IRS does not care about anything other than the entity reporting its situation.

In the event no one does anything, IRS will kill the exempt status, and POSSIBLY select the item for audit.  If the entity is selected, the IRS will act upon what it finds, or does not find--------including prosecuting anyone who is a "responsible party" for withholding information, if it appears that such is occuring.

The likelihood of that happening??----------- everyone must check their own crystal ball for that answer.

If the notice was known to have been received by a person, and that person engages in transactions on behalf of the entity, and there is tax related to the transactions (or IRS deems there to be the possibility of taxes), and that responsible person does not act to work with IRS............person would/could be prosecuted for aiding in the under-reporting of income taxes-------- not a good deal, criminal penalties.



Let's say the cemetary association owned some ground "over there"---------and only one person in the area knew it.   He had oil drillers drill, under his name, and found oil..........and he never reported it, since it was not really his.........but he cabbaged onto the cash.
IRS did audit and found provision for property taxes being paid........checked, and found that it related to land "over there"...........and noted the drills.
I would not want to be the one who signed the last tax return which excluded that income, or....worse yet........never filed a tax return but was deemed to be a "responsible party".  In the example, two parties would get hammered------ the one who knowingly took the money that wasn't his (criminal charges), and the hassle (time and money) for the other party----innocent, but who would have to prove his innocence.

Far-fetched example..........but illustrative.    

This is a kind of a "do it right or leave it totally alone" situation.  Too many tenacles if it is done half-reared.