I think I have a problem. I am a professional accountant and work for a notfor-

profit organization that operates a summer camp. We have obtained a legal opinion stating that a portion of our camp fees could be considered a charitable donation with respect to religious education costs for the 2007 summer and subsequent years.

When we originally invoiced parents for the 2007 summer (in January 2007), we billed the amounts as fees fully subject to sales tax and collected and remitted the tax to the government authorities. As a charitable donation, no sales tax needs to be collected, so we have since adjusted the 2007 invoices to reflect the amounts of taxes charged in error and are in the process of recovering these funds from the governments involved.

The issue that arises is that, as we are acting as an agent for the governments with respect to collection of taxes and therefore these funds are considered a “deemed trust,” it is my opinion that these recovered taxes rightfully belong to the parents who originally paid them and should be refunded. Our Executive Committee believes that we can simply keep these funds and issue donation receipts without ever telling the parents that they are entitled to this money. I strongly believe that their view is unethical and have indicated as such, but they are intent on doing it regardless.

This leaves me in a difficult position in that I do not want to do anything that I feel is unethical, but I cannot afford to lose my employment by refusing their demands.

Any guidance or advice you could give me would be most appreciated.

Question:-

1. What is your advice?