bob2the2nd
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- Apr 18, 2005
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Are there any CPAs here?
Had a question: turns out our HOA hasnt filed federal taxes in sometime (at least 6 years, maybe never), and I was curious if its even worth trying to file for previous years. or jsut start moving foward?
In exchange everyone gets a "fun" HOA story.
Background: We are a working class single family neighborhood of 93 homes, with the only real expenses of cutting grass for the common area and taking care of a storm water management area. Dues have never been increased from the original $100 dollars they were in 92. The HOA for as long as i have been here (9 years) has been pretty much completely inactive, it was wonderful. Then we found out why.... grab a beverage....
Early July a letter was sent out to everyone in my neighborhood that HOA dues would be increasing from $100/year to $500, because of "maintenance needed for our storm water area", that being the full reason why. This was the first communication anyone had received from our HOA in 6 years (except for the yearly bill). So people started asking questions, the biggest one was "We have a functioning HOA? followed shortly by who the FUCK is running it??". The only way to reach the HOA was through a PO Box. So people starting sending letters to the PO box, which it turned out hadnt been paid for in about 6 months and had been given to someone else. Eventually the former president who still lived in the neighborhood, reached out to the woman running things, and the former president scheduled a meeting......
Fast forward sevearl many months here is what was pieced together: The woman running things, had never been elected to a position for the HOA. Instead she had been appointed treasurer by the previous president, and then moved up to the president spot, when the previous one resigned. 7 years ago. With no one else either as an officer (there are 4 positions) or on the board (there are 3 positions), the treasurer made herself president, and just never bothered to inform anyone. Over the next 6 years she never called for a meeting, never sent out a news letter, never called for elections. The only thing she ever did was send out the yearly bill for $100 and.... took about $30k for herself, and $25k for her neighbor's son........
To start the storm water area (SWMA) is inspected every 3-5 years by the county. The last inspection was done in 2016 and noted many problems. The county sent off the report to the HOA PO Box, but apparently the acting president never got it (bullshit). So last spring, the acting President just randomly decided that it was time to fix the storm water management area (of which she didnt know there was an issue with???) and she did what anyone would do, and hired her neighbor's son because he is in "construction". She didnt making a single other phone call, to reach out to anyone else. Now this guy in fact does run a construction/landscaping company, but knows absolutely fucking nothing about storm water management to include not knowing he needed to be licensed, get a permit, or contact the county in anyway. After the fact it was learned that he had never once done SWMA work before, but he did tell the acting president it was going to be "really expensive to fix, and that it was going to take a couple of years to get things right". To make sure she had the money to pay him, she decided to up the HOA dues to $500. Now the only quote she ever received from this guy was for $7k to "return the area to waht it looked like in 92, when it was new" (WTF???). On the 4th of July at 7am this guy shows up with heavy equipment and takes down about 50 full grown trees in the SWMA, only the acting president had any idea he was going to show up. After he took down the trees he told the acting president there was still a massive amount of work to be done. Apparently, she told him how much was left in the HOA account (WTF) so he knew how much more work he could do THIS YEAR. After doing a lot more work he would send her a followup bill 6 weeks later for an additional $23k (30k total).
In the mean time we have an actual HOA meeting with some VERY angry residents, and someone calls the county. We eventually find out, after his 2nd bill had arrived, he violated a multitude of state laws, lots of additional county laws and we were told that if we didnt fix things within 2 months the HOA would be reported to the state and we would be fined into oblivion. (We have since been able to talk to the county and they have agreed to let us wait till spring to fix things). Naturally he hasnt been seen since, adn the last time anyone talked to him he said no way in hell he would be coming back to fix things, because he "did exactly what he said he was going to do". The only saving grace of the entire situation was that the acting president was only cutting him checks for $5k at a time (no clue why), and she had only gotten up to $25k in total payments when she was forcefully removed. Now this entire thing led to an even more puzzling question. Why the hell was there only around $30k in the HOA bank account? The only costs to the HOA for the last 6 years had been grass cutting (about 1 acre), and the HOA should be bringing in between $8-9k/year depending on who pays.. so there should be a MASSIVE amount in the account, being as the last budget anyone had from 2012 there was 20k in the account...... take a drink guys...
Here is where it really gets good: After becoming acting president, the woman did away with the previous grass cutter who lived and still lives in the neighborhood. It turned out she never paid him for his last year of grass cutting, and just started charging the neighborhood for her own grass cutting services. The only reason we didnt try to take her to court, was she actually does have a very small part time gig cutting grass and thus technically was charging for her "professional" services. Her first year of cutting the grass in 2015 she paid herself $250/cut ($4000/year) and by last year she was charging 375/cut, or a little over $6500/year. After we ran her off we found out several things related to her grass cutting; the guy that cut the grass before her was charging $150/cut, after we got several quotes the next highest was $280/cut, and most were 170-200/cut. Meaning she was effectively paying herself twice what going rate was. Over the 6 years she paid herself over $30k to cut about an acre of grass, 17-20 times a year.
Other things we have pieced together; She was only very loosely keeping track of who had been paying their dues, she was only checking the PO Box about 2 or 3 times a year which meant almost everyone in the neighborhood at one time or another had their HOA dues sent back/not deposited, she NEVER gave the HOA an actual quote/bill for her services and was just writing herself checks, she never tried once to balance the HOA budget, the only thing we have to go on is the new treasurer was able to get the bank to give him the yearly statements going back 7 years, she misplaced/forgot about a second HOA bank account that had $10k in it (it was the former president that ask about that account), and best of all while she filed state taxes.... she never once filed federal taxes. Which leaves us to today. I am now a sitting board of director member on the HOA, and we really need a CPA.
