Personal liability of incorporator?

[jdbst56]

What is the name of your state (only U.S. law)? Pennsylvania

Last January I incorporated a non-profit corporation (church entity) in PA with the goal of starting a non-denominational church. As part of that process, I also obtained an EIN for the corporation from the IRS and listed myself as the responsible party. Shortly after incorporation I recruited a lead pastor who has been serving as the president/CEO of the organization, even though he was not formally named or elected to such office. There were no initial board members or officers (nor lead pastor) listed in the articles of incorporation despite the fact that the bylaws state the original board would be set forth in the articles. There has been over 100 people attending the Sunday morning services so the weekly offerings have been quite substantial. I have since become concerned by the lack of financial transparency with the lead pastor and the fact that there is no board to oversee financial decisions (salaries, budgets, etc) as outlined in the bylaws. After bringing my concerns to the attention of the lead pastor on multiple occasions with no action taken, I realized that I was at an impasse and decided to resign my volunteer role at the church and completely disassociate myself from it.

My question is what personal liability do I have, if any, at this point? My name is listed in the articles of incorporation as the incorporator but not as an officer or board member. My name was also listed as the responsible party with the IRS when I obtained the EIN. My biggest concern is the IRS coming after me if the lead pastor does not file the proper tax forms and have the correct taxes deducted for his salary. My other concern would be if the congregation would try to pursue legal action against me for failure of not establishing a board or negligence in not addressing the fact that the lead pastor was conducting activities in violation of the bylaws. Is there anything I could or should do to protect myself from such actions?

The bylaws state that the lead pastor must be elected by the membership but they have not been maintaining membership rolls. So it appears to me that there is no board or members and the pastor who is supposed to be a board member by virtue of his role is also not legitimate. I would assume that in order for them to fix this problem, they would have to establish membership, conduct a formal vote for the senior pastor, and then allow him to nominate board members and officers?

 

[tranquility]

I would see an attorney. You could be liable for any number of reasons both vicariously and directly and need to disengage yourself correctly. In fact, if the now pastor intentionally tried to set you up, he could have not planned it better. Not that that is what is happening, but his actions could tie you up for quite a while.

 

[jdbst56]

I would see an attorney. You could be liable for any number of reasons both vicariously and directly and need to disengage yourself correctly. In fact, if the now pastor intentionally tried to set you up, he could have not planned it better. Not that that is what is happening, but his actions could tie you up for quite a while.

Thanks I have sought legal counsel on the matter and my attorney seems to think that because I was only listed as incorporator, that I have no personal liability in the matter. His biggest concern is me being listed as the responsible person with the IRS in case the proper taxes are not paid. At this point though he is leaning towards me sending an official letter outlining when I stepped down from my volunteer role and also reiterate the fact that I was not an officer or board member with the organization.

 

[tranquility]

Thanks I have sought legal counsel on the matter and my attorney seems to think that because I was only listed as incorporator, that I have no personal liability in the matter. His biggest concern is me being listed as the responsible person with the IRS in case the proper taxes are not paid. At this point though he is leaning towards me sending an official letter outlining when I stepped down from my volunteer role and also reiterate the fact that I was not an officer or board member with the organization.

I'm not going to question an attorney who has access to the facts, but, you were not just "listed" as the incorporator, you were in charge of the entire process. Where is the stock? What did you do to verify the pastor's credentials? What representations did you make to others? How were you able to do corporate acts without minutes or having a board as required by the organizational documents? I don't think you have vicarious liability for the acts of the pastor, but direct liability for your acts that may have been ultra vires and may have fell below the standards required for a person in your position. As to the taxes, the requirement to be a "responsible party" was:

For all other entities, "responsible party" is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.

That representation will be problematical until the new boss takes over. A quick idea on how to change things is at:
http://www.ehow.com/how_5675455_change-name-fein.html