Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)

Gene Gaines <> Wed, 22 September 2004 23:57 UTC

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Date: Wed, 22 Sep 2004 19:49:03 -0400
From: Gene Gaines <>
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To: Karl Auerbach <>
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Cc: Harald Tveit Alvestrand <>,, scott bradner <>
Subject: Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
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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.


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--

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