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The IRS vs. Open Source

Posted by timothy on from the why-are-you-depriving-them-of-revenue? dept.

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?"

9 of 356 comments (clear)

  1. Open source equates to freedom. by Anonymous Coward · · Score: 5, Insightful

    Which is exactly why the U.S. government is against it.

    1. Re:Open source equates to freedom. by interval1066 · · Score: 5, Insightful

      Why would the freest (sic) country in the world...be against it?

      Yeah, I'm kind of not too sure I'm buying into the grade school rhetoric anymore. When I hear words like "traitor" bandied about for people who are obvious whistle blowers (Snowden) and fed. orgs. like the IRS have been snooping on random citizens I'm thinking the "land of the free" sig. is just a whitewash. In the words of Johnny Rotten the US has become just another country.
      Its obvious to me that the higher-ups who approved or created these directives to start whole-sale spying on citizens are so backwards and cloistered in their mindset they most likely believed that anyone who stood up for anything was grist for the mill. "Free & open source software? They might be terrorists." Sure. I get it.

      --
      Python: 'And then suddenly you have a language which says "we're all stuck with whatever the whiniest coder wants".'
    2. Re:Open source equates to freedom. by smooth+wombat · · Score: 5, Insightful

      I mean, who would prefer that the IRS hand out tax-exemptions willy-nilly without any judgement?

      That's what I've been telling people since the beginning. The IRS is/was in an impossible position. If it didn't investigate every group which applied for a tax exempt status, then people would whine about them not doing their job.

      Now, during the height of a frenzied presidential election, they go the extra mile to make sure those who are applying are truly worthy of the tax exemption, and they're accused of playing partisan politics even though we now know they looked at groups from both sides and apparently even folks wanting to work on free software.

      Make your mind up folks: either you want the IRS to do its job, even if that means taking a bit more time and extra scrutiny, or you want them to rubber-stamp whatever comes through.

      --
      We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
  2. Liberty by intermodal · · Score: 5, Insightful

    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!
  3. At the Risk of Disgust for Defending the IRS ... by eldavojohn · · Score: 5, Insightful

    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.
  4. For-profit business aspect by Todd+Knarr · · Score: 5, Insightful

    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.".

  5. Tax dodge by SirGarlon · · Score: 5, Insightful

    Well, TFA says:

    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.

    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.
  6. Open Source is similar to the Tea Party ... by drnb · · Score: 5, Insightful

    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.

    1. Re:Open Source is similar to the Tea Party ... by lgw · · Score: 5, Insightful

      That's the thing about Venn diagrams: there's the part that overlaps, and there's the part that doesn't. For those dim enough to swallow whole the media narrative about the Tea Party, let me spell it out: the beliefs of Open Source and of the Tea Party overlap where "we don't need a central authority for this" is concerned, however much or little they may overlap elsewhere.

      Powerful central authorities predictably to frown on groups that hold "we don't need a central authority for this" as a key value, regardless of what their other values might be.

      --
      Socialism: a lie told by totalitarians and believed by fools.