Year End Responsibilities

Many associations have their fiscal year as the calendar year (January 1 - December 31).  If that is the case with your association, it’s time to start getting the year end financial work done.  What does that mean?  Well, like any business, an HOA is responsible for providing 1099s, filing its taxes and preparing and distributing an annual financial statement.  Depending on the amount of income, a financial review may also be required.  Let’s look at each of these issues in turn.

Form 1099-MISC.  Most HOAs will have to file at least a few of these forms.  Any vendors paid for services of more than $600 (with the exception of corporations; these are mostly exempted from this requirement) should receive a Form 1099-MISC from the HOA.  All law firms must also have a Form 1099-MISC, whether or not they are a corporation.  There are very specific rules and instructions for the completion of these forms, which can be reviewed at this link:  If you have additional questions, contact a CPA.

Federal Taxes.  HOAs, although sometimes mistakenly thought as non-profit corporations (truly, they’re really not-for-profit, which is not the same from the government’s standpoint), must annually file taxes with the IRS.  HOAs file either Form 1120 or Form 1120-H.  Federal taxes are due March 15 for HOAs on a calendar fiscal year (a month earlier than personal returns are due).  There is generally a significant tax benefit to HOAs who qualify for and file Form 1120-H, but in addition to other qualifications, an HOA must annually adopt IRS Revenue Ruling 70-604 at the annual meeting.  This ruling allows HOAs to roll over any excess member income to the next tax year without being taxed on that income.  This should be done every year at the annual meeting (it should be a standing agenda item) and must be done by the owners (the board cannot approve this ruling on the owners’ behalf).  For more information on this, see this fascinating article by Gary A. Porter, a CPA:

For more information about Form 1120-H, see

Oregon State Taxes.  Most Oregon HOAs are no longer required to file Form 20 (as of the 2012 tax year).  HOAs that may need to do so are ones that have non-trivial income from interest and other non-member-assessments.  For more information, see my article from March 1, 2013 entitled, "Oregon HOAs and Corporate Minimum Tax."

I do not recommend that HOAs, even small, self-managed ones, have a board member take on the liability of filing the HOA’s taxes, either federal or state.  Instead, have a CPA familiar with HOAs take over that potential liability for you.

Annual Financial Statement.  Regardless of income received in the year, each year the board is responsible for having an annual financial statement, consisting of at least a balance sheet and an income/expense statement, prepared and a copy distributed to each owner within 90 days of the end of the fiscal year.

Annual Review.  Oregon statutes now require that an association who has income in excess of $75,000 must have a review by an independent CPA.  Many boards know about this clause but misunderstand it.  To determine if the HOA is subject to this requirement, total income for the year must be evaluated, not just income from owner assessments.  So if there was a special assessment applied or if the HOA received an insurance settlement, these funds are also considered income and for the purposes of determining the review must also be added to total income for the fiscal year.  Likewise, any income for the HOA, whether from coin op (laundry facilities), rental of HOA-owned parking spots or otherwise, must be included in this total to determine if the income exceeds $75,000.  If it does, an HOA must have the review done unless 60% of the owners vote not to do the review.  This vote only applies for a single fiscal year and must be repeated each year the owners do not want to have the review done (Note that it is the owners who must make this affirmation, not just simply the board.  From this fact alone, and with the inherent difficulty most associations face simply trying to reach quorum, I suggest boards simply comply with the statute and have the review done).

For more information, please consult a CPA.  CPAs familiar with HOA rules and regulations may be found through the CAI-Oregon website:

For more information about requirements in statute, please also see:

Condominiums (ORS 100.480):
Planned Unit Developments (ORS 94.670):