Mutual Elections
Mutual 14 is the first Mutual to receive the voting ballots to elect their Mutual Board of Directors. All other Mutuals will receive their ballots according to the election schedule on the left. The shareholders will receive cumulative and non-cumulative voting ballots in the mail.
Cumulative voting offers multiple votes (based on the Mutual) to give to certain candidates. It allows shareholders to cast all of their votes for a single candidate when the Mutual has multiple openings on its board. Non-cumulative voting is a single-vote system that only allows one vote per candidate. IRS Revenue Resolution 70-604 is a new addition to the ballot. In reviewing the election process for the mutuals, it was determined that this item should be included to ensure compliance with tax laws.
Homeowners associations have two different options when filing their respective federal income tax returns. Although there are many different factors that can affect the final determination of which return shall be filed, IRS Revenue Ruling 70-604 is one factor that allows for homeowners associations to exclude net membership operating profits from taxation (as defined as excess membership operating revenues over membership operating expenses).
Under this ruling, owners may vote to apply any excess membership income for the year to the following (or subsequent) year’s budget requirements. Failure to approve the revenue ruling limits the tax filing options available to the association and can mean increased tax liability for the current fiscal year.
For Mutual election questions, contact Senior Portfolio Specialist Ripa Barua at ripab@ lwsb. com. For GRF election questions, contact Jenna Dever at jennad@lwsb.com.
