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The IRS vs. Open Source
simonstl writes "The IRS wasn't after just the Tea Party, Progressives, or Medical Marijuana: Open Source Software was a regular on IRS watch lists from 2010 to 2012. Did they think it was a for-profit scam, or did they just not understand the approach?"
Which is exactly why the U.S. government is against it.
They probably know that people with libertarian/anti-authoritarian views gravitate towards such things, much like how they tend also to support groups like the EFF. To the federal government, that's not much better than being a member of Al Qaeda...
In SOVIET RUSSIA... erm...NSA AMERICA, the Internet logs onto YOU!
And of course, we know how the Government listens to Microsoft et al.
"These organizations are requesting either 501(c)(3) or 501(c)(6) exemption in order to collaboratively develop new software. The members of these organizations are usually the for-profit business or for-profit support technicians of the software."
The fact that for profit businesses are using open source as a tax break excuse is reason enough for investigation. The IRS wants to collect taxes, not give tax breaks. Of course it would investigate people seeking tax breaks on potentially shaky grounds...
Review and investigation of applications is to be expected in any organization.
Only the FISA court approves applications without review
More music, fewer hits
And that's who the government REALLY works for.
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
Did they think it was a for-profit scam, or did they just not understand the approach?
I'm very pro-open source but it appears that the fear from the Internal Revenue Service was that companies were figuring out ways to dodge taxes by moving developers to 501(c)(3) or 501(c)(6) organizations and then paying them in "donations" after the software was released thereby avoiding some federal and state income taxes to what normally would be their regular employees. Basically you would be setting up an educational or scientific group of your own developers, you would be able to pay them less due to 501(c) income tax leveraging and at the end of the day you'd still get your commercial software designed for you under an Open Source license. This, of course, by and large does not happen nor is there any evidence of it (I'd imagine very few open source developers even get paid for it) but was it really so wrong for the IRS to watch out for it? Even if they're not engaging of what the IRS would call "non-linear compensation" you might still be able to pay developers as employees of the 501(c) their regular wages with far less tax.
I mean, are we going to sit here and bitch and moan about corporate tax avoidance in our country and then freak out when the IRS investigates if Open Source groups are being abused in the same manner?
Is it really that wrong for the IRS to identify points of abuse and to look out for them? My gut says they should be able to identify and investigate but perhaps I just can't imagine how they would abuse that ability if they present a legitimate reason. Seems like they had a legitimate reason to watch for unlawful activity, unless I'm missing something?
My work here is dung.
My guess is it's the fact that most of the membership in those open-source projects are developers for for-profit businesses. The IRS would be on the lookout for businesses hiding their normal development activity over in a tax-exempt organization. I note that the IRS position is "no particular advice, look it over and punt it higher up the food chain if you can't make a clear call on it". Which I think is the standard procedure for anything. I'd rather have that in place, when a Tier 1 bureaucrat makes a wrong call it's easier to argue "They admit it's not clear here and here, according to IRS procedures they should've sent it up to a higher level to decide." as opposed to "They made the wrong call.".
Well, TFA says:
so maybe the IRS was concerned that open-source consortia are some kind of tax dodge.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
Open Source Software
These organizations are requesting either 501(c)(3) or 501(c)(6) exemption in order to collaboratively develop new software. The members of these organizations are usually the for-profit business or for-profit support technicians of the software.
There is no specific guidance at this point. If you see a case, elevate it to your manager.
It appears that the fear here is that for-profit companies have the potential to evade taxes by relabeling their code as "OpenSource", and turning their development staff into 501C employees (supported by donations from the for-profit company). For that reason, they want someone with a wee bit more training than your average low-level screener looking at applications.
IMHO allowing this would be a Good Thing from the standpoint of social policy, as the resulting software could be used by anyone, rather than just that one company. But deciding on what is good social policy to allow is Congress' job, not the IRS's.
