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1120-H Are internet Service Fees paid by the HOA and then reimbursed by the members considered exempt income if not all members participate.

Level 1

I have an HOA that recently entered into a contract with a local internet provider.  The HOA is charged a set fee per house each month regardless if the home has chosen to go with this internet provider.  The homes that participate pay their internet fees to the HOA, on a pro-rated basis.  For example, there are 150 homes in the HOA and the internet provider is charging them $40/home/month, for a total of $6,000.  Only 125 homes have chosen to receive internet from this provider, so each of the 125 homes pays the HOA $48/month; total received is $6,000.  This is a wash for the HOA, but is this income considered exempt function since not all homes are obligated to participate.

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