Q. Our association is in the process of developing rules prohibiting the carrying of concealed firearms. What is the requirement for the sign that we will be required to display?
A. Several weeks ago I wrote about issues facing associations with respect to regulating concealed firearms in common areas by the holder of a concealed carry firearm permit, so I won't go into that here. However, the Illinois State Police website addresses the sign issue to which you refer.
Private property owners can prohibit individuals from carrying a concealed firearm on, or into, property under their control. Homeowner groups that prohibit the carrying of firearms must clearly and conspicuously post the Illinois State Police-approved sign at the entrance of the building, premises or real property. Signs must be of a uniform design and be 4-by-6 inches in size.
The Illinois State Police has provided a template that includes a depiction of a handgun in black ink with a circle around and diagonal slash across the firearm in red ink, and a white background. There is no text (except the reference to the Illinois Code 430 ILCS 66/1) or marking surrounding the graphic design.
To download a template of the approved sign for use, visit the Illinois State Police website at www.isp.state.il.us/firearms/ccw."
Q. Our association seems to be under the rule of a tyrant president who spends his (copious) free time looking for violations of the rules. Many of these violations are inadvertent or very minor. Nonetheless, the president's response is always the same; he issues a violation notice that is followed by a hearing and the levying of a fine. This is creating a lot of animosity in our community. I'd like to get your thoughts on this.
A. Associations aren't prisons, and the rigid enforcement of rules required to keep order in a penal institution may not be appropriate in an association. A certain amount of judgment and discretion should be used before a notice of violation is issued.
Boards need to keep in mind that it is sometimes better to informally let a neighbor know what they are doing wrong, and give them time to correct it, before taking strict enforcement action. That said, associations should have an enforcement procedure in place that provides for notice of violation and an opportunity for a hearing and the levying of fines when the violation calls for such action.
The owners need to consider employing the political approach and replace the board member at the next annual meeting, if the aggressive style of the board president does not reflect the personality of the association.
Q. Does an Illinois not-for-profit homeowners association pay income taxes?
A. Condominium and other forms of community associations are entities that must account for their taxable income. Even if no tax is owed, there is still a filing requirement. A community association will generally not qualify for tax-exempt status under Section 501(c) of the Internal Revenue Code. Nonetheless, Section 528 of the code permits a qualifying community association to make an election to receive certain tax benefits that, in effect, permits the exclusion of certain income (referred to as "exempt function income") from its gross income, thereby reducing (if not eliminating) its income tax liability.
If such an election is made, the community association is not taxed on its exempt function income. However, the community association is taxed at the rate of 30 percent of the "homeowners association taxable income." This rate applies to both ordinary income and capital gains. The laws concerning income taxation are complex. Careful tax planning, and input of an accountant who is familiar with community associations, is required of each community association in order to receive the greatest income tax benefit.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.