Maybe it is from the NSA cooperating with or using the IRS. Nothing they'd hate more than software that they can't bully backdoors into, not only is it balkanized by design compared to the corporates but the source code being open makes it hard to hide any if they were to make it into builds. Normally that'd be paranoid conspiracy theory thinking but now it seems very reasonable.
Some companies where trying to use open source to mean they didn't need to pay taxes.
The Kruger Dunning explains most post on
IRS internally uses JBoss and Tomcat, both open-source Java application servers. They also use PrimeFaces and the Spring Framework.
Or so he might say...
If this were easy, they wouldn't need us to do it!
I wonder if the abuse would be mitigated if the software were released publicly while under the open source license. Evade taxes, taxpayers get access to your product.
My gut says they should be able to identify and investigate but perhaps I just can't imagine how they would abuse that ability if they present a legitimate reason.
'Cause, I mean, it's not like an IRS audit is anything to worry about when you've done nothing wrong.
You might want to ask Richard Nixon about his 'Enemies List' and how he tried to use the IRS to harass them.
Never ascribe to malice that which is adequately explained by incompetence.
"I'm going to work for the IRS" said no competent, industrious individual. Ever.
"These organizations are requesting either 501(c)(3) or 501(c)(6) exemption in order to collaboratively develop new software. The members of these organizations are usually the for-profit business or for-profit support technicians of the software."
The fact that for profit businesses are using open source as a tax break excuse is reason enough for investigation. The IRS wants to collect taxes, not give tax breaks. Of course it would investigate people seeking tax breaks on potentially shaky grounds...
Yes, exactly. There are many abuses of 'non-profit' status.
In my entrepreneur ship class, a classmate of mine did a project for a non-profit startup.To make a long story short, she was worried that she wouldn't be able to get investors. The prof assured her that wouldn't be the case because non-profit is just a tax status - you're just limited as to what you can do with those profits. In other words, you can get as rich as you like with a non-profit and make your investors rich too.
People get rich with charities too. That's why if you want to give to charity, do it outside of big national charities - your money will go a lot farther.
Are you assuming that any of this has to do with finding actual tax criminals? The IRS, just like any US government agency, works for the lobbyists. If they were looking at open software companies, then follow the money trail back to any of the big software companies. Microsoft and Oracle, BFFs all of a sudden, come to mind. Just like NSA snooping has more to do with finding and shutting down movie pirates than terrorists. Just follow the money. It worked for Watergate.
The only thing worse than a Democrat is a Republican.
That would be the if they present a legitimate reason part of the sentence that you quoted yet failed to read. If the IRS publishes these things and people know why some groups get more scrutiny than others and those reasons can be discussed publicly, is it a bad thing for them to try to do their jobs more effectively?
I wonder if the abuse would be mitigated if the software were released publicly while under the open source license. Evade taxes, taxpayers get access to your product.
Would still be a possible tax loophole if you develop software that is of use to you and you only, with no secrets that can be discovered from the software, and you release it as "open source" fully knowing that nobody in the world except you is interested in it and can use it.
That would be the if they present a legitimate reason part of the sentence that you quoted yet failed to read.
No, I read it.
Why do you think an audit is any less troublesome if they present a legitimate reason and you've still done nothing wrong?
it's also entirely possible to operate in pure for profit fashion while doing open source consulting etc while labeling it as a nonprofit.
world was created 5 seconds before this post as it is.
That would be the if they present a legitimate reason part of the sentence that you quoted yet failed to read.
No, I read it.
Why do you think an audit is any less troublesome if they present a legitimate reason and you've still done nothing wrong?
Ummm, you do know that ordinary people who try to do their taxes themselves and do nothing wrong but fill something out in a round-about manner are automatically flagged for a higher chance of auditing than someone who went to H&R block and said, "I'm stupid, do my taxes for me." Right? Are you saying that this legitimate reason is discrimination by the IRS?
When someone downloads and installs Open Source Software, they may receive intangible Goodwill as income, which may be a taxable event. Expect a notice from the IRS in the coming weeks notifying you of unpaid taxes on imaginary income you may have received from your downloads.
