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From: "William L. Thomson Jr." <wlt@...>
Subject: Re: Tax return and accounting discrepancies
Date: Wed, 23 Mar 2011 17:10:49 -0400
On Wed, 2011-03-23 at 20:40 +0000, Matthew Summers wrote:
>
> 5. The Gentoo Foundation has been and is in good standing with NM,
> having filed all necessary documents on time since I joined.

Where are the annual financial reports that are required to be filed
with New Mexico?

"All charitable organizations existing, operating or soliciting
contributions in the State of New Mexico must register with the New
Mexico Attorney General and must file annual financial reports."
http://www.tax.newmexico.gov/Businesses/How-Do-I/Pages/Start-Registera-Non-Profit.aspx

> 6. I live in the US.
> 7. The Gentoo Foundation has been completely transparent regarding
> finances since the recovery.

If that was the case, the information I seek would already be available
and I would not be bring this matter up at all.

> 
> William,
> 
> I appreciate your perspective regarding the Gentoo Foundation.
> Unfortunately, the main reason the Foundation has not achieved proper
> status with the IRS is directly due to the irresponsibility and/or
> negligence of the former (pre-2008) board of trustees. 

Which should have been corrected permanently in 2008.

> I do not say this to be mean-spirited, please note. This irresponsibility is
> manifest in the fact that correct status with the IRS was not filed
> within 27 months of the start of the organization, which would be
> sometime in 2004. It is that simple.

So an organization can never re-file or start over? You can cease one
legal entity and start a new one at any time. If there were mistakes in
the, past, there are easy ways to correct moving forward.

>  This has in fact been a huge obstacle to the development of the
> Foundation as a non-profit entity. I was not involved with Gentoo,
> except as a user, during that time. Now, you have made and continue to
> make many claims in your various statements regarding the Foundation,
> some are quite novel while others are rather unhelpful.

Well if others were doing their duties, I would not be commenting either
way ;)

>  Its completely true that the Foundation is not what it could be. I
> perhaps recognize this more than others given that I work closely with
> non-profits on a daily basis and know what the world holds in store
> for a fully operational 501(c)(3) Gentoo Foundation.

As I pointed out back in 2008, 501c3 takes 5 years. Which is a 5yr
probation period, which you must be in 100% compliance, or you lose the
status retroactively.

>  I understand your frustrations regarding action and/or inaction
> within the board, but you must realize that the Foundation is not a
> dictatorship. We, the board I mean, are working together towards the
> common goals of Gentoo, while taking on a rather large legal
> responsibility.

You really need to explain to me the role and duties of an entity I was
part of before you? :)

We got quite allot done in 2008. I am very displeased there was a motion
to amend the bylaws back in 2009, but they have not been updated to
reflect such. Which is not anything major to make happen.

>  You make many valid points regarding the need for
> financial professionals, etc, and I can assure you that I have used my
> CPA for many things Gentoo, paid for out of my own pocket.

Thats great, but Gentoo's needs it own CPA that Gentoo pays for. Also
the foundation should reimburse you for any of those expenses.

> I am happy to do that for now, since paying an actual CPA to handle an
> organization like the Gentoo Foundation can cost in excess of $1200
> per month. 

That is just silly speculation. No CPA in their right mind, give the
amount of revenue Gentoo deals with on an annual basis would ever charge
such on a monthly basis. I can't even see them charging $1200 for annual
compliance. Now in this situation, I can see it costing in excess of
that to hire someone to correct the mess.

> I think you may agree that the Foundation cannot afford
> this.

If the foundation loses its NPO status, it will be instantly bankrupt in
paying back taxes, fines, etc.

> The values you quote for income are skewed since Google paid us
> for previous years GSoC. The actual income of the Foundation on a
> yearly basis averages less than $12,000.

Exactly my point, if you look at the form with the IRS, its an ecard
that needs to be filed. This is not major stuff, and a CPA would not
spend much if any time on such.

I still do my own taxes for my business which I also own.

> Further, I have used my attorneys for various bits and the Foundation
> has been assisted by the SFLC on various issues.

Unless they are tax attorneys, thats moot in this discussion. Though we
had discussed the SFLC and other matters back in 08.

> As I see a few more emails from you coming down the line, I will
> address those now. You are stirring the pot, sir. Please refrain from
> this as it does no good. You are attempting to scare people by your
> statements and I will not stand for it. Its quite clear that you are
> misinformed regarding the status of the Gentoo Foundation with the
> IRS. We, due to what I mention above, never received non-profit or
> tax-exempt status. In fact, that has been very difficult, and it's
> something we have been working on for many months now.

You can see things however you like. If I am wrong, then I will easily
be dismissed as fud. However if I am correct.....

Do you have any facts to show me to prove otherwise? Do you have copies
of annual financial reports sent to New Mexico and the IRS? If they
exist why are they not published on g.o?

> The Foundation is in no real danger.

What proof do you have of this? If I called the IRS would they confirm
that?

> Yes, we will likely have some tax
> penalties to deal with, however the Foundation's income has been well
> below federal minimums, so those penalties will be low.

Um no, loss of exempt status is not small. Even the minimal amounts of
revenue over the years, taxes will then have to be paid on. Gentoo
immediately becomes a for profit entity and has to comply as such. Then
Gentoo has to expend time, money, and resources, to regain NPO status.
Much less dream and hope for 501c3 status/

> This is especially true if we are able to make a convincing case regarding why
> the Foundation did not observe the 27 month guideline in our 1023
> application.

What 27 months? 501c3 takes 5 years.... Which I pointed out by reference
IRS documents back in 2008.

> All of this is actually being dealt with by competent individuals,
> despite what you may believe. What was left by the old trustees was a
> mess that will take awhile longer to sort out, but have no fear we
> will sort it out.

Look if things were published as they should be, then I would believe
otherwise. If these things exist, why have they not been published?

Convince me with proof, make me a believer. Because anytime I look, I am
not seeing anything.

> Lastly, I am preparing a proposal for review by the other board
> members that will address much of what you are taking issue with, as I
> believe at this point its time to bring in some funded professional
> assistance. I would highly encourage you to review the logs of our
> past meetings as I think you will see that we are addressing most if
> not all of your concerns.

Again Gentoo should have hired a CPA back in 2008. I recall a post on
g.o in the news some time back about a CPA. Does Gentoo have a CPA right
now? If Gentoo does not have a CPA, why?

> Thank you very much for your interest in the Gentoo Foundation and its
> continued health.

I am a member of and have contributed to the Gentoo Foundation. Thus its
my right to speak up, or question such things. Like it or not ;)

-- 
William L. Thomson Jr.
Obsidian-Studios, Inc.
http://www.obsidian-studios.com



References:
Tax return and accounting discrepancies
-- William L. Thomson Jr.
Re: Tax return and accounting discrepancies
-- Rich Freeman
Re: Tax return and accounting discrepancies
-- William L. Thomson Jr.
Re: Tax return and accounting discrepancies
-- Matthew Summers
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