By Peter J Reilly

August 5, 2014

Unless they have vast reserves earning significant investment income, homeowners associations can avoid any significant tax liability by filing Form 1120H, which allows the organization to exclude assessments.  Despite that option, some homeowners associations go to the trouble of applying to be 501(c)(4) social welfare organizations . (501(c)(4) status is at the heart of the IRS targeting scandal.  Politically oriented organizations were applying for 501(c)(4) status, since social welfare organizations do not have to disclose donors.  Lois Lerner, who should have stayed at the Federal Election Commission, threw the IRS into that breach and under the bus.)  Regardless, the homeowners associations also get turned down from time to time.  IRS turning down HAs  does not generate quite as much sturm and drang.  The most recent rejection was Private Letter Ruling 201429030

Gategate

Private Letter Rulings are redacted, so I get to make up a name for the HA.  I’m going to call it Gategate, because it seems to be somewhat attached to gates.  My inference from the ruling is that the HA is more of a vacation spot than a place where people live permanently, since it talks about having both campsites and mobile home sites.  There are different deals on how the electric bills are handled.  Read more: