Gentoo Archives: gentoo-nfp

From: Matthew Summers <quantumsummers@g.o>
To: Alistair Bush <ali_bush@g.o>
Cc: gentoo-nfp@l.g.o
Subject: Re: [gentoo-nfp] Tax return and accounting discrepancies
Date: Fri, 25 Mar 2011 16:22:54
Message-Id: AANLkTinDF4oqXgBNoSyfz7NpXVu8zKFH107piDi7Si-_@mail.gmail.com
In Reply to: Re: [gentoo-nfp] Tax return and accounting discrepancies by Alistair Bush
1 On Fri, Mar 25, 2011 at 7:36 AM, Alistair Bush <ali_bush@g.o> wrote:
2 > <!-- snip -->
3 >
4 > Mathew,  I would like to thank you for the work you are doing.
5 >
6 > I know absolutely nothing of how the IRS operates so hopefully these questions
7 > are appropriate.
8 >
9 > When you state that there will not be "serious consequences",  is this
10 > personal opinion or based on law/irs policy.   I would assume that IRS would
11 > have the power to confiscate all assets of gentoo and "close us down" in the
12 > worse case.  Would you be able to give an indication of what "serious
13 > consequences" might entail.  I'm assuming it will be a financial penalty that
14 > we are currently able to afford.  Your personal opinion on this is sufficient but
15 > if you can give a range (ie < 5000) it would be apprieciated.
16 >
17 > Also, is there any visibility on the steps that need to be completed and
18 > estimated timelines for when each step may be completed.  I realise that
19 > timelines could be very difficult to give and even harder to meet but it seems
20 > very important that we do.  Would it be possible to allocate funding to speed
21 > this process along. where is the bottleneck? is it us?  the US mail service?
22 > IRS/Goverment Bureaucracy?
23 >
24 > Thanks
25 >
26 > Alistair.
27 >
28
29 Alistair,
30
31 First, thank you for your well considered email.
32
33 The statement regarding consequences derives from consultation with
34 attorneys and CPAs specializing in non-profits. What I would consider
35 serious in this case would be jail time, asset confiscation, and/or
36 other criminal penalties. My consultants have lead me to believe that
37 we are not in danger of these sorts of consequences. This is
38 predominantly due to the fact that we have income below the minimum
39 and we have no employees, nor do we pay any contract personnel for any
40 work. Further, we are more than willing to be fully transparent to any
41 auditors, and have nothing to hide. This is to say, there has been no
42 wrong doing or criminal behavior in the history of the organization to
43 the best of my knowledge.
44
45 We have been fortunate thus far in that the IRS has not actively
46 sought to investigate or audit the organization (however I want a
47 complete audit, just not by the IRS, but this has been nearly
48 impossible given the absence of documentation prior to 2008) . I hope
49 that no rash action by anyone on this list would provide encouragement
50 for the IRS in seeking an investigation or audit before we have the
51 opportunity to establish proper status. As I had previously stated,
52 this is a delicate situation right now, and I am working as fast as I
53 can to set things aright, however these things take time and some
54 money. I have been lead to believe that we may, in the worst case, be
55 subject to monetary penalty by the IRS, however since our income has
56 been so small (relative to other organizations), we may not be subject
57 to any large fines. In terms of a range, it is really difficult to
58 estimate appropriately. I will defer this to my CPA, with whom I will
59 meet again regarding these items in early April (prior to the 15th, of
60 course). I will provide a full report to the board at during the April
61 meeting.
62
63 As far as visible steps that are available to us at the moment, I am
64 working with a local CPA specializing in non-profits to assist in
65 handling our filings for the moment. Since my name is legally
66 associated with the Foundation, as the signatory officer, I have
67 knowingly accepted full responsibility and legal obligation. I am also
68 gathering quotes from CPAs across the country, based on
69 recommendations from various non-profit directors with whom I have
70 personal relationships, in the hope of identifying the most cost
71 effective means of obtaining the long term support the Foundation
72 needs going forward. This will require an allocation of funds, and yes
73 the other board members are aware of this. I believe we have
74 sufficient funds to secure the required professional support. I think
75 the dominant reason we need to contract a professional is the simple
76 fact that with a contract we have greater accountability and legal
77 recourse available, whereas with volunteers we do not have that. At
78 some point in the near future I believe a composite of professional
79 and volunteer support will be possible, and this will be a good thing
80 when the time comes. Now is not that time. Now is the time for
81 professional assistance and support.
82
83 In terms of the bottlenecks, there are a few. For one, it has been
84 impossible to conduct an appropriate financial audit for the period
85 prior to 2008. The records are simply unavailable to the best of my
86 knowledge. Further, the original bank was purchased by another entity
87 and we were only able to recover the funds from that previous account
88 last year. Thankfully we were successful in recovering those funds as
89 it was a good amount of money. We are all indebted to Mr. Joshua
90 Jackson for his persistence in that matter. Additionally, we have no
91 idea what paperwork, if any, has been filed with the IRS prior to
92 2008. There is some indication that the Foundation and/or D. Robbins
93 was attempting to solicit donations to fund the application costs for
94 Gentoo to become a 501(c)(6) trade organization, but we have no idea
95 what became of that. We need some, if not all, of this information to
96 satisfy the reporting requirements of the IRS since we are well past
97 the 27 month filing 1023 form deadline. This deadline was passed in
98 late 2006, so its been a long time ago. Regarding the 1023 form, I
99 have completed the components that I was able to. We were working with
100 the SFLC to handle the requirements to satisfy the late filing.
101 Unfortunately they have not been able to provide this material after
102 one year. Hence why I am now turning to familiar local resources for
103 this support. This was discussed at the last board meeting, as well as
104 general status, etc.
105
106 I will keep everyone posted on all pertinent developments. I really
107 appreciate the interest and well reasoned questions. Gentoo is very
108 important to a whole host of people, and we all want its health to be
109 maintained and provide for its growth and future. I promise to
110 continue to do my level best in this endeavor.
111
112 Kind Regards,
113 Matthew Summers
114 --
115 Matthew W. Summers

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Re: [gentoo-nfp] Tax return and accounting discrepancies "William L. Thomson Jr." <wlt@××××××××××××××××.com>