SCA Board Still Confused, Or Willfully Deceiving SCA Members?

February 1, 2012 by admin.

(revised)

After 4 years of spinning and being proven wrong by the IRS concerning failing to return end-of-year surplus assessments to SCA owners, one would think certain past and current board members would be trying to do the “right thing” and avoid personal litigation risks.  

But, such does not seem to be the case.  Past and present directors seem determined to ignore the case that SCA homeowners have the right to demand payment of the lost/un-returned surpluses since 2002.  Members simply do not have to accept the board’s negligent losses and succumb to unjustified special assessments. 

Members have remedies for dealing with certain director’s and finance committee member’s apparent knowing violations of various laws, statutes and federal regulations.  For example, this week a Sun City Anthem Director incorrectly reported the following concerning the next steps on the SCA 2007 income tax bill for $1.3 Million back taxes and penalties as follows:

“We have 90 days after we receive a note of deficiency — if we receive one.   Since we will not be initiating litigation but rather entering into an administrative appeal, we would not need a vote of the owners. I may have the description wrong but the spirit is correct in our understanding. 

I’m sure if it comes to that point this Board will be sure we have sound advice and impeccable legal standing for whatever action we vote to take.” 

But, the truth (as stated by a national expert on IRS procedures) is as follows:

“All of the process from the examination by an agent to the conclusion of the trial in the US Tax Court is done before tax is assessed.  It must be assessed before collection efforts happen.  I’ll try to break this down into steps:

1.  When the examination of a tax return concludes the agent issues a Revenue Agent’s Report (RAR).  The taxpayer can agree and pay the tax.

2.  The cover letter to the agent’s report says, “If you are not in agreement you have thirty days to file a protest”  you file that protest and it, along with the RAR, go to the Appeals Division.

3.  You make your presentation to Appeals and at the conclusion the Appeals Officer informs you of his/her decision at which time if it supports the agent you have the option of paying the tax!

4.  If you do not indicate your agreement with the Appeals Officer a report is issued with a cover letter.

5.  The cover letter says you have 90 days to agree and pay the tax or….. file a petition with the US Tax Court.  If you don’t voluntarily pay and don’t file a petition within the 90 day period you will be considered to have waived your right to take the matter to the Tax Court, the tax is assessed and collection procedures ensue.

It is interesting that the first thing that is checked on a petition is “was this timely filed”.  People tend to put this off… if filed on the 91st day it is too late and the tax is legally assessed and collected.

These are the steps in the process.  The time limits are only on the taxpayer not the government.

As you have seen when this examination was concluded the board was required to enter their disagreement (request for an Appeals hearing) within 30 days.  It was about six months before the government got around to scheduling the Appeals hearing.  

Now the confusion.  The Appeals Officer has informed the board that their appeal was denied, the Revenue Agent’s position is being sustained.  Apparently the AO stated it would be about three months before the “90 day letter” would be issued.  It could take five or six months…. there is no clock ticking on the government.  I know this seems like a long time but the step is a statutory… but clerical step.  It’s just waiting to be typed up.

When the 90 day letter (statutory notice of deficiency) is issued, the taxpayer will have ninety days from the date of that letter to either file their petition with the Tax Court or they will be considered to have waived their right and the tax will be assessed.  If not received timely it is not given notice by the Tax Court and waiver is presumed.

The same process has been in place since around 1929.  If you think it’s a little out of date….. it is! “

So, why would board members still be trying to pretend there is still hope to beat the IRS in tax court and claim they do not have to get membership approval via a ballot before being legally allowed to sue the IRS?

In case you missed it, check out Ron Johnson’s comments in this regard.
http://www.scaview.org/MoreLegal.html

Why are at least some of the new directors not rushing to pay what is owed and trying to minimize further taxes and penalties by making all of the required amendments to previous tax returns?  Could they have been threatened to keep their mouths shut or risk legal action from the old board members?

Can all of the past and present directors truly believe they all can avoid possible federal tax fraud charges in the future?  Historically, trying to bluff the IRS when you have a bad hand is not smart.

Are some directors just so hung up with their egos they are incapable of knowing the truth, or do they truly not care how much of our hard-earned money they waste?   Perhaps it is both?

We will continue to receive such grossly disrespectful treatment as long as we tolerate it.   And, as competent real estate professionals can advise, failure to disclose to potential buyers the details about the many unresolved SCA financial problems can create significant liabilities to sellers.  It can also impact the declining property values resulting from sustained SCA board misconduct.

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