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The IRS vs. Open Source 356

Posted by timothy
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?"
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The IRS vs. Open Source

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  • by Anonymous Coward on Tuesday June 25, 2013 @12:12PM (#44101541)

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

    • by Anonymous Coward on Tuesday June 25, 2013 @12:13PM (#44101559)
      Why would the freest country in the world (except, perhaps, Iceland) be against it?
      • Re: (Score:3, Interesting)

        by Anonymous Coward

        Open Source makes it harder(not impossible) to do this: http://en.wikipedia.org/wiki/NSAKEY [wikipedia.org]

        • by lgw (121541) on Tuesday June 25, 2013 @01:32PM (#44102599) Journal

          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.

      • by 0123456 (636235) on Tuesday June 25, 2013 @12:26PM (#44101779)

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

        Damn.. and I just ran out of mod points.

      • by interval1066 (668936) on Tuesday June 25, 2013 @12:41PM (#44102017) Homepage Journal

        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.

      • by tbannist (230135) on Tuesday June 25, 2013 @12:56PM (#44102163)
        Hmm, according to the Heritage Foundation [heritage.org], the U.S. ranks 10th, and according to the Fraser Institute [fraserinstitute.org] 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: (Score:3, Insightful)

          by operagost (62405)
          That's a chart of economic freedom. It's clear how it differs from one based on personal freedom, based on the fact that Hong Kong, Singapore, and Australia rank among the highest.
        • Re: (Score:3, Insightful)

          by Hentes (2461350)

          I don't know what methods these rankings use, but calling the ultimately communist-controlled Hongkong freeer than America is a misuse of the word.

      • by Jodka (520060) on Tuesday June 25, 2013 @01:02PM (#44102243)

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

        According to the 2013 Index of Economic Freedom [heritage.org], produced by the Heritage Foundation in partnership with the Wall Street Journal, the United States and Iceland are, respectively, the 10th and 23rd freest countries.

        The top 10 positions are:

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

        In addition to current rankings the index also reports trends. For example, economic freedom in the United States has declined since 2009, according to the graph on this page [heritage.org]. In comparison, freedom in Chile is high and continues to climb [heritage.org], which makes it a popular destination for American expatriates such as "Simon Black" over at his Sovereign Man [sovereignman.com] website.

      • by Technician (215283) on Tuesday June 25, 2013 @01:18PM (#44102423)

        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.

    • by NoNonAlphaCharsHere (2201864) on Tuesday June 25, 2013 @12:41PM (#44102013)
      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. Not saying I'm against what he has to say, just stating reality.
      • Here's the problem, both (D) and (R) are for "big government", meaning they want a strong central government. BOTH parties love certain aspects of "big government". The left, likes the whole taxing people into oblivion and giving money to those people who can't or won't earn it for themselves. Stallman, is for "big government" as much as anyone else, just his version of big government.

        One cannot complain about "big government" intrusions into people's lives, if you are voting for "big government" to take ca

    • by drnb (2434720) on Tuesday June 25, 2013 @12:43PM (#44102037)
      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: (Score:2, Insightful)

        by MightyMartian (840721)

        I wasn't aware open source was inherently against Mexican immigrants or black presidents.

        • by Anonymous Coward

          treating someone as equals does not mean you hate them.

        • by DaHat (247651)

          I wasn't aware open source was inherently against Mexican immigrants or black presidents.

          I'm sure we can find a nut or two at an Open Source Rally with a controversial sign then put them on the front page.

          If the OSS folks are really unlucky... the Lyndon LaRouche fans will show up to their rally with a booth and make them look back by proximity.

        • by lgw (121541) on Tuesday June 25, 2013 @01:37PM (#44102675) Journal

          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.

        • Tea Party is against illegal immigration, not legal immigrants. People who make it about race, do so because it is politically expedient way of marginalizing the distinction between "legal" and "illegal". If you want open boarders, let the people vote on that as a proposal, don't hide it inside mislabled "immigration reform" legislation which does nothing to actually fix the problem, and gives big handouts to cronies of Harry Reid and Bernie Sanders.

          Some of us remember the broken promises from '86

      • I support open source and ... 9/11 WAS A CONSPIRACY! 9/11 WAS A CONSPIRACY!
    • 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, bu

  • Liberty (Score:5, Insightful)

    by intermodal (534361) on Tuesday June 25, 2013 @12:12PM (#44101549) Homepage Journal

    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...

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Tinfoil hat? Check.

    • Tax dodge (Score:5, Insightful)

      by SirGarlon (845873) on Tuesday June 25, 2013 @12:22PM (#44101709)

      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.

      • by CannonballHead (842625) on Tuesday June 25, 2013 @12:25PM (#44101755)
        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: (Score:3, Insightful)

        by intermodal (534361)

        Nonprofit status in general is a tax dodge. It's one of the many reasons people use them. The real question is, why haven't we switched to a consumption tax to divest the IRS's ability to actually abuse their power to this extent?

        • Re:Tax dodge (Score:5, Informative)

          by benjfowler (239527) on Tuesday June 25, 2013 @12:29PM (#44101833)

          Consumption taxes weigh particularly heavily on people with little money.

