Are POA's tax exempt non profits

Hello. I have a question which may sound technical or maybe, silly. Our new management company of one year, says that we are a "nonprofit" corporation and that we are tax exempt and that we filed as a nonprofit tax exempt corporation in 2004 when we became incorporated and the builder started building our homes..... We all own our own homes in a small community with 6 ponds being our only common assets. I doubt he filed as a nonprofit since he made a profit on two hundred and thirty homes.
I don't think so. When I was on the first board after the builder turned over the neighborhood streets to the county, we were filing forms 1120-H for our income taxes. I believe we are a not- for- profit organization and to maintain that we can't make a profit when we file our taxes.
We are not a charity and we do not benefit any public organization and it's odd they're just stating that in a letter. A H/O complained that we didn't get seven days notice or even 24 hrs notice before a meeting. The mgmt company said as a nonprofit organization they don't have to follow certain rules. I do not believe we ever filed a form 1024 with IRS for tax exempt status or that we filed Form 990 for our yearly taxes.
Any insight on this matter?

Oops, me again, I just found attached to the last page of our covenants, South Carolina, Secretary of State, Nonprofit corporation, Articles of Incorporation. filed January 29 2004.
So I guess we filed with the SC state in 2004 // However, I don't know if we were approved by IRS to be a tax exempt non profit or if it is the same thing?

Some observations to help your thinking along:

-- All IRS code 501(c) organizations are nonprofit and pay no taxes.

-- But not all nonprofits are 501(c)s.

-- Some nonprofits (like nearly all HOAs and COAs) fall under IRC 528. They may, after completing 1120 or 1120-H, owe taxes. No big deal.

-- Here are tools to help identify whether the IRS provided the HOA a "determination letter" saying it is a 501(c):

https://www.irs.gov/charities-non-profits/tax-exempt-organization-search

https://www.wikihow.com/Verify-the-501(c)(3)-Status-of-a-Nonprofit

-- Again, it is highly unlikely that your HOA/COA is a 501(c) organization. Look up the requirements for qualifying as a 501(c), and you will see why. If a person has to strain to see whether an organization has the qualifications to be a 501(c) organization, then it is almost guaranteed the organization would not qualify.

-- Your MC is going to totally screw up everyone's thinking there. Plus the only one the board can really trust is the HOA attorney. Get ready to pay for some basic education on tax status, at whatever your attorney's hourly rate is. Thanks a lot, management company.

Thank you both for your answers especially Ellen. I appreciated every word you wrote.
This all came about because they called a meeting for Jan 3 and gave us less than 24 hours notice in an email at 4:10 pm January 2nd.
Because a homeowner complained, we got an e-mail today saying they don't have to follow any rules because we are a tax exempt and the South Carolina State laws (Section 27-30-140 re HOAs) don't apply??? This seemed nonsensical to me and that they were mixing apples and oranges and making an excuse for not giving us enough notice. Only five people showed up to this suddenly scheduled- one month early- quarterly meeting. It should have been the first week in February, not January.
thank you

True if you file form 1120-H. For various reasons, not all associations use that form.

Typically HOA's are not for profit, but do not the same classification as a 501(c)3
The only two things I can think of that an HOA pays IRS income tax on its profits from the sale of
HOA-owned "real" property and earned interest from HOA-held bank accounts like CDs and money market accounts.

Lynne, please, please specify if you're writing about a meeting of the Board of Directors, OR a meeting of the members (owners), which usually, but not always, is your annual election.

In addition, cite the EXACT wording in your Bylaws about the 7-45 days notice. That appears, to me, anyway, to be a required notice period for a Meeting of the Members NOT of the Board. IS there anything in your Bylaws about notice to owners being required for Board meetings???

We do have a couple of good SC board member posters who might like to help.

( Do NOT use the "tax" word again)

That is very interesting because I'm. just got an email from our management company saying that they do not have to notify homeowners of Board of Directors meetings only of special meetings and the annual meeting.
Our bylaws have a section that says 5.Notice of Meetings- which comes after the section for special meetings and it doesn't say what particular type meetings, but it says that homeowners should get notice of meetings... between 7 and 45 days... Since homeowners are entitled to hear all board meetings, shouldn't we be notified when there is a board meeting so we can hear what's going on.?
I missed the last meeting and at it, the president suggested that we take out all 13 of our fountains and put in little bubblers instead, so the fountains don't make waves and cause erosion in our six ponds.
Now that would require us spending about $2,000. to $3000 on bubblers for 13 fountains. Where's that money coming from? We don't have it in the budget. We don't have it in our reserves either. So don't you think homeowners should have been at that meeting. Our ponds are small less than an acre. Some less than 30 feet wide. There are no waves. No big erosion on the hills.
Well, since JohnC46 said it, and my property management company said it, I guess we don't need notice if there's a quarterly meeting.

So, "meetings of the voting members" means owners, not board members (aka directors). Meeting of the members also are sometimes called "meetings of the association." Bylaws that I've seen also name another type of meetings of members/owners and they are called "special meetings of the members [or of the association..]" This language probably also is in SC nonprofit Corporations Codes. I assume notice to members is required for these.

So, WHAT "special meetings" are you talking about?? Special meeting of the members ? OR special meetings of the Board??

When you read about board meetings in your Bylaws or state corp. codes, you might see there are 3 kinds of board meetings: Regular Meeting of the Board--often monthly or quarterly. You mentioned quarterly, Lynn, so I think that reference is to regular board meetings.

Special Meetings of the Board. These often are about only one topic that needs special attention. You seem to think these must be noticed to Owners, but it's not clear to me that you're correct. A final type of Board meeting is an emergency meeting of the board, which is self-explanatory.

