[Iasa20] Answers

Alissa Cooper <alissa@cooperw.in> Fri, 02 March 2018 18:43 UTC

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From: Alissa Cooper <alissa@cooperw.in>
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Date: Fri, 02 Mar 2018 13:43:05 -0500
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Subject: [Iasa20] Answers
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I’ve gotten some initial answers to some of the questions below. The tax lawyers are still working on some of these so you can expect to see more follow-up.

> On Feb 26, 2018, at 8:36 PM, Alissa Cooper <alissa@cooperw.in> wrote:
> 
> I’ve compiled the list of questions below for review by the folks at ISOC and Morgan Lewis (as appropriate). Some of these are derived from the list discussion and some from the design team’s initial discussions of the memo. 
> 
> 1. We’d like more information about the public support test, what the desired relationship is between public support and total support, and whether the 2% cap applies to non-profit foundations.

In the ideal case, we would be aiming for: ( public support / total support ) >= 33.5%. Under a budget like our current budget, total support == (sponsorships + ISOC contribution). Meeting registration fees would not count towards total support. Public support would include ISOC’s contribution, so we would exceed the necessary threshold.

Contributions from non-profit foundations would be capped at 2% for the purposes of calculating public support.

> 
> 2. For option 2 and option 3, we’d like to understand what kinds of provisions could be included in an operating agreement between ISOC and the IETF entity regarding board appointments and control, assuming we want to maximize the IETF’s ability to determine the composition of the board.

Awaiting the lawyers on this.

> 
> 3. We’d like more information about the extent of the administrative burden under options 1 and 2, both the one-time burden to create the entity and the ongoing burdens relating to tax and audit obligations. 

None of these burdens are considered highly significant in the context of setting up and maintaining an organization. Ongoing burdens relate to audits and compiling the IRS form 990, which many small non-profits manage via contracted accountants. This is also how ISOC manages these burdens for itself.

> 
> 4. We’d like to understand whether it would be possible for the IETF administrative entity to be incorporated outside of the US under options 2 and 3, and if so, how the administrative complexities compare to incorporating the entity in the US.

This appears to be quite complicated. Across a survey of jurisdictions, the issues to address would include understanding the local tax laws, the intersection with US tax laws, jurisdiction for tax receipts, analysis of what is deductable, etc.; rules for obtaining non-profit status; employment rules and regulations; requirements for banking, bank transfers between jurisdictions, and transfer pricing; and numerous other issues. Although ISOC does have an office in Geneva, that would not help to bootstrap the process of incorporating in Switzerland in any particular way.

The lawyers may follow up with more detail here.

> 
> 5. Ted’s question about whether the notion of membership under option 2 contemplates members aside from ISOC as the sole member.

There were indeed two different uses of the word “member” here. “ISOC as the sole member” was meant in the corporate law sense of being legally responsible for the entity, whereas “can have members that are not ISOC members” was meant in the sense of ISOC’s existing org/chapter/individual members (which of course the IETF doesn’t have, but I don’t think we communicated that clearly to the lawyers before they wrote the memo).

> 
> 6. We’d like to understand how the tax receipts work under option 3 — whether sponsors and/or meeting attendees will pay the IETF administrative entity but receive a tax receipt from ISOC, or whether there is another way of handling receipts.

Awaiting the lawyers on this.

Best,
Alissa