You are president of the board of the Theler Community Center inBelfair, WA. Revenues have come from facilities rental, donations,grants, and community classes. The 2014 revenues had been projectedto be $71,000. Expenses cover insurance, utilities, supplies,taxes, and payroll. Expenses are projected to be $68,000. On 1/8/14during the board meeting the interim Executive Director (ED)informs you, the board and the public that the center is faced with$162,000 in debt and back taxes. In addition, there is a criminalinvestigation into the center’s former ED. The interim ED was hiredlast month after the former ED was put on suspension andultimately, fired. The new ED informed the group that the former EDhad created a financial mess that dated back to 2008 when thecenter last filed a tax return. The center owes state unemploymenttaxes and social security and medicare taxes for the employees tothe tune of $97,000. The IRS has additionally levied the center’sbank accounts because of the failure to file for the past 5 years,making it unable to pay its bills this month. What are theramifications of not having filed the 990 tax forms with the IRS?Besides not being able to pay the bills how will this contribute tothe financial situation? What impact does this have on receivingdonations and grants from foundations? How may you, and the boardmembers, be held accountable by the IRS? Do the board members havea duty to keep the organization from losing money? Explain.