I hope JohnC of SC stays with us. I recall him writing several times that HOA board meetings in SC must be open to owners. But notices are not required.* Please correct me if I'm wrong JohnC. The way I see it, an open transparent and owner-friendly Board posts notices of the board meetings in a visible place or, as my HOA does among many types of notification, also eblasts notices to all owners.

But if your Board prefers secrecy (Booo!, you just need to constantly nag the PM about the date/time/place of the next Board Meeting so you and the several others don't miss them. If you and others feel your Board is too secretive and otherwise unreasonable, your recourse is to run for Board opens at your next Meeting of the Members/ annual election.

Btw, you cited Sect. 5, Lynne. Is Sect. 5 part of an "Article?" If so, what is the title of that article?

* I may recall this incorrectly, but I seem to recall VA is the same way. Board meetings must be open to owners, but no notice is required. I'm sure Tim will feel free to correct me and I welcome it.

There is no state that requires meetings be open to owners but does not require owners to have notice. This would be illogical. Two seconds of googling would have answered your question about Virginia and stopped this latest hijacking.

Ah, Lynne, I really appreciate your exact quotation from your HOA's Bylaws. It's also in SC Homeowners Assoc. Act 27-52-150 (B)(C):

"(B)  All meetings of the board of directors, including any subcommittee or other committee thereof, shall be open to all members of record.[owners] The open meeting requirement does not apply to meetings between the board and its attorney with respect to proposed or pending litigation where the content of the discussion would otherwise be governed by attorney-client privilege."

"(C)  Members have the right to attend all meetings of the board and to speak on any matter placed on the agenda for a reasonable amount of time. The board may adopt reasonable rules to govern the rights of members to speak and the frequency and duration of member statements."

But, jeez, I think elle lurched again away from the topic, which IS notice to Owners for board meetings (not if board meetings must be open) So far as I can tell, and I do agree with Elle that it makes no sense, SC nonprofit corp. codes do not require any notice to members (owners) for board meetings.* Long-time SC director JohnC has written this numerous times though I don't think he's ever said wither this is from HIS Bylaws or SC Code. I think he's written there's really nowhere to post a note & board meetings are held in directors' homes.

Lynne wrote: There are these meetings: " 1 )Special Meetings. 2) Voting member's Meetings. and 3) Board of Directors." Please read your Bylaws really closely, Lynne, to see that there can be special meetings of the Board and Special meetings of the Members (owners). Lynn: "And they each have different notification rules." So far as you've shown, your Bylaws require no notice to owners of Board meetings even though owners may attend.

* To suggest that SC may not be the only HOA open meeting state that doesn't require notice of open board meetings to members is not to "hijack" this post. elle shows no evidence that such a seeming contradiction is nowhere to be found except, so far as I can tell, in SC.

No, no no. This was in proposed bills in the SC legislature. This never became law.

The topic of why, when board meetings are open, notice is legally required is over your head. Fact: If the bylaws or statute require that board meetings be open to owners, then notice is required. Notice has to be "reasonable" to satisfy the law.

My earlier response on this could have been better.

Unacceptable.

Rest of post ignored.

Kerry

Our Bylaws say the BOD must notify owners when a Member Meeting and any Special Meeting via USPS 4 to 50 days before hand. Years back the BOD added a rule of at least 30 days notice. There is nothing in the Bylaws about notifying owners when a BOD Meeting takes place. Our Bylaws say our BOD meeting are open to owners. Our Bylaws say we must have a BOD Meeting once a quarter which I admit we do not follow this. We have an MC and we pretty much can run this place on cruise control.

We have never had an owner request to meet with the BOD. As of now I have no idea when our next BOD meeting will be. We decide when one is needed. In SC as we can discuss/conduct BOD business via phone and Email We do not meet that much.

We are a simple association. 40 single story duplex (side by side) homes and 32 standalone one and two story homes. We have no amenities, no parking lots, no nothing. Our home are smallish, 1200 to 1500sq feet patio homes on small lots. Our largest budget item is landscaping as the association is responsible for doing it. Our dues are $100 per month, per home so a budget of about $135K. The association is also responsible for replacing roofs so we are continually building our reserves so we can do this project beginning in 2027 or later and done over 7 years as that is how long it was from first to the last home built.

Of the things you mentioned we are NOT responsible for walks, patios, drainage, lighting only in that we pay the electric bill for street lights. We raised dues by 30% in 2021 and by 20% in 2023. With nearly all of the money going into the Reserves. We did not raise dues for 2024 but I can assure you we will be raising them in future years.

Our units are brick front and the other 3 sides are vinyl siding. Roofs predicted for 25 years and as we used top grade shingles we might get a few more years. Vinyl siding good for 35 years. We have 72 structures (40 duplexes at 1,100sq ft per unit and 32 standalones from 1,200sq ft to 1,500sq ft per unit). It was 7 years from the first unit sold to the last unit sold so any work we do will be over a 7 year period starting no sooner then 2027 for the roofs and according to those we have had look at the roofs, we may not have to start until 2022.

While we are "close" to comfortable, we do pray for a massive hail storm as owner's home insurance would pay for a new roof.....LOL

One side note. We do not pay for "damages" only normal wear and tear. Damages are paid for by the owner's insurance. As an example if your roof leaks, is is not the association's problem, it is yours. We do have the occasional but the realtor/seller told me so and so. One person backed into their garage door and expected us to pay for it.

As one court put it with regard to County Commission meetings and notice:

"Without public notice, an open meeting is open in theory only, not in practice."

Where statutes or bylaws require open meetings, and regardless of whether anything is said about notice, of course reasonable notice is required.

I realize JohnC46 and KerryL1 disagree.