Great comment. Not only does due scrutiny result in correct non-profit status, but it improves the value of the distinction. We're all better off with not-for-profits being a little more ivy-league and a little less online-degree-mill.
Anybody want a peanut?
I'd be curious as to a realistic example of this. The closest thing I can think of would be hardware drivers, but there are other parties that benefit from the application of that software. Maybe some drivers for hardware that is used only internally within a system, but that seems pretty unlikely to me.
This is my signature. There are many like it, but this one is mine.
Why has no one published an article listing "Organizations likely to not pay for professional tax advice and do it on their own fall prey to IRS suspicion."
I've filed as a tax exempt organization though with the help of a CPA - it's not a trivial task. If people really are so eager to make these crazy conspiracy correlations let's at least discuss the fact that those groups that are being binned together all are also likely to try to file on their own.
right, Google is a small company, and most corporations like having their bottom lines trashed by having to use microsoft server in their datacenters.
Open Source is similar to the Tea Party. It advocates for individual involvement, responsibility and rights. It wishes to downplay the involvement and power of government and corporations.
I realize many of you are flipping out at the comparison to the Tea Party. Don't let politics blind you. While political beliefs may differ wildly there are these shared basic concepts. These concepts are inherently a threat to the government/corporate status quo.
Now instead of taking very real potentially problematic applications and scutinizing them more (while allow completely non-problematic TEGE's to fast track,) instead *every* group will get scrutinized. Job security for the clerks/agents, and no common sense. Just plain bureaucracy.
Good job, public!
The only thing that is wrong about the IRS is that they exist. Every other issue is just inevitable bug caused by that initial design flaw.
lust? yes, lust for power.
Let's be real, we've had the NSA spying on us for who knows how long, and suddenly, by accident, the IRS is picking on some political groups, medical marijuana (after all, it's a stab in the "war on drugs" policy) and god knows who else? This isn't by accident, this is part of the Governments plot to keep all people down.
Our Government (that is, if you are American) is corrupt. It's using it's power in different offices to harass it's citizens. It's using it's power to harass the world for that matter. Time for some big changes.
Be seeing you...
I wonder if the abuse would be mitigated if the software were released publicly while under the open source license. Evade taxes, taxpayers get access to your product.
Why, because the people need more ETL software?
This might hurt some egos, but no matter how much you love your desktop OS,
Open Source Software does not categorically benefit the public in a way that satisfies requirements for tax exempt status.
http://www.thebaffler.com/past/the_meme_hustler
I'm very pro-open source but it appears that the fear from the Internal Revenue Service was that companies were figuring out ways to dodge taxes by moving developers to 501(c)(3) or 501(c)(6) organizations and then paying them in "donations" after the software was released thereby avoiding some federal and state income taxes to what normally would be their regular employees.
Hold on sparky. Since we are talking about open source software, the software released is presumably open source and thus a donation to the world. Since this is an actual donation what's so wrong with counting it as a donation for tax purposes?
I think companies should get a tax break on the salaries of their employees who develop open source software that is made public even if that software is also used commercially.
We don't see the world as it is, we see it as we are.
-- Anais Nin
did we forget the old mantra.
Free as in freedom, not free as in beer.
perfectly legitimate to make money off open sourced code, the IRS simply says they want to make sure you're paying your taxes on that profit.
is it a slow tuesday? let's actually put some thought into topics please.
That's tricky. As the OP says, for lots of applications it's quite possible the only people who could use the software are the for-profit company benefiting from the tax treatment. To figure out whether these maneuvers are legal you'd need somebody who was both a tax geek AND a computer geek.
If you read the article the Open Source apps don't get automatically denied, or sent to some heightened scrutiny status, they get sent to management. Presumably management sends it to their geek-squad. After all, if they were actually giving these projects a hard time we probably would have heard about it on Slashdot before now.
I mean, are we going to sit here and bitch and moan about corporate tax avoidance [slashdot.org] in our country and then freak out when the IRS investigates if Open Source groups are being abused in the same manner?
Yes. Yes, we are.
