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

Karl Auerbach <karl@cavebear.com> Wed, 22 September 2004 22:00 UTC

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Date: Wed, 22 Sep 2004 14:49:25 -0700 (PDT)
To: Gene Gaines <gene.gaines@gainesgroup.com>
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Cc: Harald Tveit Alvestrand <harald@alvestrand.no>, ietf@ietf.org, scott bradner <sob@harvard.edu>
Subject: Re: Scenario C prerequisites (Re: Upcoming: further thoughts on where from here)
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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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