If your association pays any owner or Board member for services performed for the association, the association is required to report the earnings to the IRS.

Income earned ($600 or more) is taxable to the recipient and must be reported on their income tax returns.  The Board should secure a completed Form W-9 from any paid owner/Board member.  A Form 1099-MISC should be completed and delivered to the recipient by January 31.  Government copies and Form 1096 must be filed by February 28.

Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable.  The Mortgage Forgiveness Debt Relief Act of 2007 allows debt forgiven as a result of a foreclosure to be excluded as taxable income.  The Act applies to debt forgiven in years 2007 through 2012.

The amount of the forgiven debt must be reported on your income tax return.  Homeowners who are forgiven debt as a result of a foreclosure should be issued a Form 1099-C by the bank that held the mortgage.  For more information, see the IRS website or contact your tax return preparer.

If your association has had an election recently, the new board should ensure that owners who previously served are removed as signers from the association bank accounts. This should be done when new board members are added as signers on your bank accounts.

The bank will need to see proof that the new members are authorized to be added, and the President or Secretary will need to be present to either add or remove signers.  You should have a copy of the meeting minutes detailing the election on hand when you visit the bank, and if your association is incorporated, an amended Illinois Annual Report should be filed to record the changes to your board.  Simply submit a new IL Annual Report to the Secretary of State, with "Amended" typed at the top of the form, with the $10 filing fee.  Once the change is processed, your banker will be able to view the names of the current President and Secretary online to verify those authorized to make changes to the association bank accounts.

In the last year a few of our clients have experienced surges in water bills as a result of leaking pipes.  Running water can cause serious financial problems for small associations.

If you notice your water bill jumping suddenly, you may need to get a plumber out to check for leaks. If there is no obvious water coming through your walls, it's possible the leak is occurring underground or even at an owner's fixture.  The City of Chicago Dept. of Water Management should also be able to tell you if water is running constantly.

The IL Condo Act grants the board the right and responsibility to "prepare, adopt and distribute the annual budget for the property." (Sec. 18.4b) Unit owners do not vote on the annual budget, but there is a certain circumstance in which an owner vote may apply.

If the proposed budget shows an increase of more then 15% over the prior year's assessments, a unit owner vote may occur.  A written petition signed by at least 20% of the owners by ownership percentage must be delivered to the board within 14 days of the adoption of the budget.  The board must then call a unit owner meeting within 30 days of the date of the delivery of the petition.  A majority of the total votes of the unit owners must be cast at the meeting to reject the budget or it is ratified. 

The 15% increase applies to the total of all regular and special assessments.  If the association's total budget was $100,000 in the prior year and they also collected a special assessment of $10,000 (for a sum of $110,000), the proposed budget would have to exceed $126,500 to meet the 15% threshold.

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