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On Fri, Mar 25, 2011 at 7:36 AM, Alistair Bush <ali_bush@g.o> wrote: |
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> <!-- snip --> |
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> |
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> Mathew, I would like to thank you for the work you are doing. |
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> |
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> I know absolutely nothing of how the IRS operates so hopefully these questions |
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> are appropriate. |
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> |
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> When you state that there will not be "serious consequences", is this |
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> personal opinion or based on law/irs policy. I would assume that IRS would |
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> have the power to confiscate all assets of gentoo and "close us down" in the |
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> worse case. Would you be able to give an indication of what "serious |
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> consequences" might entail. I'm assuming it will be a financial penalty that |
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> we are currently able to afford. Your personal opinion on this is sufficient but |
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> if you can give a range (ie < 5000) it would be apprieciated. |
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> |
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> Also, is there any visibility on the steps that need to be completed and |
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> estimated timelines for when each step may be completed. I realise that |
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> timelines could be very difficult to give and even harder to meet but it seems |
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> very important that we do. Would it be possible to allocate funding to speed |
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> this process along. where is the bottleneck? is it us? the US mail service? |
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> IRS/Goverment Bureaucracy? |
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> |
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> Thanks |
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> |
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> Alistair. |
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> |
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|
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Alistair, |
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First, thank you for your well considered email. |
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|
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The statement regarding consequences derives from consultation with |
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attorneys and CPAs specializing in non-profits. What I would consider |
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serious in this case would be jail time, asset confiscation, and/or |
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other criminal penalties. My consultants have lead me to believe that |
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we are not in danger of these sorts of consequences. This is |
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predominantly due to the fact that we have income below the minimum |
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and we have no employees, nor do we pay any contract personnel for any |
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work. Further, we are more than willing to be fully transparent to any |
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auditors, and have nothing to hide. This is to say, there has been no |
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wrong doing or criminal behavior in the history of the organization to |
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the best of my knowledge. |
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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 (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) . I hope |
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that no rash action by anyone on this list would provide encouragement |
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for the IRS in seeking an investigation or audit before we have the |
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opportunity to establish proper status. As I had previously stated, |
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this is a delicate situation right now, and I am working as fast as I |
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can to set things aright, however these things take time and some |
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money. I have been lead to believe that we may, in the worst case, be |
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subject to monetary penalty by the IRS, however since our income has |
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been so small (relative to other organizations), we may not be subject |
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to any large fines. In terms of a range, it is really difficult to |
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estimate appropriately. 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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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. 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. 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. 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. 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. 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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|
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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. We are all indebted to Mr. Joshua |
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Jackson for his persistence in that matter. 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. 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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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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Kind Regards, |
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Matthew Summers |
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-- |
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Matthew W. Summers |