Can you pay an HOA member to do the HOA's taxes?

Started by ScottJ9 • 12 replies • 453 views

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ScottJ9 (Arizona)
Posts: 3

Posted:

I am President of an HOA Board in Arizona. Does anybody know if we can hire an HOA member (i.e., homeowner) to do the HOA's taxes? Likewise, could we hire a member to do the paperwork required from the HOA when there is the sale of a home?

ScottJ9 (Arizona)
Posts: 3

Posted:

I should add that our CC&Rs/Bylaws don't allow this currently, but they are being revised.

AugustinD
Posts: 3,698

Posted:

Are either of the potential hirees a director or relative of a director? If so and depending on what type of relative the person is, Arizona statutes say there is a conflict of interest. Per the statutes, certain steps, pertaining to declaring the conflict, need to be taken to hire the person.

At https://www.carpenterhazlewood.com/wp-content/uploads/2020/10/CHDB-AZ-Statues-Book-2019-2021.pdf , see ARS:

33-1811
33-1243 (C)
10-3860
10-3861
10-3862
10-3863
10-3864

SheliaH (Indiana)
Posts: 6,964

Posted:

I agree with Augustin - even if the homeowner isn't related to a board member, the optics are bad. You may several homeowners who are also tax preparers and then all of them will complain about not being hired. It could also get really tricky if the homeowner made a mistake that cost the association a lot of money.

Best to hire an someone who's not related to the community at all.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By SheliaH on 07/24/2021 9:10 AM
I agree with Augustin - even if the homeowner isn't related to a board member, the optics are bad. You may several homeowners who are also tax preparers and then all of them will complain about not being hired. It could also get really tricky if the homeowner made a mistake that cost the association a lot of money.

Best to hire an someone who's not related to the community at all.

Sound advice. Keep things separate.

BenA2 (Texas)
Posts: 1,273

Posted:

There is nothing wrong with it as long as you follow your governing documents and state law (getting required bids, etc). I doubt either one would prohibit it. You could potentially have problems with excluding someone from bidding based on ownership or residence in your HOA.

I agree that you should avoid hiring a board member's family member but, in most cases, I think even that would be legal. Obviously, the related board member should abstain from the vote.

MaxB4
Posts: 3,513

Posted:

Actually you can and should be no problem. In many associations, the treasurer is not required to be a director, sometimes not even a member. If you Bylaws state that the treasurer need not be a director, all those citations about directors go right out the window.

MaxB4
Posts: 3,513

Posted:

This is from the Bylaws of a Arizona HOA

ARTICLE 4
OFFICERS AND THEIR DUTIES

4.1 Enumeration of Officers. The principal officers of the Association shall be the President, the Vice-President, the Secretary, and the Treasurer, all of whom shall be elected by the Board. The President must be a member of the Board. Any other officers may, but need not, be members of the Board.

4.2 Election of Officers. The election of officers shall take place at the first meeting of the Board following each annual meeting of the members.

4.3 Term. The officers of the Association shall be elected annually by the Board and each shall hold office for one (1) year unless he shall sooner resign, or shall be removed or otherwise disqualified to serve.

MichaelS56 (Minnesota)
Posts: 858

Posted:

Having a member of the HOA doing the taxes seems to be a good idea but it could generate bad optics. Your residents that have that training and licensed to do taxes should be on the HOA finance committee. An outside of the HOA company to do your taxes is not too expensive. This would remove any favoritism and would be viewed as an independent preparation. If a serious mistake is made in the prep work then an owner living within the HOA would not get the wrath of others.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Turning the question around, is there any benefit to the HOA to hiring a member?

Others have outlined the negatives: bad optics, potential conflict of interest, hurt feelings or accusations of favoritism, potential disclosure of confidential info, and problems if mistakes are made.

On the plus side, do you believe that the HOA will benefit in some way? A reduced price, maybe?

Personal opinion: financial stuff should be handled by qualified persons whose only tie to the HOA is a professional one.

MarshallT (New York)
Posts: 414

Posted:

Hi Scott, while you probably could once governing documents are amended, it's best to hire someone who is not a member. All of the "what-ifs" and potential conflicts of interest could create problems that are otherwise avoidable.

JackJ9 (New York)
Posts: 112

Posted:

I don't see any issue as long as the HOA member is in the business of doing corporation taxes.

We hired an HOA member that owns a business to do a particular task for us, and they did a great job. No one complained. It worked out fine all around. We will include that particular company on the list of people we get proposals from for next time we have another task to be accomplished that their business can help with.

Everything is on the up and up. We get multiple bidders. They need to be licensed, bonded, insured. We award the contract to the company that does the best proposal for us (not necessarily cheapest).

So I don't see an issue with it as long as the person normally does this kind of work.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is the only two barbers in town paradox. There are Two barbers on an island. One has great hair. The other hair is messy. Which one do you hire? The one withe messy hair. He cuts the other barbers hair.

So if you need or want to hire someone whom is qualified for the job otherwise then why potentially hire the messy haired fellow if it is just for looks?

Former HOA President

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