) 980-4315

Michigan no longer issues sales tax exemption letters. (Used to be you showed that when buying goods for the group)

You can show your IRS Determination Letter issued by the IRS when they gave you the 501(c)(4) status.