N.N. from Maine writes:
Dear Mister Condo,
I am part of a two-family “condo”. There is only this one house in the “condo” association. The association is filed as a non-profit corporation according to the Maine annual filings. There are just two people in the association (i.e. two units) and the association does nothing more than handle the grass, the snow and the insurance for the exterior. We have no profit or income and we pay as expenses arise. Problem is we purchased this property in summer and fall of 2016 receptively. At the time the prior owners handed it over – they changed the name so we started anew- I realize they never filed anything with the IRS (I am not sure they even kept up with the state filings). We didn’t think we had to more than keep up with the state annual filings. But do we need to file anything with the federal government? If so what do you advise we do, practically speaking? Thank you. (P.S. We each pay approx. $2000 a year – give or take- just whatever we need to-to cover expenses.)
Mister Condo replies:
N.N., although I am neither an attorney nor a tax professional, it is not uncommon for condominium associations to have to file both state and federal filings. However, it is possible that your state is also sending or sharing a copy of your filings with the IRS, which makes sense seeing as most states use the IRS form 1120-H as the basis for their own filings. Is that what you file now? You can read a great article on Maine HOA and COA tax filing requirements at the Sundin & Fish PLC website at https://hoatax.com/maine-condo-association-hoa-tax-return/. You may already be doing it right but then again, one more simple form to the IRS to ensure your compliance couldn’t hurt, could it? All the best!