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LDP/howto/linuxdoc/User-Group-HOWTO.sgml
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<title>Linux User Group HOWTO
<author><url name="Rick Moen" url="mailto:%20rick@linuxmafia.com%20"></author>
<date>v1.8.0, 2007-03-16
<date>v1.8.1, 2007-03-16
<abstract>
The Linux User Group HOWTO is a guide to founding, maintaining, and
@ -1265,16 +1265,16 @@ corporate net assets, in that one case. However, volunteers are still
fully liable for any personal involvement they're alleged to have had.</item>
<item><p>Umbrella insurance coverage against tort liability (i.e., against civil litigation) for your volunteers almost certainly costs far too much for your group to afford (think $2,500 each and every year in premium payouts, give or take, to buy $1M in general liability insurance coverage -- which generally would cover only the corporation as a whole and its directors in the strict performance of their defined duties), if you can find it at all.</item>
<item><p>IRS recognition as a tax-exempt group doesn't mean donations to
your group necessarily becomes tax-deductible: Automatic deductibility is
your group necessarily become tax-deductible: Automatic deductibility is
reserved to <it>charities only</it>, IRS category 501(c)(3), which must obey
extremely stifling restrictions on group activities (e.g., it would then
become illegal to host anti-DMCA events or support any other political
activity), and must meet exacting paperwork and auditing standards. It's
difficult to envision 501(c)(3) charity status actually making functional
sense for any Linux group -- though one continually hears it recommended by
those who imagines being able to tell people their donations will be guaranteed tax deductible must justify any accompanying disadvantages. Most LUGs would more logically file (if at all) for recognition as a "social and recreation club", category <url url="http://www.t-tlaw.com/lr-06.htm" name="501(c)(7)">.</item>
those who imagine being able to tell people their donations will be guaranteed tax deductible must justify any accompanying disadvantages. Most LUGs would more logically file (if at all) for recognition as a "social and recreation club", category <url url="http://www.t-tlaw.com/lr-06.htm" name="501(c)(7)">.</item>
<item><p>In any event, unless one wishes to become a registered charity to render incoming donations tax-deductible, there is <it>literally no point</it> in applying for IRS recognition of your small, informal Linux group under any of the Internal Revenue Code section 501(c) tax-exempt statuses, because IRS simply doesn't care about groups with annual gross revenues less than $25,000, and <url url="http://www.guidestar.org/news/features/990_myths.jsp" name="doesn't want to hear from them">.</item>
<item><p>The <url name="Federal Volunteer Protection Act of 1997" url="http://www.congress.gov/cgi-bin/query/C?c105:./temp/~c105ss2v68"> does <url name="not" url="http://www.runquist.com/article_vol_protect.htm">, in fact, shield volunteers of Internal Revenue Code section 501(c)(3) charities from tort lawsuits. At most, it furnishes some legal defences that can be raised during (expensive) civil litigation, with a large number of holes and limitations, and in most states will be denied unless the group also carries large amounts of (very expensive -- see above) liability insurance. Also, unless the volunteer's duties are not very meticulously defined and monitored, and the alleged tort occurs strictly in the scope of those duties, there's no shield at all -- plus the duties must not involve a motor vehicle / aircraft / vessel requiring an operator's licence, nor may the volunteer be in violation of any state or Federal law, else again there's no shield at all. (On the bright side, it's completely false, as often alleged, that the volunteer must be a member of the group, to be covered: In fact, the Act clearly states that a volunteer may be anyone who performs defined services for a qualifying group and receives no compensation for that labour.)</item>
<item><p>The <url name="Federal Volunteer Protection Act of 1997" url="http://www.congress.gov/cgi-bin/query/C?c105:./temp/~c105ss2v68"> does <url name="not" url="http://www.runquist.com/article_vol_protect.htm">, in fact, shield volunteers of Internal Revenue Code section 501(c)(3) charities from tort lawsuits. At most, it furnishes some legal defences that can be raised during (expensive) civil litigation, with a large number of holes and limitations, and in most states will be denied unless the group also carries large amounts of (very expensive -- see above) liability insurance. Also, unless the volunteer's duties are not very meticulously defined and monitored, and the alleged tort occurs strictly in the scope of those duties, there's no shield at all -- plus the litigated action must not involve a motor vehicle / aircraft / vessel requiring an operator's licence, nor may the volunteer be in violation of any state or Federal law, else again there's no shield at all. (On the bright side, it's completely false, as often alleged, that the volunteer must be a member of the group, to be covered: In fact, the Act clearly states that a volunteer may be anyone who performs defined services for a qualifying group and receives no compensation for that labour.)</item>
</itemize>
As may be apparent from the above, a number of groups have, in the past, talked themselves into unjustifiable levels of bureaucratic strait-jacketing with no real benefit and serious ongoing disadvantages to their groups, because of misconceptions, careless errors, and tragically bad advice in the above areas. In general, you should be slow to heed the counsel of amateur financial and tax advisors. (This HOWTO's maintainer had past experience during his first career as a <it>professional</it> finance and tax advisor, but, if you need competent advice tailored to your situation, please have a consultation with someone currently working in that field.)
@ -1597,6 +1597,7 @@ issues surrounding incorporation, tax-exempt status, and insurance in the
USA. Found new URLs for a vast number of links. Updated licence to
Creative Commons BY-SA 3.0, to incorporate improvements. Re-sorted country coverage into alphabetical order (a small gesture to further reduce US-centrism). Add plug for The Linux Foundation.</item>
<item>1.8.0: Corrected typos. Improved some markup. Expanded "Common Misconceptions Debunked" section to address recently popular errors about USA Volunteer Protection Act of 1997, civil liability, and IRS 501(c)(3) tax-exempt status. Linked directly to the Act and an analysis page. Furnished links for <it>Non-Lawyers' Non-Profit Corporation Kit</it>, for <it>DistroWatch Weekly</it>, and for the Raymond quotation.</item>
<item>1.8.1: Banished more typos. (I blame society.)</item>
</itemize>