[Board] IRS response to OSGeo's 501c3 and discussion of our options

[Jeff McKenna]

Today on the Open Source Foundations mailing list, someone pointed out
that their 501c6 application was turned down because they 'provided
services for members', but from advice they submitted a 501c4
application and it was today accepted.  Could this apply to us?  Pasting
email below.  In any case the cover letter idea seems excellent.

Other thought I had, honestly, while reviewing David Atkin's letter to
the Board, was how shocking it was for me to read of us possibly
"deleting the words Open Source" from our foundation name (whether a new
entity or not, quite startling).

-jeff

*******
Back in early April, I asked for suggestions for legal help, as the IRS
was about to deny our application the 501(c)(6) status.  The problem was
that OpenNTF submissions normally execute in an IBM
Notes/Domino/Connections environment, so we were considered too
IBM-centric.  However, as I mentioned at the time, the reason for the
denial was "you offer services to your members". Which is bizarre - as,
like any open source organization, what we do is provide an
infrastructure for the development and posting of open source code.
Members receive no specific benefit.

In any case, we got several good recommendations from this list on who
to approach for legal help.  We ended up going with Marcus Owen - a
former Director of the Exempt Organizations Division of the IRS.  Marc,
with his assistant William Fournier, suggested that we go after
501(c)(4) status instead, through modifying our application and adding a
letter describing our activities in the context of 501(c)(4)
requirements.  What the letter said about OpenNTF could probably have
been said about any open source organization.

Yesterday we got the word from the IRS that our 501(c)(4) application
was accepted.  So - things worked out - and I very much appreciate the
help that we got from members of this list.
-- 
Peter Tanner
IP Manager - OpenNTF
www.openntf.org
*****

On 2013-08-12 11:42 PM, Daniel Morissette wrote:
> Hi Board,
> 
> As I wrote a few days ago, we had a conference call a few weeks ago
> between myself, the IRS agent responsible for our 501c3 application, and
> our attorney David Atkin. In the call we discussed the IRS position and
> our possible options, and I asked David to summarize that in a
> letter/report to share with the rest of the board.
> 
> I just got this letter/report form David tonight and attached a copy.
> There are a few points that were discussed in the call that are not
> clear in the document, so I just emailed David to ask for clarifications
> that I will share, but I thought I would share this first version with
> you all right away.
> 
> We have until August 31 to respond to the IRS indicating which way we
> want to go, so we need to discuss this now and make a decision on those
> tough questions soon. I realize that timing is not ideal with the
> election but we need to act on this ASAP.
> 
> Even if that's not obvious by reading the letter, there is a possible
> path forward that the IRS would agree to and with minimal tax
> implications relative to the accumulated surplus that serves as a
> cushion/seed money for FOSS4G, but that would imply running two
> organizations in parallel as described in the letter.  More on that
> later once I get the response from David to my questions sent a few
> minutes ago.
> 
> Finally, David offered to participate in our next board meeting to
> answer any questions we may have. We may also want to hold a separate
> special meeting on this topic alone, perhaps over phone or skype as this
> is what David would be most used to.
> 
> Daniel
> 
> 
> 
> 
>