Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
So, as I see it, we can choose scenario C which includes this bureaucratic work, as well as many other pieces of bureaucratic work, or we can choose scenario O in which all this work was done ten years ago. Brian Karl Auerbach wrote: On Wed, 22 Sep 2004, Gene Gaines wrote: ISOC is non-profit, 501(c)(3) tax-exempt, incorporated in the District of Columbia. I suggest it would be a serious mistake for the IETF not to obtain the same status. There are many kinds of 501(c) exemptions. They all come with different kinds of chains that impose limits on what the organization can do and impose affirmative duties. Simply jumping into one category without understanding the nature and form of those chains could lead to a kind of organizational buyer's remorse. Whether one considers the application process easy (or hard), fast (or slow), or the IRS to be capricious (or not), it isn't something to be undertaken lightly or without understanding the ramifications. The IRS is one of the world's great bureaucracies; I know attorneys whose entire practice is focused on just small parts of the US tax code and small parts of that bureacracy. The choice of Federal excemption also may have impact on the liability (or rather on the limitation of liability) of unpaid Directors and officers both on the basis of State laws that recognize certain protections for certain 501 categories (and not for others) and also under Federal laws that may provide some protection for volunteer (unpaid) directors under some circumstances. Many have, of course, navigated the maze and been happy with the results. And some entities, after having experienced life as a 501(c)(3) have discovered the limitations too binding and have changed their status. The IETF ought to move forward with knowledge and understanding. It ought not go forward blindly and with say 501(c)(3) or bust without knowing fully what that means and implies. The same goes for chosing the state of incorporation and the form under that state's laws. (There is, of course, the option of creating several different legally cognizable entities, each shrink-wrapped with its own choice of jurisdiction and form. But that could lead to a situation in which there is not one IETF but several that drift in divergent directions.) I'm not arguing against the 501(c)(3) status - I have neither an opinion nor enough knowledge to make an informed choice. I'm merely noting that the issue is complex and involves hard choices that ought to be made with knowledge of the tradeoffs. --karl-- ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
Scott, some meta-thoughts. --On 21. september 2004 20:33 -0400 scott bradner [EMAIL PROTECTED] wrote: The Scenario C document says that there are 3 prerequisites required before the option of a corporation can be considered viable at all 1/ IETF consensus on the plan 2/ ISOC agreement on a support contract 3/ assurance that a corporation would be tax exempt re: 1/ Considering the level of participation in this discussion on the IETF list I do not see how one could assert that there was IETF consensus without an explicit discussion at an IETF plenary - I do not think that just issuing a last call (as envisioned by the Scenario C document) would be seen by about anyone as an adequate involvement of the community. I am not at all certain of that. In what way is 20 people arguing in front of a thousand people in a room more community involvement than the same 20 people arguing in front of a thousand people on a mailing list? Our tradition as IETF has been to declare that mailing list discussion is the final arbiter of consensus. If we need to abandon that principle for organizational matters, we leave ourselves in a situation where we can only make significant decisions at 4-month intervals; that is a theoretically defensible position, but sharply limits the scope of what we can hope to accomplish in any given timeframe. re: 2/ the use of the term contract to describe an agreement to be a supporter feels a bit funny to me but, certainly, a common understanding of the ISOC/IETF relationship would have to be reached (as I mentioned before, I think there will be a lot of working out of details to come to such a common understanding ) - it is true that a common understanding of the relationship would also have to be developed in Scenario O But I think that would be easier since Scenario O is more of an evolution of our current relationship not inventing a new one out of whole cloth. I was told a number of times that contract is a term that is less likely to be misunderstood; at some times in some contexts, some people have claimed that an MoU is something that any of the organizations can unilaterally disregard and walk away from even if the document says it can't - that's an unreasonable platform on which to build a working relationship. Contract brings the connotation of binding promise. Also, the contract, as envisioned in the Scenario C document, looks like it boils down to ISOC agrees to provide $75K/month. That seems to be a very unlikely contract - the ISOC needs to ensure that monies that it donates are used for purposes that fit within the ISOC's bylaws and tax exempt role. I would expect that the ISOC would have to do a bit more due diligence during the budget process than to blindly accept the proposed budget numbers. I am hoping that if we get to negotiating the contract, ISOC will state its requirements for due dilligence. I can't imagine having a contract that did not allow for them. WRT blindly accept - that's why I put in a proposed budget in July and an agreed budget in November. re: 3/ Of course, there can be no assurance that a corporation will be tax exempt unless 1/ it already is, or 2/ the IRS rules that it is. Scenario O covers the 1st case since the ISOC is already tax exempt. The only way to be sure in Scenario C is to wait until the IRS acts and that could be many months. If the 3rd item is truly a prerequisite then, even if we incorporated the IASF (not a name that rolls of the tongue) next week the IRS might not rule until next summer. Being a bit facetious here, the only way to be sure the sun will rise in the morning is to wait for it to show up. If we get an organizational charter that a tax attorney is willing to assure us is likely to be accepted as a nonprofit, I (personally) think that the risk of the IRS acting irrationally is an acceptable risk, if we find that the scenario C solution is the one we want. Harald ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