At the risk of disgust for not defending the hivemind, we Slashdotters are a bunch of mindless fools being pushed from one outrage to another. Under the banners of "freedom" and "technology", we're taught to hate the masses, the government, big business, small business, the wealthy, the poor, the crazy and the calm, all because everybody everywhere has done something worth lambasting on the front page.
Every invention is panned as a new patent on old technology, rather than an improvement on an old idea. Every lawsuit is an us-against-them fight for survival, rather than a search for justice. Every wound is a tragedy, and every windfall is a triumph, rather than just the caprices of circumstance. Every story is a new demon being unleashed upon the world.
Slashdot is just as bad as Fox News. Rather than twisting facts to fit the story, Slashdot twists the circumstances to fit the mob's hatred du jour.
You do not have a moral or legal right to do absolutely anything you want.
The ruling class in Washington uses all their power to stop anyone who stands in the way of them controlling everything. Groups that promote freedom are #1 on their hit list.
I would have expected the DOJ to be more interested in OS/FS. AFAIK, they look into all the anti-trust cases. When you're giving stuff away, it's arguably dumping.
This must be hard for you.
They collect Income, Property, etc tax on the value of goods Sold. For every Open Office installation, there is a direct loss of a potential cut of the Income Tax from Redmond Washington. Many states also have Sales Tax revenue reductions.
Open Source Software is a direct threat to their revenue model.
The truth shall set you free!
How is the money given to a non-profit different for tax purposes from paying the employees' salary directly? Aren't both just expenses that get deducted from the taxable income?
The point of an audit is to find out if you've done anything wrong. An audit is an investigation. If they only investigated everyone they knew with 100% certainty were guilty numerous people would be able to dodge their taxes easily. For example let's say an accountant does 60 tax returns and 57 have the exact income necessary to get maximum Earned Income Credit. Maybe another accountant turns in 43 of tax returns and all have more then half their housing expenses deducted as a Home Office. In both cases the IRS knows with near-100% certainty that most of those deductions and credits are wrong and should be paid back to the Federal government. But it has no way of knowing which of the 100 households on it's list owe the Feds money.
If they've got no reason to think you've done anything wrong, or they're treating you differently then they treat equivalent groups, then they shouldn't audit you. But if they have a reason to audit you it's kinda their entire job to audit your ass, and not go "While there's a 23% chance he's right, so we'll just not bother him."
It makes sense, that the IRS takes a close look at open source software organisations claiming exempt status.
Software is usually a very commercial thing and a big business. So if someone makes software for free, the idea isn't far behind for some evil people to use this to optimise taxes: Create an Open Source foundation to build some very limited distribution open source and reaping all benefits of the tax exemption, then sell the software. This kind of scam looks pretty obvious.
So it's only natural, that the IRS looks at those organisations a lot more closely to figure out whether they're legit or just another tax fraud. So this wasn't directed against the Linux or Apache foundation, but more against the shady organisations claiming to produce open source of which nobody except the tax-man ever heard.
"If they have nothing to hide, why hide it?"
So is it really any surprise that open source groups would get "extra scrutiny" from the IRS?
Appalling! I wonder how anyone could possibly hate the IRS and the government. After all they've done for us.
Right back atcha.
Your political fee-fees are so hurt that you harbor a fetishistic desire for actual civil war? (Yes I read a couple of your other posts.)
It is warmongers like you who deserve nothing but contempt.
Rethink, chill-out, or get the fuck out of the pool yourself.
Just more proof that we live in a statist system with a crony capitailistic (not real capatialism) economony and the political system is ruled by corrupt ologoarchs.
Mod down! You make entirely too much sense! How can I rant about the government with you making this kind of sense!!
