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HOA Tax Return Issues
Author : Stansbery Weimar
Submitted : 2012-01-30 Word Count : 720 Popularity: Not Rated
Tags: homeowners association tax return, hoa tax return
Homeowners associations have many issues on their plates these days. Some of the important questions they face are:
What tax forms do I need to file for the IRS?
Should I file a 1120 or an 1120H?
What are the differences between the forms and how difficult are they to complete?
How do you manage the ever changing economic environment in which homeowners are falling farther and farther behind with their dues and placing many HOAs in financial hardships (this will take years for many HOAs to recover from).
Compliance will always be an important issue when it comes to filing HOA tax returns. The boards of associations can be difficult to deal with and we all know that pricing can be a big issue. In addition, staying on top of the ever changing tax code is tough enough for experienced accountants. There is no way that the average HOA can tackle these tax issues.
The IRS is authorized by Congress to administer and supervise the application of the nation's tax laws, as detailed in the Internal Revenue Code. Included in the code are specific filing requirements for HOAs and other related industries. Make sure that you stay on top of compliance issues. As a matter of policy, the IRS emphasizes that enforcement is an issue. To be certain, a tax system based on voluntary assessment would not be viable or acceptable without enforcement programs. Accordingly, the IRS is responsible for taking all appropriate and relevant actions provided by the tax law to compel noncompliant HOAs to file their returns and pay any tax that is due.
Many HOAs turn to specialized property management companies for assistance with HOA tax issues and to oversee the management of the park area, common areas and overall financial administrative tasks. Property managers are normally the ones charged with getting the tax filing completed and filed on a timely basis. They must ensure that they hire professionals who have expertise in the industry. Many CPAs will file an 1120-H which is the easier form to file (as compared to the standard 1120).
There are many Certified Public Accountants (CPAs) out there who work in the HOA industry. But there are not many firms who deal specifically with the issues facing the industry. Make sure that you deal with a professional who understands the issues facing homeowners associations and can help make the life of the property manager as easy as possible.
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