The Internal Revenue Service is auditing the Mozilla Foundation, the nonprofit arm of the organization that develops the Firefox Web browser and Thunderbird e-mail software.

The organization revealed the IRS inquiry into its tax-exempt status and other accounting issues in its newly released 2007 auditor's report and consolidated financial statements. Mozilla relies on an open source approach to development, using a team of programmers around the world who cooperate on improving the software, which is distributed for free. The organization says on its Web site that it's a "public benefits organization dedicated not to making money but to improving the way people everywhere experience the Internet." However, the organization earned $75 million from its advertising partnership with Google. It classified the money as royalties rather than revenues. The foundation also has a wholly owned subsidiary known as the Mozilla Corp.

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