Homeowners Association

[Duane Anderson]

Client is a homeowners association organized in 1989 and owns land and building valued at $3,500,000 and provides services to 550 members. Files an 1120H as a 501 (C) 4. They want to consider changing to a 501 (c) 7 to be exempt as a social club or 528 with exempt status. They have a minimal amount of non member income. They want to consider a 501 (C) 4 which would allow any contributions from members or others to be a charitable deduction for the giver. What is involved (IRS Forms and cost) in changing to a social club or obtain exempt status under 528? And any recommendation as to what would be preferred. They have a June 30 year end. Thanks,,,Duane Anderson

[taxmandan]

Who said they are a 501(c)4?

Homeowners Associations do not fall under the tax exempt laws. They are corporations and can elect to file a Form 1120 or a Form 1120H to report their activities. Have you seen the award letter from the IRS that granted them tax exempt status? They are neither a civic league nor a social welfare organization so I can't see how they got a 501(c)4 status.

[Roland Slugg]

It is highly unlikely the HOA is 501(c)(4) exempt, and it's even more unlikely it could qualify under 501(c)(7). A HOA is not a TEO and files F-1120, not F-990. It can elect to file F-1120H, and most HOAs do that. I completely agree with taxmandan's post above.

[Duane Anderson]

Homeowners Associations do not fall under the tax exempt laws. They are corporations and can elect to file a Form 1120 or a Form 1120H to report their activities. Have you seen the award letter from the IRS that granted them tax exempt status? They are neither a civic league nor a social welfare organization so I can't see how they got a 501(c)4 status.

They are currently a 501 C 4 and want to change to a 501 C 7 (social club) which they say will allow the members who make gifts / contributions (over and above their quarterly dues) to have them tax deductable...Thanks for your response...Regards,,,Duane Anderson

[Burke]

Under certain circumstances HO Assns can be declared Social Welfare organizations, but they have to jump through hoops. See this link: https://irs.gov/charities-non-profit...s-associations. Pay particular attention to the third paragraph. IRS puts out a number of documents regarding this subject. Google Section 528, etc.