Cohousing-L Mailing List: Re: tax exempt status for HOAs

[Buzz Harris (buzz_harris]

--- Ken Lewis <kenlewisjr [at] yahoo.com> wrote:
> I'm with Nevada City Cohousing in California and
> last year we owed $5,000 in
> tax to the state despite our non-profit status. The
> federal tax was fine,
> just for interest income, as expected. So, I
> recently applied for tax exempt
> status, hoping to avoid that large tax hit.

Hi Ken.

If the government of California deals with the issue
of nonprofit status in the same way as other states,
it will likely only recognize nonprofits that are
officially recognized by the IRS under section
501(c)(3) of the Internal Revenue Code.  Those are
generally charitable, educational or public service
groups.  See:

http://www.irs.gov/charities/charitable/article/0,,id=96099,00.html

I've worked with and in the nonprofit world for many
years, and it seems unlikely to me that a cohousing
community, as such, would qualify under the Internal
Revenue Code definitions.  I say that because, from an
official perspective, we look like real estate
developments which are privately owned and in which
the owners can sell their units at a profit.  I
suppose that it's possible that your state might treat
you as tax-exempt, but I'd be surprised by that.  You
might want to check with the office of your state
treasurer or secretary of state (or an attorney
knowledgeable about this area of law in CA) about it.

Please note that there is a difference between being
civic-minded, community-oriented, and environmentally
aware (which all or most cohousing communities are)
and being a nonprofit.

Good luck!

Buzz Harris
Common Hearth Cohousing
Eastern Massachusetts




~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Buzz Harris
Writer, activist & political researcher

Interested in Cohousing in Massachusetts?
http://www.common-hearth.org


What used to be called liberal is now called radical,
What used to be called radical is now called insane,
What used to be called reactionary is now called moderate, and
What used to be called insane is now called solid conservative thinking.

-Tony Kushner

http://civic-oracle.livejournal.com/

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


       
____________________________________________________________________________________
Be a better Globetrotter. Get better travel answers from someone who knows. 
Yahoo! Answers - Check it out.
http://answers.yahoo.com/dir/?link=list&sid=396545469