Incorrect. It's one less expense for a company, which means those dollars fall down to the bottom line or get spent in another area, such as machinery and equipment.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
I've been involved directly with the 501c3 application of both MythTV and Schedules Direct. MythTV's lawyers (the SFLC) were able to find out that there is sort of an internal struggle at the IRS about what to do with open source. As described in the parent comment, the IRS is concerned about corporations benefiting from open source projects, regardless of whether or not the corporation contributes directly or indirectly to their development (think how many companies use Linux, Apache, etc. but never contribute a single penny or line of code). On the other hand, we've also been told that for the most part they've been intentionally ignoring applications, essentially leaving them in limbo to avoid ruling on any of them because it would then allow the the open source groups to go to court and potentially set a precedent, which the IRS apparently fears more than letting the applications linger and collect dust for years (the process normally takes 9-12 months). In my opinion this is a BS argument. I'm no accountant but I know that corporations can already deduct money spent on R&D (time, salaries, resources, etc), and even then it's no excuse to lump all open source projects together (or even organizations like Schedules Direct that only support open source groups without producing any software ourselves). Because of this, the MythTV developers basically gave up on forming "The MythTV Foundation" since all we really wanted was a legal entity to make it simpler to track who owns assets like the domain names, name copyright, etc.
Do you really need reason for beer? Wingman Brewers
AIUI, in some states non-profits don't have to pay towards unemployment benefits for an employee as long as the employee continues working for them. If they have good staff retention, this can turn out to be a huge saving.
Might be they're targeting groups they expect to screw up their numbers -- and I know very few computer geeks who are good at tax paperwork.
My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
In what universe are the operations of the IRS so secret they can/must be hidden from the public?
When the IRS targets you, its the fault of that pesky troublesome IRS.
It's as if none of these agencies are under Obama's control. His worshipers continue to believe "he'd fix these problems if only he could. Poor guy...suffering from those crazy Republicans in the House" I cannot believe the free ride our fascist president is getting...
You have a wonderful career in comedy ahead of you, but just in case someone else missed the joke, Microsoft accounts for a little over 0.1% ($3.1B) of what the IRS collects. If they didn't have a massive amount of tax shelters, they would get up to a whopping 0.2% ($5.5B) of tax revenues. This is not exactly small potatoes, but the idea that the IRS has some major financial stake in MS's profit margins is farcical. It's not like the IRS gets a cut of the take anyway; their budget is set by Congress for the most part. Lastly, if the IRS were really interested in increasing revenues, there's an estimated 6.8% of revenues ($166B) lying around in corporate tax shelters.
Waitasec. Open source companies don't pay taxes in your world? Forget what I said, sign me up for your newsletter!
Those who advocate genocide deserve every protection afforded by law, and none afforded by common human decency.
I (like many) have had a nightmarish experience trying to get 501(c)(3) status for the open-source NGO I've started, a process that has taken over 2 years now. I could probably write a book about the experience. The IRS tax-exemption process is out-of-touch and ineffective at best, and political and corrupt at worst. There are many anecdotes I could share, but here are a couple:
We met with Lois Lerner and members of her team about our tax-exempt status, and the whole meeting was about the dysfunctional relationship between the IRS and another USG department, not a word about the merits of the case.
At one point in a recent meeting with the IRS, they said my anti-censorship software could be used to spread child porn. I asked, well, what if 20 years ago the Web itself was being created by an NGO seeking tax-exempt status? Would the IRS block it because the Web could be used to spread child porn? The IRS lawyers indicated a probable yes.
It looks like the recent IRS "scandal" has been a political fabrication (cherry-picked transcripts, false insinuations against Obama), but I hope it leads to a complete overhaul of the tax-exemption process. My experience makes me wonder how many great projects have died on the vine waiting for their tax-exempt status from the IRS.
FYI, for 501(c)(3) status, there is a list of "exempt purposes" that qualify, as interpreted by IRS lawyers with a mountain of very opaque precedent. Two of the exempt purposes that open-source software *should* qualify under are "scientific" (computer science) and "educational" (open-source software teaches programming). But to the out-of-touch IRS, open-source is a "new" concept, and so they are overly cautious.
Is it really that wrong for the IRS to identify points of abuse and to look out for them?