--On Wednesday, 22 September, 2004 05:59 +0200 Harald Tveit Alvestrand [EMAIL PROTECTED] wrote: ... re: 3/ Of course, there can be no assurance that a corporation will be tax exempt unless 1/ it already is, or 2/ the IRS rules that it is. Scenario O covers the 1st case since the ISOC is already tax exempt. The only way to be sure in Scenario C is to wait until the IRS acts and that could be many months. If the 3rd item is truly a prerequisite then, even if we incorporated the IASF (not a name that rolls of the tongue) next week the IRS might not rule until next summer. Being a bit facetious here, the only way to be sure the sun will rise in the morning is to wait for it to show up. If we get an organizational charter that a tax attorney is willing to assure us is likely to be accepted as a nonprofit, I (personally) think that the risk of the IRS acting irrationally is an acceptable risk, if we find that the scenario C solution is the one we want. Harald, I hope things are better in Norway and assume that they probably are. But the IRS does make decisions that are irrational or, perhaps more accurately, reflect a version of reality that are not always predictable even to experienced tax attorneys. And many of the rules require that one must presume and act as if they will rule against you until they actually rule for you -- a presumption of acceptable risk is, under some circumstances, actually illegal. The alternatives are, at best, really impressive penalties. The experience with ability to predict the rise of the sun has been much better empirically, and also derives from principles of physics that further strengthen the probabilities. john ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
--On Wednesday, 22 September, 2004 05:59 +0200 Harald Tveit Alvestrand [EMAIL PROTECTED] wrote: ... re: 3/ Of course, there can be no assurance that a corporation will be tax exempt unless 1/ it already is, or 2/ the IRS rules that it is. Scenario O covers the 1st case since the ISOC is already tax exempt. The only way to be sure in Scenario C is to wait until the IRS acts and that could be many months. If the 3rd item is truly a prerequisite then, even if we incorporated the IASF (not a name that rolls of the tongue) next week the IRS might not rule until next summer. Being a bit facetious here, the only way to be sure the sun will rise in the morning is to wait for it to show up. If we get an organizational charter that a tax attorney is willing to assure us is likely to be accepted as a nonprofit, I (personally) think that the risk of the IRS acting irrationally is an acceptable risk, if we find that the scenario C solution is the one we want. Harald, I hope things are better in Norway and assume that they probably are. But the IRS does make decisions that are irrational or, perhaps more accurately, reflect a version of reality that are not always predictable even to experienced tax attorneys. And many of the rules require that one must presume and act as if they will rule against you until they actually rule for you -- a presumption of acceptable risk is, under some circumstances, actually illegal. The alternatives are, at best, really impressive penalties. The experience with ability to predict the rise of the sun has been much better empirically, and also derives from principles of physics that further strengthen the probabilities. john ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
On Wednesday, September 22, 2004 05:59:02 +0200 Harald Tveit Alvestrand [EMAIL PROTECTED] wrote: Being a bit facetious here, the only way to be sure the sun will rise in the morning is to wait for it to show up. If we get an organizational charter that a tax attorney is willing to assure us is likely to be accepted as a nonprofit, I (personally) think that the risk of the IRS acting irrationally is an acceptable risk, if we find that the scenario C solution is the one we want. I think this and a number of other points made here gloss over a key point of which some of the participants may not be aware. Under US law, there is a significant difference between not-for-profit and charitable nonprofit. The former status is relatively easy to obtain; the latter is much more difficult. Only the charitable status makes you exempt from a variety of taxes, and only that status means that donations made to you are deductable for the donor under US income tax law. -- Jeffrey T. Hutzelman (N3NHS) [EMAIL PROTECTED] Sr. Research Systems Programmer School of Computer Science - Research Computing Facility Carnegie Mellon University - Pittsburgh, PA ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
