October 10, 2011

Press Release - For Immediate Release

California Homeowners Association Gains Tax Exempt Status

Porter & Company, CPAs recently received notice from the IRS that an application for a homeowners association in California has been approved by the IRS for tax exempt status under Code Section 501(c)(4). This is the first instance in where we assisted, but did not prepare the initial application. The application was prepared by a retired CPA who is the treasurer of the Association. When the application was initially denied by IRS, that treasurer then turned to us for help.

The first order of business was to completely restate the application to overcome poorly stated positions, and the second order of business was to add language to directly address several important issues that had not been addressed in the initial application. As this treasurer learned, it would have been both easier and less expensive had we been engaged to prepare the application to begin with, and would have spared him a lot of indigestion in dealing with the IRS.

This master association only has some 500 lots, but the Association is not gated, and maintains common areas, primarily trails and paths, that are open to the general public.  Because of the unique geography of this Association, maintenance costs of these trails and the hillsides has amounted to several million dollars over the years.

Tax refunds claimed for the tax years open under the statute of limitations far exceeded all costs related to the filing, and the Association’s future tax savings are substantial each year.

Porter and Company, CPAs has prepared more tax exemption applications than any other tax professional serving the HOA industry.  All exemption applications submitted that have been processed by the IRS have ultimately been approved.  We usually have several applications pending at any given time.  Most tax exemption applications submitted have been for associations allowing substantial public access to their common areas.  However, we have also successfully gained tax exempt status for several gated associations that meet other criteria, and have successfully regained tax exempt status for several associations that had previously had their exempt status revoked by the IRS.  Our expertise with the tax exemption process has benefited many associations across the country.

For more information on tax exemptions for homeowners associations, contact Gary Porter CPA at (805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..  View our website at www.501c4taxexempt.com.

 

October 1, 2011

Press Release - For Immediate Release

Charitable Organization Receives Tax Exempt Status as 501(c)(3) organization

Porter & Company, CPAs recently received notice from the IRS that an application for a charitable organization has been approved by the IRS for tax exempt status under Code Section 501(c)(3). What makes this particular organization unique is that it was formed as a follow on process to a recently approved 501(c)(4) exempt status for the related homeowners association. We have been successful in several such applications in recent years.

Associations generally cannot qualify as charitable in nature, but are classified as “social welfare” in nature. We have created a number of 501(c)(3) charitable organizations for large associations AFTER we have gained the 501(c)(4) status for the HOA.  A critical point is that once the related association has achieved tax exempt status under IRC Section 501(c)(4), that serves as evidence that the area served is a “community,” which equates to the “public” that must be served by a charitable organization. Please note that the charitable organization cannot take over the duties of the Association in an attempt to make dues deductible. But, certain related contributions CAN be deductible.

That is the initial step towards attempting to establish a charitable organization. There are other factors related to the purpose of the charitable organization. The purpose of these organizations is different, but has resulted in allowing association members to make deductible contributions to that charitable organization.  Various purposes of the charitable organizations on which we have been successful are to construct "community" parks on association common areas, provide "rehab" type projects for the "community," promote cultural awareness of the local area (a recent one in Hawaii), and even to effectively act as a private version of United Way, where wealthy members could make donations to their own captive charitable organization, with the specific request that the funds donated be directed to another charity of their choice (say Boy Scouts).  That allows the donors to remain anonymous and not be bothered with repeated requests for contributions from the Boy Scouts (or whomever).

For more information on tax exemptions for homeowners associations, contact Gary Porter CPA at (805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..  View our website at www.501c4taxexempt.com.

 

January 10, 2011

Press Release - For Immediate Release

Texas Association granted tax exempt status


Porter & Company received notice from the IRS in late December that an association located in Texas was approved by the IRS for tax exempt status under Internal Revenue Code Section 501(c)(4). The Association, located near San Antonio, Texas consists of approximately 500 homes and provides landscape maintenance for a community park that is open to the public, and operates a swimming pool that is open to the public.  In addition, the Association maintains landscaping and fence maintenance adjacent to public streets, and street lighting on public streets.

While this Association doesn’t pay a lot of income tax, gaining this exempt status allows the Association to be exempt from Texas state sales tax on all goods and services.  This represents a significant tax savings for the Association.

Porter & Company has prepared more tax exemption applications than any other tax professional serving the HOA industry. We have successfully regained tax exempt status for several associations that had their exempt status revoked by the IRS. We have successfully re-filed for exempt status where others tried and failed. We have successfully gained exempt status where other tax professionals and advisors stated that the associations would not qualify. We snatched one association from the gaping maw of the IRS just as it was ready to issue a significant tax deficiency notice based on the IRS audit of the Form 1120 tax return. Our experience has benefited many associations all across the country.   Cumulative income tax savings for our clients exceeds $17,000,000.

