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| Author |
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| 25 new of 138 responses total. |
cmcgee
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response 50 of 138:
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Mar 31 02:56 UTC 1998 |
While awaiting the legal opinion of dpc, I would suggest that gaining
*tax-exempt* status will allow us to pay FEWER taxes than we do now, not more.
We are already a corporation; becoming a corporation with tax-exempt status
will help on the tax issues, not hurt.
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other
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response 51 of 138:
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Mar 31 03:37 UTC 1998 |
maybe m-net has been paying "property" taxes on non-land property?
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mdw
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response 52 of 138:
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Mar 31 05:01 UTC 1998 |
I've no idea where matters stand with grex, but I happened to talk to a
restaurant owner once who said that he did, in fact, pay property tax on
the restaurant firnishings and equipment, even though he was also
separately renting the building he was in. Since he was running a
commercial restaurant in store-front property, it's quite likely his tax
situation is wildly different than grex. Given the
# of large companies with millions of dollars worth of property,
my guess is that the tax rate, if any, is pretty low, and given that
grex actually has very little capital equipment (probably less than
$1000 in value) chances are the taxes aren't really worth the city's
while to collect. It should be pretty easy to find out however.
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scg
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response 53 of 138:
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Mar 31 05:25 UTC 1998 |
If we do need to pay property taxes, now is probably the time to find out
about it. This is really the first time in Grex's history that we've been
running new commercial grade equipment, instead of old stuff put together from
spare parts. The Ascend Pipelines and the 670 are all things that we didn't
have a year ago.
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rcurl
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response 54 of 138:
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Mar 31 06:33 UTC 1998 |
The MKC is a non-profit 501(c)3 exempt Michigan corporation with its
registered office in Ann Arbor, but it has never been contacted by
the city with regard to anything, much less taxes. This does not
establish what the law is, of course, and I would be interested in knowing
where the lines are drawn.
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davel
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response 55 of 138:
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Mar 31 14:38 UTC 1998 |
I checked with someone (not a lawyer, but deals with this stuff).
He says that Corporate Personal Property Tax indeed exists in A2 (& in
every city in Michigan, by state law). Yes, it would cover furnishings,
equipment, etc. He thinks that a Michigan nonprofit is almost certainly
not liable, however.
I don't recommend taking his word for it without checking the law; but
I'd say he's probably right.
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jep
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response 56 of 138:
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Mar 31 16:44 UTC 1998 |
A few years ago, Arbornet was assessed a couple of hundred dollars in
property taxes form the city of Ann Arbor. Arbornet appealed the bill
and tried to get a retroactive exemption, and both of these moves were
denied. I guess that's what Bruce was referring to.
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rcurl
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response 57 of 138:
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Mar 31 17:03 UTC 1998 |
Were they 501(c)3 exempt at the time? I think we need to know the grounds
for that tax and how their situation differed from other non-profits.
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dpc
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response 58 of 138:
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Mar 31 19:02 UTC 1998 |
Yes, Arbornet was 501(c)(3) exempt at the time we contested Ann Arbor's
right to collect "personal property" tax (a tax on business property
that is not real property). The City and State have their own standards
on which businesses can be exempted from this tax, and Arbornet didn't
meet them.
The "personal property tax" is probably one of the least-enforced
in the Universe. The City has to know that you're in business, and then
it has to follow up by sending you a tax bill. I expect that the
City doesn't "know" officially that Grex is in business.
The tax rate is low. I think Arbornet paid $200 or so last
year in personal property tax, based on the computers and stuff in
the NEW Center.
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mta
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response 59 of 138:
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Mar 31 19:07 UTC 1998 |
Some one up there (sorry this particular connection doesn't let me scroll
back) said that anyone who is so inclined can make 501c3 a real issue -- even
if they're wrong. I'd say that's absolutely true.
BUT -- that's far from unique to 501c3. Someone with a hankering to cause
dissension can use *any* issue, including which direction toilet paper should
hang, into a cause. I don't think that should let anyone influence their
bahvior, either on the TP issue or on 501c3.
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dang
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response 60 of 138:
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Mar 31 22:09 UTC 1998 |
(It should hang from the front of the role. End of discussion. :)
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bru
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response 61 of 138:
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Apr 1 04:58 UTC 1998 |
I suppose my point is, that if you gain 501(c)3 status, it is more likely the
city will notice you.
But I still believe it will hinder you in what you can do as a corporation.
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rcurl
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response 62 of 138:
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Apr 1 06:52 UTC 1998 |
How?
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bru
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response 63 of 138:
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Apr 1 14:58 UTC 1998 |
because you have to consider every action you take as a corporation and how
it will effect or be effected by your 501(c)3 status.
It limits you in what you can do in a lot of areas.
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davel
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response 64 of 138:
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Apr 1 15:09 UTC 1998 |
That at least is a real argument against going for 501(c)3. I don't think
it's enough to outweigh the advantages, but it applies, anyway.
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janc
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response 65 of 138:
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Apr 1 17:45 UTC 1998 |
Actually, our articles of incorporation begin, after giving the name of the
corporation, by saying:
The corporation is organized for such charitable and educational purposes
as may qualify it for exemption from the federal income tax under
section 501(c)3 of the Internal Revenue code of 1986, as amended (or the
corresponding provisions of any future United States internal revenue
law.) More specifically, such purposes include, but are not limited to,
...
