Feeds

Firefox millions - only 12 per cent Google free

Mozilla faces IRS audit over search sugar daddy

Boost IT visibility and business value

In 2007, the Mozilla Foundation received 88 per cent of its revenue from a certain Mountain View sugar daddy. And thanks to its longstanding Google dependence, the organization is facing an IRS audit and questions over its tax exempt status.

Today, the non-profit behind the open-source Firefox browser released its long-delayed 2007 financial report. Revenues hit $75 million, and $66 million of that came from Larry, Sergey, and crew.

In 2006, the Foundation pulled in $67 million, and Google dollars accounted for 85 per cent ($59.5 million).

Mozilla and Google have entered some sort of agreement that involves Firefox shuttling people onto the world's most popular search. You'll notice that Mozilla slaps a Google search box onto the Firefox toolbar and default home page. Just before Google unveiled its very own Chrome browser, the two outfits renewed their Firefox pact for another three years. It expires at the end of November 2011.

Presumably, the pact is tied to ad revenue generated through Firefox. It dates back to at least 2005 - and most likely to 2004. Mozilla's 2004 tax form shows $4,422,674 in search cash, or 76 per cent of its revenues.

The Foundation received tax exempt status in 2003. And it did not pay taxes on that $4,422,674 in 2004, saying that an arrangement with "a search provider...facilitates the dissemination of the Foundation's browser, thereby increasing the accessibility of the internet."

We're not quite sure how a search box facilitates the dissemination of a browser. But there you have it.

Then, in 2005, the Foundation spun off a for-profit operation. And multiple search engine contracts were transferred to this brand new Mozilla Corporation.

That same year, according to today's blog post from Mitchell Baker, chairperson of the Foundation, it set aside a "tax reserve fund" in case the Internal Revenue Service (IRS, the US national tax agency) decided to review the tax status of its 2004 and 2005 search engine funds.

And the IRS has indeed launched a review. "We are early in the process and do not yet have a good feel for how long this will take or the overall scope of what will be involved," Baker says.

In its financial report, Mozilla argues that its 2004 and 2005 search revenues were royalties and should not be taxed. But it's well aware that the IRS may see things differently. Its tax reserve fund totaled $14,832,000 as of the end of 2007.

The report also says there has been an "inquiry regarding its tax exemption" because Google is supplying such a large share of its revenue: "While the Foundation did not automatically qualify as a public charity with public support at 33 per cent of total support, it believes that it qualifies as a public charity under the facts and circumstances test with public support over 10 per cent."

If it doesn't pass the test, the Foundation says, it will become a private charity, coughing up about $100,000 in taxes.

We say all this merely to show there's a fine line between a tax-exempt charity and a multi-million-dollar Google traffic machine. ®

Best practices for enterprise data

More from The Register

next story
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?