Paying Sales Tax

Started by DebbieW11 • 5 replies • 105 views

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DebbieW11 (Florida)
Posts: 1

Posted:

We have a group that "fundraises" for just our community. They help with the cost of purchasing or fixing things within our community. We have some people that insist they pay sales tax for the money they bring in. I called the Department of Revenue, and they said they did not have to pay. However, these people still insist. To make matters worse, they are using HOA money to pay the tax. What are your thoughts on this?

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By DebbieW11 on 10/28/2024 6:13 AM
We have a group that "fundraises" for just our community. They help with the cost of purchasing or fixing things within our community. We have some people that insist they pay sales tax for the money they bring in. I called the Department of Revenue, and they said they did not have to pay. However, these people still insist. To make matters worse, they are using HOA money to pay the tax. What are your thoughts on this?

How does the group have access to HOA money?

CathyA3 (Ohio)
Posts: 6,299

Posted:

I would suggest that the board set assessments at a level that meets the association's spending needs.

Commingling HOA assessment dollars and and "private" donations should give your auditor and tax person hives. What does your tax prep person say about all of this? Do you have your books audited, and what does the auditor say?

TimB4 (Tennessee)
Posts: 21,061

Posted:

donations to the HOA would be taxable income using 1120-H IRS form.

DeanJ
Posts: 1,786

Posted:

Quote:

The HOA should request a letter of determination from Florida requesting if the HOA needs a vending license for these fund raisers.

I agree with a previous comment. Raise the fees to cover all the expenses and quit trying to run the HOA like a Cub Scout troop.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Debbie,

I expect that you mean income tax and not sales tax.

However, if you mean that the group solicits donations and then gives the money to the association (who might be tax exempt), then when the association spends the money they can use the sales tax exemption. However, the donation to the Association would be taxable income (30% if using form 1120-H).

If the Association is tax exempt, the group is purchasing items for the Association using the Associations tax exempt status and the association is not reporting those goods/services as income to the IRS - the Board should pray that a disgruntled member doesn't tell the IRS what is going on or audits and penalties will be in the Associations future.

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