          • They can. But it doesn't change the fact that the IRS does as well, especially those they target.

            Personally, I support the FairTax proposal, which has mechanisms to alleviate the impact it would have on those of lesser means.

            • What I'd prefer seeing instead of a Sales Tax (consumption based) is a flat tax of ten percent with no deductions/allowances (everyone pays the same amount) but that aint ever going to happen because it would impact congress and the rich.

              • by Rob Riggs (6418)

                What I'd prefer seeing instead of a Sales Tax (consumption based) is a flat tax of ten percent with no deductions/allowances (everyone pays the same amount)

                Ten percent on what? Income or profit?

                If you say "profit", what do I get to deduct from my income to call "profit"? Wages? Rent? Equipment? Raw materials? Transportation costs? Marketing and advertising? Employee training? Sales retreats? Investment expenses?

                If it is income, I buy 100 shares at $10, and sell that 100 shares for $11, when I sell the shares I have an income of $1100, but a profit of $100 (actually less once you figure in brokerage commission). Are you going to let me deduct the cost o

              • by Nadaka (224565)

                10% isn't enough to run the government.
                A flat tax of 25% is the minimum, and that is assuming the maximum reasonable +/-5% or so shrinkage of government spending.

                I would like to see a flat personal income tax of +/-55% with no exceptions, a 0% corporate income tax, and a government payout = the poverty level income for every household in America + single payer healthcare with no means testing at all. That would actually balance the budget and you could eliminate a lot of bureaucracy when you don't have to m

                • Re: (Score:3, Insightful)

                  by intermodal (534361)

                  10% is more than enough to run the government. However, it's not enough to run it as presently run. Which is a whole separate problem.

          • Which is why you send out some sort of regular rebate to lower income earners to make up for the more regressive aspects of a consumption tax.

          • by moeinvt (851793)

            There are bad taxes and worse taxes. The inflation tax is the worst. Income tax sucks. The least bad are consumption taxes.

            The simple way to avoid this negative effect on the poor is to send every single person in the USA their tax "prebate" at the beginning of the year.

            $prebate = $tax_rate * $income_threshold

            That way, anybody with income below a certain threshold (poverty level or some multiple thereof?) would be unaffected by the tax. If they were below the poverty level, it would even be a windfall.

        • Re:Tax dodge (Score:4, Interesting)

          by SirGarlon (845873) on Tuesday June 25, 2013 @12:40PM (#44102003)

          The real question is, why haven't we switched to a consumption tax to divest the IRS's ability to actually abuse their power to this extent?

          Well, primarily because Congress can't find its ass with both hands. :-) But also because income tax was set up by the 16th Amendment [wikipedia.org] to the Constitution, and major change would require an additional constitutional amendment. Well, in my opinion anyway. (recent precedent has been to just ignore the Constitution when it gets in the way.)

      • by jfengel (409917)

        That's interesting. Most of this kerfluffle is about 501(c)4, used for civic organizations. They were singling out groups whose names implied that they were political, rather than civic, and should file under section 527 instead.

        The tax implications are the same: you can't deduct donations to either one. Both are tax exempt, which means that their profits aren't taxed, but they can't be paid out to investors. They have to be used for the organization's stated purpose.

        The key difference between the two is th

    • Re:Liberty (Score:5, Insightful)

      by geekoid (135745) <(dadinportland) (at) (yahoo.com)> on Tuesday June 25, 2013 @12:28PM (#44101811) Homepage Journal

      I'll let you in on a little secret:
      Libertarians are not pro-liberty.

      • That's at the beginning of the sentence. Are you using big-L Libertarian, as in the party, or small-L libertarian, as in the political philosophy? There is such a large difference between the two that I'm not sure we're talking about the same thing. I used a small-L quite on purpose.

        • Re:Liberty (Score:4, Insightful)

          by NicBenjamin (2124018) on Tuesday June 25, 2013 @12:49PM (#44102089)

          Nowadays 'libertarian' has a much different meaning then even 10 years ago.

          10 years ago most people identifying as libertarians opposed gay marriage because they thought the government shouldn't be in the marriage business, identified as pro-choice (or at least pro-birth-control), opposed Social Security on principle, thought a "free country" could not have a religion, strongly opposed all regulations against gay sex, opposed all forms of anti-discrimination legislation that apply to the private sector, etc.

          Nowadays 'libertarian' means conservative who is choosing not to talk about social issues. Paul Ryan, who is strongly pro-life, opposed decriminalizing gay sex, thinks the US is a Christian Nation in a very real and legally binding sense of the term, supports many forms of anti-discrimination law, etc. Basically what he means when he says "I'm a libertarian," is "I really, really REALLY hate Obamacare."

          This evolution of political terms isn't unusual. "Republican," for example, means completely different things to my cousins from Canada, Ireland, Sweden, and Florida. It just happens. If you were a libertarian prior to Dubya temporarily convincing everyone conservative = batshit stupid in the dying months of 2008 your options are a) become conservative in the sense of the term that applied in 2008, b) make up a new word for what you are, or c) try to convince everyone that 30% of Americans are evil for stealing your word.

