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The New 501(c)(3) and the Future of Open Source In the US

Soulskill posted about 1 month ago | from the learning-at-the-speed-of-government dept.

Government 228

An anonymous reader writes: If you're involved in the free and open-source software movement — especially in the United States — you may want to read through this, as long as it may seem. It appears that the United States' Internal Revenue Service has strongly shifted its views of free and open-source software, and to the detriment of the movement, in my opinion. From the article: "The IRS reasons that since Yorba’s open source software may be used for any purpose, Yorba is not a charity. Consider all the for-profit and non-charitable ways the Apache server is used; I’d still argue Apache is a charitable organization. (What else could it be?) There’s a charitable organization here in San Francisco that plants trees throughout the city for the benefit of all. If one of their tree’s shade falls on a cafe table and cools the cafe’s patrons as they enjoy their espressos, does that mean the tree-planting organization is no longer a charity?"

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228 comments

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Don't mention the tree-planting thing! (5, Funny)

halivar (535827) | about 1 month ago | (#47362233)

You'll only give them ideas.

Re:Don't mention the tree-planting thing! (0)

Anonymous Coward | about 1 month ago | (#47362939)

This is 100% clear. If you plant trees then someone might later chop them down. If they chop them down then they might make wood from them. If they make wood from them they might make chairs from them. If they make chairs from them they might sell those chairs for money. Decietful cheating corporate bastards.

Have you considered that a CEO of a for profit company might have a house plant which uses the CO2 which a charitable officer breaths out. It's a scandal.

Re:Don't mention the tree-planting thing! (4, Insightful)

BenSchuarmer (922752) | about 1 month ago | (#47363039)

Trees produce oxygen. There's no telling who might be inhaling that oxygen!!! They could be supporting not just commercial customers, but criminals and terrorists!!!!!

501(c)(3) Classes (5, Insightful)

TechyImmigrant (175943) | about 1 month ago | (#47362245)

From the wikis: charitable, religious, educational, scientific, literary, testing for public safety

Why do you need to be charity? Why not educational/scientific?

Re:501(c)(3) Classes (5, Funny)

itzly (3699663) | about 1 month ago | (#47362413)

Why not religion ? Stallman makes a decent prophet.

Re:501(c)(3) Classes (3, Funny)

Mordok-DestroyerOfWo (1000167) | about 1 month ago | (#47362435)

Why not religion ? Stallman makes a decent prophet.

But very little actual profit.

Re:501(c)(3) Classes (4, Funny)

asylumx (881307) | about 1 month ago | (#47362503)

Why not religion ? Stallman makes a decent prophet.

But very little actual profit.

Well then he won't make a very good religion...

Re:501(c)(3) Classes (4, Funny)

605dave (722736) | about 1 month ago | (#47362571)

Which ones are the good ones again? I get confused.

Re:501(c)(3) Classes (4, Funny)

K. S. Kyosuke (729550) | about 1 month ago | (#47362635)

Pastafarianism, Discordianism, Kopimism.

Re:501(c)(3) Classes (4, Funny)

Jason Levine (196982) | about 1 month ago | (#47362721)

I think I'm going to convert to Improvism. They let you make up the religious rules as you go along.

Re:501(c)(3) Classes (3, Insightful)

just_another_sean (919159) | about 1 month ago | (#47362817)

How is that different from other religions?

Re:501(c)(3) Classes (5, Insightful)

krashnburn200 (1031132) | about 1 month ago | (#47362889)

In other religions THEY make up the rules as you go along,

Re:501(c)(3) Classes (0)

Anonymous Coward | about 1 month ago | (#47363043)

Unless you're in Soviet Russia... >.>

Re:501(c)(3) Classes (0)

Anonymous Coward | about 1 month ago | (#47362873)

Why not religion ? Stallman makes a decent prophet.

But very little actual profit.

Maximize the Prophet [youtube.com]

Re:501(c)(3) Classes (0)

Anonymous Coward | about 1 month ago | (#47363181)

Yes, let's establish a Linux State (Hereby called LS), all Linux followers should emegrate to the LS.

Stallman for Caliphate of the LS.

All kafir (non-Linux followers) shall be forced to wear red collars around their necks, ride mules and walk in the middle of the road, Pavements are only for followers of Linux.

Re:501(c)(3) Classes (1)

Anonymous Coward | about 1 month ago | (#47363199)

Step 1) Establish Linux State (LS)
Step 2) Proclaim Stallman as Caliphate of LS
Step 3) ??
Step 4) Prophet!

Re:501(c)(3) Classes (1)

alexander_686 (957440) | about 1 month ago | (#47362415)

The examples you are giving are not the right ones. For example, a educational institution could be non-profit or for profit. The right examples would be Profit, Non-Profit, and Not-For-Profit.

