Is the old or new HOA management company responsible for 1099s?

Started by DeniseS8 • 6 replies • 269 views

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DeniseS8 (Colorado)
Posts: 4

Posted:

We switched HOA management companies on March 31, 2023. This year, in January, our new HOA management company informed us that they won't be issuing 1099s to the vendors who worked before March 31, 2023. They told us to contact our previous HOA management company and tell them that they should be the one to issue those 1099s because those vendors didn't do any work for us after March 31, 2023.

Our board doesn't agree with this, but our new HOA management company insists they are correct. Are they? Who is responsible for 1099s? The old or new company?

Thanks in advance x

SheliaH (Indiana)
Posts: 6,964

Posted:

The previous company handled your association's finances, so it makes sense that they would issue the 1099. What did your old contract say about this? Did anyone read it? Did you have a transition plan to ensure all paperwork would be addressed by the time of the changeover? Doesn't sound like it.

Call the old company and see what can be done- yes, you'll probably have to pay for this. Otherwise, talk to your tax preparer on what to do.

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

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is the old company not the new one. The contract was executed prior to them taking over. They need to issue the 1099. Do not be surprised if they charge the HOA to do it. It's no longer part of the contract. Not sure if it's part of the new contractors. May want to verify that.

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

It may help to think of it like any other tax forms.

If you change jobs on April 1, your previous employer is still going to send you a W-2 covering January-March - your current employer won't send it because they don't have access to the necessary information.

In this case, your new management company doesn't necessarily have information that the previous company does. And current company can't vouch for the accuracy of information they don't have first-hand knowledge of.

ElleN (Idaho)
Posts: 4,420

Posted:

Who is legally responsible for issuing 1099-NECs? The HOA is, period. Furthermore the 1099-NECs were supposed to be sent to vendors by January 31. I recommend stopping the squabbling. Instead review the books; identify vendors; call vendors as needed; speak with the HOA accountant to see if he/she can help; and get on this.

Completing a 1099 is not hard.

Right now the HOA owes an IRC penalty of $120 per late 1099-NEC. After August 1, the penalty goes up.

ElleN (Idaho)
Posts: 4,420

Posted:

If a vendor was paid $599 or less, the IRC does not require a 1099-NEC to be submitted.

Chances are that there is only one box that might be a challenge to complete: The total dollar amount paid to the vendor. The HOA could use bank statements to figure out how much each vendor was paid for the first three months of 2023, for crying out loud.

The IRS prefers typed 1099-NECs, but the IRS accepts even 1099-NECs filled out by hand, using a pen.

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By CathyA3 on 03/14/2024 5:49 AM
It may help to think of it like any other tax forms.

If you change jobs on April 1, your previous employer is still going to send you a W-2 covering January-March - your current employer won't send it because they don't have access to the necessary information.

In this case, your new management company doesn't necessarily have information that the previous company does. And current company can't vouch for the accuracy of information they don't have first-hand knowledge of.

In this case the name of the payor is the HOA, not the MC. Nothing's changed there. Unlike W-2's where the payor, the employer, has changed.

The new MC should have fully recorded accounting records from the previous MC. The new MC should carry forward with that info and issue the 1099 from the HOA to the vendor for all payments the HOA paid the vendor for 2023.

Just because you change the person who does your accounting, doesn't change what reporting is required for the year. The HOA did not change. The name on the 1099 is the HOA who paid the vendor, not the MC who wrote the check for the HOA.

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