Question on HOA income tax

My HOA is in FL.

I found out at the Annual Meeting that the Boad is not in the habit of filing an income tax form every year. They believe, since we are a not for-profit-corporation, they are exempt from doing so.

As a former Board member from years ago, I remember, if the Board has is not ever filed an income tax form, they shouldn't ever start. From memory mind you, the reason is, IRS will wonder where are the other years of income tax returns are, and IRS will audit the Association.

Is this still how it is today?

The issues are two fold:

First, the President wants to send hurricane victims a monetary donation ($50). I do not see any where that it is written in our legal documents, that we can do that. I told the President if it isn't writen within our documents then we cannot send a donation. I also informed the President, if the Association is not in the habit of filing an income tax return every year, then you still cannot send in a donation. According to our Newsletter, the President is not listening to me, and will discuss this issue at the November 7th Board meeting.

If it is not written in our legal documents, can the Association make donations to any organization?

If the Association could make donations, does the Association have to file an income tax form for their donation of $50 or higher?

If the Association does have to file an tax form, and this being the first one, can this cause an IRS audit?

Second,the Board handed out $7,500 worth of their so called "legalized gifts" via our yearly dues to themselves and members of their committees, at our Annual Meeting. Really, the amount is $7,400, because I have no intentions on cashing my hundred dollar check. I have a more "legalized" use for it instead.

Doesn't the Association have to claim the $7,400 gifts to the IRS?
If so, would this cause the IRS to audit our Association?

The President believes: "Gifts" are not income to those who recieve,
and do not have to claim on their taxes. Nor, does the Association have to claim "gifts" on their taxes either.

I would hate to fine out from the IRS's audit, that our Association owes back taxes with interest. Guess who the Association looks to pay the IRS those back taxes? The homeowner's! They would have to be assessed for those back taxes, and many who live here, live on a fixed income.

Please, if you know how to help me with any of these issues, or have experienced something like this with your own Association and how they handled any one of these issues, please let me know.

I appreciate and value your time too.

Thank you very much,
Audrey

Audrey says,"Thank you,you are awesome!"

Hi Hank,

Thank you for your words of wisdom. I hope you don't mind if I borrow them to use in Tallahassee. I'm trying to keep my Board as well as their Committee's as "unpaid volunteers."

I am for whatever works,too. Let us know how the pot luck does at your next Annual Meeting.

Take care,
Audrey

Just an added note. HOA's that don't file timely tax returns may be forfeiting their chance to use Form 1120-H and that could force them to use Form 1120 which could have a dramatically different result.

There is no statute of limitations for non-filers.

Get all delinquent tax returns filed as soon as possible.