So actually, almost the only thing the articles of incorporation limit our
mission to is obeying the 501(c)3 rules. The later articles do this in more
specific detail, promising that no earnings will be distributed, no
substantial part of our activities will be propaganda or influencing
legislation, and so forth. Grex is already legally bound by *all* the
restrictions of 501(c)3 corporations, and have always operated under those
restrictions. I don't think there has ever been a time when we *wanted* to
do anything that was outside those rules.
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rcurl
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response 66 of 138:
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Apr 1 17:57 UTC 1998 |
Re #63: whether an organization has 501(c)3 exemption or not, any
organization has "to consider every action you take as a corporation and
how it will effect or be effected by your <whatever it happens to be>
status". This is no argument whatsoever.
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bru
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response 67 of 138:
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Apr 2 17:51 UTC 1998 |
Saying you will abide by 501(c)3 rules, adn actually being bound to those
rules by law are two different things entirely.
I can say I will follow the rules of vegetarianism, butif I slip and don't
follow those rules, it isn't gonna hurt me.
What exactly do you expect to gain from being 501(c)3 compliant? What
advantages in business does it bestow exactly, other than the fact that
donations made to you can be claimed by the donator on his taxes?
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rcurl
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response 68 of 138:
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Apr 2 18:19 UTC 1998 |
501(c)3 tax exemption gives donors a tax deduction, as you point out. It
is also necessary for a Michigan charitable solicitation license. I think
it helps get a Michigan sales tax exemption (but I am not sure if it is
necessary). It is also necessary for most non-profits to obtain property
tax exemption (it is evidence of one's charitable status, for the
consideration of the township board to exempt property). Finally, it is
necessary to establish an endowment fund with a Community Foundation, which
would allow donations to be a Michigan tax credit.
How much of this would be advantageous to Grex depends on what Grex does.
At the very least, Grex raises money from donations. This source would
be augmented if the donations were deductible. [The state does require
that an organization be licensed to solicit donations from the public,
which Grex does, though there may be some limit below which the license
is not required. This should be looked into.]
The other side of the coin is what *disadvantages* accrues from 501(c)3
tax exemption. The main one is that assets cannot accrue to the personal
benefit of members. That is, Grex could not be a profit-making organization.
In addition, sales could not be a major source of income.
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dang
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response 69 of 138:
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Apr 2 18:50 UTC 1998 |
We are legally bound to follow our Articals and Bylaws, unless they are
changed. Hence, we are just as legally bound to be 501(c)3 as we would
be if we got tax exhemption. More so, as a matter of fact, because we
could let our 501(c)3 lapse, but we can't let our Articles lapse.
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aruba
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response 70 of 138:
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Apr 2 21:20 UTC 1998 |
If nothing else, 501(c)3 status gives us credibility when we solicit
donations. I've noticed that M-Net's solicitations often point out their
tax-exempt status, and I'd like us to be able to do the same.
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scg
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response 71 of 138:
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Apr 2 22:06 UTC 1998 |
I've lost count of how many cool pieces of hardware and the like people have
told me they would donate to Grex if we were 501(c)3, but couldn't otherwise.
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jep
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response 72 of 138:
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Apr 2 22:41 UTC 1998 |
What 501(c)(3) will do is allow Grex to pursue external funding; grants.
As Arbornet has discovered, users don't donate in order to take a tax
deduction. Tax deductable status is not an incentive for the users of
M-Net to make donations, and I bet it wouldn't be an incentive for Grex
users, either.
Grants take a fairly large amount of work, because someone has to
convince someone else with money to give away that they should give it
to us, and not to some other worthwhile organization. I'm not convinced
anyone will have a lot of time to spend on this kind of activity, but if
no effort is put into it, then still, no harm is done by getting the
501(c)(3) designation in my opinion. And if effort is put in, and if it
pays off, a lot of good could come of it.
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mdw
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response 73 of 138:
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Apr 4 08:43 UTC 1998 |
Getting grants doesn't excite me that much. If we (grex) were to pursue
grants, I would only want to see us do so for capital improvements, and
not operating expenses. I would very much hate to see grex become
dependent on grants for *operating* expenses. As free-nets were
originally organized, they were supposed to be almost entirely funded by
grants and such; this produced both good & bad experiences. Public TV
is also partially funded by grants. It works better there because there
is more "push" content that can be influenced by the grants. It's still
a bit icky.
More reasonable I think, are grants by individuals - even if it doesn't
actually *attract* more grants, it will make people feel better about
donating to grex, and there's certainly no harm in that--we *want*
people to feel good about donating to grex. Another useful avenue for
grex is in terms of acquiring obselete property. There are certainly
plenty of corporations which would prefer to give obselete equipment to
a 501c3 organization, than to dumpster it, or sell it on the open
market. M-net never made good use of this largely because they don't
have people with the right skills to deal with obselete stuff. On the
other hand, here on grex, we've always specialized in the
"bottom-feeding" technique, so we already have all the expertise we need
in terms of doing this. We've also gotten feedback from potential and
actual donors that if we had 501c3, it would facilitate their giving us
*more* stuff. That means we might get stuff that was less obselete, and
we could even take a stab at getting stuff from larger corporations that
don't know us, don't want to know us, but do know what 501c3 is.
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other
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response 74 of 138:
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Apr 4 08:58 UTC 1998 |
if we want to go for grants, then i would support the idea of a hired
grant-writer, on the condition that the grant money that person brings in
covers their compensation. this is not uncommon.
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