Rest assured, HOA Dock is compliant with IRS non-profit guidelines!
< 35% of non-membership income
IRS: "A social club may receive up to 35 percent of its gross receipts from nonmember sources, including investment income."
This means you can collect up to 35 percent of your income from assessments other than regular HOA dues. This includes charging for HOA documents.
In addition, the HOA can elect to receive the income AFTER escrow closes. This effectively allows the income to count as a member source, therefore not counting towards the 35% guideline.
A Substantially Related Activity
IRS: "The activities that generate the income must contribute importantly to accomplishing the organization's exempt purposes to be substantially related."
Furnishing HOA financial statements to the bank is substantially related to the HOA's purpose.
An exempt club may receive nonmember income
IRS: "An exempt club may receive nonmember income, consistent with exempt status, subject to limits on the amount of permitted unrelated business income. Permitted amounts must be received from activities that, if conducted with members, would further the club’s tax-exempt purposes. Income from investments is also from a permitted traditional activity."
By spending the income generated from selling HOA documents on common area improvements, that is furthering the club's tax-exempt purpose.