      • by oodaloop (1229816)

        I'll let you in on a little secret

        Wow, that's great. Thanks so much. I'll let you in on another little secret: Not everyone in a group is the same, nor does everyone have the same agenda. That's called Presumption of Unitary Action by an Organization.

  • Valid Reasons (Score:4, Informative)

    by Anonymous Coward on Tuesday June 25, 2013 @12:17PM (#44101619)

    "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...

    • Non news (Score:3, Informative)

      by Anonymous Coward

      "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 char

    • Re:Valid Reasons (Score:5, Informative)

      by Sponge Bath (413667) on Tuesday June 25, 2013 @12:36PM (#44101939)

      The IRS wants to collect taxes...

      More correctly: the IRS is required by law (written by congress and signed by the president) to collect taxes and make determinations of status related to taxing.

    • the question is whether the orgs were targeted BECAUSE the setup was for OS software or if they thought it was being used to stash profits.

      did they just keyword search for Open Source or did they see a number of companies gathering together??

      • My best guess is that the IRS saw a pattern and didn't quite understand what Open Source means. Thus it was flagged. Now if it was a charity for cancer, there would be less scrutiny as they see those types of non-profits all the time.
  • by OglinTatas (710589) on Tuesday June 25, 2013 @12:18PM (#44101637)

    Review and investigation of applications is to be expected in any organization.

    Only the FISA court approves applications without review

    • by iggymanz (596061)

      but agenda driven discriminatory review is forbidden. each application is to be judged separately on its own merit. There is to be no political or ideological triage.

      • by NicBenjamin (2124018) on Tuesday June 25, 2013 @12:59PM (#44102189)

        Under what law are they not allowed to do triage?

        Hell, how can they not have these lists? They are tax geeks. They have no clue as to what to look for in an application to find a fake non-profit. It's true they don't have the right to target solely the members of one party or the other, but the practical options are a) build up a list like this so they know who to hassle, b) hassle everyone (which would cost a lot of money), and c) let everyone be a non-profit.

        Let me put it to you this way:
        If Microsoft could make some fake open-source license, grant it to a fake non-profit, and then spend $10 Billion on Windows 9, and get a massive tax write-off because it all counts as a charitable donation would you be happy?

        Because Microsoft, Apple, Google, etc. would totally do that shit if they thought they could get away with it. Having a guy who actually knows something about open source actually read all these applications, so they know who to give a hard time is a Very Good Idea. Read the article. This is not "we deny open-source applications," it's "we send open-source application to this one guy, who is a manager."

    • *Nobody* expects the FISA Inquisition! Our chief weapon is surprise, surprise and fear, fear and surprise. Our *two* weapons are fear and surprise, and lack of oversight. Our *three* weapons are fear and surprise and lack of oversight and an almost fanatical dedication to the show Firefly. Our *four*... No... Amongst our weapons... Amongst our weaponry are such elements as fear, sur- I'll come in again.
  • 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 [slashdot.org] 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?

    • by Crash24 (808326)
      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.
      • by gnasher719 (869701) on Tuesday June 25, 2013 @12:32PM (#44101881)

        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.

        • 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.
      • 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 the

    • by 0123456 (636235)

      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.

    • by gl4ss (559668)

      it's also entirely possible to operate in pure for profit fashion while doing open source consulting etc while labeling it as a nonprofit.

    • 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.
    • by DrJimbo (594231)

      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.

    • by Sarten-X (1102295)

      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

      • by moeinvt (851793)

        Appalling! I wonder how anyone could possibly hate the IRS and the government. After all they've done for us.

  • by Todd Knarr (15451) on Tuesday June 25, 2013 @12:22PM (#44101705) Homepage

    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.".

    • With open source you'd need to hike it up to a higher level.

      If Tim Cook's lawyers figure out a way to declare Apple's entire development budget a charitable contribution it's their entire job to make that happen. OTOH Apple has historically contributed to some completely legitimate open source projects. As a tax geek I have no fucking clue how to tell the difference between Tim Cook's lawyers screwing the Feds and Tim Cook donating developer time to legitimate open source projects.

      OTOH my manager probably h

  • by T.E.D. (34228) on Tuesday June 25, 2013 @12:25PM (#44101749)

    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.

  • by geekoid (135745)

    Some companies where trying to use open source to mean they didn't need to pay taxes.

  • IRS internally uses JBoss and Tomcat, both open-source Java application servers. They also use PrimeFaces and the Spring Framework.
  • 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.

  • 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.
  • 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

    • by moeinvt (851793)

      You can start by calling it "THE Government" instead of "Our government". "Our" implies ownership or mutual participation. As you pointed out, the NSA, IRS and the rest of the criminals are operating a cartel designed to extort wealth from and exert control over The People.

      It's "The People" on one side and "The government" on the other side. There is no "our". You're either one of them(a government parasite) or one of us (the American people).

  • 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.
  • 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

  • So is it really any surprise that open source groups would get "extra scrutiny" from the IRS?

Aren't you glad you're not getting all the government you pay for now?

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