My question involves business law in the state of: SD.

If it is discovered by the members of a nonprofit that the director has been embezzling funds, is it required that the IRS be notified?

Or can the director be quietly moved out, a new Board take over, a new bank account opened and the nonprofit continue to do the good work it is set up to do?

No one in the organization wants to press criminal charges against the director. (No one in the organization draws a salary; it is all volunteer.)

Thank you,
Jes