Federal Income Tax Filing Responsibilities – The following are general federal income tax filing responsibilities for community associations:
1. All associations must file a federal income tax return every year. The lack of taxable income does not eliminate the need to file, and filing a tax return does not necessarily mean that the association owes the government money.
2. A community association is generally required to file its federal income tax return as a corporation using Form 1120, but may elect to file as a homeowners association using Form 1120H, if it meets certain requirements. The association should consult its tax professional regarding this choice because tax rates are different.
3. A community association’s Federal Form 1120-H by the 15th day of the 4th month after the end of your association’s tax year. It is possible to obtain up to a six-month extension of time in which to file a return. If an association needs an extension, it must file an extension request form and pay any expected tax due by the original filing deadline.
BUT, yes there is always that but …
an association with a fiscal year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. An association with a short tax year ending anytime in June will be treated as if the short year ended on June 30, and must file by the 15th day of the 3rd month after the end of its tax year. Form 1120-H Instructions
4. If previous boards failed to submit tax returns for previous years, the current board is not absolved from filing a return for the current year or for any previous year that was omitted.
5. An association may be required to make quarterly payments of its estimated annual tax, depending on the tax filing method it uses. When a tax professional prepares an association’s tax return, he/she will notify the association if it needs to make estimated tax payments for the upcoming year.
6. State income tax filing requirements vary from state to state. They are not necessarily the same as federal requirements.
Courtesy: Financial Operations – Best Practices Vol.4 – ISBN 978-0-941301-65-7
Published by the Foundation for Community Association Research