Mozilla Settles With IRS and pays $1.5 Million

Mitchell Baker, chairman of the foundation, said that Mozilla settled with the IRS and agreed to pay $1.5 million. The organization froze $15 million in funds to cover any outcomes of the investigation.

"As a result of this settlement, $15 million in funds we had held in reserve pending the resolution of the audit are now available to support the Mozilla Foundation’s mission to support innovation and opportunity on the web," Baker wrote in a blog post. "I’m happy to note that we’ve settled the issues raised and the IRS recently closed the audit."

The audit was focused on the IRS investigating the tax status of the Mozilla Foundation as a nonprofit organization. The IRS looked a bit closer into the tax records since Mozilla declared its Google revenues as "royalties" and are therefore excluded from the public support test for public charity status. There was speculation that the IRS may view the revenues as advertising income, which may have switched the foundation's status to a "private foundation". Initially, Mozilla had set aside only $100,000 to cover this issue, but increased the reserved amount as the investigation continued.

Baker did not provide any further details, other than explaining that "the IRS chooses which organizations — taxable, tax-exempt, individuals, businesses — it wishes to understand better." Baker promised to share more details in the future.

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  • hunshiki
    Modern mafia.
  • Thomas Creel
    This is really wrong, 1.5M for an audit?
  • The IRS needs to take a dirt nap.
  • cookoy
    "the IRS chooses which organizations — taxable, tax-exempt, individuals, businesses — it wishes to understand better."
    They just want to squeeze the most juice out of you and sometimes it takes years of audit to understand how to fully accomplish this. Dummies? No, more like suckers.
  • A Bad Day
    JacekRingThe IRS is a joke, they don't even understand the federal tax code. They make stuff up as they go.And you can't challenge them in court, because the law says you have to prove THEY are wrong, not that you are wrong. And the courts won't let you recite all 200k+ pages of tax code in court to prove they are wrong.
    Isn't the tax code like changed everyday? I've read an article about it once, and a spokesperson from H&R admitted that tax accounting is more like a guessing game because you can interpret the codes in many ways.
  • f-14
    jan 1 2013 no matter who gets elected if no positive flow major cost savings budget plan gets worked out austerity measures kick in for the USA $660 billion gets cut and taxes go up all across the board in order to avoid a greece situation and default on about 4 trillion in loans from japan and china.

    the IRS is going to be targeting everything it can like this very very soon.