Tax-exempt Geek Group hit with huge tax bill

Non-profit hackerspace The Geek Group has been hit with a hefty tax bill despite their tax-exempt status. We featured a boom camera built by the organization back in November. It is the goal of The Geek Group to fulfill the thirst to explore and create by providing facilities, peer group, and camaraderie that make knowledge and learning not only acceptable, but desirable. In the video after the break you can hear a bit about the organization’s role in servicing donated computers and putting them out into the community, as well as its role in education through groups like the Boy Scouts of America.

This is all done without the goal for profit and accordingly they have attained 501(c)(3) status with the federal government (we’ve seen their 990 forms stating this). To the best of our knowledge this doesn’t mean that they don’t need to pay property taxes, but it does make property taxes ridiculously low (we’ve heard of one cent per acre for non-profit land holdings before). That’s why it comes as quite a surprise when the township slaps a sticker on the doors giving notice of seizure and demanding payment for $47,652.78 in back taxes or the assets will be auctioned off. The entire story, from The Geek Group’s point of view, unfolds in a video of the quarterly Board of Directors meeting from last Saturday.

We’re hoping this is just a mistake and can be remedied. That being said, it’s not easy to run this type of operation. It’s unfortunate that the Board of Directors needs to deal with a tax battle in addition to fulfilling the mission of the organization. Good luck to them in navigating the road ahead.

[Thanks Jeremy]

Comments

  1. Anon says:

    Saw it coming…

  2. Skitchin says:

    It sounds like all they should even have to do is wave a piece of paper in front of a judge and they would then dismiss the case, but I know things don’t work like that in the real world… It sounds like this thing has already spiraled well out of logical and honest approaches. What the city is trying to pull should be(and might be for all I know) completely illegal. This is almost like bait and switch fraud, so now I wonder if something else like this has occurred in the city’s recent history?

  3. Ron says:

    @Anon

    They should have seen it coming too… cities just don’t one day decide slap a notice on the door, it takes many YEARS and many bills (and summarily ignoring them), to get to that point. There is MUCH more to this story.

  4. Mikey says:

    @Skitchin
    It’s okay, the law is only there to keep citizens in line, since when have the govt./police ever been obligated to follow it?

    Bleh, this is fuzucked up, Good luck guys.

  5. justDIY says:

    does anyone have info on the other side of this story? The reporting is awful one sided and biased. As others have posted, the govt doesn’t just all of a sudden do things, it takes years and lots of meetings. The City of Kalamzoo’s website is pretty bad, they don’t seem to have their meeting minutes indexed. The County website doesn’t index their minutes either (wtf guys!).

  6. Dave says:

    The state of Michigan were a-holes to the Boy Scouts and Owassippe camp in Muskegon. This doesn’t come as a surprise to me, but I hope the group gets through this and things get straightened out.

  7. BigBubbaX says:

    Absurd, as though groups like this don’t get enough flak as it is. I hope this gets cleared up asap.

  8. rob says:

    as to whether this was a legitimate surprise or not…

    the county i grew up in does this sort of stuff to people all the time. an old man in town tore down a derelict building, which the county assessed to be an increase in the value of his property. a long time (3-4 years) went by before the assessor’s office figured out it was gone and upped the assessment of his property. the assessor at some point talked to his neighbors and figured out on what date the building was torn down, then claimed he tried to hide the “improvements” from them. so the first visit he got was to be served with a delinquency notice that said he needed to pay an absurd sum or they were going to auction off his stuff.

    if it can happen here (WA) i can see it happening anywhere.

  9. Si1entDave says:

    I believe its actually property taxes as in the stuff they have *in* the building. That’s why the whole newspaper article thing has happened. The tax office has read reports that they’ve got a $1.3m robot (for instance) and decided that means they owe lots of taxes. I believe they are still exempt from property taxes as in land and the building.

    Could be wrong though. I live in the UK, I’ve never encountered the idea of taxing you based on what value of junk you’ve got…

  10. ehrichweiss says:

    @Ron, nope they can do this the moment you file, and they do.