If it's Karl Rove trying to hide campaign donators by illegally using 503 corporations, it seems the answer is "Yes". The people cheating campaign laws last election will never be punished, because it's easier to blame the IRS for catching them. Everyone hates the IRS!
How stupid of the IRS to wonder if something called "Tea Party" is involved in politics. Let's beat up on the IRS for doing it's job and let politicians continue to cheat the system.
I assume they were looking at amortization period tricks. Not all software expenses can taken in the year in which they occur
A develops software they have to take the credit over 3-5 years.
B donates money to non-profit C.
C writes software which is only useful to B.
B takes the donation tax credit fully in the initial year.
I don't have any inside knowledge but if I had to guess, that's what they were worried about.
We know that almost all members of the government are bought off by corporate interests. At this point we pretty much just have a corporate fascist state where money and power are consolidated in the private sector then that power is used to control the elected officials via lobbying... (ahem.... bribery.....). What most likely happened is big wigs that don't like open source such as MS or Oracle, who donate how much money a year to government officials, probably had this added from one of there wish lists about legislating away there competition.
Country with the biggest prisoner population in the world "the freest" ?!?
The IRS' goal is to get all the ducks in a row, to make sure all the i's are dotted and t's crossed. An IRS Audit doesn't mean the Feds are coming after you! RUN FOR THE HILLS!
It means they want to take a closer look at your papers. Considering Open Source projects include both tax-exempt donations in equal measure to business with for-profit companies, (and I mean business in the sense of money changing hands), it shouldn't come as too much of a surprise that the IRS decided to look into it. Same thing with the Tea Partiers; they call themselves a Party, as in Political Party, something that is heavily regulated. The IRS Auditing them is to make sure they are following regulation, and to make recommendations on how the current regulations might not be matching with the current usage.
When the facts appeared to be that the IRS was mostly investigating groups with conservative sounding names, it was valid to accuse the IRS of targeting a particular part of the political spectrum, and that would be very bad indeed.
But now we know the IRS was also investigating groups with names including words like "occupy" and "progressive." Apparently they were investigating both Jewish and Christian groups. Apparently the IRS was investigating broadly across the political spectrum to make sure groups applying for 501(c)(4) status were really non-political.
At this point, don't we need to start easing off our claims of targeting? At this point, don't we begin to notice that the claims of political use of the IRS might have been premature and off base? At this point, don't we begin to concede the IRS might, just possibly might, have been doing the job they were created to do?
If so, then the IRS wasn't "targeting" open source groups at all. Maybe its time to cool down a little.
--- Often in error; never in doubt!
Anyone who thought they just went after tea party groups had an agenda or was thick. They'll go after any group because unlike employees who have co-workers who do their taxes, these groups can be taking in any number of donations and making mistakes or purposely fudging numbers.
hello.
Your standard bog IT employee (Anonymous) of a foreign (non-US) nation state here.
There are two average ways to look at this matter
a) the government is employing systems or structures of which the mission is to acquire political information about the Current Government's inclinations and Fascinations to the detriment of some internal nation-state Third Patry. You're in Deep Shit and on a slippery slope, but it has happened in some place else before so the sky's not falling because of You.. But please Handle it before there is a war coming, OK?, Yeah! Right hard-on!
b) Your government Agencies is in a penny-pinching mode of some overriding Government Accreditation or Priority (such as a national Sequester for Budgetary reasons). This means simply that ALL financial issues that can provide a proven source of non-negative revenue for a Government Agency or the State-at-Large is accounted as a positive and it particularly Does Not Matter if the Government Agencies is swallowing Whole Camels instead of the Swill. If you catch my drift.
Relax, United States Of America. You are still a very young nation-state. Nobody expects You to be anywhere but in Your proverbial evergreen Teen years (as you dont seem to mature any-a-hoo after two centuries.. tssk tssk).. Of course, doesn't mean we'll nuke you if if it comes to that to keep your nightly probation effective.
Little. Unruly. Child of ours. You basically don't know half of what it means to be a nation-state.. so you bother being angry?
Except of course, you're high on sugar and fat as always, because you're parents were "curling You" Like The British.
