I am not a lawyer, but if nobody is personally being enriched then you are probably looking at a small-fish situation -- you improprieties are most likely insufficient in magnitude to generate serious legal action.

Having said that, I would still listen to your lawyer and resign. If the state/IRS did come down on the group, it couldn't hurt that you made an effort to disassociate yourself from the group when the nature of the situation became known to you.

The board is fully aware of the situation and so is the principal. They do not think it is their responsibility to change anything. I have checked and their is no simple solution. The only solution is to cease all activities and reorganize. New articles of incorporation, tax id,ect..

Have you discussed it with them? Can you tell them all that you just told us? Can you offer to file the paperwork on behalf of them, perhaps they are intimidated by IRS documents and figure they've been doing it this way this long, no need to change, maybe...

Please help me. Here is my story in a nutshell. Was elected to an elementary school parents board last year. Information has come to light about the boards financial practices. They are operating with an invalid EIN number. The Irs has no record of this being issued to them. They have not bothered ever filing taxes. They do not have their 501 c 3 status from the irs, and never have ever had it. Their bank accounts are structured illegally. They are soliciting for donations on School District letterhead and having the verifications come back to a board member that works as a secretary in the school office.` They have never registered with our state to solicit(our state req's registration.) and are currently doing so. People have made charitable donations to our organization and have deducted it from their tax returns. There is money going to the teachers without any accountability, petty cash and checks going to the principal directly also with no accountability. The superintendent has been notified and says he can take no action because it is its own entity. They are breaking bylaws and no one cares. I have a fudiciary duty according to my states laws, that I can be held accountable for their actions even though I am not treasurer. And the kicker is the treasurer was just named pres. for next year!!!! They do not care that they are breaking the laws they claim they are just "volunteers" they state they are tax exempt and do not have to file. My lawyer told me to resign immediately to cover my butt, but the state told me it dosent matter because I am responsible because I was elected. The principal helped establish this organization 24 years ago and has had control of it ever since. If anyone can offer advise it would be greatly appreciated!!!!!