4 ms·

You are not supporting the software but bad practices resulting in fines and fees. But there's hoping a lesson was learned. It would be a shame if something lik

by rplnt 9y ago

You are not supporting the software but bad practices resulting in fines and fees. But there's hoping a lesson was learned. It would be a shame if something like this damaged the product.

DanBC 9y ago
You say bad practices, but they got advice from a registered qualified professional in a complex area of tax law.
- rplnt 9y ago
  Yeah, I see, I didn't mean to say it was intentional.
- Sujan 9y ago
  If this were the case, wouldn't that person be liable then?
  - gcp 9y ago
    They would need to prove they suffered loss (and an actual error!). That's not clear in this situation. Not paying taxes you were due isn't extra costs due to your accountant, although fines and interests may be.
    - Sujan 9y ago
      So it doesn't work like this? A: Hey B, how do we have to set up our company/foundation so this doesn't blog up and we have to pay non-sensical taxes only because of the way we are set up? B: Do it this way: ... (later) Z: A, you have to pay taxes because your setup is strange and makes no sense to our rules. B: Damn, we're liable for the bad advice we gave... (honest question)
      - TheOtherHobbes 9y ago
        No. Legally, the hired professional is an advisor. The board/management are collectively responsible for picking a good advisor and double-checking his/her recommendations. Bottom line: no one takes responsibility for anything (unless they're on the board) and you are on the hook for everything. This also applies to lawyers, property professionals, medical professionals, engineers, architects, and so on. Of course this is outrageously unfair, but the reality is that winning compensation for incompetence and malpractice is incredibly hard and expensive - and most professional contracts include explicit disclaimers of responsibility in an attempt to make it even harder.
        Tyrek 9y ago
        There's no reason why this is outrageously unfair. An external consultant is only held to an advisory standard because they are external - they are not party to the detailed nuances that management may have inadvertently or deliberately concealed.
        TheOtherHobbes 9y ago
        It's outrageously unfair because when you hire an advisor you typically know so little about their domain of expertise you have no idea what questions to ask them. So you have no effective oversight over the quality - or otherwise - of their work. Of course you can hire another professional to double check the advice of the first professional, but that soon gets expensive, you're pretty much guaranteed some angry muttering, and you're still not guaranteed a reasonable outcome. It's a remarkable fact that consumers have more rights when buying a toaster than when hiring an accountant or lawyer - and the toaster is going to be more reliable, and much less expensive to run.
        mLuby 9y ago
        Sounds like what they should have gotten was "audit insurance". IDK if such a thing exists, but if it does I'd think you could reduce your premiums if you can prove your risk is low (by providing documentation, or by getting sign-off by a 3rd party tax accountant). Point is, I'd want to pay money to remove my liability, not just reduce its likelihood.
    - icebraining 9y ago
      They say the money made by the developer is only due because of iffy status of the Foundation, and now the income is tax free. So it seems that the taxes due were because of the accountant advice on the structure of the Foundation - unless the sales started later, or the laws changed in between.
      - gcp 9y ago
        That's a fair point. Still won't be easy to actually come out on top when litigating, though.
gcp 9y ago
Getting accounting correct in this kind of situation is just very hard, and sometimes people get it wrong even with due diligence and advice from trained professionals in the field. Saying this is "supporting bad practices" when they are addressing the problems with their set up is IMHO disingenuous. (This kind of problem also illustrates why Mozilla is set up the way it is, with a Foundation and a Corporation. Tax Law doesn't always deal well with doing both in the same org.)
- wodenokoto 9y ago
  Just to add to your point: Mozilla is set up that way because they got in trouble with the IRS, and had a tax debt for - if memory serves me well - some years after setting up the corporation. Taxes and accounting is not easy.
bjpbakker 9y ago
Boudewijn Rempt replied elsewhere in this thread with a little more details [1]. After reading this, I don't think the fines are based on bad practices by Krita, but rather on the over-complicated Dutch tax system. [1] - https://news.ycombinator.com/item?id=14899324 https://news.ycombinator.com/item?id=14899324
- deleted 9y ago
  [deleted]
DiThi 9y ago
Still better than supporting a new project from scratch that would take many years to reach the state of Krita. Despite this setback, they still deserve donations IMHO.

by rplnt 9y ago

You are not supporting the software but bad practices resulting in fines and fees. But there's hoping a lesson was learned. It would be a shame if something like this damaged the product.

