Employee Credit Card Fraud

I starting keeping the books about a year ago as a volunteer while going to school.

When pulling a balance sheet I noticed an account labeled fraud.

I asked the leadership about it and was giving the story of an employee who misused the credit card.

I was given the promissory note that was completed and signed by the employee.

The problem is it has been three years and the individual is still unable to pay any money to the church.

The church leaders are not worried about getting the money back my concern is that according to tax laws we are to report this as taxable income.

What are my options now that it has been three years and we still have not reported this to the IRS? Thank you.

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