[OSGeo-Conf] Tax Implications of FOSS4G

[Steve Swazee]

Cameron,
Out of my intent to get folks thinking about FOSS4G tax implications in the
long term....I've walked into a minefield in the short term.  

>From my review of various documents, it would appear neither group is
showing the event closeout payment to OSGeo as a taxable event.  Putting
aside venue, food, AV and other similar fixed costs for both events, it
appears to me that Eclipse has total staff and administration charges of
about $156,000 + a cut of the excess, versus Portland at a flat fee of
$50,000 for approximately the same administrative services.  This
circumstance accounts for a significant delta of potential money in OSGeo's
pocket.  In a tax paid environment using the ~900 attendee event numbers,
the current Washington DC profit comes in at approximately $42,500 ($50,000
- $7,500 taxes) profit, while Portland comes in at approximately $109,979
($152,799 - $42,833 taxes).  Make both events tax exempt, and the take home
numbers come in at $50,000 for DC versus $152,779 for Portland.  Obviously,
the magnitude of the tax implication grows significantly as the potential
profit goes up.  To be certain, these event numbers are projected based on
best guesses by both groups of organizers - but they do demonstrate the
concept.

Both the Eclipse Foundation, Inc. (DC) and Stumptown Syndicate (Portland)
are IRS approved tax exempt organizations in the U.S.  However, there is a
big difference in the pigeon-holes that they are in, and their various
umbrella capabilities as a result:
- I will defer to the Eclipse Foundations legal staff to comment on whether
or not a 501 (c) 6 (trade organization) is capable of extending its tax
exempt status.  
- As a 501 (c) 3, Stumptown Syndicate (charity) is clearly capable of doing
what I have suggested, if they wish.    

If I understand circumstances correctly, OSGeo was more than 27 months old
before it filed its latest request for tax exempt status with the IRS.  As
such, if tax exempt status is granted at some point in the future, it is my
understanding that OSGeo will only be entitled to tax free income (as a
self-standing nonprofit) from the date of the postmark of its latest
application to the IRS.  Consequently, per your question about putting this
plan in motion - it amounts to a willingness on the part of OSGeo to ensure
for the time being that event contracts are appropriately structured and
executed if protecting the organization's main source of income from taxes
is a concern.  If not, pay the tax man.  Otherwise, run the risk that
another IRS denial of tax exempt status at a future point in time will bring
the tax man pounding on the door for....back taxes. 

Again - FWIW.

Best Regards,
Steve


-----Original Message-----
From: Cameron Shorter [mailto:cameron.shorter at gmail.com] 
Sent: Tuesday, July 09, 2013 11:24 PM
To: sdswazee at sharedgeo.org
Cc: 'Darrell Fuhriman'; conference_dev at lists.osgeo.org
Subject: Re: [OSGeo-Conf] Tax Implications of FOSS4G

On 10/07/2013 3:32 AM, Steve Swazee wrote:
> Given Denver generated approximately a $120,000 profit, I don't think 
> it is at all unreasonable to believe 2014 will generate at least 
> $150,000.  That's a tax bill of approximately $41,750.  You can buy a 
> whole bunch of USB's, student admissions, OSGeo banners, code sprints, 
> etc. for that kind of smack.  It's a $41,750 question that all boils down
contract construction.
> The trick on that last point is making sure you crawl in bed with the 
> right party.

Steve,
You have provided some excellent advice here. What I'm unclear on is whether
either of the FOSS4G 2014 proposals are offering tax exempt status as you
are suggesting?

Or alternatively, what is involved in putting your advice into practice?

--
Cameron Shorter
Software and Data Solutions Manager
Tel: +61 (0)2 8570 5050
Mob: +61 (0)419 142 254

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