DanBC 9y ago

You say bad practices, but they got advice from a registered qualified professional in a complex area of tax law.

rplnt 9y ago
Yeah, I see, I didn't mean to say it was intentional.
Sujan 9y ago
If this were the case, wouldn't that person be liable then?
- gcp 9y ago
  They would need to prove they suffered loss (and an actual error!). That's not clear in this situation. Not paying taxes you were due isn't extra costs due to your accountant, although fines and interests may be.
  - Sujan 9y ago
    So it doesn't work like this? A: Hey B, how do we have to set up our company/foundation so this doesn't blog up and we have to pay non-sensical taxes only because of the way we are set up? B: Do it this way: ... (later) Z: A, you have to pay taxes because your setup is strange and makes no sense to our rules. B: Damn, we're liable for the bad advice we gave... (honest question)
    - TheOtherHobbes 9y ago
      No. Legally, the hired professional is an advisor. The board/management are collectively responsible for picking a good advisor and double-checking his/her recommendations. Bottom line: no one takes responsibility for anything (unless they're on the board) and you are on the hook for everything. This also applies to lawyers, property professionals, medical professionals, engineers, architects, and so on. Of course this is outrageously unfair, but the reality is that winning compensation for incompetence and malpractice is incredibly hard and expensive - and most professional contracts include explicit disclaimers of responsibility in an attempt to make it even harder.
      - Tyrek 9y ago
        There's no reason why this is outrageously unfair. An external consultant is only held to an advisory standard because they are external - they are not party to the detailed nuances that management may have inadvertently or deliberately concealed.
        TheOtherHobbes 9y ago
        It's outrageously unfair because when you hire an advisor you typically know so little about their domain of expertise you have no idea what questions to ask them. So you have no effective oversight over the quality - or otherwise - of their work. Of course you can hire another professional to double check the advice of the first professional, but that soon gets expensive, you're pretty much guaranteed some angry muttering, and you're still not guaranteed a reasonable outcome. It's a remarkable fact that consumers have more rights when buying a toaster than when hiring an accountant or lawyer - and the toaster is going to be more reliable, and much less expensive to run.
      - mLuby 9y ago
        Sounds like what they should have gotten was "audit insurance". IDK if such a thing exists, but if it does I'd think you could reduce your premiums if you can prove your risk is low (by providing documentation, or by getting sign-off by a 3rd party tax accountant). Point is, I'd want to pay money to remove my liability, not just reduce its likelihood.
  - icebraining 9y ago
    They say the money made by the developer is only due because of iffy status of the Foundation, and now the income is tax free. So it seems that the taxes due were because of the accountant advice on the structure of the Foundation - unless the sales started later, or the laws changed in between.
    - gcp 9y ago
      That's a fair point. Still won't be easy to actually come out on top when litigating, though.

gcp 9y ago

Getting accounting correct in this kind of situation is just very hard, and sometimes people get it wrong even with due diligence and advice from trained professionals in the field. Saying this is "supporting bad practices" when they are addressing the problems with their set up is IMHO disingenuous. (This kind of problem also illustrates why Mozilla is set up the way it is, with a Foundation and a Corporation. Tax Law doesn't always deal well with doing both in the same org.)

wodenokoto 9y ago
Just to add to your point: Mozilla is set up that way because they got in trouble with the IRS, and had a tax debt for - if memory serves me well - some years after setting up the corporation. Taxes and accounting is not easy.

bjpbakker 9y ago

Boudewijn Rempt replied elsewhere in this thread with a little more details [1]. After reading this, I don't think the fines are based on bad practices by Krita, but rather on the over-complicated Dutch tax system. [1] - https://news.ycombinator.com/item?id=14899324 https://news.ycombinator.com/item?id=14899324

deleted 9y ago
[deleted]

DiThi 9y ago

Still better than supporting a new project from scratch that would take many years to reach the state of Krita. Despite this setback, they still deserve donations IMHO.