Question:
If members elect to do so IRS Ruling 70-604 provides for excess member income income to be returned to members or be set against the following year”s dues, as no such election was made such income is subject to tax,The Board have incorrectly authorised the excess income to be ‘pooled’ with reserves. Is the Board in breach of its fiduciary to members?
– Anthony
Answer:
Hi Anthony,
Not electing to follow IRS Ruling 70-604 does not automatically mean the board cannot transfer surplus funds to the HOA’s reserves. An HOA board typically can transfer excess funds to the reserves, though it depends on the governing documents. Check your bylaws and CC&Rs to know if your board can do this.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
