
Why the IRS is Targeting Open Source Software Groups - talboito
http://www.motherjones.com/kevin-drum/2013/06/revealed-why-irs-targeting-open-source-software-groups
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a_p
The real scandal here happened in 1959. When Congress passed created
501(c)(4)s, the law said that (emphasis is mine): "Civic leagues or
organizations not organized for profit but operated _exclusively_ for the
promotion of social welfare".

In other words, 501(c)(4)s were intended to be allowed to spend NO MONEY on
politics. However, a 1959 IRS regulation decided that "exclusively" (0%)
really meant "primarily"(up to 49%), and in doing so they completely changed
the spirit of law, which was not only illegal, but made the new law a
nightmare difficult to enforce. Every single 501(c)(4) that has spent money on
politics since 1959 has been in violation of the law passed by Congress —
which means that the real law is almost guaranteed not to be enforced.

[http://blogs.reuters.com/great-debate/2013/06/17/the-real-
ir...](http://blogs.reuters.com/great-debate/2013/06/17/the-real-irs-scandal/)

~~~
jacques_chester
As I understand it, the US method of interpretation of legislation is to take
the opinions of government agencies more or less at face value. After all,
they're the experts, so to speak. This is distinct from the Supreme Court's
power to interpret the Constitution.

To me it seems like an abrogation of the independent role of the judicial arm.
In Australia, for example, the courts jealously defend their rights and powers
to interpret legislation to divine the intent of Parliament. Each government
agency has no more standing or influence than anyone else.

IANAL, TINLA.

~~~
danso
Government agencies are part of the executive branch, though...so in a sense,
their professional role is to execute the law. The judiciary at every level
has the power to check that execution...a criminal judge can rule against the
prosecutor's office, for example.

I guess I'm not getting what you're getting at? When the judiciary interprets
the intent of a law, whose opinion besides the government agency do you think
they should consider with equal influence? And if you're going to say, "the
public"...well, I think that is the case in the U.S. too. So how are you
gauging whether Australia's courts give fairer weight to the public than
America's courts?

~~~
jacques_chester
The idea is that from day to day, agencies interpret the Acts that govern them
in order to correctly give them effect. When someone challenges an agency, a
US Court presumes in the first instance the agency's interpretation is correct
because they are the experts in its administration.

An Australian court does not make that presumption.

It's a big deal because if you go to court against a US agency over the
content of its relevant laws, you have to overcome that presumption. In
practice that gives US agencies _de facto_ interpretive powers that Australian
agencies don't usually have.

IANAL, TINLA.

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mehmehshoe
Here is a redacted form just stating that:

"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."
[http://democrats.waysandmeans.house.gov/sites/democrats.ways...](http://democrats.waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/November%202010%20BOLO%20IRS0000001349-IRS0000001364.pdf#page=13)

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ryanisinallofus
If huge corporations are hiding parts of their operations under a 501c status
it SHOULD be looked into. Don't fall into the trap that Tea Party members fell
into. This is not a scandal. Don't cry about it.

No big deal.

~~~
adestefan
People complain that government doesn't do a good enough job, but then people
complain when government tries to do a better job.

~~~
sliverstorm
Totally. Just earlier today I was reading something about how the IRS taxes
citizens who have their wealth abroad. People were very angry! But these are
the same people who want more taxes on the rich. All I could think was, 'Hold
up a second guys, aren't you familiar with the key ways the rich avoid taxes?'

~~~
untog
That's a little different. If you moved to Europe, took a job in Europe, lived
in Europe and paid taxes in Europe, you'd STILL have to pay US tax. Very few
other countries do that.

~~~
sliverstorm
Only if you make $100k+ though, from what I've read. You get an exemption if
you make less than that, I believe?

~~~
untog
Even still. The fact that you have to pay taxes for services you have no means
to access is a little unfair.

~~~
adestefan
You still have access to all the services and protection provided by the US
embassy and consulates.

I'm not saying that it's appropriate for someone to pay the taxes, but it's
not true to say you get no services as a US citizen abroad.

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TallGuyShort
Neither this nor the original post seem to link to any additional information
about which FOSS groups have been hit by this. Does anyone know?

