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On Fri, 2011-03-25 at 16:21 +0000, Matthew Summers wrote: |
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> |
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> We have been fortunate thus far in that the IRS has not actively |
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> sought to investigate or audit the organization |
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|
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They are super slow, NPOs rarely show up on their radar without |
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substantial revenue. After all the IRS is a business, and anyone they go |
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after has to have considerable benefit vs the cost. If the cost of an |
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auditors time is greater than any amount recovered. IRS will likely just |
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move on to something higher paying :) |
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|
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> (however I want a |
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> complete audit, just not by the IRS, but this has been nearly |
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> impossible given the absence of documentation prior to 2008) . |
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|
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My concern over the ~$9k adjustment is that it occurred in Q3 2010. Had |
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the adjustment taken place sometime in 2008, it would make much more |
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sense. But how can accounts be off for ~2yrs, and only |
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adjusted/corrected in Q3 2010. |
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|
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> I hope that no rash action by anyone on this list would provide |
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> encouragement for the IRS in seeking an investigation or audit before |
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> we have the opportunity to establish proper status. |
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|
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Given the change in stance, to having all paper work filed, to doing an |
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audit to check either way. I have no plans to take any action. I am not |
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seeking to harm Gentoo. But some harm will come if these things are not |
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done. That is my only concern. |
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|
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Also in the future, this type of response is much better than the first |
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stance of everything is in order. There is nothing wrong with saying, I |
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am not sure and conducting an audit to make sure one way or another. Had |
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that been the initial reply, that would have been suffice for now. |
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> I will defer this to my CPA, with whom I will |
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> meet again regarding these items in early April (prior to the 15th, of |
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> course). I will provide a full report to the board at during the April |
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> meeting. |
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|
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That is wonderful, but your time is better spent talking to and |
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retaining a CPA for the foundation. I have no doubt your CPA is |
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experienced, however does he practice in the state of New Mexico? If not |
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then he will only be able to help/consult on the federal matters, IRS, |
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not anything with regard to state compliance. Not a huge deal, state has |
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much less consequences, than federal government. |
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|
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> As far as visible steps that are available to us at the moment, I am |
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> working with a local CPA specializing in non-profits to assist in |
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> handling our filings for the moment. |
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That is good. Also in the interest of disclosure. My father was a self |
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employed CPA with a sizable practice, for over a decade. After working |
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for Arther Anderson, who is not defunct, an my father passed long ago. |
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My mother is also a certified CPA in the state of California. My half |
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sister is also a CPA, but after years of promotions is a partner |
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overseeing internal acquisitions and such at Deloitte. |
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|
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I have done my own taxes since as far back as I can recall. Though I did |
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have a CPA for a business out in California, mostly due to payroll. My |
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current business i have mostly 1099, and its a bit easier than dealing |
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with payroll, back payroll taxes, etc. Which is what got the IRS to |
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crawl up a clients but, and dictate their life style, tell them how much |
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they can spent on groceries etc. |
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|
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> Since my name is legally |
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> associated with the Foundation, as the signatory officer, I have |
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> knowingly accepted full responsibility and legal obligation. |
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That is appreciated, as I know what its like to stick my neck out on the |
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line. Most involved with Gentoo do not realize the personal liability. |
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Its not tremendous, but its very different than being a dev, foundation |
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member, user or anything else. |
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|
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> I am also |
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> gathering quotes from CPAs across the country, based on |
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> recommendations from various non-profit directors with whom I have |
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> personal relationships, in the hope of identifying the most cost |
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> effective means of obtaining the long term support the Foundation |
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> needs going forward. |
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Ideally will be one located in New Mexico, but if not one that is versed |
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in New Mexico's laws as well as federal. Which federal is moot as to |
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where the CPA resides. |
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> This will require an allocation of funds, and yes |
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> the other board members are aware of this. I believe we have |
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> sufficient funds to secure the required professional support. |
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Even to clean up the mess at top rate, should not be more than a few |
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thousand, maybe $5k or so at best. Likely no way to get an exact quote |
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upfront. |
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> I think |
