Nonprofit web browser foundation out from under IRS audit

There's a reason why the notion of an Internal Revenue Service audit tends to send shivers up the spine. They can be horrendous to undergo. It doesn't matter if you happen to live in the Washington, D.C., area or are on the other side of the country.

Besides the emotional stress that can be generated, it can be an intrusion on one's privacy and a huge drain on time. And unless the matter is handled well, it can wind up being financially taxing (pardon the pun).

The case of the audit of the Mozilla Foundation upholds at least a part of that view. It has been going on for nearly four years. But recently, the head of the foundation announced that the IRS has closed out the audit. And now that it's over, the organization is handing over a payment of $1.5 million.

Computer users may know Mozilla as the source of the Firefox browser. According to the foundation's website, the Mozilla Foundation was created in 2003 as an independent nonprofit. It claims to have been supported by private donors and a number of companies. One of them has been Google -- the search engine giant that now has its own browser.

The IRS reportedly decided to take a look at the foundation in 2008, after it claimed that $66 million it had received from Google amounted to royalties as part of a partnership agreement, which should be exempt from taxes. What the tax amount being sought was isn't clear, but foundation leaders say they set aside $15 million in anticipation. Now that the audit is done, foundation officials say the IRS is settling for 10 percent of that.

Foundation chairperson Mitchell Baker wrote in a recent blog post that she's very happy with the outcome. She says the money which was being held in reserve will now go toward fulfilling the Mozilla mission "to support innovation nad opportunity on the web."

Source:, "Mozilla gets lucky, settles IRS audit for $1.5M," Dara Kerr, Nov. 6, 2012

  • The subject matter of this post deals with topics handled by our practice. To learn more about our firm, please visit our Washington, D.C., IRS audit page.

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