The more we learn about the so-called IRS Tea Party targeting scandal, the less there seems to be alarmed about. On Monday, Alex Seitz-Wald reported that the IRS was also looking into groups with the word Occupy or progressive in their names. Liberals and conservatives were both getting a hard look.
As were, it turns out, groups that labeled themselves open source software.
Geek alert! Why would the IRS care that software programming organizations producing code free for all to share or modify as they see fit might want to seek nonprofit, tax exempt status? What part of free doesnt the tax man understand? Other branches of the U.S. government actually contribute to open source projects.
In the 2010 internal IRS document listing keywords for examiners to watch out for, the explanation is simple. Open source isnt always what it seems:
Open Source Software
These organizations are requesting either 501(c)(3) or 501(c)(6) exemption in order to collaboratively develop new software. The members of these organizations are usually the for-profit business or for-profit support technicians of the software.
One could quibble with the word usually. A better substitute might be often. There is definitely plenty of overlap between for-profit businesses and open-source software. Its a murky world, and some groups probably deserve tax-exempt status while others dont. (At Mother Jones, Kevin Drum highlights a readers letter suggesting that the confusion is exacerbated by the IRSs chronic underfunding.)
But the key thing to focus on here is that the IRS document acknowledges that there are no clear lines to be drawn around open source: There is no specific guidance at this point. If you see a case, elevate it to your manager.
So maybe targeting was never the right word to use in this controversy in the first place. Maybe flagging for review would be more appropriate?
More here:
Why is the IRS “targeting” free software?
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