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X.Org Foundation Loses 501(c)3 Non-Profit Status

Posted by timothy on from the swimming-in-the-fine-print dept.

An anonymous reader writes "The X.Org Foundation, which drives the X.Org Server projects, Mesa, and Wayland open-source programs, had its tax-exempt status revoked by the IRS. It turns out the X.Org Foundation had put in quite a lot of work to become a non-profit organization, with guidance from the Software Freedom Law Center. They got in trouble after failing to routinely file their taxes on time. There's also been a host of other X.Org accounting errors in recent years. There was also the recent news of the IRS going after open-source projects, too."

8 of 208 comments (clear)

  1. No one to blame but themselves by barlevg · · Score: 5, Insightful

    Seriously. How hard is it to file your taxes on time? Or to hire someone to do it for you?

    1. Re:No one to blame but themselves by PolygamousRanchKid+ · · Score: 5, Funny

      How hard is it to file your taxes on time?

      How hard is it to deliver your release on time?

      Hey, we're software folks . . . we just don't deliver on time. The IRS should know this, and cut all software folks some slack on that April 15th date.

      --
      Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
    2. Re:No one to blame but themselves by QuasiEvil · · Score: 5, Informative

      Yeah, no sympathy here. I sit on the board of a local historic preservation society, and we're 501c3. We pay our accountant something like $1000/year (some of her rate is counted as an in-kind donation, but nothing we do is really that complicated) and she keeps the paperwork current and straightened out. I'm relatively sure that X.org runs with a bigger budget than we do and could find accounting services, so this is just gross incompetence on their part.

    3. Re:No one to blame but themselves by ShaunC · · Score: 5, Informative

      > software folks if working with money of sufficient amounts should hire an accountant.

      They have one, but he apparently didn't do his job. FTFA:

      Stuart Kreitman, the X.Org Foundation accountant and Oracle employee, wrote during the Board of Directors' IRC meeting this week, "The status of the 501c3 is lost because we (me) failed to file the 3 past years' tax returns on time. Note that we've Never filed returns since our first re-organization to the LLC in 2005. I was taken by surprize that the IRS hit us so rudely. I've had little issues with my own returns and have always found them to be reasonable and friendly."

      --
      Thanks to the War on Drugs, it's easier to buy meth than it is to buy cold medicine!
  2. Re:Failing to file taxes? by dicobalt · · Score: 5, Informative

    To prove that you are still in a position of being tax exempt?

  3. what this means by jbolden · · Score: 5, Informative

    OK the article should have said what this means and didn't. The IRS reinstates 501c3 status pretty easily once you clean up your paperwork. You can apply for retroactive reinstatement but that requires a good explanation of why they didn't file, and if X.org's reason is some variant of "we forgot" that won't cut it. This means they are liable for corporate income taxes but I'm sure their expenses easily kill any income. The big problem is often state taxes apply during the period where they are off the 501c3 rolls. But here they might be able to do OK on an appeal.

    My guess is that this is not going to be too expensive but it will be annoying.

  4. Re:Solution by M.+Baranczak · · Score: 5, Funny

    "We should tax all foreigners living abroad." - Monty Python

    The British Empire did this successfully for hundreds of years. It's a pretty good revenue model, don't knock it.

  5. But the NFL is Non-profit by Terry+Pearson · · Score: 5, Informative

    Meanwhile, no one has a problem with the National Football League being considered "non-profit" by IRS standards ( http://www.usatoday.com/story/sports/nfl/2013/05/29/nfl-sports-leagues-irs-tax-exemption/2370945/ ). I am not saying that X.org did not screw things up, but we certainly have some strange qualifications to benefit from non-profit status. X.org sounds like they had some trouble filing, but I am sympathetic to non-profits in general having difficulty filing. Oftentimes, they really are run by people who are passionate about their cause, but not necessarily familiar with the accounting standards needed to remain in good standing with the IRS. Compliance with reporting requirements can cost you a lot in accounting fees and time.