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Why the IRS is Targeting Open Source Software Groups

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Re: Why the IRS is Targeting Open Source Software Groups

#61

Post by danso »

jacques_chester wrote: post #59
a_p wrote: post #45

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 4…

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 pow…

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?

Re: Why the IRS is Targeting Open Source Software Groups

#62

Post by counterpointer »

samolang wrote: post #49
counterpointer wrote: post #44

Earlier quoted context omitted.

No it's more nuanced than the 51% number. The actual law passed by Congress says "exclusively for social welfare". IRS interpretation changed that to "primarily social welfare" a few decades ago which is actually wrong since IRS cannot make laws, only implement them as written. There was a huge ruckus in congress over this matter. Can't find the video now but here's an article: http://www.psmag.com/politics/the-irss-…

So there's a law that states "exclusively for social welfare" and there's a law that says its okay to participate in non-social welfare activities? The laws sound contradictory to me and it seems like the IRS has a pretty good justification for their interpretation. Either way, whatever they rules are they should apply equally to all people/organizations. As an aside, I wonder if you could make the legal argument tha…

There is only one law which says exclusively. The "primarily" thing is an interpretation of the law by IRS.

Re: Why the IRS is Targeting Open Source Software Groups

#63

Post by samolang »

counterpointer wrote: post #62
samolang wrote: post #49

Earlier quoted context omitted.

So there's a law that states "exclusively for social welfare" and there's a law that says its okay to participate in non-social welfare activities? The laws sound contradictory to me and it seems like the IRS has a pretty good justification for their interpretation. Either way, whatever they rules are they should apply equally to all people/organizations. As an aside, I wonder if you could make the legal argument tha…

There is only one law which says exclusively. The "primarily" thing is an interpretation of the law by IRS.

I guess we interpreted this differently:

> Spurred by such concerns over unfair competition and lost revenue, Congress enacted the UBIT. It taxed any trade or business regularly carried on by Section 501(c) organizations if the activity is not related—aside from the need for funding—to the organization’s exempt purpose.

Re: Why the IRS is Targeting Open Source Software Groups

#64

Post by samolang »

lambda wrote: post #56
samolang wrote: post #41

Earlier quoted context omitted.

The law states that 501c groups are allowed to participate in politics so long as 51% of their money goes towards social welfare. For example, [1]. Would you say the same thing if planned parenthood was denied non-profit status because it is a liberal organization. [1] http://www.opensecrets.org/pacs/pacgot.php?cmte=C00314617&cy...

If a group could be considered a "tea party" group, that pretty much indicates that it's primarily a political group; the term "party" specifically refers to a political institution. If a tea party group does some form of social welfare, that doesn't change the fact that it's primarily a political institution. Planned Parenthood, on the other hand, is unquestionably a social welfare organization. It has offices which…

So spending 10% of your budget on public policy is okay, but 49% is too much? You have to draw the line somewhere, they've chosen 49%. You can't just have IRS agents going "oh that sounds too political." You need actual enforceable rules.

Re: Why the IRS is Targeting Open Source Software Groups

#65

Post by jacques_chester »

danso wrote: post #61
jacques_chester wrote: post #59

Earlier quoted context omitted.

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 pow…

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 thin…

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.

Re: Why the IRS is Targeting Open Source Software Groups

#66

Post by adestefan »

untog wrote: post #55
sliverstorm wrote: post #53

Earlier quoted context omitted.

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

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

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.

Re: Why the IRS is Targeting Open Source Software Groups

#67

Post by 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.

Re: Why the IRS is Targeting Open Source Software Groups

#68

Post by SomeCallMeTim »

samolang wrote: post #64
lambda wrote: post #56

Earlier quoted context omitted.

If a group could be considered a "tea party" group, that pretty much indicates that it's primarily a political group; the term "party" specifically refers to a political institution. If a tea party group does some form of social welfare, that doesn't change the fact that it's primarily a political institution. Planned Parenthood, on the other hand, is unquestionably a social welfare organization. It has offices which…

So spending 10% of your budget on public policy is okay, but 49% is too much? You have to draw the line somewhere, they've chosen 49%. You can't just have IRS agents going "oh that sounds too political." You need actual enforceable rules.

You're creating and then trashing a strawman.

He said that he couldn't come up with ANYTHING that a "Tea Party" group could do outside of politics with the 51% of their money, other than launder it by giving it to other groups.

Why don't YOU come up with something OTHER than changing public policy that a Tea Party group would do with that 51%? Any Tea Party group is a political group by definition, and shouldn't qualify as a charitable group. Period. It's just a tax dodge, plain and simple. Heck, that's pretty much the point of the party is they don't like taxes, so it's a blatantly obvious tax dodge.

Re: Why the IRS is Targeting Open Source Software Groups

#69

Post by SomeCallMeTim »

tomjen3 wrote: post #57
lambda wrote: post #56

Earlier quoted context omitted.

If a group could be considered a "tea party" group, that pretty much indicates that it's primarily a political group; the term "party" specifically refers to a political institution. If a tea party group does some form of social welfare, that doesn't change the fact that it's primarily a political institution. Planned Parenthood, on the other hand, is unquestionably a social welfare organization. It has offices which…

The entire point is that you really can't separate politics and social well-being. Often the most effective way to improve some groups life is through politics. Killing separate but equal for example.

No, the entire point is that political contributions shouldn't be tax deductible, no matter the goals.

I make lots of political contributions with the intent of improving social well-being. I just don't expect to also be able to deduct those contributions from my taxes.

The IRS wasn't preventing these groups from collecting money in support of a cause. It was preventing those donations from being deducted from your taxes.

I'm willing to take that tax hit to help people. It's the Tea Party supporters who hate taxes so much that are making a big deal of the fact that they can't get a deduction on their taxes on contributions made to elect people who will then try to reduce their taxes.

They want to double dip. Screw that. Make sure that the rules are fair in preventing any such political organization from being considered a "social welfare" organization, by all means. But don't let political contributions become deductible, no matter the politics.

Re: Why the IRS is Targeting Open Source Software Groups

#70

Post by samolang »

SomeCallMeTim wrote: post #68
samolang wrote: post #64

Earlier quoted context omitted.

So spending 10% of your budget on public policy is okay, but 49% is too much? You have to draw the line somewhere, they've chosen 49%. You can't just have IRS agents going "oh that sounds too political." You need actual enforceable rules.

You're creating and then trashing a strawman. He said that he couldn't come up with ANYTHING that a "Tea Party" group could do outside of politics with the 51% of their money, other than launder it by giving it to other groups. Why don't YOU come up with something OTHER than changing public policy that a Tea Party group would do with that 51%? Any Tea Party group is a political group by definition, and shouldn't qual…

My point was that it doesn't matter that HE can't come up with anything. The IRS agent can't just be like, "well I don't think there's any way that a tea party group could be doing social welfare. Denied!" They have to use actual facts. They look at where their money was spent. They look at the rules and regulation for what is considered social welfare and what isn't. Then they determine whether or not 51% of that money was spent on social welfare.
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