[Board] Questions from IRS vs our 501(c)(3) status

[Daniel Morissette]

BTW, I did a quick check about the taxable subsidiary idea and found 
that the Mozilla foundation uses that model 
(http://en.wikipedia.org/wiki/Mozilla_Foundation) In this case the 
Mozilla Corporation taxable subsidiary is 100% owned by its parent, the 
Mozilla Foundation non-profit.

However, others such as the Apache and Gnome foundations seem to operate 
solely as a 501(c)(3) non-profit.


On 12-10-30 12:09 PM, Daniel Morissette wrote:
> Board,
>
> Earlier in September, we received some news from a new IRS agent about
> our application for 501(c)(3) status. The agent spoke to David Atkin,
> our attorney who worked on IRS stuff with Tyler in the past, and then we
> received a list of questions to answer from the IRS [1].
>
> I also spoke to our attorney in the days that followed, and yesterday I
> received a written copy of his advice and suggestions, see [2].
>
> To make a long story short, it seems that the IRS recognizes our
> educational mission and would be willing to grant 501(c)(3) status for
> our educational activities, but they do not consider that supporting
> software development qualifies by itself (unless it's solely for
> education), so things like the project sponsorship program would need to
> be moved to a for-profit subsidiary. There are also some bugs with the
> way some things are handled with respect to FOSS4G that would need
> adjustment.
>
> To be honest I'm not too excited by the idea of a for-profit subsidiary
> and am not even sure if that would make any sense in our case (who would
> own it anyway?). In my first exchange with David I thought
> (misunderstood?) that it might have been the charitable aspect that was
> the problem and that going with 501(c)(6) as some people suggested in
> the past might do, but this is not what David's written notes (received
> yesterday) suggest.
>
> I am planning a call tomorrow (Wednesday) with David's assistant to
> discuss our options. I would love to hear your feelings until then.
>
> Perhaps we could setup a task force with a couple of US-based board
> members (or other members with experience) to work on our response which
> is due by mid-November (we requested and got an extension).
>
> Daniel
>
>
> [1] http://svn.osgeo.org/osgeo/board/irs_docs/OSGeo-IRS-Letter-20120914.pdf
> [2]
> http://svn.osgeo.org/osgeo/board/irs_docs/OSGeo-IRS-attorney-advice-and-suggestions-20121029.pdf
>
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-- 
Daniel Morissette
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