What IRS Form 1120-H (2016) Is For

Form 1120-H is the U.S. Income Tax Return for Homeowners Associations that allows qualifying associations to access special tax benefits under Internal Revenue Code Section 528. Condominium management associations, residential real estate associations, and timeshare associations use this form to exclude exempt function income—such as membership dues and assessments—from taxable income and pay tax only on non-exempt income at a flat rate (IRS Instructions for Form 1120-H (2016)).

When You’d Use Form 1120-H for 2016 (Late or Amended Filing)

You’d file a late 2016 Form 1120-H if your association never filed the original return or missed the March 15, 2017 due date (for calendar-year filers). Late filings are often triggered by IRS notices about missing returns or unpaid balances. Filing late results in penalties but doesn’t eliminate your obligation to file. You may also need to file an amended 2016 Form 1120-H to correct errors on a previously submitted return.

Refund claims for 2016 are subject to the statute of limitations, meaning the three-year refund window has now expired, so any overpayments generally cannot be recovered.

Key Rules Specific to 2016

• Due date change: 2016 was the first year Form 1120-H was due on the 15th day of the 4th month after year-end (April 15 for calendar-year filers).
  
  
• Late filing penalty: Increased to the smaller of tax due or $205 if more than 60 days late.
  
  
• Flat tax rates: 30% for condominium and residential real estate associations; 32% for timeshare associations.
  
  
• Qualifying tests: At least 60% of gross income must be exempt function income, and at least 90% of expenses must relate to managing or maintaining association property.
  
  
• Electronic filing was still optional, not mandatory, for 2016.
  
  

Step-by-Step (High Level)

• Gather IRS transcripts: Request 2016 account transcripts to confirm filing history.
• Complete the 2016 form: Always use the 2016 version of Form 1120-H and instructions.
• Attach schedules: Add any supporting schedules or statements relevant to your return.
• Submit filing: Mail or e-file (if eligible) to the appropriate IRS service center.
• Maintain records: Keep copies of the filed return and supporting documents.
• Confirm receipt: Use certified mail or e-file confirmation to ensure proof of filing.

Common Mistakes and How to Avoid Them

• Using the wrong year’s form instead of the official 2016 version.
  
  
• Misclassifying income as exempt when it is taxable (e.g., rental or interest income).
  
  
• Forgetting the 60% income test or 90% expenditure test before electing Form 1120-H.
  
  
• Applying the wrong flat tax rate (30% vs. 32%).
  
  
• Leaving Items A–E incomplete or entering incorrect EIN/address.
  
  
• Failing to include estimated tax payments already made.
  
  

What Happens After You File

The IRS generally takes 8–12 weeks to process late or amended returns, though complex cases may take longer. You’ll receive acknowledgment of receipt and, if applicable, notices about balances due or penalties. If you cannot pay in full, you may request an installment agreement using Form 9465.

Penalties and interest accrue from the original March 15, 2017 due date until paid. If the IRS disagrees with your filing, you’ll receive a notice and have the right to appeal.

FAQs

Can I still file Form 1120-H for 2016 even though it’s late?

Yes. You can still file, but penalties apply: 5% of unpaid tax per month (up to 25%), plus a minimum penalty of $205 for returns filed more than 60 days late.

What if my association never filed any 2016 return?

File immediately. Continued non-filing may increase penalties and jeopardize your eligibility to use Form 1120-H in future years.

How do I check what the IRS has on file for 2016?

Request business tax transcripts using Form 4506-T or through IRS Business Online Services.

Is there still time to claim a refund for 2016?

No. The three-year statute of limitations for refund claims has expired unless very narrow exceptions apply.

Should I also amend my state return?

Check with your state. Some states follow the federal Form 1120-H, while others require a separate state amendment.

What’s the difference between late and amended filing?

Late filing applies if you never filed a 2016 return. Amended filing applies if you need to correct an already filed return.

Can penalties be waived?

Possibly. If you show reasonable cause (e.g., natural disaster, illness, or reliance on incorrect professional advice), the IRS may abate penalties. Provide documentation if responding to a penalty notice.

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