Extremely Unusual 501(c)(3) Question involving Goverance/Compliance?

Question

Who actually GOVERNS a non-profit that has 501(c)(3) status and is classified as a public charity operating a school when...

Since receiving letter of determination from IRS in 12/2005 they have never filed a 990 (gross receipts yearly are close to .$800K), cannot find their original or a copy of the 1023 they submitted, nor can they find any of the documents (Articles of Association, Bylaws, Nondiscriminatory Policy) attached to the original 1023, never filed a informational change with the IRS even though they have changed policies and bylaws, and have a School Board governing the shcool that is different than what they orignal stated in the 1023,

I guess what authority does the CURRENT School Board have when it is not structured as originally stated in the 1023 and have been made aware of the noncompliance issues?

Yes, I have requested from the IRS a copy of the 1023 but it will still take weeks to get to me.

Any thoughts but "report them to the IRS" are WELCOME.

Answer 1

Oh geez, that's a problem.  Not filing a timely 990 has penalties attached.  If you are on a calendar year, then the 2007 990 was due May 15 - extensions can be gotten for 3 months but it's too late now to request one.

From the 990 instructions:  Under section 6652(c)(1)(A), a penalty of $20 a day, not to exceed the smaller of $10,000 or 5% of the gross receipts of the organization for the year, may be charged when a return is filed late, unless the organization can show that the late filing was due to reasonable cause.

I'd find a CPA quickly who can help you deal with getting the 990's filed and also advise you on the other issues you have.

Good luck.

Answer 2

This is a really tough situation, and your options are fairly limited.

You should be able to request a copy of the Articles of Association (known as "Articles of Incorporation"  or "Corporate Charter" in some states) from the Secretary of State office in the state in which they are incorporated.  The cost and ease of getting a copy will depend on the state.  In some states, the articles are available for free and are available online.  Other states will charge an outrageous sum for merely making a photocopy, and it could take weeks.

There also might be an annual corporate update form on file with the state that you should be able to get a copy of.  Those forms usually list the current officers and directors for the corporation.

The articles might or might not provide you with information about the governance of the organization.  Usually that information appears in the bylaws, which you have been unable to get.  

You might want to also check with your state attorney general.  Each state's attorney general office usually has an office that is in charge of supervising charities within the state.  Part of the process of registering with the attorney general usually involves sending ina copy of the corporate articles and bylaws.  They should be willing to mail or fax you a copy if they have one on file.

If you think that control of the corporation has been improperly transferred, you can't do much about it unless you were somehow supposed to be one of the people with control over the organization.  In that case, you could file a lawsuit to try to take control back again.  If you don't have standing to file suit yourself, you could report the situation to the state attorney general. They will investigate the situation, and could possibly file a lawsuit to straighten things out if they feel that there is a serious problem.

You stated that you don't want to go to the IRS, but if you do decide to, there's a pretty significant penalty of $20 per day for failure to provide you with copies of their exemption application and the accompanying documents.  There are additional penalties for a willful failure to provide the documents that might or might not apply here.