Without reading the article I am going to guess Not-For Profit which has some internal sense. Not-For-Profits are when people come together to pull their resources. Examples would be Co-ops and Credit Unions. I would think farm co-ops would be semi on point. Famers (for profits) come together to pull their resources together to increase their purchasing power and other shared resources. Kind of like how for profit corporations come together to support a shared resource, Apache.

Re:501(c)(3) Classes (4, Insightful)

Moryath (553296) | about 1 month ago | (#47362567)

Most open-source "foundations" have been operating in a "give away the razor, sell the blades" mentality.

Give away the razor (base software), sell the blades (support contracts / phone support / specific pay-for-implementation requests / etc).

I can see why the IRS is having a hard time taking claims of being a nonprofit or public-benefit company seriously when that's examined. It's kind of taking the "how to make money off FOSS" instructions constantly published in the community at face value.

Re:501(c)(3) Classes (2)

jedidiah (1196) | about 1 month ago | (#47362665)

The only problem with your rant is the fact that an entity that looks like a conventional looking company can in-fact be a non-profit enterprise. Hospitals notably fall into this category and they hardly give stuff away for free. They are some of the most notorious high way robbers on the planet.

This is a situation where the "quacks like a duck" legal principle doesn't quite work out.

Re:501(c)(3) Classes (1)

Anonymous Coward | about 1 month ago | (#47362707)

Give away the razor (base software), sell the blades (support contracts / phone support / specific pay-for-implementation requests / etc).

The problem with that analogy is that a razor is worthless without the blade. A better analogy might be "give away the razor and the blades, while selling lessons on how to shave".

Or for a car analogy, your analogy would be analogous to "give away the car, sell the gasoline", while this is more like "give away the car and gasoline, sell you driving lessons".

Re:501(c)(3) Classes (1)

MobyDisk (75490) | about 1 month ago | (#47363131)

What foundations do that? I agree that they are not non-profits if they are charging support or consulting fees. Usually they don't do that.

Re:501(c)(3) Classes (0)

Anonymous Coward | about 1 month ago | (#47362445)

This.

There is a long and well-developed string of cases out there that has expanded the educational category so greatly, that it is harder to find a nonprofit that can't use this designation than can.

Re:501(c)(3) Classes (1)

disposable60 (735022) | about 1 month ago | (#47362509)

Public Safety also (might) come into play.

Commercial Services (1)

disposable60 (735022) | about 1 month ago | (#47362263)

The charity plants trees, the city contracts out tree maintenance - limited profit.

Open SW developed, released by charity, for-profit service organization ecosystem springs up to support - loads of profits to companies that contributed resources/finances to development.

I don't agree with IRS in this case, but their reasoning is approximately sound.

Re:Commercial Services (1)

vandon (233276) | about 1 month ago | (#47362835)

No, your reasoning is NOT sound....Both Goodwill and Salvation Army take donations both monitary and material and sell the material items...for money.

How is having a paid support structure where the money goes back into the charity for more charitable uses any different than both of those?

Re:Commercial Services (1)

Znork (31774) | about 1 month ago | (#47362951)

For-profit ecosystems spring up around many charities; everything from environmentalism to religions spawn such commercial activities around them.

The issue that should be at the heart of the matter is whether some person or company specifically and exclusively stands to profit from the charities work. As long as anyone who wants to can engage in commercial activities related to the work, such as commercial sales of religious texts and figures, sell eco friendly products, use charity relations in branding and marketing, use the open source software etc, I don't think the reasoning is valid.

well that makes sense (-1, Troll)

slashdice (3722985) | about 1 month ago | (#47362275)

Open Source is bad, mmmkay, because conservatives might use it.

Re:well that makes sense (0)

thaylin (555395) | about 1 month ago | (#47362489)

Conservatives are less likely to use it then liberals. The whole IP monopoly concept is something the conservative love.

Re:well that makes sense (1, Troll)

epyT-R (613989) | about 1 month ago | (#47362577)

On the contrary, liberals love a monopoly too, just for the government.

Re:well that makes sense (1)

Anonymous Coward | about 1 month ago | (#47362679)

umm, remind me who is the current MPAA CEO and chairman? Oh yeah, former liberal Democratic Senator, Chris Dodd. Big Media companies have long been the constituents of many liberal dems in Congress, far more than that of Republicans

Re:well that makes sense (1)

Anonymous Coward | about 1 month ago | (#47362927)

Really? The RIAA and MPAA are both products of the Hollywood ultra-leftists.Capitalists are, in generally, fairly happy with the core of patent law, that it's a time limited monopoly.

Re:well that makes sense (0)

Anonymous Coward | about 1 month ago | (#47362957)

Which clearly explains the dominance of conservatives in heavily protected industries like the film & music industries. Because only conservatives love intellectual property.

