Nonprofit Tax Filing Requirements for Farmers' Cooperative Associations
An overview of applying for tax-exempt status.
What Should Farmers' Cooperative Associations Know About Tax Exemption and Form 990 Filing?
- Updated August 14, 2023 - 2.00 PM - Admin, Tax990
The primary purpose of nonprofit organizations can be the furtherance of charitable, educational, or any other related purposes. Based on that operational purpose, the IRS classifies a nonprofit under the corresponding IRC Section for federal tax exemption purposes, provided that they meet the requirements mentioned.
This article discusses the Farmers’ Cooperative Associations, their eligibility to obtain tax-exempt status, and what their tax filing requirements are.
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How Does the IRS Define Farmers' Cooperative Associations?
Section 521(a) of the Internal Revenue Code (IRC) defines Farmers’ Cooperative Associations as organizations that are operated between farmers, agriculturists, or other similar members on a cooperative basis for one of the following purposes,
- Marketing - To market the products of the members or other producers and turn back the sale proceeds (less the applicable marketing expenses).
- Purchasing - To purchase the supplies and equipment required for the use of members or other persons and turn them over at actual price (plus applicable expenses).
How Do Farmers’ Cooperative Associations Apply for
Tax Exemption?
In order to obtain federal tax exemption, Farmers’ Cooperative Associations involved in the services described above can file either of the following forms:
Form 1028 - Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code
Form 1024 - Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code
Upon approval of the request, the Farmers’ Cooperative Association will become tax-exempt.
Do Farmers' Cooperative Associations File Form 990?
No! Usually, most nonprofits that obtained tax-exempt status are required to file 990 forms as part of their annual tax filing requirements.
However, Farmers’ Cooperative Associations that obtained federal tax exemption under the IRC Section 521(a) aren’t required to file 990 returns.
Note:
They may still be required to file Form 1120-C - U.S. Income Tax Return for Cooperative Associations.
