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Post by Admin on Sept 10, 2014 21:01:33 GMT -5
Finally, it took an Official Records Request to get the Audit which was posted on CHUG at the same time the Records Request was answered. Note that this is an Audit for General Accounting Principles; this is VERY different from a "forensic Audit". There are several questions that came to my mind as I was reading this audit, but I am not very good at this stuff and would like to hear what others are thinking. Among other questions, I was wondering why SLohA was filing IRS returns as a corporation rather than a homeowner's association, which has a preferred tax structure. Attachment Deleted
This audit was attached to Stambaugh's reply to the Official Records Request dated 9/8/14.
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Post by Alaska HEMI R/T Jm Admin. on Sept 11, 2014 8:29:12 GMT -5
I am concerned that the "Corporate Tax Filings" may be associated with the reason for our "Fiscal Year End" date that was changed by Management Co.. There has to be a direct link to that change that may not be for reasons told to SLohA membership.
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Post by Admin on Sept 11, 2014 11:32:10 GMT -5
The only correlation I was aware of at the time of the (sudden and unexplained) change to SLohA's Fiscal Year was to coincide with Management Company's contract with SLohA.
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Post by jimherbst on Sept 14, 2014 11:09:45 GMT -5
The question of SLohA's IRS status has intrigued me ever since I learned that we obtained an SBA loan for that storm sewer. Ordinarily, SBA loans are not available to non-profits. The only exception is a disaster loan. But I believe that the area must first be declared a federal disaster zone before an individual or business can apply. Does anyone know whether the flooding which led to the installation storm sewer on or near lot 29 was declared a federal disaster? Does anyone know under what chapter of the IRA code SLohA files its return? As some of you may know, I favor the idea of some "neighborhood businesses" within the common areas of S-bag. (I don't, however, favor leaving the type & location of these businesses at the discretion of the Board. Types of permitted businesses and permitted locations should be specified in our covenants - along with County approval of an appropriate amendment to the PUD). I have been advised, however, that, if we did rent out space in the common areas to branch banks, financial advisors, convenience stores, etc., it would jeopardize our IRS status as a "non-profit". I'd like to get some verification on that
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Post by BagLady on Sept 14, 2014 13:09:40 GMT -5
I think, Jm, that some of your questions can be answered by a studied review of FS617, the corporate non-profit statute. Some of my questions were addressed by simply googling questions. However, without a good knowledge base of corporate tax laws, I am unable to comprehend the details of answers into an understanding and leave that to others.
When I read the audit, I wondered why SLohA was filing under a corporate structure rather than a homeowner structure. From my googling, it appears that there is a high threshhold of revenue that must be reached which would differentiate assessment revenue (exempt) from non-assessment revenue (donations from club activities) i.e. 60%! to tip the HOA over from an HOA non-profit tax structure into a corporate tax structure. My casual googling mentioned that the IRS would require the form 1120 on the former and 1120-H on the latter.
Here is an excerpt from hbsbusiness.com:
It appears that a request was made for SBA loan funds to be made available; however, I found absolutely nothing that verified that the request had been granted. However, a resident of S-bag, Bb Lapley, was instrumental in getting the loan, I believe and would likely have knowledge of that.
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Post by Cornfused on Sept 14, 2014 15:23:37 GMT -5
So am I understanding that all those donations by clubs may have ruined our not for profit exemption status?
If so, I would think that what is going on would be considered an act of treason to our community.
On one set of financials it shows the line item for donations....ZERO But in numerous SLR Express editions the manager boasts of donations in the thousands of dollars, see Managers Corner.
Which is it? Zero or the Several if not 10s of thousands of dollars donated for items in SLR. Why aren't the donations from clubs listed and totaled?
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Post by BagLady on Sept 14, 2014 16:03:08 GMT -5
Club donations (that we know of) would be insufficient income to push SLohA out of favorable homeowner tax status, notwithstanding the issue of non-disclosure on the financials. The income would have to be enormous. It is unknown why SLohA is filing tax under the less favorable corporate structure. Remember, the question arose from a passing mention by the auditor; the first question should go to our financial people as to how SLohA files federal taxes and the rationale for that. There might be a very good reason.
More pointedly, the members need to demand a more complete and understandable accounting of ALL SLohA income and expenditures; indeed, in this current climate of suspicion of monkey business, owners deserve complete and detailed check registers for both Operating and Reserves, as well as a commitment by the Board to explain--without owner urging--all monthly deviations from the budget in excess of 10%.
Yo--Baglady--WAKE UP! You're dreaming!
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