Don’t Pay Taxes! Board Must Refund All Surplus Dues–NOW!

If you had listened to the SCA directors (past and present) and the board’s contracted auditor/tax preparer, CPA Gary Lein, you might conclude the dispute with the IRS Revenue Agent is just about whether the board had the “authority” to DECIDE on befalf of members to:
(1)  immediately REFUND the surplus assessment income to members, or
(2)  RETURN all of the surplus funds by cutting the annual assessment rate the NEXT year.

But, accepting that misdirection would be a huge MISTAKE!  The REAL issue TODAY is that the boards NEVER RETURNED the surpluses as the Treasurers CLAIMED UNDER OATH!  It is no wonder certain individuals want to stall as long as possible (at any cost to us) before having to face the music!  And, certain directors have been deceiving us for years.  See this document for some hard evidence of that:  Cover-Up

The hard evidence shows the board has filed knowingly FALSE tax returns, lied to the Henderson Police Department, and deceived the membership into believing ALL assessment surpluses have been returned.  Look at this last page of SCA’s 2007 Income Tax Return for some CLEAR evidence.
2007 Tax Return Page & Board Resolution Showing False Claims

Past and current boards have gone so far to falsely claim they had spent some of the assessment surpluses from prior years to “keep dues from going up”.  Outrageous political deceptions!  IRS specifically prohibits the board from doing that under 70-604!

It is now shown that all past SCA dues have been GROSSLY over-charged since 2005!  The boards have been rolling in surplus assessments and wasting hundreds of thousands of dollars while claiming to be managing “prudently”.  Shame on all of us for buying such trash!

Certain individuals have even falsely claimed to use prior year surpluses to enable the “dues holidays” in the 4th quarters of 2008 and 2009.  But, the income tax reports, the IRS audit, and the annual budget reports PROVE those statements were false.

For example, look at the attached budget chart the board FINALLY revealed in 2009.  It clearly reports there were millions of dollars of UNTAXED surpluses rolled over, year-by-year, since 2002.  Never were the annual assessment rates reduced to allow member refunds from prior year surpluses–as mandated by the IRS to AVOID income taxes .

A review of the 2008 and 2009 budgets submitted for approval by the board and members FAILED to refund the millions of accumulated surpluses. And, while the budget planning charts showed the accumulated surpluses, the actual budgets did not show the surpluses.  If they had, the obvious questions would have been, why are the assessments not CUT–instead of increased?  This indicates DECEPTIVE accounting–if not violations of generally accepted accounting standards.

We now know the so-called “dues holidays” had NOTHING to do with the prior year assessment surpluses.  They had to do with the CURRENT year EXCESS assessments AFTER the boards discovered they had failed to find ways to spend all of the gross overcharges, and when there was no room in the BLOATED reserve accounts to park any more surplus money.

The board’s own records show there were millions of accumulated assessment surpluses AFTER the 2008 and 2009 dues holidays.  IF the boards had been telling the truth to the IRS, Henderson Police, and our homeowners, the annual assessment rates would have been REDUCED BY MORE THAN FIFTY PERCENT (50%) in both 2008 and 2009, and there would have been ZERO accumulated surpluses at the start of 2010.

Look up the names of all those on the SCA board and finance committees since 2005, and see if you can find more than one board member who voted to reduce the annual assessments and voted consistently against raising them.  One director was ridiculed and harassed when he tried to get the board to understand and apply the tax code correctly. Two SCA members were arrested in 2010 when they were merely seeking justice for fellow homeowners.

Now we know that, contrary to the deceptions by those self-serving directors and friends on the finance committees, our annual dues should have been set at least twenty-five percent (25%) lower than it was.   If we had had honest and ethical directors, we could have enjoyed the extra cash, our property values would have been significantly enhanced over today’s levels, and our lifestyles would not be dragged down by the endless disputes over the board’s financial misconduct.

So, in the future when the SCA income tax issue come up, tell the board members, candidates, and everyone you know that you DEMAND YOUR MONEY BACK!  You want the board to STOP wasting your hard-earned money on their egos and their lawyers.  Instead of paying income taxes on surplus income, YOU INSIST THE SURPLUSES BE REFUNDED TO YOUR SCA ACCOUNT–as the law requires!!  And, you know that there is NO REASON to pay income taxes if they RETURN ALL of the accumulated surplus assessments!

Tell the directors (in writing and in person–every chance you get) that you will hold them personally responsible if they don’t immediately stop wasting your money by trying to bluff, bully or finesse the IRS.  Tell them that saving the director’s egos is not worth a penny of your money.  Assure the directors you consider it GROSS NEGLIGENCE to be wasting your money appealing the tax ruling and that you will be working with the whole community to demand they personally make up the losses from their bad judgments.

Kay Frank
SCA Resident
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If you are not conversant with Revenue Rule 70-604, see this link for easy to understand details:

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Kay Frank
SCA Resident

References:

• Bogus Dues Holidays 
• Dues Overcharged
• 2010 Dues Should Be $800
• Why Is There A Dues Holiday?
• Dixon & Roz Berman Fail to Explain Taxes
• Briggs Reports Income Tax Return Errors

(Note: to find more postings on taxes and related matters, use our Search Box at the bottom–left of the home page.)

This entry was posted on February 19, 2011 at 20:18 and is filed under 2011 Campaign, Ann_Small, SCA Board, Community Affairs, Operations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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