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?"

Comments

Open source equates to freedom.

[Anonymous Coward]

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

Re:Open source equates to freedom.

[Anonymous Coward]

Why would the freest country in the world (except, perhaps, Iceland) be against it?

Re:Open source equates to freedom.

[interval1066]

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.

Re:Open source equates to freedom.

[Anonymous Coward]

Please tell me this post is a joke post.

And no-one else was affected because it was a hack made to the source by a developer on a distro few people use. I don't believe that change made it into any of the Debian-based distros.

Yeah, none except for Ubuntu. But that's just a distro that "few people use", right?

http://www.techrepublic.com/blog/opensource/find-and-fix-weak-opensslopenssh-keys-debian-based-linux-vulnerability/210

A recent vulnerability was found in the OpenSSL package as provided by Debian and Debian-based Linux distributions, such as Ubuntu, that broke the effectiveness of the OpenSSL PRNG (Predictable Random Number Generator). This vulnerability caused OpenSSL to generate weak keys for anything relying on OpenSSL, including SSL certificates, OpenSSH keys, and OpenVPN keys. Any OpenSSL-based key generated on a Debian-based system since September 2006 by the openssl, ssh-keygen, or openvpn –keygen commands are vulnerable to this issue.

That you were modded up for your completely wrong post is just another sign that Slashdot is full of morons.

Re:Open source equates to freedom.

[tbannist]

Hmm, according to the Heritage Foundation, the U.S. ranks 10th, and according to the Fraser Institute the U.S. ranks 7th. Freedom House's ranking doesn't easily lend itself to ranking countries in the top category. Heritage foundation top 10:

1 - Hong Kong
2 - Singapore
3 - Australia
4 - New Zealand
5 - Switzerland
6 - Canada
7 - Chile
8 - Mauritius
9 - Denmark
10 - United States

Fraser top 10 (Chapter 3, page 9):

1 - New Zealand
2 - Netherlands
3 - Hong Kong
4 - Australia
5 - Canada
6 - Ireland
7 - United States of America
8 - Denmark
9 - Japan
10 - Estonia

So they seem to be in agreement that Australia, New Zealand, Canada, Hong Kong are freer than the United States.

Re:Open source equates to freedom.

[Kelbear]

He's probably just having the knee-jerk reaction that the editors want, and hasn't read the article. Given that it's only about a paragraph or two of actual text, here's all the relevant information:

" Amidst the blacked-out redactions, this turned up on the watch list, page 13:

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.

I would guess that the IRS was suspicious of Open Source Software because it figured that it was primarily a profit-driven project. Perhaps they had had some applications that clearly benefited only a single profit-making sponsor, or perhaps they simply hadnâ(TM)t understood the dynamics of open source.

By February 8, 2012, they had added âoeThe software is provided for free, however, fees are charged for support by the for-profit,â and specified a contact for the cases."

Taking a step back to think about what non-IT people think of an organization comprised of for profit businesses and their employees, requesting non-profit treatment...it's not at all surprising for additional investigation to take place. It makes sense for them to want to take time to understand exactly what the organization is doing to avoid approving an organization that may not be for the advancement for the public good, but rather a simple tax-dodge for underlying businesses.

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

Re:Open source equates to freedom.

[lgw]

Sure, but the government doesn't need to put in flaws, they can just keep them secret.

Several years back there was a bit of mystery around the Map the Internet project. They would basically ping every IPv4 address to see what responded. Some admins, being either crazy or stupid, would treat this as a malicious attack and attempt to do something about this evil attacker who pinged their box, so early on the learned to harden their box as much as possible. The made hacking the mapping box a goal in itself, and so eventually they were running SecureBSD stripped to just Ping and SSH, which kept them up and pinging.

However, at one point the hardened box did go down, with no logs or evidence on the box what happened. The router logs showed traffic from a WindowsNT box in the office, but the box happened to be powered off at the time. The project just rebooted and moved on, but the mystery lasted.

In hindsight it's no mystery - SSL has had a couple of critical security fixes since, and the router in question turned out to have a Cisco backdoor (or something equally silly, it's been a while) and other weaknesses long since fixed. But it was years before these weaknesses were discovered - the oddest part really was that someone was willing to show off by using them, but at the time bringing that mapping box down was quite the trophy.

Re:Open source equates to freedom.

[smooth wombat]

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.

Liberty

[intermodal]

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...

At the Risk of Disgust for Defending the IRS ...

[eldavojohn]

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?

For-profit business aspect

[Todd Knarr]

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.".

Tax dodge

[SirGarlon]

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.

Re:Tax dodge

[CannonballHead]

Oh come on now. If your answer for why the IRS does something doesn't include something evil, it's clearly not the right answer. ;)

Re:Tax dodge

[benjfowler]

Consumption taxes weigh particularly heavily on people with little money.

Open Source is similar to the Tea Party ...

[drnb]

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.

Re:Open Source is similar to the Tea Party ...

[lgw]

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.

Re:Open source cuts their revenue model

[Technician]

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.