Re:well that makes sense (1)

CanHasDIY (1672858) | about 1 month ago | (#47363113)

Conservatives are less likely to use it then liberals. The whole IP monopoly concept is something the conservative love.

Yes, it's likely that a person would believe that if they paid attention to what politicians say rather than what they do.

Re:well that makes sense (3)

Austerity Empowers (669817) | about 1 month ago | (#47362609)

Hush now, if a tax law has been approved, both agreed to it. Given that they can't agree on the time of day, but have agreed to focus on 501(c), we can assume this annoys all the rich people, not just some ideological faction of them.

All a simple mistake... (0)

Anonymous Coward | about 1 month ago | (#47362289)

...the IRS just thought Yorba was associated with the Tea party and conservatives and everyone knows those people can't be a charity! So it only made sense for the IRS to revoke their charity status.

Re:All a simple mistake... (0, Troll)

AutodidactLabrat (3506801) | about 1 month ago | (#47362355)

The fact that Teagaggers got their exception but Occupy didn't really doesn't intrude into your victimhood-conspiracy-ubermench theory, does it?

Re:All a simple mistake... (0, Informative)

Anonymous Coward | about 1 month ago | (#47362453)

The fact that you had to use a derogatory term for the tea party people shows you have limited intelligence and nothing of significance to offer.

Re: All a simple mistake... (3, Insightful)

kenh (9056) | about 1 month ago | (#47362513)

A couple points - first off, there were hundreds of Patriot/Tea Party groups that applied, not just one monolithic Tea Party organization - each application was unique and individual.

I'm not sure how many of what you refer to as 'Occupy' applications were submitted, by your use I assume it was one.

The Occupy group that got a denial is actually years ahead (literally) of several dozen Patriot/Tea Party organizations that are still waiting YEARS LATER for a decision up or down on their application... So what? A group can not appeal a decision until it is rendered, by denying the Patriot/Tea Party groups a decision, they denied them the chance to appeal, and the appeal process would overturn baseless political denials. A delayed decision is effectively an unappealable denial - your 'Occupy' group, by getting a denial, could appeal - the Patriot/Tea Party groups can not.

Your lone counter-example proves/dis-proves nothing.

BTW, did your 'Occupy' group have their private donor information shared by IRS employees with other, non-governmental groups? Tea Party groups had their donor lists handed over by the IRS to Democrat groups...

You would benefit from an expansion of your news sources to include, maybe source documents and/or actual, under-oath testimony from the people involved...

Re: All a simple mistake... (1)

Anonymous Coward | about 1 month ago | (#47362787)

there were plenty of other groups caught up in that too. many free software and open sourse groups among them, including mine.

that it was only tea party groups is complete cherry picked bullshit and a pre-election diversion away from real issues.

re apache foundation: it and others like it could be viewed as a trade group, the irs worries that corps could launder commercial development through it.

double bullshit on the tea party thing as 501c3 are explicitly not allowed to campaign politically or they lose their tax exempt status.

the whole thing is bullshit all the way down though, two words: professional football. tax exempt charity my ass.

get your info from the SFLC not FOX News.

Re:All a simple mistake... (1)

Anonymous Coward | about 1 month ago | (#47363139)

Seriously? Which groups were denied status? Occupy Wall Street donations have been tax exempt since at least 2011, since they were being collected by OWS' 'sponsor,' Alliance for Global Justice... which is a Non-profit organization.

Never mind the delightful irony that a group clamoring for higher taxes on the rich is taking advantage of tax exempt status. I can't wait for the rich people to start using OWS as a way of reducing their tax burden!

Re:All a simple mistake... (-1, Troll)

jedidiah (1196) | about 1 month ago | (#47362359)

Clearly.

As any Tea Bagger will tell you, the IRS only bullies charities that have some obvious ties to some Republican cause.

Re:All a simple mistake... (1, Funny)

Anonymous Coward | about 1 month ago | (#47362623)

As any liberal will tell you, the irs never bullies anyone. It's loving and cares about your needs and concerns.

IRS logic (1)

micahraleigh (2600457) | about 1 month ago | (#47362347)

If the IRS gets less money then it can't be charity.

Also, they can help you identify the correct party to vote for.

ah (5, Insightful)

Charliemopps (1157495) | about 1 month ago | (#47362367)

So... a non lawyer got a request from the IRS to explain his charitable status, they decided he wasn't a charity, and now he's posting to a blog that the entire open source world is coming to an end? I think dude needs to spend more time getting a lawyer and less time posting to slashdot.

I HATE the IRS with a passion. This stuff should be easy. But the fact of the matter is, it's not. You need legal representation if you're going to be a 501(c)

Then we have this: "We have no plans to appeal their decision."
ok... so what's the point of this post? If you're agreeing with them, I don't get it. If you're not agreeing with them, but just rolling over, then you deserve what you get.

