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JonD1
Posts: 2,350
Posted:
During a recent discussion with a resident of a neighboring property I was told the Board had voted themselves exempt from paying monthly common charges, maintenance fees or membership fees whatever you might call them.

Have you ever heard of such a thing? Can't imagine how they justified this vote.

Here's the real kicker, when a Board member leaves the Board for each year of Board service they recieve another year of exemption!

Do you wonder why the folks on this Board serve?
DonnaS (Tennessee)
Posts: 5,671
Posted:

WHOA!! NICE!! I'll be right over to serve on your Board. The question is , does it state in any of your documents that the Board recieves a "bye" on their dues? The Board cannot just vote that in by themselves. That is an amendment to the Bylaws and has to go to the membership for approval. If you know of a place where it is written in your docs, could you please post it for us? Thanks.
JohnK3 (Pennsylvania)
Posts: 967
Posted:
Qs:

1. Was your Membership notified about this?
2. If so, did they raise a stink?
3. Do your docs allow payments to the BOD?
4. Do you have a PM or are you self-managed?
MicheleD (Kentucky)
Posts: 4,491
Posted:
Quote:
Posted By JonD1 on 11/18/2008 11:34 AM

Do you wonder why the folks on this Board serve?

No.

But what I do wonder is why the membership doesn't now move to vote them all off.

Unless your docs provide for compensation for the board.

Either way, smells fishy.
JonD1
Posts: 2,350
Posted:
"During a recent discussion with a resident of a neighboring property"

This is not on my property. A former resident from my property now lives there and commented to me about this situation. Seems the grass was not as green as he thought when he moved.
SusanW1 (Michigan)
Posts: 5,202
Posted:
Jon - you might ask your buddy to find out where and how this "perk" started. And who initiated it.

I am beginning to think this "dues waiver" for sitting on the board is more common than we think.

(I really have to say, not having to pay dues for board service would still not cause a crowd of members to want to be on the board in my HOA.)
DwightT (Idaho)
Posts: 664
Posted:
Quote:
Posted By JonD1 on 11/18/2008 11:34 AM

Do you wonder why the folks on this Board serve?

I want to start by stating that I would not condone this sort of thing. But Jon's comment here did get me to thinking - with all the apathy that many of us see in our neighborhoods, something like this could be a way to get people to get involved.

On the other hand, since that involvement might include pitch-forks and torches...

D
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Such a fee exemption would most likely be considered taxable income under the Internal Revenue Code to the board member. Thus, it would require the association to send each board member a 1099 each year.
GloriaM (North Carolina)
Posts: 829
Posted:
In 27 years I have never heard of compensation for serving in a volunteer position. Of course with the exception of paper, ink jets, or other noted receipts given for the expenditure of doing HOA business.

If your governing documents read that a board member may be compensated, I going with Donna to serve on your board too! Hey perhaps we can take a vacation too, just kidding.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Quote:
Posted By GloriaM on 11/18/2008 1:38 PM
In 27 years I have never heard of compensation for serving in a volunteer position. Of course with the exception of paper, ink jets, or other noted receipts given for the expenditure of doing HOA business.

If your governing documents read that a board member may be compensated, I going with Donna to serve on your board too! Hey perhaps we can take a vacation too, just kidding.
Every job or elected position is "voluntary" by definition. We do not have slavery in our nation any longer.

Even our city/county councils, our state legislators, and members of Congress are paid for serving in "voluntary" positions. There is absolutely nothing immoral, illegal or fattening about compensating association board members, if state law and/or governing documents do not prohibit it.
GloriaM (North Carolina)
Posts: 829
Posted:
Even our city/county councils, our state legislators, and members of Congress are paid for serving in "voluntary" positions.

George, you are a very agrumentive person, I beg to differ with you. Your above statement some are elected officials and are compenstated for the duties and roles they are elected to.

My statement was in regard to HOA boards (only) and that most documents read that they are not compenstated for that role.

If Jon's CCR's and Master Deed reads in New York that board members may be compenstated, so be it!

You have your opinion and I have mine. My right to speak my mind is still my right! PS Congress is not a voluntary position.
SusanW1 (Michigan)
Posts: 5,202
Posted:
George - here we go on this 1099 thing again for what is really an in-kind compensation.

Here's what I think:

(I'd like imput from a CPA or bookkeeper on this)

Since no cash would be awarded to the board members, only a "value" placed on the service.

The HOA would write off the dues for X people, in the same way it would write off discounts for early payers. (We give 10% off it you pay dues before the due date) That is shown on our balance sheet.

JeanneK3 (Maryland)
Posts: 562
Posted:
I know of a Board in Maryland that did this for a while but stopped when the homeowners found out. Most Maryland documents do not allow Board compensation.
DJ1 (Ontario)
Posts: 798
Posted:
My first question would be, is it true?

Could just be unfounded gossip, he said she said stuff. Some CCR's specifically state one cannot exempt oneself. Shouldn't be too had to do the math if you get the financials. Roughly speaking, Budget of $X divided by X# homeowners should give the total annual dues. In order to exempt some then the rest will be paying more dues and wouldn't be happy.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Quote:
Posted By DJ1 on 11/18/2008 5:29 PM
My first question would be, is it true?

Could just be unfounded gossip, he said she said stuff. Some CCR's specifically state one cannot exempt oneself. Shouldn't be too had to do the math if you get the financials. Roughly speaking, Budget of $X divided by X# homeowners should give the total annual dues. In order to exempt some then the rest will be paying more dues and wouldn't be happy.

DJ, after reading the OP's clarification on his original post, this is the first thing that popped into my mind, too.

Possibly third- or fourth-hand information.

Who really knows what the real story is.

In THEORY, this is a bad idea. HYPOTHETICALLY I do believe their "compensation" could well-be considered taxable.

But since this is all speculation. . . .
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Quote:
Posted By SusanW1 on 11/18/2008 2:14 PM
George - here we go on this 1099 thing again for what is really an in-kind compensation.

Here's what I think:

(I'd like imput from a CPA or bookkeeper on this)

Since no cash would be awarded to the board members, only a "value" placed on the service.

The HOA would write off the dues for X people, in the same way it would write off discounts for early payers. (We give 10% off it you pay dues before the due date) That is shown on our balance sheet.
This is not a matter of what one thinks or believes or feels. It is a question of fact.

Here is the text of an e-mail my partner who deals with corporate tax matters sent me yesterday:
    "GW--Compensation of directors is reportable as self-employment taxable income by the director. Given the circumstances you described, I would advise my client that forgiveness of mandatory fees would be considered as a discount on services by the IRS and therefore fully taxable. To not be taxable the discount would have to be generally available to other members of the association you described (such as a discount for early payment of fees) and not greater than 20 percent of the monetary value of the fees. The term "in kind" in this situation has no meaning. The amount would have to be reported on a 1099-MISC if the value is $600 or more. If you want more information, I can ask Melinda to research this for you."


SusanW1 (Michigan)
Posts: 5,202
Posted:
Thanks George - I like my crow BBQ'ed!

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