Mozilla Issues Audited Financials, Faces Audit by IRS

Steven Bobson, Europe & Americas Editor
November 19, 2010 /

Mozilla’s 2009 audited financial statement revealed that the open source’s revenue largely depended upon Google, though it has dropped from 91 percent in 2008 to 86 percent last year.

The statement said that Mozilla’s contract with an unnamed search engine, listed under “concentrations of risk,” yielded royalties for the open source which is bound to expire on November 2011. The unidentified search engine also held 71 percent and 80 percent of 2009 and 2009 receivables according to Mozilla’s financial statement.

Mozilla earned total revenue of $104 million in 2009. In its blog post, Mozilla said that a major part of its revenue came from the search functionality found in its Firefox product which includes Google, Yahoo, Yandex, Amazon and EBay, among others.

Because of its dependence upon Google for a long time, Mozilla now faces an audit by the Internal Revenue Services (IRS). “We do not yet have a good feel for how long this process will take or the overall scope of what will be involved,” Mozilla stated in the same blog post.

Google has been the default homepage in the US and Western Europe when using Mozilla Firefox as the browser, which earned for the open source part of Google search dollars. Currently, Mozilla is in talks with other search engines such as Microsoft’s Bing. It can also be noted that Google is not the default search engine in some areas like Russia and China.

Mozilla downplayed the imminent risk that the tension with Google may bring, saying that there are still other options besides its longstanding partner.

With the planned audit to be conducted by the IRS, Mozilla Foundation’s tax-exempt status is threatened. In 2004, Mozilla Foundation did not pay the $4,422,674 in search dollars that could have been taxed on it because of the tax-exempt status it received in 2003.

In 2008, the IRS has investigated Mozilla’s tax status for 2004 and 2005 following the Foundation’s for-profit operation spin-off to Mozilla Corporation in 2005. But Mozilla explained that its search revenues during those years were royalties and must not be taxed.

 

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