Most members on the community email list have received Board President James Long’s notification last week that the Board’s appeal to the IRS had failed.  This means the community association must pay the full $1.3 Million for year 2007 as determined by the IRS Auditor. 

It also means that tens of thousands of dollars for interest and penalties accumulating since the audit as well as the estimated $100,000+ paid to the “expert legal team” to process the appeal have all been wasted.

Here are the words from SCA Board President/Attorney Long’s announcement:

“IRS appeal denied. We received notice late last week that the IRS Appeals Officer assigned to our Association’s administrative appeal of the 2007 tax audit has denied our appeal and upheld the findings of the IRS examiner. We expect the IRS to issue a statutory notice of deficiency within the next several weeks. After this occurs, we will have 90 days to file a petition for judicial review of the IRS decision. We have asked the Ad Hoc IRS Audit Task Force appointed at the May board meeting to recommend a course of action for consideration at the February board meeting.“

For our reader’s convenience, we would like to recommend for review a series of comments on that matter posted recently on Rana Goodman’s forum at this link:

[1] http://www.anthemtoday.com/forum/viewtopic.php?f=21&t=3552

An Anthem VOICE founder, Kay Frank (and former IRS Auditor) added the following comments to the above link:

“I can find no evidence that the IRS has ever been reversed on this statute after forty years.  Jack Troia called that “old” law, but competent attorneys call it “settled law”.

The IRS has pulled the records for the ensuing years.  Although they have not addressed them yet, they will–especially since we lost the appeal.  The best chance is to pay up and try to cut a deal on the ensuing years.

An expression of good faith is to show a reduction in 2012 dues by immediately crediting accumulated surpluses instead of forcing a net increase in assessments for 2012.   The boards have never accounted for the millions of unreturned surpluses and we must demand a clear accounting for the whole amount by the new auditor.

Homeowners are not forced to make up for the financial failures of the boards.  The board and/or a SCA homeowner coalition should seek recovery of all reported to the IRS accumulated surpluses from the insurance of our accounting firm, law firm, RMI and SCA liability insurance.   We do not have to accept punishments for the board’s willful failures.

Norm (McCullough) quoted Carl (Weinstein) as citing (Auditor/Tax Preparer) Gary Lein’s reservations about the return–however, they both are individuals who signed  and/ voted approval of the return.  In my opinion they have even more responsibility since they have self-admitted their lack of assurance that they were correct, but signed anyway.

When the current president of the association made a nasty personal remark about the IRS auditor at a board meeting, he was just asking for the IRS to show no leniency.  The least a SMART lawyer could do is keep nasty opinions private.

…just a few of my thoughts.

Kay ”