Re:ah (0)

Anonymous Coward | about 1 month ago | (#47362479)

I agree...

It is obvious he needs someone to wrangle the correct result out of them.

I could see how the IRS would be careful with a 501c and open source. You could declare all of your work as under the 501c but then have a secondary business that does support work that makes money. It sounds like someone read the statute wrong and would be a pain to appeal but he would probably win. It really depends on who the major benefactor of the open source would be. If it is one business then its probably not. But if you have hundreds of different users...

Re:ah (1)

Anonymous Coward | about 1 month ago | (#47362641)

Why do you hate the IRS with a passion? They don't write tax code, nor make it convoluted, that is all done by Congress. Bitch to Congress if you want it easy; the IRS can't make it easy unless Congress makes the tax laws easy.

Re:ah (0)

Anonymous Coward | about 1 month ago | (#47362921)

Yeah, the IRS isn't that bad. You really have to do something especially stupid to piss them off. The California FTB, OTOH, are mean sons-of-bitches. And California tax law is much more favorable to the state, whereas Federal tax law, believe it or not, is a little weaker. So it costs the IRS more time and money to prosecute, which means in the grand scheme of things it's more likely for mistakes--or fraud--to be ignored by the IRS than the FTB or equivalently strict state tax authority.

Re:ah (1)

Anonymous Coward | about 1 month ago | (#47362757)

If you're not agreeing with them, but just rolling over, then you deserve what you get.

The decision to fight the IRS in court is a complicated one and shouldn't be done lightly. Just because it's rational for someone to plead guilty or to accept higher taxes, doesn't mean they deserve those penalties - just that taking the short term unfair and certain penalty is better for them than higher up-front costs and a potentially higher and more unfair penalty.

Agreed! (0)

Anonymous Coward | about 1 month ago | (#47363213)

FTA - "We have no plans to appeal their decision."

Do something about it or stop complaining.

Fair enough, it's sneaking government funding in (0)

Anonymous Coward | about 1 month ago | (#47362393)

The 501(c)(3) system is extremely unfair. It is basically a government subsidy to organizations that are unwilling to compete in a free market. And because a non-profit doesn't pay taxes, the tax burden falls on the rest of society. Historically nonprofit charities are seen as private individuals fulfilling a role so that government doesn't have to, but is your pet Linux project really so important that you have to jack taxes up for your fellow citizens?

Re:Fair enough, it's sneaking government funding i (1)

epyT-R (613989) | about 1 month ago | (#47362653)

The only thing that can jack up taxes is the government itself.

Yes, maybe... (2)

kenh (9056) | about 1 month ago | (#47362401)

If one of their treeâ(TM)s shade falls on a cafe table and cools the cafeâ(TM)s patrons as they enjoy their espressos, does that mean the tree-planting organization is no longer a charity?

If the cafe, through it's donation, is able to direct where the charity puts it's trees AND the charity places the tree in a location solely for the benefit of the cafe, then that charity is (in my mind) no longer a charity, it is at least a part-time landscaping firm.

Re:Yes, maybe... (0)

Anonymous Coward | about 1 month ago | (#47362685)

That's really no different than a wealthy benefactor having some controlling interest in large a charitable endeavour like funding the building a hospital, which then will benefit the donor and the rest of the public. I think it's generally accepted that money can be given to charities "with strings attached", so long as the outcome is within the mission of that charitable organization.

Re:Yes, maybe... (1)

Ichijo (607641) | about 1 month ago | (#47362713)

Does it often happen that a change to open source software benefits only one person or organization?

Re:Yes, maybe... (1)

Anonymous Coward | about 1 month ago | (#47362961)

Does it often happen that a change to open source software benefits only one person or organization?

No, but generally a "donation" of code or programmer-hours will benefit the contributor. For example, IBM and Oracle contribute to Linux in the form of paying employees to add features they need. Clearly this is not charity. Google is funding Chromium by having employees work on it, and Mozilla by giving them money. This is also obviously not charity.

Re:Yes, maybe... (1)

Ichijo (607641) | about 1 month ago | (#47363141)

For example, IBM and Oracle contribute to Linux in the form of paying employees to add features they need. Clearly this is not charity.

Why can't something be both charitable and self-serving at the same time, like getting your name engraved on a donor wall? Arguments from Bible [biblehub.com] don't count.

Executive Branch (0)

Cpt_Kirks (37296) | about 1 month ago | (#47362405)

The IRS falls under the Executive Branch, and the current executive has not been shy about using the IRS to aid his friends, and hurt his enemies.

I have to suppose he considers open source an enemy.