  11. fartface says:

    The city of Kalamazoo hates things like this and they do this a LOT. They are pretty much doomed to either come up with the cash or fold up shop.

    That’s michigan, we are ran by greedy rich jerks that have no concept of reality.

  12. therian says:

    voted for Obama? now get use to this

  13. jeff-o says:

    @therian: OK, I get it, you’re a troll. But I must ask, what the hell does Obama have to do with this?

  14. Belenos says:

    Assuming that this *isn’t* a mistake, and is a malicious act, how could we help? Ideas anyone?

    Here’s the contact information for the Township:

    1720 Riverview Drive,
    Kalamazoo, Michigan 49004-1099

    Phone: 269.381-8080
    Fax: 269.381-3550

  15. Nonya-Biz says:

    @therian, at least he was born in the U.S.

  16. K0mrade says:

    I’m not a fan of speculating based off a one sided story. Like many others have said: The gov’t may be stupid, but they don’t just do this sorta thing for gits and shiggles.

    While I personally am pissed with the state of Michigan for revoking the several thousand scholarships many of us university students had, I say we should wait to hear the other side of the story.

  17. Belenos says:

    I’ve been looking around, and all the stories say is that the town officials/lawyers refused to comment. Apparently while the group’s tax status is ‘under review’ they will not comment. However, since the review process is projected to take about three weeks (source: http://www.wwmt.com/articles/margin-1373647-bottom-troubles.html), that means that the state is going to be allowed to take everything the group owns before they finish the review. Sounds shady to me.

  18. The Ideanator says:

    This is so one-sided because the other side refuses to show and explain their heinous persecution.

  19. Ivan says:

    This reminds me of the swedish police bullying tactics from last christmas: http://www.hack.org/mc/writings/hackerspace-raided.html

    What we do as hackers represent ability through knowledge, which apparently could be scary to some.

  20. jim says:

    Seriously providing communities with free pc’s ? teaching for free?!?! Encouraging our youth to better them selves?!?!? How could you !!!!!

    They should (if this doesnt get cleared up) create a format so we can make donations. This is worth saving if it actually gets that far. Keep us informed how this plays out.

  21. Sam says:

    I would like to think that those saying there is more to the story are right. However, I’m pretty disenchanted with my own city government at the moment. They’ve been writing a lot of neighborhoods citations for various silly things. Boats in the back yard and converted garages. The timing is suspect. The economy is bad and governments are hard up for cash. They will not reduce their size and so the citizens are forced to pick up the tab.

  22. ClutchDude says:

    I’m with others in wondering what is the real motive here. Is there another side to the story or is it shady and underhanded taxation?

    Please keep us updated and if there is anything we can do.

  23. BiOzZ says:

    id donate to keep them

  24. Mr.Non-Descript says:

    Get a court injunction barring the seizure of the assets while the case is being reviewed. I’ll donate to them but not for paying the apparent township blackmail – but for legal defense and perhaps a CPA. If they owe the back taxes, fine: pay the taxes. If not, get a tax lawyer and stick it to them (EFF have one on staff?). After the bad PR, I would hope there would be some changes in the township’s personnel.

    Although I’ve only heard one side of this story, it seems a real shame that this could not be worked through mediation or a more-amicable (adult) way.

  25. Haku says:

    What if it’s a 3rd party using/bending laws to try and get the Geek Group kicked out of the building so they can buy it? sending in 12 inspectors at once to ‘ambush’ the group doesn’t quite sound like normal procedures for any town authority.

  26. flaggfox says:

    just submitted to CBS 2 news in Chicago as a news tip. Hope it helps.

  27. Stephen says:

    I don’t trust any city/township government as far as I can throw them. Had my own share of problems with them.

    I am all for supporting groups that help locals out with free services.

    Sounds very suspicious to me. Somebody probably does want the property.

  28. Jayson says:

    @jeff-o

    I think what therian was talking about was the fact that we have a democrat in office and democrats don’t take too well to hackers or hacker-related things. Cyber crime is more of a democrat priority than republican and they tend to label hackers and criminals.

    The Best of 2600 has some good examples in it of what I mean.

