• TechCrunch, Thursday, November 20, 2008 11 AM

The Mozilla Foundation, the non-profit group behind the popular open source browser Firefox, announced that revenues for Firefox were up 12% to $75 million in 2007, with search royalties from Google accounting for $66 million, or 88% of the total. Mozilla makes money from using Google as the default search engine in the search box on the Firefox browser. Google splits search revenues generated from that placement with the organization.

Google's proportion of Mozilla's revenues was up 3% year-over-year, a trend that will likely continue now that Google has extended its contract with Mozilla for three more years.

However, TechCrunch reports that Mozilla is in danger of losing its non-profit status, as the IRS is currently auditing the company with regard to its tax exemption. Basically, Mozilla argues that search dollars should be treated as royalties, not revenues, and thus, should not be taxed as such. "There is little precedent for a non-profit generating so much of its 'support' from what is, in effect, a commercial agreement," says TC writer Erick Schonfeld, so if the IRS rules against Mozilla, it will lose its tax-exempt status. If that's the case, the company will be classified as a private foundation and would then be ordered to pay an estimated $100K in excise tax for 2007.

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