For more information on tax exemptions for homeowners associations, contact:

Gary Porter CPA

(805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..

and view our website at www.501c4taxexempt.com

August 16, 2010

For immediate release

Two Gated Associations Gain Tax Exempt Status


Porter & Company, recently received notice from the IRS that two more tax exemption applications prepared by the firm have been approved by the IRS for tax exempt status under Code Section 501(c)(4).  Both associations are located on the east coast, both on private islands, and to make this really special, both are gated associations.

The IRS initially indicated they would deny both applications.  But, upon reconsideration after we pointed out that the law was on our side and we would appeal, IRS finally agreed and granted exemptions to both associations, without us having to go through the appeals process (although the drawn out series of exchanges to get approval rivaled the challenges of going through the appeals process).

It is rare for gated associations to qualify as a tax exempt social welfare organization.  These associations qualified because the geographic area encompassed by the associations was virtually co-extensive with incorporated towns.  That means “public access” to the world-at-large is not required.  By definition the townships each constitute a community, so the “public” required by law exists behind the gate. 

Because of the size and extensive operations of these two associations, and corresponding requirements for large reserve balances, these associations paid significant income taxes in prior years.  Tax refunds claimed for the two associations for the years open under the statute of limitations, combined, amount to several hundred thousand dollars, and future annual tax savings are substantial.

The first association consists of approximately 2,500 lots, 1,000 full time residents, plus a larger seasonal population.  The Association maintains more than 25 miles of roads plus walking trails.  More than 500 acres are devoted to greenbelts and parks maintained by the Association.  In addition to the quasi-governmental maintenance services provided, the Association’s patrol service coordinates with local law enforcement agencies in combating crime. 

The second association consists of approximately 4,000 lots, and some 7,000 full time residents.  The Association maintains almost 50 miles of roads, numerous ponds and lakes, almost 1,000 acres of greenbelts, and clubhouses with meeting areas, in addition to the trails and other recreational areas.  The Association does have limited public access to a resort hotel located behind the gates.  The Association performs many quasi-governmental activities, including contracting for police patrol services within the community. 

Porter and Company, CPAs has prepared more tax exemption applications than any other tax professional serving the HOA industry.  All exemption applications submitted that have been processed by the IRS have ultimately been approved.  We usually have several applications pending at any given time.  Most tax exemption applications submitted have been for associations allowing substantial public access to their common areas, such as those described above.  However, we have also successfully gained tax exempt status for several gated associations that meet other criteria, and have successfully regained tax exempt status for several associations that had previously had their exempt status revoked by the IRS.  Our expertise with the tax exemption process has benefited many associations across the country.

For more information on tax exemptions for homeowners associations, contact Gary Porter CPA at (805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..  View our website at www.501c4taxexempt.com.

May 7, 2010

Press Release - For Immediate Release

Porter & Company, CPAs last week received notice from the IRS that two more tax exemption applications prepared by the firm have been approved by the IRS for tax exempt status under Code Section 501(c)(4).  One association is located in Washington State; the other is located in Virginia.

The Washington Association is located approximately 10 miles from the nearest city, and consists of more than 4,600 lots.  It is home to more than 6,000 full time residents.  The Association is not gated, and the Association’s common areas are open to the public.  The Association allows public play on its golf course, and public access to its restaurant and marina.  In addition, the Association maintains more than 50 miles of roads and 10 miles of trails that are open to the public.  More than 900 acres are devoted to greenbelts and parks maintained by the Association.  In addition, the Association’s patrol service coordinates with local law enforcement agencies in combating crime.  The public access granted by this Association qualifies it for exemption.  Tax refunds claimed for the tax years open under the statute of limitations are substantial, and far exceeded all costs related to the filing, and the Association’s future annual tax savings are substantial.

The Virginia Association is located in a heavily populated urban area, and consists of approximately 5,000 lots now, with 6,500 lots expected at complete build out of the Association.  This Association is home to more than 15,000 full time residents.  The Association is not gated, so the Association’s 20 plus miles of privately owned and maintained roads and 13 parks are open to the public.  The State of Virginia maintains another 30 miles of roads within the Association.   The Association also maintains numerous ponds and lakes, hundreds of acres of greenbelts, and clubhouses with meeting areas, in addition to the swimming pools and trails and other recreational areas.  The Association conducts many recreational activities that are open not only to members, but to the general public.  The public access granted by this Association qualifies it for exemption.  Because this Association maintained high levels of reserves to provide for the major repairs and replacement of its common areas, it also had significant interest income and resulting tax liabilities on its Form 1120 tax returns.  The tax refunds claimed for the tax years open under the statute of limitations reach six figures, more than 20 times the costs related to the filing, and the Association’s future annual tax savings are substantial.