Re:Executive Branch (1)

thaylin (555395) | about 1 month ago | (#47362521)

Citation that the president used the IRS please... Have they found some actual link other then accusations?

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47362695)

oh sorry....our hard drives crashed...all 7 of them at the same time....and our backups weren't run that day....also my dog ate my homework...

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47363067)

Where'd the other 6 hard drives comes from? Your butt?

The thing about our modern Civil Servant system, the very one that conservatives want to destroy, is that it's incredibly resistant to corruption and cronyism. Why risk your well-paying, secure job just to appease some politician who may or may not be around after the next election? This is why the system was invented, to end 120+ years of crony administrative appointments. Federal administrative jobs are cushy because that's the price we way for avoiding cronyism and corruption. If you want to see cronyism, just look at how outsourcing works.

Now, that's not to say that the IRS isn't abusive. But the IRS institutionally avoids any kind of partisanship. It's in their DNA.

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47363173)

http://dailycaller.com/2014/06/26/meet-the-seven-irs-employees-whose-computers-crashed/ You mean THESE 7?? Yup... my butt is apparently larger than I thought. Oh and the rest of your post is simply laughable. The right isn't trying to destroy anything. And by NOT doing what the head of the IRS says ( IE, obama), You therefore DO risk your job. You think he couldn't have her replaced? Its hilarious that you think Obama has avoided Cronyism while placing people into the FTC, FCC and other places, bypassing congress, and LOSING in the supreme court for doing so. My god man, open your eyes

Re:Executive Branch (2, Interesting)

funwithBSD (245349) | about 1 month ago | (#47363085)

Yes, it is called Spoliation of Evidence.

The legal concept that if you cannot provide (or destroy) evidence that is know to exist, then that failure is proof you have something to hide.

Since the emails were known to exist, were promised to Congress, and then later "lost" is proof that there were emails that proved the IRS was being used for political purposes.

Add to that the unusual number and timing of visits to the White House by IRS officials tied to those emails, there is sufficient evidence to show the linkage.

Re:Executive Branch (2)

funwithBSD (245349) | about 1 month ago | (#47363191)

One more point: the IRS had an obligation by default to keep those emails, the fact that the were negligent in doing so points to the gross incompetence, not the criminality.

Re:Executive Branch (1, Informative)

iggymanz (596061) | about 1 month ago | (#47362559)

the current president is mega-corporate bitch; how ironic considering his promises and the beliefs of those who voted for him

Re:Executive Branch (5, Insightful)

disposable60 (735022) | about 1 month ago | (#47362631)

the current president is mega-corporate bitch;

Unlike which of the previous several?

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47363167)

the current president is mega-corporate bitch;

Unlike which of the previous several?

So, that somehow makes the current president's behavior OK?

Re:Executive Branch (1)

CanHasDIY (1672858) | about 1 month ago | (#47363171)

the current president is mega-corporate bitch;

Unlike which of the previous several?

Every time someone responds in this manner, it reminds me of kindergarten.

"BUT LITTLE BOBBY DID IT TOO, WHY ISN'T HE IN TROUBLE???"

Yes, Virginia, past Presidents have been douchebags in the pocket of major corporations... which has precisely fuck-all to do with the fact Obama is one too.

Re:Executive Branch (1)

Anonymous Coward | about 1 month ago | (#47362683)

Get over your fantasy that this guy was the second coming and be an adult. Even if he wanted to he couldn't do most of what he claimed he'd have done. The part that bothers me is that those things that he does have direct control over he hasn't taken in hand but the things that he can't help but follow others over he endlessly cries about obstruction.
 
He wants to push and punish anyone who doesn't stand with him but at the same time he doesn't come off as being sincere about a lot of his promises that he could have kept with a single pen stroke 5 years ago. He's as much a part of the problem as the do nothing congress. At least the congress understand that unless Obama gets his way they're not going to get anything past him. It's certainly a slow and tedious game of chicken the two are playing.

Re:Executive Branch (1)

0123456 (636235) | about 1 month ago | (#47362769)

Obama is far too smart to waste time dealing with the tedious business of actually doing anything.

Besides, he has a Peace Prize.

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47363169)

Yeah, Obama's the laziest.

He's also simultaneously crushing all dissent and transforming the US into socialist-fascist-crony-capitalist dystopia using the IRS, NSA, DOD, BLM, HHS, DOJ, etc. etc. etc.

But he's doing this very lazily, I assume.

Also, something something Saul Alinsky.

Re:Executive Branch (0)

Anonymous Coward | about 1 month ago | (#47363157)

Every President will be pro-corporate. This has always been the case, and always will be the case. We're a very wealthy nation, and the rich will be heard. This was the case during our agricultural years (Southern planation owners had disproportion political power) as well as during and after the Industrial Revolution.