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> the dominant reason we need to contract a professional is the simple |
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> fact that with a contract we have greater accountability and legal |
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> recourse available, whereas with volunteers we do not have that. |
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Also when an accountant files, some of the liability is transfered to |
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them :) |
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> At |
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> some point in the near future I believe a composite of professional |
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> and volunteer support will be possible, and this will be a good thing |
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> when the time comes. Now is not that time. Now is the time for |
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> professional assistance and support. |
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That would be great, but again payroll brings about its own tax issues. |
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Definitely need to proceed in order. |
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> In terms of the bottlenecks, there are a few. For one, it has been |
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> impossible to conduct an appropriate financial audit for the period |
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> prior to 2008. The records are simply unavailable to the best of my |
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> knowledge. Further, the original bank was purchased by another entity |
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> and we were only able to recover the funds from that previous account |
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> last year. Thankfully we were successful in recovering those funds as |
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> it was a good amount of money. |
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That is great, I was going to inquire about that as well. However I an |
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unable to see when that took place in the quarter financial statements |
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that are available. Even going back to 2008, there is no line item of a |
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deposit of money transfered from the previous account. |
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Are you sure this took place? Do you know the amounts and when it was |
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deposited into Gentoo's current bank account? Just something to check on |
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as part of your audit. |
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> We are all indebted to Mr. Joshua Jackson for his persistence in that matter. |
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That is wonderful, and appreciate Joshua's efforts. Though having worked |
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with him, and understand he has a day job. Some of those matters get |
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dealt with much slower than they should be. This is nothing personal |
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against Joshua, I have met him in person more than once at LWE and have |
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no issues with him personally. |
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That said I was doing some of his duties back in 2008, simply because |
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time kept passing. Its good the money from the old bank account was |
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recovered. But I would be more pleased if that occurred back in 2008, or |
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2009, but that it happened in 2010, better than not at all ;) |
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> Additionally, we have no |
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> idea what paperwork, if any, has been filed with the IRS prior to |
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> 2008. There is some indication that the Foundation and/or D. Robbins |
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> was attempting to solicit donations to fund the application costs for |
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> Gentoo to become a 501(c)(6) trade organization, but we have no idea |
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> what became of that. We need some, if not all, of this information to |
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> satisfy the reporting requirements of the IRS since we are well past |
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> the 27 month filing 1023 form deadline. This deadline was passed in |
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> late 2006, so its been a long time ago. |
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And its also been 3yrs now since 2008. Plenty of time to correct both |
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the past and the present. The slowness in dealing with foundational |
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matters, was one of the other factors in my resignation. Since it was a |
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reason I told people not to vote for me, being time constrained. I |
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wanted to get as much done as fast as possible. Which many things could |
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have happened much faster and should have. |
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> Regarding the 1023 form, I |
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> have completed the components that I was able to. We were working with |
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> the SFLC to handle the requirements to satisfy the late filing. |
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> Unfortunately they have not been able to provide this material after |
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> one year. Hence why I am now turning to familiar local resources for |
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> this support. This was discussed at the last board meeting, as well as |
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> general status, etc. |
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|
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Has the SFLC invited Gentoo to join, after they have received adequate |
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funding. Last communication we had with them in 2008, they did not have |
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enough funding to take on any other entities. Nor had they invited |
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Gentoo or what ever to be part of the SFLC. |
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I was very hopeful after first the SFLC could help gentoo, but after |
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communicating with them. It became apparent quickly we were mostly on |
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our own. |
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> I will keep everyone posted on all pertinent developments. I really |
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> appreciate the interest and well reasoned questions. Gentoo is very |
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> important to a whole host of people, and we all want its health to be |
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> maintained and provide for its growth and future. I promise to |
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> continue to do my level best in this endeavor. |
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Thank you very much for your time on this matter, and serving Gentoo |
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through your foundational efforts. Please do not take my comments, or |
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inquiries personal. I am not bringing this stuff up for negative |
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purposes at all. Though its clear people react that way taking things |
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bot personally and negatively. Its business, its not personal ;) |
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|
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-- |
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William L. Thomson Jr. |
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Obsidian-Studios, Inc. |
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http://www.obsidian-studios.com |