~~~
dasht
Via huffingtonpost, here is a link to the IRS document which is the source of
this report about "Open Source" firms being targeted.

What is released here is a "Be On the LOokout" (aka "BOLO") list -
instructions to examiners. It talks not about specific companies but about
criterea for evaluating applications for not-for-profit status. Regarding Open
Source organizations, it notes that applicants may be the for-profit
developers or for-profit support providers for the software. The advice given
to examiners is to take it to their manager, since no more specific guidance
is or was then yet available.

[http://democrats.waysandmeans.house.gov/sites/democrats.ways...](http://democrats.waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/November%202010%20BOLO%20IRS0000001349-IRS0000001364.pdf)

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jbooth
I wonder if this was an intended consequence of cutting IRS funding or whether
those doing the cutting literally didn't think about it beyond "fuck'em!".

And now I'm wondering which scenario is more dissapointing.

~~~
temphn
Why is the response to incompetence to increase funding? Incompetent
businesses go out of business, they don't get more money. Others could do this
job better - assuming we even want the job being done. The US became one of
the most powerful nations in the world without any IRS for its first hundred
plus years, gaining most of its revenue through tariffs rather than taxes:

[http://en.wikipedia.org/wiki/Tariffs_in_United_States_histor...](http://en.wikipedia.org/wiki/Tariffs_in_United_States_history)

~~~
ryanisinallofus
"without any IRS for its first hundred plus years"

And rivers caught on fire, slavery was rampant, women couldn't vote, children
died in factories. Don't romanticize history.

The idea may work, it may not. It's certainly my favorite libertarian idea
after ending the drug war. But don't "look back to the good old days" like
they were better. They weren't.

~~~
samatman
Unless you're relating the end of slavery, women's suffrage etc to the
founding of the IRS, this is a fallacious argument. It's perfectly reasonable
to imply or outright state that some things worked better in the past.

I consider 19th century architecture objectively superior to that of the 20th
century. You may disagree, but cholera is not relevant to that discussion.

~~~
ryanisinallofus
Most 19th century architecture is completely unfeasible to build today. If
only we had more of those non-union wage slaves to build are elaborate
monuments like the good old days!

Dubai has that now I guess.

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mabhatter
Take something as simple as Mozilla. Most of their work revolves around
publishing the Firefox browser, they collect donations from Google for using
Google's home page. After that it gets murky because there is another for-
profit Mozilla in the background that makes its own deals for things like the
Firefox Phone OS where "Free Spftware" isn't allowed. The IRS starts caring
who gets what cut of those Goohle "donations"? Who owns the offices, pays the
wages, and who owns the IP? It gets extra murky when an Open Source project
get SOLD and more money starts changing hands... Suddenly a "non-profit" gets
its assets sold for millions of dollars... The IRS wants its TAX moment cause
they got to feed Uncle Sam.

I think the problem they have are 2 college kid companies that start as "open
source" while they build something (and its true they eat Ramen the whole
time) only to sell that for millions later. The ITS doesn't like giving away
tax money if they don't have to.. Especially when they could have been
collecting it all along ... Big companies know this and I'm sure "help" the
IRS know which kids to go after.

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LaSombra
Which is interesting since they use open source software.

~~~
superuser2
Tax-exempt status is a privilege created by Congress for which some FOSS
groups don't happen to qualify, despite the organizations' beliefs that they
do. "Targeting" is a misleading word here - the IRS isn't trying to shut these
groups down, it's just paying more attention to whether or not they have to
pay taxes like everyone else.

~~~
pekk
"Targeting" was a misleading word with regard to the Tea Party groups, too.
IRS wasn't trying to shut them down, it was just paying more attention to
whether or not they have to pay taxes like everyone else (including groups
with certain forms of political activity)

