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Our HOA has not been filing taxes. Mixed use building where…

Our HOA has not...

Our HOA has not been filing taxes. Mixed use building where city owns first and second floors and does not pay taxes. HOA needs tax exempt status and file back taxes. How do we get Tax Exempt Status for HOA?

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state the association is in?

California

Accountant's Assistant: Has anything been filed or reported?

2004 - request for tax exempt status and denied. 2004, 2005 and 2006 before city owned building filed as corporation with tax loss for the years. Not sure how that happened with the HOA. We don't have income other than dues.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

HOA has no employees, only income is interest on reserve account of $247 in 2017.

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Answered in 10 hours by:
3/9/2018
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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A HOA does not usually receive tax-exempt status. They can request to be tax exempt under Internal Revenue Code §501(c)(4), but that is expensive and takes a long time.

What usually happens is that a HOA can elect to be treated in a special way where it does not pay tax on it's income, if it meets certain tests. It files a Form 1120-H, and if the tests are met (the income has to be more than 60% from the members' dues, and the association must spend 90% of its funds on the membership/association. If it meets this rule, then any non-member income (from renting out a meeting hall, for example) is taxed at a flat 30% rate.

So most associations that are truly operated for their members will file a Form 1120-H, and pay little or no tax.

I hope this has answered your question. IF you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Customer reply replied 4 months ago
Where can I get the 1120-H forms for years 2007 thru 2017. We are in California. Does the state have a similar 1120-H form for us to file?
This really helps. I will run it through our board and get our taxes filed. I have all the records of income and what was spent for each of the years.
Thank you
You can actually go to the IRS website. If you search for The Forum, you can get prior your forms as well. You just download them.
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Customer reply replied 4 months ago
Perfect. Thank you
No problem. If you have any more questions, feel free to ask.
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