Had a question: turns out our HOA hasnt filed federal taxes in sometime (at least 6 years, maybe never), and I was curious if its even worth trying to file for previous years. or jsut start moving foward?
In exchange everyone gets a "fun" HOA story.
Background: We are a working class single family neighborhood of 93 homes, with the only real expenses of cutting grass for the common area and taking care of a storm water management area. Dues have never been increased from the original $100 dollars they were in 92. The HOA for as long as i have been here (9 years) has been pretty much completely inactive, it was wonderful. Then we found out why.... grab a beverage....
Early July a letter was sent out to everyone in my neighborhood that HOA dues would be increasing from $100/year to $500, because of "maintenance needed for our storm water area", that being the full reason why. This was the first communication anyone had received from our HOA in 6 years (except for the yearly bill). So people started asking questions, the biggest one was "We have a functioning HOA? followed shortly by who the FUCK is running it??". The only way to reach the HOA was through a PO Box. So people starting sending letters to the PO box, which it turned out hadnt been paid for in about 6 months and had been given to someone else. Eventually the former president who still lived in the neighborhood, reached out to the woman running things, and the former president scheduled a meeting......
Fast forward sevearl many months here is what was pieced together: The woman running things, had never been elected to a position for the HOA. Instead she had been appointed treasurer by the previous president, and then moved up to the president spot, when the previous one resigned. 7 years ago. With no one else either as an officer (there are 4 positions) or on the board (there are 3 positions), the treasurer made herself president, and just never bothered to inform anyone. Over the next 6 years she never called for a meeting, never sent out a news letter, never called for elections. The only thing she ever did was send out the yearly bill for $100 and.... took about $30k for herself, and $25k for her neighbor's son........
To start the storm water area (SWMA) is inspected every 3-5 years by the county. The last inspection was done in 2016 and noted many problems. The county sent off the report to the HOA PO Box, but apparently the acting president never got it (bullshit). So last spring, the acting President just randomly decided that it was time to fix the storm water management area (of which she didnt know there was an issue with???) and she did what anyone would do, and hired her neighbor's son because he is in "construction". She didnt making a single other phone call, to reach out to anyone else. Now this guy in fact does run a construction/landscaping company, but knows absolutely fucking nothing about storm water management to include not knowing he needed to be licensed, get a permit, or contact the county in anyway. After the fact it was learned that he had never once done SWMA work before, but he did tell the acting president it was going to be "really expensive to fix, and that it was going to take a couple of years to get things right". To make sure she had the money to pay him, she decided to up the HOA dues to $500. Now the only quote she ever received from this guy was for $7k to "return the area to waht it looked like in 92, when it was new" (WTF???). On the 4th of July at 7am this guy shows up with heavy equipment and takes down about 50 full grown trees in the SWMA, only the acting president had any idea he was going to show up. After he took down the trees he told the acting president there was still a massive amount of work to be done. Apparently, she told him how much was left in the HOA account (WTF) so he knew how much more work he could do THIS YEAR. After doing a lot more work he would send her a followup bill 6 weeks later for an additional $23k (30k total).
In the mean time we have an actual HOA meeting with some VERY angry residents, and someone calls the county. We eventually find out, after his 2nd bill had arrived, he violated a multitude of state laws, lots of additional county laws and we were told that if we didnt fix things within 2 months the HOA would be reported to the state and we would be fined into oblivion. (We have since been able to talk to the county and they have agreed to let us wait till spring to fix things). Naturally he hasnt been seen since, adn the last time anyone talked to him he said no way in hell he would be coming back to fix things, because he "did exactly what he said he was going to do". The only saving grace of the entire situation was that the acting president was only cutting him checks for $5k at a time (no clue why), and she had only gotten up to $25k in total payments when she was forcefully removed. Now this entire thing led to an even more puzzling question. Why the hell was there only around $30k in the HOA bank account? The only costs to the HOA for the last 6 years had been grass cutting (about 1 acre), and the HOA should be bringing in between $8-9k/year depending on who pays.. so there should be a MASSIVE amount in the account, being as the last budget anyone had from 2012 there was 20k in the account...... take a drink guys...
Here is where it really gets good: After becoming acting president, the woman did away with the previous grass cutter who lived and still lives in the neighborhood. It turned out she never paid him for his last year of grass cutting, and just started charging the neighborhood for her own grass cutting services. The only reason we didnt try to take her to court, was she actually does have a very small part time gig cutting grass and thus technically was charging for her "professional" services. Her first year of cutting the grass in 2015 she paid herself $250/cut ($4000/year) and by last year she was charging 375/cut, or a little over $6500/year. After we ran her off we found out several things related to her grass cutting; the guy that cut the grass before her was charging $150/cut, after we got several quotes the next highest was $280/cut, and most were 170-200/cut. Meaning she was effectively paying herself twice what going rate was. Over the 6 years she paid herself over $30k to cut about an acre of grass, 17-20 times a year.
Other things we have pieced together; She was only very loosely keeping track of who had been paying their dues, she was only checking the PO Box about 2 or 3 times a year which meant almost everyone in the neighborhood at one time or another had their HOA dues sent back/not deposited, she NEVER gave the HOA an actual quote/bill for her services and was just writing herself checks, she never tried once to balance the HOA budget, the only thing we have to go on is the new treasurer was able to get the bank to give him the yearly statements going back 7 years, she misplaced/forgot about a second HOA bank account that had $10k in it (it was the former president that ask about that account), and best of all while she filed state taxes.... she never once filed federal taxes. Which leaves us to today. I am now a sitting board of director member on the HOA, and we really need a CPA.
