OPA gives up fight with IRS about tax on parking income
OCEAN PINES — After years of appeal, the Ocean Pines Association will no longer continue to fight the decision of the United States Tax Court which found the homeowner’s association responsible for taxes related to beach parking income in tax year 2004.
“The OPA has, in consultation with its independent auditors and legal counsel, determined the estimated tax liability to be $340,000 at April 30, 2012,” said Teresa Travatello, marketing and public relations Director of the OPA, in a press release sent last week.
The OPA set aside $450,000 to pay the Internal Revenue Service if the ruling went against it. Included in the total is the roughly $120,000 already paid for taxes owed for fiscal year 2003-2004.
Had the OPA opted to continue its argument, its only route would have been to appeal to the United States Supreme Court. Because of the difficulty to get the Supreme Court to act on tax issues, the OPA declined to pursue the case any farther.
Prior to 2012, parking passes were sold only to OPA members and not the general public. The IRS said the proceeds of those sales, at least for 2004, are taxable.
When notified that back-taxes for 2004 were owed, the OPA apparently did not realize that parking permit revenue was taxable, since it had not been considered ordinary income in previous years.