On Wed, 22 Sep 2004, Jeffrey Hutzelman wrote: I think this and a number of other points made here gloss over a key point of which some of the participants may not be aware. Under US law, there is a significant difference between not-for-profit and charitable nonprofit It might be useful to add more precision. In the US there are two levels from which laws affecting corporations arise, state and Federal. Corporate structures are usually created under state law. Many states of the US have laws that allow non-profit or even charitable nonprofit. Here in California, for example, there are several forms of non-profit: public-benefit, charitable, mutual benefit, religious, medical, etc. And here in the US we have a lot of states - 50 of 'em - each with its own different corporations laws. At the federal level there is yet another mountain of law, but we often end up talking about tax exemptions under Title 26 Section 501 of the US code. That part of the tax code covers a lot of territory and is very complicated and full of subtle distinctions that trigger significant differences in treatment as well as imposing rather different kinds of limitations and obligations upon the entity that is seeking or obtained one or another of these exemptions. So, when talking about these things we can avoid a lot of confusion if we try to be precise about specific state level conceptions of corporations and non-profitness and federal level conceptions of federal tax exemption and the benefits, limitations, and obligations that come from each. I might add that one of the questions that ought to be raised, and it is a question that I'm certainly neither qualified to answer nor will I even attempt to answer, is whether the IETF ought to seek Federal tax exempt status at all. Sometimes it may be better to simply file the papers, pay the tax money, and be free of many of the restrictions. --karl-- ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
Karl, 2 cents. Assuming IETF is going to set up a corporation and it is to be created in the United States, it appears to me there are strong reasons for incorporating as a non-profit, and further to obtain tax-exempt status as a 501(c)(3) organization. It appears to me that IETF qualifies for this status easily as a technical, memberhhip organization, not operated for private benefit, engaged in creating and publishing information freely available without charge and in the public domain. I spoke briefly with a U.S. Internal Revenue Service (IRS) expert who told me informally that IETF appears to qualify easily for non-profit, tax-exempt status. If anyone is interested, I can provide several IRS rulings and Shephard-qualified court decisions for similar organizations. The forms to make application are not burdensome, and can be completed by any competent lawyer (knowledgeable of non-profit law) and should be part of the process of setting up any IETF corporate entity. I emphasize: Setting up the IETF entity to properly qualify for non-profit and 501(c) tax-exempt status _must_ be considered at the time the corporate charter is set up. Note that the IRS processing time for obtaining 501(c)(3) status currently is 120 days; this can be shortened by invoking special circumstances; the effective date will be retroactive to the date the entity filed for incorporation. Despite all the folk tales, the U.S. IRS is not capricious in such cases, and a qualified lawyer can state with certainty whether the IETF does or does not qualify. I'm not a lawyer, but am sure the IETF does qualify. Warning. IETF people travel between countries to attend meetings. Security and border restrictions are becoming increasingly restrictive in the U.S. and many other countries. I suggest it is imperative that, if the IETF does incorporate, it obtain non-profit and I recommend tax-exempt status. It is important -- critical -- the IETF attendees be seen as traveling to attend a technical meeting conducted by a non-profit organization. Remember the trouble with U.S. people traveling to Korea for IETF 61? (We obtained special papers from the Korean embassy in Washington by claiming the IETF to be part of ISOC, and ISOC has non-profit status. It is generally true that visitors to a country for tourism or to attend non-profit technical meetings are subject to substantially less restrictions and less paperwork than those traveling for business purposes. Further, it is so very important the IETF be transparent, and its financial dealings be open. The annual filings required of U.S. non-profit tax-exempt organizations will provide much of that transparency. Last question. What impact will incorporation, either the entire IETF organization or only a headquarters activity, have on ISOC and the support it provides to the IETF? ISOC is non-profit, 501(c)(3) tax-exempt, incorporated in the District of Columbia. I suggest it would be a serious mistake for the IETF not to obtain the same status. Gene Gaines [EMAIL PROTECTED] Sterling, Virginia USA On Wednesday, September 22, 2004, 12:37:36 PM, Karl wrote: On Wed, 22 Sep 2004, Jeffrey Hutzelman wrote: I think this and a number of other points made here gloss over a key point of which some of the participants may not be aware. Under US law, there is a significant difference between not-for-profit and charitable nonprofit It might be useful to add more precision. In the US there are two levels from which laws affecting corporations arise, state and Federal. Corporate structures are usually created under state law. Many states of the US have laws that allow non-profit or even charitable nonprofit. Here in California, for example, there are several forms of non-profit: public-benefit, charitable, mutual benefit, religious, medical, etc. And here in the US we have a lot of states - 50 of 'em - each with its own different corporations laws. At the federal level there is yet another mountain of law, but we often end up talking about tax exemptions under Title 26 Section 501 of the US code. That part of the tax code covers a lot of territory and is very complicated and full of subtle distinctions that trigger significant differences in treatment as well as imposing rather different kinds of limitations and obligations upon the entity that is seeking or obtained one or another of these exemptions. So, when talking about these things we can avoid a lot of confusion if we try to be precise about specific state level conceptions of corporations and non-profitness and federal level conceptions of federal tax exemption and the benefits, limitations, and obligations that come from each. I might add that one of the questions that ought to be raised, and it is a question that I'm certainly neither qualified to answer nor will I even attempt to answer, is whether the IETF ought to seek Federal tax exempt status at all. Sometimes it may be better
