We Received a Notice of Taxes Due From the IRS. What Should We Do?
Answer - If the Association was not expecting the notice, the issue needs to be researched. The IRS notice should give the details of the tax assessment. This needs to be compared with the Association’s records. At times the Association may need to request an account history from the IRS to get the details of payments and taxes over several years. Other times the CPA may need to be asked to assist if they prepared the tax return. Consider the following two general rules we suggest:
- If the amount owed is very nominal, the time and effort to research the matter may not be cost (or time) effective. It may be best to just pay the minimal amount as a “cost of doing business”.
- If you cannot resolve the matter quickly (and this would be the case if you were requesting account histories from the IRS or needing to wait for the next Board meeting to sign a Power of Attorney), then pay the proposed taxes to stop further penalties and interest. If the IRS is found to be in error, they will refund the monies. If the Association is found in error, however, additional penalties and interest will become due until paid, and there is the potential that the IRS may levy the Association’s bank account if enough time has passed.