Medium-to-large corporations also employ more than half of Americans, and their payroll taxes bring in much more than half of the nation's tax income. So, in the short-term the quickest way to effect national employment levels is by being cozy with big corporations.

The question is, how cozy? While Obama is cozy, you'd be hard pressed to argue that Bush or Romney or whoever the GOP's next candidate will be could possibly be less cozy.

Re:Executive Branch (2)

matbury (3458347) | about 1 month ago | (#47363041)

Like any tax authority anywhere in the world, the first thing that the industrialist and "owning" classes do is to minimise their own liabilities and obstruct auditing and regulation (off-shoring, tax havens, and shell companies being examples). The next thing is to increase the liabilities of any emerging competitors and possible competitors, i.e. everyone who isn't already a huge corporation and that they can't buy to add to their portfolios (FOSS means no IP portfolios to add by acquisition as Oracle found out). The ruling elites rely heavily on controlling tax legislation for their own benefit and to ensure as little competition as possible in any way they can; increasing liabilities, increasing the complexity of the tax system and tax laws, increasing the costs of ensuring compliance with tax laws (easy and cheap to a huge corporation, difficult and expensive for small organisations), etc. It really doesn't matter which administration is in office, the process will always be more or less the same: regulatory and administrative capture. The best way we have so far of preventing regulatory and administrative capture is transparent participatory democracy. The current adminsitration in the USA appears to be decidedly anti-transparent participatory democracy. I doubt the next administration, whoever gets in, will be any different. Goodbye democracy, it was nice while it lasted.

Corporate interests (1)

EmperorOfCanada (1332175) | about 1 month ago | (#47362437)

Hmmmmm.... would this benefit corporate interests? When the government makes any decision that is the only question that needs to be asked. The only time the answer is in doubt is if there are no corporate interests or the corporate interests are exactly balanced.

So while I agree with the sentiment about this being deeply unfair, this is not thereal issue. If anyone wants to be upset about this issue and is willing to do something about it then join the movement to get corporate money out of politics; full stop.

Re:Corporate interests (1)

just_another_sean (919159) | about 1 month ago | (#47362903)

That's easy for you to say, you're the Emperor!

In all seriousness I agree. And comparing this guy with the Apache Foundation is wrong, not because of his summary of the issue, but for exactly the reason you state. The Apache Foundation has corporate backers with corporate interests. Heck, isn't even Microsoft a supporter?

They're not going to challenge the Apache Foundation's 501 status because it's too well established, has a lot of powerful backers and provides wealth and benefit to the corporate community.

This guy either needs bigger friends or at least, as another poster pointed out, a lawyer.

Oh, and Happy Canada Day Eh.

What about research at MIT? (1)

u19925 (613350) | about 1 month ago | (#47362441)

At MIT, lot of research is done and published and the results can be used for anything including making weapons of mass destruction by terrorist and dictators. How come MIT research is tax exempt? In fact, both MIT and Yorba are involved in doing things which are good for the whole humanity without directly profiting from it and hence both should qualify EQUALLY. If one is banned then the other should be as well. In fact MIT and other educational institutions often directly work with commercial organizations and sell their IP for profit and still they are considered charity. If Yorba's purpose is to develop software specifically for commercial organization such as banks or retail stores, then it would have been a different matter.

Bill & Melinda Gates Foundation (2)

allquixotic (1659805) | about 1 month ago | (#47362515)

I'm glad the IRS is looking into 501(3)(c) organizations that really have no standing to be classified as such. While they're at it, why don't they force the B&M Gates Foundation to stop pretending to be a "charity" and reveal it as the for-profit tax haven that it is? Sure, they throw a lot of money at short-term problems that might help people in the short term, but it seems their primary mission is to establish a dependency on western pharmaceuticals by developing nations. If that's not for-profit, I don't know what is. Capitalists are lining up at the gates (no pun intended) to help push along this tax haven and further its reach. It's disgusting, really.

Missing the Logic (2, Interesting)

Anonymous Coward | about 1 month ago | (#47362529)

I think everybody is missing the logic of the decision.

This probably isn't concerned with whether an organization like Apache is doing charitable work. All things being equal, the IRS would undoubtedly accept that.

But all things aren't equal, because you have an army of lawyers and MBAs who spend all day thinking about tax avoidance strategies, in an epic arms race with the IRS.

I suspect the root of the issue is companies taking deductions on contributions to open source projects, when the projects are really simply serving and benefiting the companies "donating" the money.

So, for example, take Android. It's possible that Google is (or could be, if they were savvy enough) taking huge deductions on Android by funding the project through an "open source" shell organization.

if a charitable tree falls is still a charity? (0)

Anonymous Coward | about 1 month ago | (#47362541)

"""
There’s a charitable organization here in San Francisco that plants trees throughout the city for the benefit of all. If one of their tree’s shade falls on a cafe table and cools the cafe’s patrons as they enjoy their espressos, does that mean the tree-planting organization is no longer a charity?"
"""

What if the tree fell onto the table with patrons sitting there? That sounds like a legal charity case to me.

