[OSGeo-Conf] Tax Implications of FOSS4G - Again

Steve Swazee sdswazee at sharedgeo.org
Sun Jul 14 07:02:16 PDT 2013

"Advice that costs you nothing, is worth exactly what you paid for it."   So
goes the saying.  With that thought in mind - my comments below:

Like Robert, I do not claim to be a tax expert.  However, I do claim to be a
thorough and meticulous reader of nonprofit tax code.  Enough so that I was
able to have in hand an IRS tax exempt letter for SharedGeo in a little over
two weeks after I filed the paperwork in 2009.  If you check around, you'll
find out that's pretty much an unheard time frame (however, I will admit, it
could have been "luck").

Anyway, as previously offered, in the FOSS4G-NA 2013 contract between
SharedGeo and OSGeo I wrote in a "project" clause which I believe would have
done at least two things if it had been activated (here are some related
links about nonprofit projects/fiscal sponsorship -
, http://en.wikipedia.org/wiki/Fiscal_sponsorship):

1.) As accurately described by Robert below, it would have allowed "donors"
to write off "contributions".  However, sales tax is a state function, so
taxable items would have been exempt only to the extent SharedGeo was exempt
from Minnesota State sales tax, which it is.  
2.) More importantly, entering "project" status would have allowed all or
some of the FOSS4G-NA 2013 event profits to be held in a FOSS4G-NA project
"trust" account (without tax to OSGeo) to support the next FOSS4G-NA event.
For example, the SharedGeo "Project Manager" - David Bitner - could have
served as the fund custodian until that time when the funds were needed for
startup of FOSS4G-NA 2015, or OSGeo achieved tax exempt status - at which
time a nonprofit to nonprofit transfer could be executed.  Alternately, some
or all of the funds potentially could have been "metered" out of the account
back to OSGeo in a way that would have reduced tax impact of the inflow
(e.g. we don't need the money right now, leave it there).

Consequently, I take exception to the thought that there was no way to
shelter FOSS4G-NA profit from taxes.  This issue did not bubble to the top
in 2012 because the profit was small and it is my understanding that event
facilitation was principally by OpenGeo vs. OSGeo.  However, the 50K from
2013 is the harbinger of what's coming and as long as OSGeo does not enjoy
nonprofit status (I believe the 3rd filing is underway), I would suggest
that tax planning needs to dialed into the calculus for these events.  And
as demonstrated with the previously offered Washington and Portland
examples, it's a point that expands nearly exponentially as event profits go

Bottom line - in my opinion, OSGeo failing to have executed on that
"project" entry clause for Minneapolis unfortunately leaves SharedGeo with
no option on contract close out.  As accurately related below - ALL funds
MUST now be assigned to OSGeo as taxable income.  Living in a state with a
bunch of tight fisted Scandinavians - that makes me sad.  I watched the
Minneapolis LOC slaving away to save dimes, only to now needlessly turn over
dollars to the tax man. 

At least that is how I see the situation...FWIW.


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Today's Topics:

   1. Re: Tax Implications of FOSS4G (Robert Cheetham)


Message: 1
Date: Fri, 12 Jul 2013 18:15:15 -0400
From: Robert Cheetham <cheetham at azavea.com>
To: Dave McIlhagga <dmcilhagga at dmsolutions.ca>
Cc: conference_dev at lists.osgeo.org
Subject: Re: [OSGeo-Conf] Tax Implications of FOSS4G
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I am not a tax expert, but Azavea has worked with many non-profits and
foundations over the years, including arrangements in which the non-profit
is serving as a fiscal agent on a given project.  If OSGeo is not a
non-profit, there is no way for another non-profit to extend its status to
prevent payment of taxes by OSGeo.  I don't think Eclipse's status would be
any different from Stumptown Syndicate or any other non-profit in this

The "extension of non-profit status" for the purposes of the event (the
reference in the SharedGeo contract) would mean that the event could be
operated without paying sales tax and any donations made to the event would
be treated as donations to a non-profit organization (which would mean that
they might be tax-deductible for the donor).  However, once the proceeds are
transferred from the event organizer (the non-profit) to a for-profit entity
(OSGeo), that for-profit entity would be liable for the tax liability
related to this income, and it would be treated in the same manner as any
other income it might receive.



Robert Cheetham

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On Fri, Jul 12, 2013 at 10:09 AM, Dave McIlhagga
<dmcilhagga at dmsolutions.ca>wrote:

> One would need a US Tax expert to weigh in to know the definitive 
> answer
> -- but intuitively, it would seem impossible for a taxable 
> organization to take in revenue that results in profit for the
organization as a whole.
> If there's another way - I'd suggest that's something OSGeo would need 
> to get it's own tax advice on, and establish as a basis for future events.
> Otherwise, we're all just dealing with hearsay.
> Dave
> On 2013-07-12, at 10:03 AM, Jeroen Ticheler 
> <jeroen.ticheler at geocat.net>
> wrote:
> Hi Kate,
> Thanks! But what is the meaning of "extending the tax exempt status" 
> of e.g. the Eclipse Foundation? From your comment below this "umbrella 
> capability" becomes an empty shell if OSGeo in the end still requires 
> the tax payment on income.
> Thanks,
> Jeroen
> On 12 jul. 2013, at 15:56, Kate Chapman <kate at maploser.com> wrote:
> Hi Jeroen,
> Once a payment is made to OSGEO it would be income for the organization.
> If perhaps OSGEO were to not get approved for tax exempt status in the 
> US they would then owe tax on it as income.
> Kate
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