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
On Wed, 22 Sep 2004, Gene Gaines wrote: ISOC is non-profit, 501(c)(3) tax-exempt, incorporated in the District of Columbia. I suggest it would be a serious mistake for the IETF not to obtain the same status. There are many kinds of 501(c) exemptions. They all come with different kinds of chains that impose limits on what the organization can do and impose affirmative duties. Simply jumping into one category without understanding the nature and form of those chains could lead to a kind of organizational buyer's remorse. Whether one considers the application process easy (or hard), fast (or slow), or the IRS to be capricious (or not), it isn't something to be undertaken lightly or without understanding the ramifications. The IRS is one of the world's great bureaucracies; I know attorneys whose entire practice is focused on just small parts of the US tax code and small parts of that bureacracy. The choice of Federal excemption also may have impact on the liability (or rather on the limitation of liability) of unpaid Directors and officers both on the basis of State laws that recognize certain protections for certain 501 categories (and not for others) and also under Federal laws that may provide some protection for volunteer (unpaid) directors under some circumstances. Many have, of course, navigated the maze and been happy with the results. And some entities, after having experienced life as a 501(c)(3) have discovered the limitations too binding and have changed their status. The IETF ought to move forward with knowledge and understanding. It ought not go forward blindly and with say 501(c)(3) or bust without knowing fully what that means and implies. The same goes for chosing the state of incorporation and the form under that state's laws. (There is, of course, the option of creating several different legally cognizable entities, each shrink-wrapped with its own choice of jurisdiction and form. But that could lead to a situation in which there is not one IETF but several that drift in divergent directions.) I'm not arguing against the 501(c)(3) status - I have neither an opinion nor enough knowledge to make an informed choice. I'm merely noting that the issue is complex and involves hard choices that ought to be made with knowledge of the tradeoffs. --karl-- ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
Karl, Good thoughts. I agree with all. I suppose the reason for my long writing was to say that 501(3)(?) status should not be feared, the process is predictable, and I think you will find the IRS actually will assist in the process. In any event, requires a good non-profit / tax lawyer to evaluate and explain the consequences. But getting the status is easy. Gene [EMAIL PROTECTED] On Wednesday, September 22, 2004, 5:49:25 PM, Karl wrote: On Wed, 22 Sep 2004, Gene Gaines wrote: ISOC is non-profit, 501(c)(3) tax-exempt, incorporated in the District of Columbia. I suggest it would be a serious mistake for the IETF not to obtain the same status. There are many kinds of 501(c) exemptions. They all come with different kinds of chains that impose limits on what the organization can do and impose affirmative duties. Simply jumping into one category without understanding the nature and form of those chains could lead to a kind of organizational buyer's remorse. Whether one considers the application process easy (or hard), fast (or slow), or the IRS to be capricious (or not), it isn't something to be undertaken lightly or without understanding the ramifications. The IRS is one of the world's great bureaucracies; I know attorneys whose entire practice is focused on just small parts of the US tax code and small parts of that bureacracy. The choice of Federal excemption also may have impact on the liability (or rather on the limitation of liability) of unpaid Directors and officers both on the basis of State laws that recognize certain protections for certain 501 categories (and not for others) and also under Federal laws that may provide some protection for volunteer (unpaid) directors under some circumstances. Many have, of course, navigated the maze and been happy with the results. And some entities, after having experienced life as a 501(c)(3) have discovered the limitations too binding and have changed their status. The IETF ought to move forward with knowledge and understanding. It ought not go forward blindly and with say 501(c)(3) or bust without knowing fully what that means and implies. The same goes for chosing the state of incorporation and the form under that state's laws. (There is, of course, the option of creating several different legally cognizable entities, each shrink-wrapped with its own choice of jurisdiction and form. But that could lead to a situation in which there is not one IETF but several that drift in divergent directions.) I'm not arguing against the 501(c)(3) status - I have neither an opinion nor enough knowledge to make an informed choice. I'm merely noting that the issue is complex and involves hard choices that ought to be made with knowledge of the tradeoffs. --karl-- ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf -- ___ Ietf mailing list [EMAIL PROTECTED] https://www1.ietf.org/mailman/listinfo/ietf