Open source has to worry about its source tree falling onto patents among other things as well, right?

Looking back, I should have been a lawyer; not a computer guy.

Register as a swiss club (0)

Anonymous Coward | about 1 month ago | (#47362551)

like FIFA or IOC. Do they have to pay income tax? Of course not.

Not a precedent (4, Insightful)

mark-t (151149) | about 1 month ago | (#47362589)

While this might seem to suck, I know from first-hand inquiries that it is not possible to allow a charitable organization such as a church, for example, that has a kitchen to allow their kitchen to be used even by one of its own members for any kind of commercial purpose, even if the church receives absolutely *NO* benefit from said use. Allowing it would jeopardize the church's tax-exempt status, so it's not allowed.

Really, if you want to be a charity, then you can't allow your resources to be used by people with commercial interests. Sucks for open source organizations that want to act as charities, and I can see it being detrimental for some donations because I know that getting a tax exemption does motivate some people to donate.

But bear in mind that if tax-exemption were really the only reason or even the primary reason why people might donate to a cause or organization that they may believe in, it's highly unlikely that something like crowdfunding would ever work, and we have plenty of evidence to show that it does.

Re:Not a precedent (1)

K. S. Kyosuke (729550) | about 1 month ago | (#47362841)

Really, if you want to be a charity, then you can't allow your resources to be used by people with commercial interests.

And if someone gets rich using knowledge from an educational book published by a charity, does that invalidate the charity? What are "resources" in this case? I'd think the resource of a charity like this is the time people invest into it, not the results themselves, or their transitive implications.

Re:Not a precedent (0)

Anonymous Coward | about 1 month ago | (#47363083)

While this might seem to suck, I know from first-hand inquiries that it is not possible to allow a charitable organization such as a church, for example, that has a kitchen to allow their kitchen to be used even by one of its own members for any kind of commercial purpose, even if the church receives absolutely *NO* benefit from said use. Allowing it would jeopardize the church's tax-exempt status, so it's not allowed.

Really, if you want to be a charity, then you can't allow your resources to be used by people with commercial interests. Sucks for open source organizations that want to act as charities, and I can see it being detrimental for some donations because I know that getting a tax exemption does motivate some people to donate.

But bear in mind that if tax-exemption were really the only reason or even the primary reason why people might donate to a cause or organization that they may believe in, it's highly unlikely that something like crowdfunding would ever work, and we have plenty of evidence to show that it does.

So by this logic, only those open source projects that are purely GPL can be considered for a 503(c)(3)? MIT/Apache/BSD licenses may not apply (based on their stated goal of allowing commercial forks)? RMS must be praising the IRS right now....

This is being blown out of proportion (2)

techsoldaten (309296) | about 1 month ago | (#47362591)

This is scary but ultimately a decision that needs to be appealed.

I own a small company that works with Drupal. I am a member of the Drupal Foundation and give as generously as possible to their events.

Similar determinations have been made by the IRS before and challenged successfully. It is important that Yorba stands up for themselves on this matter and establish the scientific and educational validity of their claim to 501 c3 status.

There is an important point in the lifecycle of every open source project, where it goes from being a small hobby to something having an ecosystem that must be managed. It's essential that there is a way to provide fiscal support for groups springing up around the management of these projects without creating a tax burden.

The IRS judgement pertains really seems to only include an established software project, and not one that is supported by a small community. I am not sure there is a way for them to make a determination between the two. IANAL, but I am sure this is important in distinguishing the legitimacy of 501c3 claims.

Re:This is being blown out of proportion (1)

MrEricSir (398214) | about 1 month ago | (#47362765)

As a former employee of Yorba, I can assure you they do not have the resources to sue the IRS.

Re:This is being blown out of proportion (0)

Anonymous Coward | about 1 month ago | (#47363019)

They don't have sue the IRS in order to overturn the IRS' decision. In fact, they can't take their case to court unless they go through the IRS' appeal process first. And in order to get started with that they just need to file a protest letter within 30 days of receiving the IRS letter.

NFL (0)

Anonymous Coward | about 1 month ago | (#47362601)

Just remember - the National Football League is a 501(c)(3) non-profit.

Re: NFL (0)

Anonymous Coward | about 1 month ago | (#47362821)

Actually it's a 501(c)(6) so is the NFL and the PGA

Re:NFL (1)

tepples (727027) | about 1 month ago | (#47362973)

All the NFL's 501(c) status means is that the individual clubs are responsible for paying applicable tax.

