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.
