IRS Denies Open-Source Software Company’s Tax-Exempt Request

The IRS denied tax-exempt status to an organization that creates open-source software because its activities aren’t limited to charitable purposes.

The organization creating open-source software—which is code freely available for anyone to use or modify—is maintained and funded by a for-profit company, according to an IRS determination letter released Friday and dated May 2. The unnamed organization aims to be supported by grants and donations as well as membership fees as it expands.

The IRS said that although some of the organization’s activities may be considered education or charitable, a substantial portion of its activities revolved around creating and maintaining ...