IRS Puts Open Source Projects Under Microscope, Spawns Nonprofit Black Hole

For the past few years, trying to get tax-exempt status for your open source project has been a non-starter for many. And now we know why. Since at least 2010, the Internal Revenue Service has flagged applications by open source organizations seeking tax except status, according to internal IRS documents released by Congress this week.

According to the documents, open source projects have been flagged by the tax agency’s Be On the Look Out, or BOLO, list. This means they received extra scrutiny from the IRS — just like the Tea Party, some progressive organizations, and medical marijuana groups — when they applied for certain types of federal nonprofit status. The fact that open source projects were being flagged by these BOLO lists was first reported by Mother Jones.