What IRS Form 1120-H (2019) Is For

Form 1120-H is the U.S. Income Tax Return specifically designed for homeowners associations to take advantage of tax benefits under Internal Revenue Code Section 528. This form allows qualifying condominium management associations, residential real estate associations, and timeshare associations to exclude exempt function income such as membership dues from taxable income, and instead pay a flat 30% (or 32% for timeshares) tax rate.

When You’d Use Form 1120-H for 2019 (Late or Amended Filing)

You would file a late 2019 Form 1120-H if your association missed the April 15, 2020 deadline and later received IRS notices like CP-161 or CP-501. Filing late or amending may also be necessary if you discovered reporting errors, missed deductions, or miscalculations. Late filings can result in penalties, interest, and loss of the annual election benefit.

Key Rules Specific to 2019

• Associations must meet the 60% income test (at least 60% of gross income from exempt function income).
  
  
• They must also pass the 90% expenditure test (at least 90% of expenses used for managing and maintaining association property).
  
  
• Flat tax rates: 30% for condominiums and residential associations, 32% for timeshares.
  
  
• A $100 specific deduction applied against non-exempt income.
  
  
• Election to use Form 1120-H must be made annually by the filing deadline.
  
  

Step-by-Step (High Level)

• Gather transcripts using Form 4506-T to confirm IRS account details for 2019
• Complete the official 2019 version of Form 1120-H with accurate income and expense reporting
• Attach required schedules such as Form 8949 for capital gains, if applicable
• Mail to the correct IRS processing center—electronic filing was not available in 2019
• Retain copies of the filed return, supporting documents, and proof of mailing for your records

Common Mistakes and How to Avoid Them

• Failing the 60% income or 90% expenditure tests due to incorrect calculations
  
  
• Misclassifying non-member fees or investment income as exempt function income
  
  
• Applying flat tax rates to gross income instead of taxable income
  
  
• Forgetting the $100 deduction against non-exempt income
  
  
• Mailing returns to the wrong IRS service center
  
  
• Inadequate record keeping, which is often scrutinized by the IRS during examinations
  
  

What Happens After You File

The IRS typically processes Form 1120-H within 6–8 weeks, though late returns may require more review. Notices may be sent requesting clarification on qualification tests or income classifications. If you owe tax and cannot pay in full, installment agreements can be set up using Form 9465. Interest and penalties continue accruing until balances are resolved, but you may appeal any IRS adjustments within 30 days.

FAQs

How much are the penalties for filing my 2019 Form 1120-H late?

The IRS charges 5% of unpaid tax per month or part of a month, up to 25% maximum. For returns over 60 days late, a minimum penalty of $330 applies. Interest accrues on both unpaid tax and penalties from the original April 15, 2020 due date until the balance is paid in full.

Can I still get tax transcripts for my 2019 association tax account?

Yes, you can request business tax transcripts using Form 4506-T or through the IRS Business Online Services if your association is registered. Transcripts provide a record of filed returns, payments, and account activity. Reviewing them helps ensure accuracy before filing a late return and confirms what the IRS already has on file.

Is there a time limit for filing my 2019 Form 1120-H?

While there’s no absolute cutoff for filing late returns when taxes are owed, penalties and interest keep growing until you file. Refunds, however, are time-limited. The statute for claiming 2019 refunds ended on April 15, 2023. Filing now updates your IRS record and stops additional penalty accumulation, but refunds are no longer available.

Do I need to file amended state tax returns if I file a late federal Form 1120-H?

Yes, in most cases. State filing requirements vary, but many states require amended or late returns if federal changes affect state income. Penalty rules also differ by state. You should review your state’s Department of Revenue guidance to confirm whether you must submit additional filings at the state level.

Can I electronically file my 2019 Form 1120-H?

No, e-filing was not available for Form 1120-H in 2019. All filings for that tax year must be mailed to the IRS service center corresponding to your association’s location. Be sure to use certified mail or another tracking method to confirm delivery and keep a copy of your complete return package for your records.

What if my association doesn’t qualify for Form 1120-H after calculating the tests?

If your association fails either the 60% income test or 90% expenditure test, you cannot file Form 1120-H. Instead, you must use Form 1120, the standard corporate tax return. Filing Form 1120 often results in higher tax liability because exempt function income cannot be excluded, and regular corporate rates apply.

Should I hire a professional to help with my late 2019 filing?

Yes, it may be wise. While officers can prepare the form, professional tax preparers help ensure compliance with the IRS qualification tests, calculate penalties correctly, and reduce the chance of costly mistakes. Associations with multiple unfiled years or ongoing IRS notices especially benefit from professional tax assistance.

‍