From: "Jimmy Wales" jwales@bomis.com To: wikipedia-l@Wikipedia.org

Jimmy I would not worry about it too much right now, as many states require that you have already applied to the IRS for an exemption (some even require that you receive it and some states let you file after the end of the fiscal year. It is a very complex and troublesome process, but I don't think they are going to go after every $5,000 group out there, the requirements would be too onerous. Obviously most of these states thought up their regulations before the internet came into existence.

I wonder if there is a service out there that could assist, for a reasonable fee, in actually complying with these absurd regulations. If I could just spend $2500 and wave my hand to make it happen, that'd be great.

https://www.incspot.com/public/c7-01d.html These people charge about $11,000 for filings in all 39 states that have regulations.

It really shouldn't cost that much. Accountants will usually do it for much less. lawyers will do it too. It is mostly printing multiple copies of the Uniform Statement and an address and a putting the check in the envelope.. http://www.multistatefiling.org/urs_webv231.pdf It is a fillable form so you can fill it in online and then print out 39 copies (plus the six states that have appendixes). The form is page 5 to 8, there is some state specific information the rest is instructions and the six states that have supplemental requirements.

Once you have filled out the form it may just have to be notarized several times for different states. Most of the states want a copy of the first year's 990 form and really most conisider solicitation as occuring when you are sending documents, emails or telemarketing calls into the state.

There is talk about having an online site to do it, but last I heard they had not gotten that together yet. Maybe if you wait a few months it will happen.

The Uniform Registration Statement makes it much easier to comply, though it is still a lot of paperwork. I think the Charleston Principles are on your side, you don't really know where the contributions come from (though remember that the IRS requires a notice sent to anyone who receives more than a $75 benefit (as a donation). I can't recall but I think keeping paper records of donors and addresses is still required because of these state charities requirements.

Also there is always going to be a bit of a lag when organizations get started, they give you a while to file the IRS 1023 exemption application and you can get an extension (and only then if the projected income is over $5,000 which may not really happen this year).

I would not worry about it much as long as solicitations are not sent out via email or snail mail. Once Wikipedia's income is over $25K a year then, yes, best to comply, but for now it is pretty prudent to just say it is not solicitation. I think most people understand the distinction. They are not going to "break the balls" of a $5K a year organization, really the IRS filing is more important for now.

Probably best to get all the paperwork ready for the 1023, bylaws, board minutes, first year budget, etc. once the 1023 is filed the state forms can be sent out (many of them want a copy of that anyway along with a copy of the 990 tax return).

I think if Wikimedia has a $5,000 annual budget using almost half of that to comply with state regulations is a good reason to delay in filing these forms. Most of them do not have to be filed until after the end of the fiscal year which I am assuming is sometimes in 2004, so you have some time to do it, though I would probably do it in California as that is where the servers are for now.

You might want to look at these BBB Wise Giving standards. This is something else that gives on an idea what compliance with all these charitable giving laws is all about.

http://www.give.org/standards/newcbbbstds.asp

You will note that getting the Wise Giving Seal of approval costs a minimum of $1,000 per year and that is for organizations with income of less than $1,000,000 Wikimedia is way under that figure. http://www.give.org/seal/seal_license.pdf

This is a private method to so that there is transparency in the organization's finances and government.

Alex