Instructions For Form 1120-H - 2004 (Page 4 of 5) in pdf

Form 1120-H (2004)

Page

be sent to the IRS. For more

Penalty for late payment of tax. An

Note. The online application process is

information, see “Marking the Proper

association that does not pay the tax

not yet available for associations with

Tax Period” in the instructions for Form

when due generally may be penalized

⁄

addresses in foreign countries or Puerto

8109.

of 1% of the unpaid tax for each month

Rico.

or part of a month the tax is not paid, up

If you prefer, you may mail the coupon

Final return, name change, address

to a maximum of 25% of the unpaid tax.

and payment to: Financial Agent, Federal

change, or amended return.

The penalty will not be imposed if the

● If the association ceases to exist, file

Tax Deposit Processing, P.O. Box

association can show that the failure to

970030, St. Louis, MO 63197. Make the

Form 1120-H and check the “Final

pay on time was due to reasonable

check or money order payable to

return” box.

cause.

“Financial Agent.”

● If the association changed its name

Other penalties. Other penalties can be

since it last filed a return, check the box

For more information on deposits, see

imposed for negligence, substantial

for “Name change.”

the instructions in the coupon booklet

understatement of tax, and fraud. See

(Form 8109) and Pub. 583, Starting a

● If the association has changed its

sections 6662 and 6663.

Business and Keeping Records.

address since it last filed a return

(including a change to an “in care of”

Caution: If the association owes tax

Specific Instructions

when it files Form 1120-H, do not

address), check the box for “Address

Period covered. File the 2004 return for

include the payment with the tax return.

change.”

calendar year 2004, and fiscal years that

Instead, mail or deliver the payment with

● To amend a previously filed Form

begin in 2004 and end in 2005. For a

Form 8109 to an authorized depositary,

1120-H, file a corrected Form 1120-H

fiscal year return, fill in the tax year

or use EFTPS, if applicable.

and check the “Amended return” box.

space at the top of the form.

Note. If a change in address occurs

Estimated Tax, Alternative

Note. The 2004 Form 1120-H can also

after the return is filed, use Form 8822,

Minimum Tax, and Certain

be used if (a) the association has a tax

Change of Address, to notify the IRS of

year of less than 12 months that begins

Tax Credits

the new address.

and ends in 2005 and (b) the 2005

Item B. 60% gross income test. At

These items do not apply to

Form 1120-H is not available at the time

least 60% of the association’s gross

homeowners associations electing to file

the association is required to file its

income for the tax year must consist of

Form 1120-H. See the instructions for

return.

exempt function income (see Definitions

line 21 below for a list of the tax credits

The association must show its 2005

on page 2).

that do not apply. However, a

tax year on the 2004 Form 1120-H and

Item C. 90% expenditure test. At least

homeowners association that does not

take into account any tax law changes

90% of the association’s expenditures

elect to file Form 1120-H may be

that are effective for tax years beginning

for the tax year must consist of

required to make payments of estimated

after 2004.

expenses to acquire, build, manage,

tax. Because the election is not made

Address. Include the suite, room, or

maintain, and care for property, and in

until the return is filed, Form 1120-H

other unit number after the street

the case of a timeshare association, for

provides lines for estimated tax

address. If a preaddressed label is used,

activities provided to, or on behalf of,

payments and the crediting of

include this information on the label. If

members of the timeshare association.

overpayments against estimated tax if

the Post Office does not deliver mail to

Include current and capital expenditures.

payments or overpayments apply.

the street address and the association

Use the association’s accounting

has a P.O. box, show the box number

Interest and Penalties

method to figure the total.

instead.

Include:

Interest. Interest is charged on taxes

If the association receives its mail in

1. Salary for an association manager

paid late even if an extension of time to

care of a third party (such as an

or secretary.

file is granted. Interest is also charged

accountant or an attorney), enter on the

2. Expenses for gardening, paving,

on penalties imposed for failure to file,

street address line “C/O” followed by the

street signs, security guards, and

negligence, fraud, substantial valuation

third party’s name and street address or

property taxes assessed on association

misstatements, and substantial

P.O. box.

property.

understatements of tax from the due

Employer identification number (EIN).

3. Current operating and capital

date (including extensions) to the date of

Enter the association’s EIN. If the

expenditures for tennis courts,

payment. The interest charge is figured

association does not have an EIN, it

at a rate determined under section 6621.

swimming pools, recreation halls, etc.

must apply for one. An EIN may be

4. Replacement costs for common

Penalty for late filing of return. In

applied for:

buildings, heating, air conditioning,

addition to losing the right to elect to file

● Online—Click on the EIN link at

elevators, etc.

Form 1120-H, a homeowners

association that does not file its tax

The EIN is

Do not include expenditures for

return by the due date, including

issued immediately once the application

property that is not association property.

information is validated.

Also, do not include investments or

extensions, may be penalized 5% of the

● By telephone at 1-800-829-4933 from

transfers of funds held to meet future

unpaid tax for each month or part of a

costs. An example would be transfers to

month the return is late, up to a

7:00 a.m. to 10:00 p.m. in the

a sinking fund to replace a roof, even if

maximum of 25% of the unpaid tax. The

association’s local time zone.

the roof is association property.

minimum penalty for a return that is over

● By mailing or faxing Form SS-4,

60 days late is the smaller of the tax due

Application for Employer Identification

Item D. Enter the association’s total

or $100. The penalty will not be imposed

Number.

expenditures for the tax year including

if the association can show that the

those expenditures directly related to

If the association has not received its

failure to file on time was due to

exempt function income. Use the

EIN by the time the return is due, write

reasonable cause. Associations that file

association’s accounting method to

“Applied for” in the space for the EIN.

late should attach a statement explaining

figure the entry for item D.

For more details, see Pub. 583, Starting

the reasonable cause.

a Business and Keeping Records.

Instructions For Form 1120-H - 2004 Page 4

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