Porter and Company, CPAs has prepared more tax exemption applications than any other tax professional serving the HOA industry.  All exemption applications submitted that have been processed by the IRS have ultimately been approved.  We usually have several applications pending at any given time.  Most tax exemption applications submitted have been for associations allowing substantial public access to their common areas, such as those described above.  However, we have also successfully gained tax exempt status for several gated associations that meet other criteria, and have successfully regained tax exempt status for several associations that had previously had their exempt status revoked by the IRS.  Our expertise with the tax exemption process has benefited many associations across the country.

For more information on tax exemptions for homeowners associations, contact Gary Porter CPA at (805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..  View our website at www.501c4taxexempt.com.

January 25, 2010

Press Release - For Immediate Release

Porter & Company, CPAs recently received notice from the IRS that an application prepared by the firm for a homeowners association in Hawaii has been approved by the IRS for tax exempt status under Code Section 501(c)(4).

This master association has almost 3,000 lots, and is home to more than 8,000 residents.  The Association is not gated, and contains 20 smaller condominium and single family home associations.  Maintenance activities include maintaining parks, trails and paths that are open to the general public.  The Association’s clubhouse is also available for public use on a fee basis.  In addition, the Association’s patrol service coordinates with local law enforcement agencies in combating crime, and the Association has a very active graffiti prevention and cleanup program.

Tax refunds claimed for the tax years open under the statute of limitations far exceeded all costs related to the filing, and the Association’s future tax savings are substantial each year.

Porter and Company, CPAs has prepared more tax exemption applications than any other tax professional serving the HOA industry.  All exemption applications submitted that have been processed by the IRS have ultimately been approved.  We usually have several applications pending at any given time.  Most tax exemption applications submitted have been for associations allowing substantial public access to their common areas, such as the one in Hawaii described above.  However, we have also successfully gained tax exempt status for several gated associations that meet other criteria, and have successfully regained tax exempt status for several associations that had previously had their exempt status revoked by the IRS.  Our expertise with the tax exemption process has benefited many associations across the country.

For more information on tax exemptions for homeowners associations, contact Gary Porter CPA at (805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..  View our website at www.501c4taxexempt.com.

December 3, 2009

Press Release - For Immediate Release

Gated association gains tax exempt status

Porter & Company, CPAs recently received notice from the IRS that a homeowners association in the southeastern U.S. has been approved by the IRS for tax exempt status under Code Section 501(c)(4). 

This association consists of more than 5,000 lots and is a gated community.  It is very rare for a gated association to qualify as a tax exempt social welfare organization.  However, this association qualified for tax exemption because it is large enough to constitute a community in and of itself, and because it also performs a number of quasi-governmental functions. 

The activities performed include road maintenance for more than 40 miles of roads, security patrol coordinated with Sheriff’s department, architectural review board, and community governance.  The Association is also home to a County Fire Department station, and the association is designated as a first responder in case of emergencies.  Recreational activities consist of boating, equestrian trails, and sports courts serving the community.  The Association also operates timeshare units that are available to the public.

Porter & Company, CPAs has prepared more tax exemption applications than any other tax professional serving the HOA industry, and we have successfully regained tax exempt status for several associations that had their exempt status revoked by the IRS.  Our experience has benefited many associations across the country. 

For more information on tax exemptions for homeowners associations, contact:
Gary Porter CPA
(805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..

View our website at www.501c4taxexempt.com

 

November 16, 2009

Press Release - For Immediate Release

Porter & Company recently received notice from the IRS that two more associations have been approved by the IRS for tax exempt status under Internal Revenue Code Section 501(c)(4). One association, located in Orange County, California, consists of approximately 2,000 homes and provides trails and nature preserves to the surrounding communities. The other association, located in San Diego County, California, consists of almost 3,000 homes and maintains streets, trails, and a nature preserve open to the public. The addition of these two association brings the count to more than 60 associations successfully approved, with none denied exempt status. Cumulative tax savings to our clients now exceeds $17 million.

And, we still have several exemption applications pending for associations from Hawaii to the east coast and points in between.

Porter & Company has prepared more tax exemption applications than any other tax professional serving the HOA industry. We have successfully regained tax exempt status for several associations that had their exempt status revoked by the IRS. We have successfully re-filed for exempt status where others tried and failed. We have successfully gained exempt status where other tax professionals and advisors stated that the associations would not qualify. We snatched one association from the gaping maw of the IRS just as it was ready to issue a significant tax deficiency notice based on the IRS audit of the Form 1120 tax return. Our experience has benefited many associations all across the country.

For more information on tax exemptions for homeowners associations, contact:

Gary Porter CPA
(805)496-1883 or This email address is being protected from spambots. You need JavaScript enabled to view it..
www.501c4taxexempt.com