Condo Association Management Blog

You are dealing with a very serious major financial problem.The unit owners are individually and collectivey responsible for paying off these debts. One cource would be for your council of unit owners to assess the appropriate proportional share to each uindiividual owner. Alternattively you might try to borrow the required funds. Failing to settle these debts could result in foreclosure and you'd loose the major oart of your investment and most probasbly be forced to relocaste to a dufferent primary residence.

Condominiums in Florida are typically non-profit. I would ask how and why the Association has a tax lien for that amount in the first place, since the whole idea every year is not to have a profit but to break even. Sure the Association must pay taxes, but usually the amount they pay is minimal. 
 
Secondly the IRS is not one to be fooled with and I recommend you hire a firm which specializes in tax settlement.  
 
The Board should consult a Tax Relief firm (like Tax Masters) who will get to the bottom of it and can possibly work out a settlement to pay less. Many times they can get the interest and penalties waived.

Good Morning: 
 
My take is a little different. Yes this is a serious matter and all of the owners are responsible for the payment. The best thing for your board to do is to levy a special assessment to pay the taxes. I don't think the IRS will foreclose because that's rare for an income tax lien. However, the f/c questions depends on the type of FL tax lien. If it's income tax, then you'll simply have to satisfy it. If it's real estate tax, they likely will f/c after a certain period of time. Either way, they'll lien your units for the association's debt and you won't be able to sell or refinance. 
 
Darron

Duh, Joyce has a great point. I guess the coffee's not strong enough this morning! Yes, you are, or should be, a non profit. In that case, you shouldn't have any income taxes unless your association had windfall profits (such as the sale of development rights, property, easements, cell tower leases, etc) If you did, tell the board to be quiet and pay the taxes. If you didn't, fire the accountant and amend the tax returns. 
 
Darron

You have an expert resource to help you. The Florida Depaertment of Buisiness and professional regulation. You can obtain at no cost a CD providing CondominiumEducational and reference materials.Many of your questins will be answered in this presentgation. You shuld call the Department Call Cenet at 1.800.226.9101 or 850488.1122 or contact them via e-mail at Call.Center@dbpr.state.Fl.us. 
 
They will also answer telephone inquiries. 
 
 
 

All of you who think a nonprofit does not pay income taxes are wrong. Nonprofit doesn't mean tax exempt! 
 
 
 
An HOA can file a corp tax return (form 1120) or the HOA specific tax form (1120H). Filing the latter requires the HOA to only pay taxes on nonexempt function income such as interest earned on savings, CDs, etc. There is an automatic $100 deduction and normally the HOAs tax obligation isn't very much. I cannot imagine how they could have generated such a large amount in Fed unpaid taxes, even considering adding penalties and interest. The tax rate for the 1120H is a flat 30%, after the $100 deduction. The tax rate for the 1120 I believe goes from 15% to 40% depending upon what the taxable income is. 
 
 
 
As for the state taxes they could be either income taxes, which again should be very nominal, or property taxes. I don't know how FL levies property taxes, some states only tax the individual condo owners. 
 
 
 
A CPA should be consulted immediately to find out exactly what the State tax liens are for and to check out the Federal tax filings.

Mary, 
 
I did not say the association is not responsible for taxes, or the filing of tax returns.  
 
Yes, even non-profits have to file returns, but typically Condo Associations have very little income, if any and their taxes even over several years are no where near 11K. 
 
I also pointed the individual asking the question to find out WHY the taxes are owed....and then referred them to someone who can actually possibly reduce their taxes. 
 
In Florida, under the Florida Statutes, property taxes are only assessed against the owners -- and the State is prohibited from assessing the Association. So I'm not sure how it is possible for the State of Florida to have a tax lien against the property, unless it was something that occurred while the developer was in control?

A Home Owners Association (HOA) is not the same entity as a Condominium Association. The two terms are not interchangeable and the state regulations pertaining to each are different

The condominium has cell tower leases and the board since 2003 were under the mistaken assumption that a non profit does not owe taxes. Also employee withholding tax were remitted on the quarter but were supposed to be remitted monthly. All past due tax notices were ignored.

Most state condominium acts contain a requirement thast a Condominium Association must hire a professional licensaed management company to oprovide the required services to the association such as maintain accounts, provide engineering services. Provide if Board requests qualified employees of their own to act as the facility manager and the chief engineer and such other staff as they are requested to provide, The management company is the book keeper and the payor of the bills for their customer. I don't know what the Floridas law says on this point.