[OSGeo-Conf] Tax Implications of FOSS4G - Again
Cameron Shorter
cameron.shorter at gmail.com
Sun Jul 14 15:16:55 PDT 2013
Steve,
I'm impressed with your advise, and would be keen to see your guidance
put into practice for FOSS4G 2014, if possible. It seems very plausible
that FOSS4G could save a significant tax bill if your advice is
followed, and it would be worth our while paying an accountant to
investigate this further.
Steve,
Would you be prepared to continue advising OSGeo/FOSS4G with what you
know, until such time as a contract is put in place?
Washington / Portland proposals,
If you were to be selected, would you be prepared to support Steve in
his investigations and help gain tax exempt status for the FOSS4G event,
determine if it is possible, and then put it into place if it is
economical to do so?
On 15/07/2013 2:56 AM, Robert Cheetham wrote:
> Steve,
>
> I was not part of the list through the entire conversation, and I
> think I might have missed the part about holding the funds in a trust
> account for use by another non-profit in the future. In this
> scenario, I agree that if the funds are never disbursed to OSGeo, then
> one could be potentially avoid taxes, provided that OSGeo does not
> have control of the funds and they are turned over to another
> non-profit to manage the next event. This is a subtlety, however,
> that one would need to discuss with an accountant to make sure it
> would pass muster.
>
> Robert
>
>
>
> ------------------
> Robert Cheetham
>
> Azavea | 340 N 12th St, Ste 402, Philadelphia, PA
> cheetham at azavea.com <mailto:cheetham at azavea.com> | T 215.701.7713 | F
> 215.925.2663
> Web azavea.com <http://www.azavea.com/> | Blog azavea.com/blogs
> <http://azavea.com/blogs> | Twitter @
> <http://goog_858212415>rcheetham <http://twitter.com/rcheetham> and
> @azavea <http://twitter.com/azavea>
>
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> <http://www.bcorporation.net/what-are-b-corps> - we apply geospatial
> technology to create better communities /
> /while advancing the state-of-the-art through research. Join us in
> creating a better world./
>
>
>
> On Sun, Jul 14, 2013 at 10:02 AM, Steve Swazee <sdswazee at sharedgeo.org
> <mailto:sdswazee at sharedgeo.org>> wrote:
>
> "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://charitylawyerblog.com/2010/09/17/fiscal-sponsorship-vs-fiscal-agency/
> , 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
> up.
>
> 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.
>
> Cheers,
> Steve
>
>
> -----Original Message-----
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> 1. Re: Tax Implications of FOSS4G (Robert Cheetham)
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> ----------------------------------------------------------------------
>
> Message: 1
> Date: Fri, 12 Jul 2013 18:15:15 -0400
> From: Robert Cheetham <cheetham at azavea.com
> <mailto:cheetham at azavea.com>>
> To: Dave McIlhagga <dmcilhagga at dmsolutions.ca
> <mailto:dmcilhagga at dmsolutions.ca>>
> Cc: conference_dev at lists.osgeo.org
> <mailto:conference_dev at lists.osgeo.org>
> Subject: Re: [OSGeo-Conf] Tax Implications of FOSS4G
> Message-ID:
>
> <CAGEj39nQEYa-aCJBB0woP-FUn=j+c4LdaegOb2Q9e7LiuBAY+A at mail.gmail.com <mailto:j%2Bc4LdaegOb2Q9e7LiuBAY%2BA at mail.gmail.com>>
> Content-Type: text/plain; charset="iso-8859-1"
>
> 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
> respect.
>
> 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.
>
> Best,
>
> Robert
>
>
>
> ------------------
> Robert Cheetham
>
> Azavea | 340 N 12th St, Ste 402, Philadelphia, PA
> cheetham at azavea.com <mailto:cheetham at azavea.com> | T
> 215.701.7713 | F 215.925.2663 Web azavea.com <http://azavea.com>
> <http://www.azavea.com/> |
> Blog azavea.com/blogs <http://azavea.com/blogs> | Twitter @
> <http://goog_858212415>rcheetham
> <http://twitter.com/rcheetham> and @azavea <http://twitter.com/azavea>
>
> *Azavea is a B Corporation
> <http://www.bcorporation.net/what-are-b-corps> -
> we apply geospatial technology to create better communities * *while
> advancing the state-of-the-art through research. Join us in creating a
> better world.*
>
>
>
> On Fri, Jul 12, 2013 at 10:09 AM, Dave McIlhagga
> <dmcilhagga at dmsolutions.ca <mailto: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 <mailto: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
> <mailto: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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--
Cameron Shorter
Software and Data Solutions Manager
Tel: +61 (0)2 8570 5050
Mob: +61 (0)419 142 254
Think Globally, Fix Locally
Geospatial & Data Solutions enhanced with Open Standards and Open Source
http://www.lisasoft.com
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