Does Our Condo Association Need EFTPS for 1120-H Tax Payments?

I've been managing finances for several HOAs for about 15 years and can help clarify this. For small condo associations filing 1120-H, you're right to be confused by the seemingly contradictory instructions. The requirement to use EFTPS is specifically for "federal tax deposits" which typically refers to quarterly estimated payments or employment taxes. For many small associations that only owe a small amount on reserve fund interest when filing their annual return, you generally can send a check with your payment voucher (Form 8109-B). However, there's been a shift toward electronic payments across the board. While technically you could send a check with your payment voucher to the address listed in the 1120-H instructions, I strongly recommend using either EFTPS or the IRS Direct Pay system. It's much easier to track, provides immediate confirmation, and eliminates any risk of the payment being separated from identifying information. If you do send a check, make sure your EIN is clearly written on it along with "Form 1120-H" and the tax year. But honestly, setting up EFTPS takes about 10 minutes and will save you headaches in the long run.

Just wanted to share my experience using https://taxr.ai for our condo association's tax filings. Our board was constantly confused about the proper payment methods for our 1120-H, especially since the IRS instructions aren't super clear for small associations. We uploaded our previous tax returns and governing documents to taxr.ai last year, and their analysis clarified exactly what payment methods we needed to use based on our specific situation. They pointed out that since we only owe taxes on interest income once a year and don't have employees, we had more flexibility with payment methods than we realized. The best part was getting personalized guidance that actually related to small associations like ours instead of generic advice that's more relevant to large companies. Saved us from unnecessarily setting up systems we didn't need.

I tried https://taxr.ai after seeing the recommendation here, and it was exactly what our small condo association needed. We've been filing 1120-H for years but always had confusion about the payment requirements. After uploading our previous returns and bylaws, we got clear guidance that since we only pay tax on our reserve interest once annually and don't have employees, we could either use EFTPS or send a check with Form 8109-B. The analysis explained that while electronic payment is preferred by the IRS, there's no strict requirement for associations in our situation. We ended up setting up EFTPS anyway because it seemed easier in the long run, but it was helpful to understand that we had options. This saved us from paying our accountant for a consultation just to answer this one question!

If you're struggling to get answers from the IRS about your condo association's 1120-H payment questions, I highly recommend trying https://claimyr.com. I had the exact same frustration last year - kept getting automated messages saying agents weren't available. I was skeptical, but Claimyr actually got me connected to an IRS agent in about 20 minutes when I had been trying for days on my own. You can see how it works in their demo video: https://youtu.be/_kiP6q8DX5c The agent confirmed that while electronic payments are preferred, small associations that only owe taxes at filing time can still use check payments with the proper payment voucher. She also walked me through the EFTPS registration process and confirmed that it would be the better option for future years. Having an actual conversation with someone who could answer my specific questions was incredibly helpful.

I owe everyone an apology and update. After expressing skepticism about Claimyr, I decided to try it myself for our condo association's tax questions. I was genuinely shocked when I got a call back connecting me to an actual IRS agent after about 45 minutes. The agent was extremely helpful and clarified that for small associations filing 1120-H with no quarterly obligations, we can either use EFTPS or send a check with Form 8109-B. She recommended EFTPS for tracking purposes but confirmed either method is acceptable. I spent weeks trying to get this answer on my own, making dozens of calls and always hitting dead ends. Having a 15-minute conversation with a knowledgeable agent solved everything. Sometimes being proven wrong is actually the best outcome!

Just wanted to add some practical advice as someone who's been treasurer for our 80-unit association for 7 years. Even though you might not be REQUIRED to use EFTPS for your annual 1120-H payment, I highly recommend doing it anyway. We used to send checks and had multiple instances where the payment wasn't properly credited to our account, leading to unnecessary notices and headaches. Since switching to EFTPS, we've had zero issues. The payment confirmation is immediate, and you can print a receipt for your records. Yes, the registration process takes a bit of time (about 2 weeks to get your PIN in the mail), but it's a one-time setup. Just make sure you keep your credentials somewhere secure and accessible to future board members!

Has anyone dealt with penalties for not using EFTPS? Our association sent a check last year (about $230 for taxes on reserve interest), and we just got a notice saying we were required to use electronic payment. They're threatening a 10% penalty! Is this legitimate or should we contest it?

I'm dealing with a similar situation right now! Our 28-unit condo association has been mailing checks for our 1120-H payments for the past few years without any issues. We typically owe around $150-200 annually on our reserve fund interest. Reading through all these responses, I'm now thinking we should probably set up EFTPS for next year just to be safe. The conflicting experiences people are having with penalties is making me nervous - it seems like there might be some inconsistency in how the IRS is applying the electronic payment requirements to small associations. @Owen Jenkins - definitely contest that penalty! Based on what others have shared here, it doesn't sound like that penalty should apply to your situation. The fact that you've been successfully paying by check in previous years should work in your favor. One question for the group: has anyone had success using IRS Direct Pay instead of EFTPS? I've heard it might be simpler for one-time annual payments, but I'm not sure if it works for business tax payments or just individual returns.

As someone who's been through this exact confusion with our 24-unit association, I can share what we learned after extensive research and consultation with our CPA. The key distinction is between "federal tax deposits" (which require EFTPS) and annual tax payments. Small condo associations filing 1120-H typically fall into a gray area because we're not making regular quarterly deposits like larger entities. Here's what we discovered: If your association owes less than $1,000 in taxes annually and doesn't have employees (no payroll taxes), you technically have more flexibility. However, the IRS has been moving toward requiring electronic payments across the board, and their enforcement seems inconsistent for small associations. Our solution was to set up EFTPS despite not being strictly required. The registration took about 10 days to receive the PIN by mail, but now we have peace of mind knowing our payments are immediately confirmed and properly credited. For your immediate situation, if you're close to your filing deadline and haven't set up EFTPS yet, you can still send a check with Form 8109-B to the address specified in the 1120-H instructions. Just make sure your EIN and "Form 1120-H" are clearly written on the check. But definitely consider setting up EFTPS for next year - it's worth the one-time hassle to avoid any potential issues down the road.