0x4E: IRS Refusal Redux

Bradley and Karen discuss the key differences between 501(c)(3) and
501(c)(6) organizations in the USA, and discuss recent refusals by the IRS
to grant such statuses to Open Source and Free Software orgs.

Show Notes:

Segment 0 (00:34)

Bradley mentioned the 501(c)(3) vs. 501(c)(6) difference came up on FaiF 0x41. (03:35)

Bradley mentioned that in 501(c)(3)
status from the IRS is based on receiving some status governed by §170(b)(1)(A)
of the tax code. (Most Free Software charities, such as Conservancy,
are classifed as non-profit charities under §170(b)(1)(A)(vi).)
(05:10)

Bradley mentioned this issue had been discussed on FLOSS Foundations' mailing list
(05:50)

Bradley discussed that at the OSCON
2013 tutorial, Community Foundations 101, most of the
501(c)(6) representatives who spoke argued incorrectly that the
differences between 501(c)(3)'s and 501(c)(6)'s were not
substantive. (10:50)

Karen referenced how the
TV show Silicon Valley parodies the irony of for-profit
software companies claiming they make the world a better place.
(11:58)

Bradley mentioned he was inspired by Michael Moore in his work on Free
Software. (15:02)

Bradley mentioned Karen's
talk called Identity Crisis (15:21)

Karen mentioned that open
source was on the list of items the IRS gave additional scrutiny. (16:51)

Bradley mentioned a blog
post by Jim Nelson where Yorba's rejection was discussed; Yorba's
501(c)(3) application was previously discussed on was
discussed on 0x1C, and covered
in many other places. (17:46)

Karen
wrote a blog post about why she isn't worried for Conservancy's 501(c)(3)
status at this time. (18:30)

Bradley mentioned that IRS decisions don't make precedent, and if
there's a dispute, it would go to USA Tax Court (19:00)

Mozilla Foundation's odd hybrid for-profit/non-profit model was audited
by the IRS, and Mozilla Foundation settled with the IRS. (20:22)

Open Stack Foundation was initially denied
501(c)(6) status, as reported on Mark McLoughlin's blog. (25:10)

Bradley promised links to both Yorba's
501(c)(3) denial letter from the IRS and Open
Stack Foundation's 501(c)(6) denial letter from the IRS. (The response
to the IRS from OpenStack, written by DLA Piper, OpenStack
Foundation's law firm, is also available, too. (27:15)

Bradley and Karen discussed Board of Directors meetings in FaiF 0x45: I'm Board
(31:40)

Bradley mentioned the How
fresh stays fresh campaign, which includes the Nature's Pause Button
television commercials by the American
Frozen Food Institute, which is a 501(c)(6) organization. It's FY
2012 Form 990 is the most recent on available.

Bradley also mentioned the Beef: It's What's For
Dinner advertisting campaign that has existed for decades in the USA,
which is sponsored by the National Cattlemen's
Beef Association, Inc. which is a 501(c)(6) as well. It's FY
2012 Form 990 is the most recent on available. (35:40)

Bradley further mentioned the Pork: the other white
meat advertising campaign, which has also existed for decades but is
now called the Pork:
Be Inspired campaign, seems a bit more dubious in its non-profit
existence. It appears to be funded by the National Pork Board Foundation,
which is ostensibly a 501(c)(3) but has no
assets, revnue nor expenses, and appears to be a front for an
org called the America's Pork
Producers / Pork Checkoff, which appears to be some quasi-govermental
agency related to pork (in other words, it's pork for pork). More research would probably be needed to
figure out better what's going on here with regard to non-profit status,
but it seems that unlike the Beef ads, which are clearly funded by a
501(c)(6), this campaign is funded by a separate legislation, presumably
unrelated to §501(c). There is, BTW, also, a 501(c)(5) called the
National Pork Producers Council, which
appears to be where
the big money is (— not surprisingly — 501(c)(4)'s and 501(c)(5)'s often
make 501(c)(6)'s and 501(c)(3)'s look tiny by comparison). (36:13)

Segment 1 (39:43)

Conservancy
and OSI jointly announced a working group on IRS applications and
denials. (40:49)

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to <[email protected]>.
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