NON PROFIT REQUIREMENTS

Hopefully someone will have an answer to this question. It has recently become a point of controversy that our HOA will loose its non-profit status because we do not have two (2) full time paid employees. We are due to refile in March 2007.

I do not find this in a copy of Texas Statues for Coroporations with statues #1396 covering non-profit corporations that I have. However, I know my copy is not current.

This supposed 'requirement' of having two full time paid employees seems rather harsh and unfair. I don't see how this could be imposed on the many small companys that have non-profit status.

Does anyone have any idea where I could find the legal information regarding a yes or no to this question?

Thanks ahead of time. Nikki T.

Nikki, pretend you are from Missouri

next time someone says "You gotta have two employees or else..." look them straight in the eye and say "Show me."

Ain't no such requirement in any law that I know of, and i would bet my HOA dues this month they can't prove it either. There is no requirement that a profit making company or non-profit making company have ANY employees, let a lone two.

look it up yourself at the irs website and I can assure you non profit has nothing to do with employees, you can have 1000 employees and still be non profit. 501 C 3 or some form of it is what you need to look at and then look up associations. Consult an attorney or CPA for advice in these matters not people that may or may not know what they are talking about

Good Luck

Your answer is in the Tx property code 204.010 #3. There is no set number on employees. We have several.

There are 100's of non profit kinds and yes you can have paid employees as well as people with salaries, that has nothing to do with what a real non profit is, Look at the IRS website if you want to know what defines a 501 C 3. Please don't give out advice unless your sure you know what your talking about, and as far as what state your in you have to have approval from the IRS, and you can act as a non profit until approved or disapproved, you only have to file papers with the state informing of what status your have applied for.

Brian,
I appreciate you setting me straight on that. I never thought of it that way.
Thank you once again.

I apologize to Joe and to others for my misinterpretation of a non-profit HOA.
The question that Nikki asked still remains unanswered to me. Does a non-profit HOA have to have two (2) full time paid employees? Who pays them? Does the money received from assessments pay for their services?
I don’t mean to sound ignorant by any means, it just doesn’t make sense to me.
I’m currently home on disability. So essential I could work for my HOA, If I’m to understand this correctly.

Chuck W.

Also note, you can be a non-profit company and NOT be a 501 (C)3 company... many non profits are.

The 501 (C)3 status is a special type of non-profit that allows donations given to them to be tax deductible. It is a higher status of non profits, but many (probably most) non profits never file for it or qualify. There is little to no reason for an HOA to attempt 501(C)3 status, unless you have a wealthy benfactor who wants tax deductions for donating to you.

And before it is asked, dues, assessments and fines paid to HOAs are NOT tax deductible under IRS rules for charities, because the HOA is not a charity. It is a non-profit company, which is not equal to a charity. Said dues and fines MIGHT be deductible in some situations, consult a competent and bonded tax professional to see.