HOA in CA Never Filed Taxes

Started by PeggyK • 2 replies • 1076 views

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PeggyK (California)
Posts: 1

Posted:

Hi,
I'm new to the Board and new to HOA involvement. I live in a 3 unit condo complex and by default am responsible for all HOA duties- I'm president, treasurer and secretary. I've only lived there a short time and found that the
organization has never filed taxes since the building was built in 1990. We wou;dn't have any dollar liability since all HOA fees go to pay for communal water, electric, insurance and gardening service. A friend (tax guy)
said if it ain't broke...basically suggesting I don't draw attention by starting now to file taxes and frankly there are no records covering the time before I moved in.

Any advise, guidance for a newbee??

Thanks!!

MaryA1 (Arizona)
Posts: 7,043

Posted:

Peggy,

Regardless of what your "tax guy" said, I would consult a CPA to file all the back taxes. Remember, there are no penalties if you don't owe anything. It's doubtful the assn. owes any taxes since all the assessments are classified as "exempt" income and are not subject to taxes. Also, when filing the Form 1120-H (specific to HOAs), the IRS gives the HOA a "specific deduction" of $100. Unless you have a large amount of $$$ in the bank earning interest (in excess of $100 per year), you shouldn't have a tax liability. IMO, it's never too late to start doing things right. Oh, and by the way, if your state has an income tax, you'd better check on that too!

CharlieP2 (Utah)
Posts: 15

Posted:

Peggy,

"If it ain't broke, don't fix it" is a wonderful strategy.

However, in this particular case...... it is broke.

I would suggest using a professional management company for this. Otherwise, you're going to end up spending an awful lot of time, energy and headache on this.

Good luck!

Charlie Peterson
[email protected]
801 521 2421

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