I'm in my second year as Treasurer for our PTC. Last year our board found out that the previous board members did not file taxes dating back to the 99/00 school year. Needless to say both the State (CA) and IRS issued hefty penalties totalling approx $2k. Fortunately we were able to submit financials dating back as well as a letter of explanation and all penalties were waived for both the State and Federal. As for the missing money, we also had a similar issue last year with our yearbook editor. Over $500 ended up not being accounted for and we've been in a quandry as to the best way to approach it. The only way we found out was when we ended up with WAY more yearbooks that we should have and after some digging we found out the money was never submitted to me for deposit. Of course the editor has "no idea" what could've happened and the receipt book she used apparently grew legs and vanished. We are thinking of having a legal letter drafted to use as a scare tactic. We fully realize that we'll never see a dime of the missing money, but it will be nice to see her squirm a little.
Thanks everybody. As a board, we went over all the evidence, drafted a demand letter that was reviewed by an attorney, and sent it certified to the previous treasurer. Our letter basically said that this missing money is owed by her alone because not only was the money missing, we have clear and indisputable evidence she held on to PTO money at her home for at least seven months. We also stated that after we receive notice from the State regarding the back taxes and WE take the time to go down and battle to get an offer and compromise meeting, we'll then follow-up with this old treasurer to let her know her financial responsibility in that regard. We decided as a board that she is responsible for the missing cash because it was in her care. We decided both and she and the previous president are responsible for tax penalties and interest because the treasurer should have filed taxes, but the president should have noticed it wasn't done. I should also say this letter was signed by our entire executive board as well as the administration of the school, whom we have been careful to keep in the loop in this whole mess so that we can always show that we have tried our best to handle this proactively and honestly.
So, she received the letter yesterday. Her response is that myself as the president and our new treasurer are retaliating against her in regard to the taxes. She never mentions the actual missing money - only the taxes. She says so many obvious lies and even contradicts emails we received from her months ago.
I know that if the worst case arises and we had to go to court, we would easily win. I believe our information and research is that strong. I think she fails to realize how much she has incriminated herself. I don't want to hang this woman out to dry. I don't want this to drag out. I wish she would just finally for once own up to her mistakes and fix them.
Our PTA just went through this and guess what? We are expecting a check anyday now from our insurance co. We filed a police report as soon as the tresurer got out of sorts with us. The police handed it over to the DA and they prosecuted. She actually didn't keep receipts for cash but reported profits at our meetings. Well the profits in cash never made it to the bank. She was arrested a two weeks ago. I say prosecute or else it is the presidents behind. Don't forget that ultimately the president is responsible. This could come back to bite her in the behind if it is not handled properly. FIDUCIARY RESPONSIBILITY.
Hope this helps
My advice - how much time do you have to spend and it is worth the return? Staying with the bad stuff can kill you. Might be better to move on - call it a learning experience - and spend your time and efforts on good things that will benefit the students and the school instead of working so hard for money you may never see. If it isn't enough money to be catastrophic - move on.
My sister took over and had to do fundraising to pay for tens of thousands of $ in back taxes. Suing would have done them no good. Instead they focused on getting things back in order - which is sounds like you have done a great job with - and moved forward because it was unlikely they were going to get money back.
You might consider implementing a yearly or twice yearly financial review to make sure this doesn't happen in the future. We do it once a year and give a full report to the membership to confirm that things are in order. Helps to see where and if things are going wrong and correct them while people are still in office. We do a year end review but the one in the bylaws is the one done in January.
Good luck - sounds like they are lucky to have this new board in place and you are on the right track!
miloslove;144348 wrote: My question is, can we legally make her responsible for this missing money and tax penalties and interest?
I'd be tempted to have a lawyer draft up a letter about the missing money, as d suggested.
As for tax penalties, I've heard that they can be waived (at least, those for the IRS, don't know about your state). My PTO is presently testing this "rumor" -- apparently no treasurer in our 20-year history ever filed, until I did back in March.
I'm with d, unless you can irrefutably prove that she took the money and you're willing to deal with the process of going after her legally, you are probably better off to just straighten out what you can, make sure that your financial procedures are updated to prevent this from happening again, and move on to better things. If her recordkeeping and organization is as poor as you say it is, then that money might be laying in a drawer in her house somewhere buried under stacks of papers.