  29. vonskippy says:

    Maybe they should have hired a Accounting Geek to count their beans for them.

  30. Charles says:

    The property taxes they are being charged are taxes on the land and building. The contents inside the building unless a motor vehicle such as a car, truck or boat can not be taxed. If they have a $1.5m robot good for them.

    In South Carolina the state, county, or city can only seize the land and building. They must allow you to recover your belongings.

    Tax exempt orgs must still pay property taxes as they help fund the emergency services that that location might need such as the Fire Department or EMS services. If you want to find out how many notices were given all you have to do is search the local newspapers tax notices. In most states the tax office is required to post delinquent accounts in the newspaper.

  31. AnthonyDi says:

    Why don’t they just sell the robot, to pay the taxes.

  32. Anon says:

    They had a chance to dispute this through their lawyer, but didn’t. 22:30 to 24:00 of the board meeting video is relevant, but 23:40 is the key point.

    I wonder why not?

  33. Rhyno says:

    @Jayson

    Yes, progressives are the ones crushing progress in the hacking community. How the hell did they get away with it for so long? Everyone knows that the Republican party is the true friend of independent thinking and entrepreneurship. As a party, they invite fresh, new ideas, and encourage the little guys to develop ways of doing things that reduce dependence on big business, particularly the energy companies. Thank Jebus that they are fighting for the little guy, and not in the pockets of their biggest supporters, the corporate interests. It’s too bad only six percent of our scientists are Republicans… http://www.huffingtonpost.com/2009/07/10/only-six-percent-of-scien_n_229382.html

    Now if they could just crush stem cell research and teach more creationism then all would be right with the world…

    Of course, Obama is personally blocking not just this hack club, but countless others across the nation, and using the long arm of the Democratic party to destroy every last Arduino and remove every electronic parts drawer from every Radio Shack in these United States. Rise up, hackers, and join the RNC…

  34. jeditalian says:

    this is not non profit, its negative profit.
    it’s ridiculous, it’s absurd.
    I would like to see some proof to support “Nonya-Biz”‘s comment..
    not that i care whether or not our president was born in the country, just as long as he wasn’t born and raised and trained in ‘Red China’ or something, coming to fuck up the country.. but that is why we have checks and balances.
    there is no reason that the Nerd Herd should be taxed. obviously the Michigan Dept. of Treachery is unaware of the secret CIA facility that lies beneath the hackerspace

  35. jeditalian says:

    i seem to have misspelled Treasury. my bad.

  36. Jayson says:

    @Rhyno

    I wasn’t saying I agree with therian. I’m saying that democrats focus on cyber-related stuff more. I’m stuck in a state with the govenator slashing s**t left and right that should not be slashed (or at the bottom of the list) and frankly, I’m sick of the republican’s conservative bull crap. I’ve lost trust in our system and our government, but I’m also to the point right now where I hope that we don’t have a republican president after Obama’s 4-8 years in office. Then again, the trends are starting to look like the late 80’s to early 90’s all over again. I sure hope it isn’t because I really don’t want to have to go through that again.

  37. jeditalian says:

    people voted for him because they thought he was going to legalize it.
    i never heard him say that, i heard kids saying that. and drug dealers lol. but i never watch tv or read that shit so i never heard HIM say that he was going to ‘get it legal’ (thats the name of cheech&chongs new tour.)

  38. karmicthreat says:

    I’ve been watching the tax war for a while. This boils down to a few different levels of taxes. In Michigan you pay taxes to the State, Local and County governments.

    These taxes are property taxes on the value of the building and land. Businesses in MI also have to pay PERSONAL property taxes. These are assets other than those covered by the above state property tax. So the contents of the building, machines, vehicles, etc are covered there.

    The KZOO township assessor used the newspaper to assess the personal property taxes of TGG. So when a few 1.3M$ prototype robots are mentioned, the local assessor decided to tax it at that value. Never mind that they are non-functional and are basically worth scrap value, hence why KUKA donated them.

    Since the levels of government in Michigan above the local level use the local assessors assessment to set what they are going to tax, it sets off a taxation chain reaction.