Fuckin' Brits! Douchebags! Twats! Fuckin Empires gone sour!
Cheers,
Rest Of The World
The reason the US government wanted to destroy FOSS, is that we do not include back doors for the NSA.
Specifically money paid to Obama and other "for sale" politicians to try to kill a competitor... Look at all of the people Oracle, M$ and others contributed to, if you want to see why the IRS was out to get OSS...
Okay, I suppose there is a need for you to infer the IRS was casting a wide net what with the implicit need to pander to the sanctimonious hipster crowd that frequents this site but let's get real - IRS was engaged in voter suppression and they weren't suppressing the 'Progressive' vote.
All we have really learned is Chicago style David M. Axelrod dirty politics (enjoying the full faith and credit of the federal government) scales really really well.
'I don't know what it's called. I just know the sound it makes, when it takes a man's life.' ~ Four Leaf Tayback
Are we to assume it takes 20 years to get on this list? Maybe they were checking to see if anyone was paying attention?
For-profit company donates money to non-profit open source development company, and takes a tax deduction for the donation. Non-profit source development company spends the money developing software and gives the software away, giving the for-profit company a good source of revenue in support and consulting fees on same software. That's no problem, because if the for-profit company had done all of that themselves, they could have deducted the development expenses anyway.
If non-profit open source development company ratholes some of the money to build up a fund (like MacArthur and Ford and Rockefeller foundations used to), that's a potential tax dodge. As long as the fund does not become big enough relative to the amount of non-profit good that is getting done to run afoul of IRS rules, the investment income on the fund is tax free. The non-profit cannot pay dividends or otherwise give the money back to the for-profit company, but maybe they could pay the for-profit company for some services, co-sign leases, license software and pay license fees, share employees and their salaries during hard times, use investment income earned tax-free to train employees, develop software to the for-profit's specs or advertise to promote the software, and other things that provide a pretty big financial benefit to the for-profit affiliate. If I were the IRS and saw that some very large (and maybe even profitable) corporations were funding software non-profits that employed hundreds of developers, I would want to keep an eye on them to make sure they weren't focusing too hard on ways to convert taxable money to the tax-free money.
Which is exactly why the U.S. government is against it.
There's no evil conspiracy, never was...please, stop the crazy talk...
Open source projects often have a complicated business model, and some open source projects are for-profit.
It makes a lot of sense to check business with complicated business models. Especially, if some of them claim tax exception as non-profit.
In any event, if there are issues it's better that they are discovered and remedied now, than 5 years later.
I'm sure it's fine for some projects to claim to be non-profit organizations, but if the organization:
1. hires developers,
2. is funded by donations from companies,
3. has representatives from same companies on the board, and
4. the same companies generate revenue with open source project.
Then it's hard to see the difference between, open source commercial collaboration between companies, and non-profit open source organizations.
(Just like how it's hard to see the difference between a tea-party related organization and an organization with a political agenda).
Any government intelligence organization that DOESN'T have people like Richard Stallman on its "subversives" list isn't paying attention. Stallman is, by definition the kind of person that Big Government Spooks are in place to keep an eye on.
What would that definition be? Stallman is a political activist who has very strong opinions about the importance of liberty. He also has a very strong track record of non-violent protest, and of finding solutions for meeting his ideals within the existing laws, and trying his best for preventing bad laws to be passed.
For a society prouding itself to be the land of the free, he is a model citizen. Not dead weight that will go wherever the wind blows.
If that's "by definition" the type of person to be considered a potential enemy of the country, then this is not the land of the free, but the land of underlings.
Since someone making something infringing any of those is making their own work with their own effort.
And how is your freedom to keep all this stuff kept if there is no police force or law courts or indeed prisons for those who would steal your stuff?
It is apparent to me that someone must have confused it with the "other" kind of Open Source, which is Open Source Intelligence. Perhaps an agent thought it was ripe for the picking.
Tracy Johnson
Old fashioned text games hosted below:
http://empire.openmpe.com/
BT