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07.03.14

US System Manipulated to Financially Punish Free Software

Posted in Free/Libre Software, Law at 11:24 am by Dr. Roy Schestowitz

“My background is finance and accounting. As a socially conscious venture capitalist and philanthropist, I have a very good understanding of wealth management and philanthropy. I started my career in 1967 with the IRS as a specialist in taxation covering many areas of the tax law including the so-called legal loopholes to charitable giving. […] However, the Gates Buffet foundation grant is nothing more than a shell game in which control of assets for both Gates and Buffet remain the same. […] The only difference is that the accumulation of wealth by these two will be much more massive because they will no longer have to pay any taxes.”

The Gates and Buffet Foundation Shell Game

Summary: The Yorba Foundation is denied tax exemptions while the world’s biggest thief, who increases his wealth by lobbying and investing under the guise of ‘charity’, receives tax exemptions

THIS is a major story that, unlike some stories (e.g. the No-IP takeover scandal which we’ll cover soon), has not received sufficient press coverage. The other day in our daily links we included a link that my wife had found and was made rather furious by. We linked to the original just hours after it was published (in June) and it took days until some sites — small sites — covered it very briefly. Susan Linton said: “The top story in today’s Linux news is the IRS denial of nonprofit status for Open Source projects.”

This was hardly the top story. It didn’t receive much attention and it took days for it to get any press coverage at all. Here is what Boing Boing wrote only yesterday:

In a disturbing precedent, the Yorba Foundation, which makes apps for GNU/Linux, has had its nonprofit status application rejected by the IRS because some of projects may benefit for-profit entities.

Will Hill said that there is “[a]n interesting comment from a lawyer on the pluss“:

If ICANN can be a 501(c)(3), and pull in around $400,000,000 in 2013 while benefiting pretty much every intellectual property protection agent in the world, I don’t see how someone who produces code that they give away for free can be refused similar status.

Thankfully, this issue has been getting some more coverage in some technology news sites very recently [1,2], but nothing else as far as we can tell. Apparently it’s OK for an investment and Microsoft lobbying body to get tax exemptions (that’s Gates Foundation), but it is not okay for a bunch of programmers who work without a salary to receive tax-free donations. This is how US ‘justice’ works, apparently. Rich people pay next to nothing to their government and diligent poor people are portrayed as some kind of “parasites” and forced to pay part of the meager donations they receive to the government.

Related/contextual items from the news:

  1. IRS Rejects Non-Profit Status For Open Source Organization, Because Private Companies Might Use The Software

    Last year, as the IRS scandal blossomed over the IRS supposedly targeting “conservative” groups for extra attention concerning their non-profit status, we noted that the IRS had also been told to examine “open source software” projects more closely as well. We found that to be a bit disturbing — and it appears that for all that focus on the scandal, the IRS hasn’t quite given up on unfairly targeting open source projects. The Yorba Foundation, which makes a number of Linux apps for GNOME, has been trying to get declared a 501(c)(3) non-profit for over four years now… and just had that request rejected by the IRS for reasons that don’t make any sense at all. Basically, the IRS appears to argue that because there might be some “non-charitable” uses of the software, the Foundation doesn’t deserve non-profit status, which would make it exempt from certain taxes (and make donations tax deductible).

  2. IRS policy that targeted Tea Party groups also aimed at open source projects

    The IRS denied a proposal to grant 501(c)(3) status to Yorba, a nonprofit organization that develops open source software for the Linux desktop. In a blog post yesterday, Yorba spokesperson Jim Nelson disclosed the full text of the IRS rejection letter. He fears that IRS policy has evolved to broadly preclude nonprofit open source software developers from obtaining 501(c)(3) tax exemptions.

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