They are not a charity (1)

larkost (79011) | about 1 month ago | (#47362617)

My read of this is that they applied as a charity, but the IRS's definition of a charity requires that you be serving a distinct, disadvantaged group of people. A quick look at the software that Yorba produces (http://yorba.org), does not lead me to believe that their software would particularly benefit any specific disadvantaged groups more than other people.

So by the rules that the IRS is working on, it does appear that they do not qualify as a charity. And to be honest, this is a correct definition, they are not running a charity. Now there is a valid question about whether there should be a method for them to run a non-profit without being taxes, but they are not a charity.

Re:They are not a charity (2)

TemporalBeing (803363) | about 1 month ago | (#47362777)

My read of this is that they applied as a charity, but the IRS's definition of a charity requires that you be serving a distinct, disadvantaged group of people. A quick look at the software that Yorba produces (http://yorba.org), does not lead me to believe that their software would particularly benefit any specific disadvantaged groups more than other people.

So by the rules that the IRS is working on, it does appear that they do not qualify as a charity. And to be honest, this is a correct definition, they are not running a charity. Now there is a valid question about whether there should be a method for them to run a non-profit without being taxes, but they are not a charity.

There are many kinds of Charitable organizations. But 501(c)3 does not necessarily mean a Charity as you describe, though it does allow you to take donations. Most of the 501(c) organizations are pretty specific in what they may serve; 501(c)3 is the exception in that it is a lot more general.
The Wikipedia Article on 501(c) organizations [wikipedia.org] is actually pretty good. Of course, you can also go directly to the IRS information [irs.gov] too, but I find the Wikipedia article to be easier to read.

Re:They are not a charity (1)

Mr. Slippery (47854) | about 1 month ago | (#47362885)

but the IRS's definition of a charity requires that you be serving a distinct, disadvantaged group of people.

No. 501(c)3 organizations can include churches in rich neighborhoods, symphony orchestras, museums, and plenty of other groups which do not serve "disadvantaged" groups.

Probably not wrong (2)

spopepro (1302967) | about 1 month ago | (#47362633)

When I was on a board that was incorporating a not for profit organization it was enlightening to hear that while 501(c)3s dominate the conversation, they aren't appropriate for most causes. Part of my understanding is that a 501(c)3 is a public, mutual benefit corporation where all assets are actually owned by the public, should push come to shove. It seems like for structure, ownership, and purpose, something like a 501(c)4 or (c)8 would be more appropriate. Of course, 501(c)3 has been baked into so many things, that there are orgs that will not donate unless you have a (c)3, even though there are other tax-exempt designations that also give you a break. Of course, IANAL, YMMV, Your state sucks and works differently, etc, etc.

Re:Probably not wrong (2)

Mr. Slippery (47854) | about 1 month ago | (#47363007)

Part of my understanding is that a 501(c)3 is a public, mutual benefit corporation where all assets are actually owned by the public, should push come to shove.

I'm sorry, but you're confused -- that's not correct at all. The assets of a 501(c)3 have to be transferred to another exempt organization if the organization shuts down, but they are in no way owned by the public. We had that baked into our articles of incorporation [free-spirit.org] but I'm not sure if that's a requirement.

501(c)3s can include religious corporations and public-benefit nonprofit corporations. A public corporation [oregonlaws.org] is something completely different, a corporation set up by a government; for example, some state universities are set up this way. A mutual-benefit corporation [wikipedia.org] , which includes some co-ops, insurance companies, and other groups set up to benefit their members, cannot be a 501(c)3.

IRS dont like republicans and freetards (0)

Anonymous Coward | about 1 month ago | (#47362667)

Face it and move on.

Of course they arn't charities (0)

Anonymous Coward | about 1 month ago | (#47362751)

Non-profits? sure. Charities, hell no.

Re:Of course they arn't charities (0)

Anonymous Coward | about 1 month ago | (#47362863)

501(c)(3) applies to both charities and non-profits. It's a requirement for any organization tax-exempt status.

501(c)7 (1)

nani popoki (594111) | about 1 month ago | (#47362995)

That's a flavor of non-profit which is not a charitable organization.

Disclaimer: I am in no way a member of the legal profession nor am I trained in law.

The IRS (0)

Anonymous Coward | about 1 month ago | (#47363029)

There is a reason we consider the IRS to mean the "Infernal Revenue Service"... They come directly out of Heck(sic). I'd say He-double-ell, but that would be an insult to Satan and his minions! Heck is that place between here and Satan's domain, but they have no rules other than what they make up. At least with the Prince of Darkness, you know where you stand. With the Prince of Murkyness, your guess is as good as any!

They need to move to a model w/ a clear precedent (1)

lazlo (15906) | about 1 month ago | (#47363129)

If only Yorba had a SWAT team instead of just some software...

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