Condominium and homeowner association board members often ask whether their community association has to pay sales tax or other taxes since the association is an Ohio non-profit corporation. Unfortunately, community associations are not considered “charitable organizations” and therefore do not qualify as tax-exempt organizations under Section 501(C)(3) of the Internal Revenue Code.
The term charitable refers the public good or benefit and includes such causes as relief of the poor; advancement of religion, education, or science; erecting or maintaining public buildings or works; and defending human and animal rights. Although community associations are not-for-profit corporations, their purpose is to administer and maintain private communities for the benefit of owners who pay for such maintenance. Consequently, the term “not-for-profit” is not the same as “charitable.” Thus, community associations do not meet the requirements for tax-exempt status of a 501(c)(3) organization.