Our HOA has not filed tax returns for years. How does the board catch up?

By OurHOA · General information · Revised November 8, 2026

What an HOA board does after finding years of unfiled tax returns: Form 1120-H or 1120 by year, likely penalties, penalty relief, state returns, and a motion.

Part of the HOA board handbook: treasurer and money.

The short answer

File, and do it before the IRS writes first. An unfiled year has no clock that runs out, so waiting saves nothing. For most small associations the bill is smaller than the board fears, because federal late filing penalties are based on the tax due, and a dues-funded HOA often owes very little. The catch is that Form 1120-H is an election, made year by year, and a late return can lose it. Older years may have to go on Form 1120, which can change both the tax and the state filing. Hire a CPA who has done association returns. It is general education, not tax or legal advice, and your state and governing documents may add their own rules.

Confirm what is actually missing

A treasurer who finds no returns in the file may only have a records problem. Ask the former treasurer, the former manager and any CPA named in old minutes. Then ask the IRS. On Form 4506-T an officer can request an account transcript by year, one form number per request, so send a set for 1120 and a set for 1120-H. Line 7 requests a verification of nonfiling. The IRS mails results only to the address of record, so fix an outdated address first. Check two other things while you wait. An association exempt under section 501(a) does not file Form 1120-H, but a state nonprofit charter does not make it exempt, as our guide on whether an HOA has to file a tax return explains. And if the association had employees, unfiled payroll returns come first. Under 26 U.S.C. 6672, a person responsible for withheld taxes who willfully fails to pay them can owe a penalty equal to the full amount. Call the CPA first.

Decide how many years to file

The law sets no end point. Under 26 U.S.C. 6501(c)(3), when no return was filed the IRS can assess tax at any time. The Internal Revenue Manual says Policy Statement 5-133 typically leads to enforcement for no more than six years, and going further needs a manager's approval. It counts back from the return currently due, so in November 2026 that means tax years 2025 back through 2020. That is an IRS staff practice, not an amnesty. Ask your CPA whether six is right for your facts, and keep the answer in writing.

Sort each year by form

Regulations section 1.528-8 says the election is made separately for each year, by filing Form 1120-H by the due date, including extensions. Each missed year lands in one of three groups. Inside the 12-month window. Regulations section 301.9100-2 grants an automatic 12-month extension for this election. Take corrective action within that time and put "FILED PURSUANT TO § 301.9100-2" at the top of the return. For a calendar-year association with no extension on file, the 2025 return was due April 15, 2026, so this relief runs through April 15, 2027. Outside the window, on Form 1120. An association that does not elect Form 1120-H files the applicable return, such as Form 1120, at the 21 percent corporate rate. Under 26 U.S.C. 277, costs of serving members offset only income from members, with any excess carried to the next year. So bank interest usually gets no offset, and a dues surplus can become taxable. See our guide on whether an HOA can keep a budget surplus for the Revenue Ruling 70-604 election. Outside the window, by private letter ruling. Section 301.9100-3 lets the IRS grant more time if the association acted reasonably and in good faith, and it treats a request as reasonable only if made before the IRS discovers the failure. Requests need detailed affidavits and a user fee. Rev. Proc. 2026-1 sets a reduced fee of $3,450 for gross income under $400,000. That is often more than the whole tax bill, so a ruling usually makes sense only when a large surplus would be taxed heavily on Form 1120. Do not mail a stack of 1120-H returns for old years and hope. Ask the CPA how each year will be treated, and why.

A sample bill

Take a 72-home calendar-year association that last filed for 2021. Dues roughly equal spending each year, and its only other income is $1,400 of bank interest. It finds the gap in November 2026. - 2025, Form 1120-H with the 301.9100-2 legend: ($1,400 minus the $100 deduction) at 30 percent is $390. - 2022, 2023 and 2024, Form 1120: $1,400 at 21 percent is $294 a year, or $882. Tax totals $1,272. The late filing penalty is 5 percent of unpaid tax per month up to 25 percent, but a return more than 60 days late has a minimum: the smaller of the tax due or a fixed amount, which is $525 for returns due in 2026 and lower for earlier years. Every year here is under that amount, so each penalty equals the tax, adding another $1,272. The late payment penalty adds half a percent a month, up to 25 percent. Interest runs on the tax and the filing penalty, compounded daily, at 7 percent in the fourth quarter of 2026. Together they add roughly $500. Expect a bill a little over $3,000, plus the CPA. A year with zero tax has no penalty under this formula, though the return is still owed. Paying sooner stops the interest and the late payment penalty, so pay once the CPA has the numbers. Payments are electronic, and each must name the right form and year.

Ask for penalty relief, in the right order

Do not attach a letter to the return. The instructions say to send the explanation after the association receives a penalty notice, and our guide on responding to an IRS notice sent to an HOA covers those letters. Start with first-time abatement. The IRS says it covers failure to file and pay penalties if the same return type was timely filed for the prior three years with no penalties. An association that filed through 2021 may qualify for 2022, but the later years have a gap behind them. Call the number on the notice, or use Form 843. Then try reasonable cause. The IRS lists inability to get records and death or serious illness as possible grounds, and lack of knowledge, mistakes and relying on a tax professional as weak ones. "Nobody on the board knew" will probably not carry it. "The prior manager held the books until a court order in March" might, with the letters attached.

Check the state side

Rules vary by state, so have the CPA confirm these for each year. Texas has no corporate income tax, but Tax Code section 171.082 exempts qualifying nonprofit associations from the franchise tax only if they apply. The Comptroller's form is AP-206. Search its exempt entity list for the association. Under section 171.251, a corporation subject to the tax that ignores a forfeiture notice for 45 days can lose its corporate privileges, and our guide on reinstating a dissolved HOA corporation covers the repair. Florida is where the form choice bites. The Department of Revenue says an association filing federal Form 1120-H does not file a Florida corporate return, but one filing Form 1120 must file Form F-1120 whether or not tax is due. Section 220.14 exempts the first $50,000 of net income, so tax is unlikely, but section 220.801(2) sets a penalty of $50 a month, up to $300, for each late return showing no tax. Colorado's DR 0112 instructions say each C corporation doing business in the state must file. They do not say how an association filing Form 1120-H is treated, and we found no Department of Revenue statement on it. Get an answer from a Colorado CPA or the department in writing.

What the board does, in order

A workable schedule: - Week 1: send Forms 4506-T, ask former officers for records, and ask two CPAs for a per-year quote. - Weeks 2 to 4: order bank statements for each open year. The CPA sorts years by form. - Week 5: approve the plan and the money at a noticed meeting. - Weeks 6 to 10: the CPA drafts returns on each year's own form, from the IRS prior-year forms page. A current officer signs. A motion the board can copy: "I move that the board engage [firm] to prepare the association's unfiled federal and state income tax returns for tax years [years], at a cost not to exceed $[amount], authorize the treasurer to sign the returns as an officer and pay the tax, penalties and interest from the operating account, and direct the treasurer to report status at each board meeting until the returns are complete." A paragraph for owners: "While reviewing financial records, the board found that federal income tax returns were not filed for tax years [years]. We have hired [firm] to file them. We estimate the total cost, including penalties and preparation, at about $[amount], paid from [source]." Owners forgive a late return more easily than a quiet one.

Mistakes that make it worse

Filing only the latest year. The old years stay open. Assuming no tax means no return. The return is how the election gets made, as our guide on preparing Form 1120-H explains. Missing April 15 for the most recent year. It is the one year the association can still save with no ruling. Stopping once the backlog clears. Add the filing date to the board calendar, put a tax line in next year's budget, and keep each filed return where the next treasurer will find it.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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