HOA Tax Alert

Written by David T. Schwindt, CPA RS PRA Published: 15 August 2013

Clients and Interested Parties:

Many of you are aware that the Oregon Department of Revenue, through actions of the Oregon Legislature, revised the corporate minimum tax owed on the filing of Form 20 from $10 to $150 beginning with the 2009 tax year. Schwindt & Company began investigating the applicability of this change for Associations in early 2010. This investigation revealed conflicting views from revenue agents on whether Associations would have to pay the $150.

Due to these conflicting views, Schwindt & Company asked for and received an opinion letter from the Policy Systems and Estate Unit of the Oregon Department of Revenue dated March 8, 2010. Schwindt & Company used this letter as the basis for filing Oregon Corporate tax returns. This opinion letter, in part, states that Homeowner and Condominium Associations that have any gross income subject to tax will be required to file Form 20 and pay the minimum tax. The letter goes on to say that even if deductions bring net taxable income to zero or a net loss, the return must be filed and the minimum tax is still owed.

As early as Spring of 2012, the Policy Systems and Estate Unit began re-evaluating their position on this issue. Based upon my discussions with the manager of the Policy Systems and Estate Unit, the Oregon Department of Revenue has revised their position with respect to the filing requirement. Homeowner and Condominium Associations filing Federal form 1120H with no taxable income (gross income such as interest income reduced by applicable expenses creating a zero income or a taxable loss) will no longer be required to file Form 20 and pay the minimum $150. The Department will issue an Oregon Revenue Bulletin in January/February 2013 detailing this change. Qualified Associations will be allowed to request a refund for the $150 minimum tax paid for the 2009, 2010 and 2011 tax years including interest.

Schwindt & Company will be requesting a refund for qualifying Association clients that paid the minimum tax of $150 for the 2009-2011 tax years at no charge.

Please note that no action should be taken until the Revenue Bulletin is issued in 2013.