    At this point TGGs legal counsel is of the opinion that there are no legal means to avoid the taxes. It needs to be a legislative solution. So that means Ganholm (governor), Thomas M. George (R)(state senator) or Larry DeShazor (R)(state rep).

    So I think its kind of up in the air about what is going to happen next.

  39. eil says:

    Well, it seems obvious enough to me what’s going on here.

    Those who don’t live in the midwest probably don’t know that since the economy crashed in 2008, Michigan has been bleeding. With the collapse of the auto industry, there has been a mass exodus of people and jobs, and therefore money as well. All Michigan cities and townships are in a severe financial crunch right now because tax revenue has fallen through the floor.

    Local governments are hit particularly hard right now, so it’s not entirely surprising that Kalamazoo is taking this track to revenue generation:

    1. Notice that a local non-profit is getting millions of dollars of equipment donations.

    2. Claim that the donations are not tax-exempt.

    3. Demand an obscene amount of current and back-taxes with the expectation that the non-profit will not be able to pay them. (Because non-profits typically can’t, being non-profit and all.)

    4. When the taxes are not paid, auction off the non-profit’s assets for a cool million or two.

    5. Profit.

  40. jeditalian says:

    let’s do the Haiti thing for Michigan, y’all

  41. cyberscan says:

    If this group’s property is indeed stolen, they should come up with a way to punish the city government and its officials for the theft. They’re hackers. The reason this kind of stuff goes on as often as it does is due to the fact that governments of all types have lost their fear and respect for the people. When Marvin Heemeyer found out that he “cannot fight city hall,” he hacked his bull dozier into a tank and leveled it (city hall among many other city and official owned buildings) instead. These guys can think of something I’m sure.

  42. Nonya-Biz says:

    @jeditalian, talking about McCain he was born at a naval base in coco solo, panama.

  43. Craig says:

    The other side of the story: Kalamazoo is BROKE. Taxing some nerds = easy money. A lot easier than going after Pfizer with their busloads of lawyers.

    If you actually want to donate: http://www.thegeekgroup.org/Donations/index.php

    As to revenge, I wouldn’t be surprised if they have all kinds of plans up their sleeves if it goes as badly as possible. You don’t build a group like that without being creative.

  44. Mr. Twister says:

    The folks who run local government are generally the worst cross-section of lifetime public trough feeders. Google Rep. Laura Richardson to see the kind of idiot who represents my district. I would love to arrainge a meeting between her and Marvin Heemeyer. Good luck to you guys.

  45. Drone says:

    The second I saw mention of them supporting the Boy Scouts of America – the light went on. This is another case of the Government saying, “believe as I do, do as I say, or you will cease to exist”.

  46. Mlohkcots says:

    Ask Chris Boden where the $20,000 per month it takes to heat the building comes from. He says he has no money. He has money to pay their taxes. He’s been ignoring the bills for years now.
    Ask him when the last time a kid was in his building being educated. He says he educates youths. But where are they?
    He has a building full of junk. He claims to have over a thousand members. The building is empty most of the time. And he wants to charge dues for access to his pile of junk.

  47. nod says:

    Mlohkcots you should like you’ve got some related information to this story, how would you know the information you’re claiming?

  48. Belenos says:

    hahaha! Protip: most trolls try to *hide* their trollishness at first.

  49. Nonya-Biz says:

    they should just sue that daniel dehaan guy, and use the money for the taxes.

  50. Mr. Twister says:

    Here’s what really happened: I flew to Kalamazoo with two big bags of $20’s to help Mr.Boden with his tax problem. Mlohkcots saw me at the airport with the money bags and followed me to the Geek Group building. The tax auditors were already harassing Mr. Boden. Boden gave me a nod and it was on. I put Mr.Mlohkcots and one of the tax guys in a headlock. Mr. Boden knew my hands were full (I had to protect the money as well) so he put the other tax guy in a full nelson. We made them cry and they said that the police would be called. Not good. I gave Mr. Mlohcots bus fare and left without giving Boden the money. I felt bad so I flew home in coach class.

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