{{vm.title}}
25{{vm.includesText}}
{{item}}
{{vm.selectText}}
{{ vm.welcomeLabel.trim() }},
{{ vm.userName }}
{{ vm.text }}
{{vm.newUser1}} {{vm.newUser2}} {{vm.newUser3}} {{vm.newUser4}}
{{ vm.unknownUser }}
{{ vm.title }}
{{ vm.title }}
{{ vm.title }}
- {{ vm.siteSelectorList.flyout.cell1.heading }} {{ site.countryLocale }} {{ vm.siteSelectorList.flyout.cell1.global.countryLocale }}
{{ vm.closeTabLabel }}
- {{ vm.flyout.cell2.title }} {{ vm.flyout.cell2.newTabAllow }} {{ vm.flyout.cell2.title }}
- {{ vm.flyout.cell3.title }} {{ vm.flyout.cell3.newTabAllow }} {{ vm.flyout.cell3.title }}
- {{ vm.flyout.cell1.viewAll.label }} {{ vm.flyout.cell1.viewAll.newTabAllow }} {{ vm.flyout.cell1.viewAll.label }}
IRS denies tax-exempt status for “food co-op”
IRS denies tax-exempt status for “food co-op”
The IRS today publicly released a final adverse determination letter in which it was concluded that an entity functioning like a “food co-op” did not qualify for tax-exempt status pursuant to section 521, as available for eligible cooperatives.
Read LTR 201835010 [PDF 1.18 MB] (released August 31, 2018, and dated June 5, 2018).
Summary
An entity was formed in part to provide local food producers and consumers with a year-round market for buying and selling goods and services. The entity requested exemption from federal income tax as a cooperative.
In issuing a final adverse determination, the IRS noted among the following items:
- The entity did not market its members' products in a cooperative manner.
- The entity did not cooperatively purchase supplies or equipment for the members.
- The members of the entity were "largely consumers" and not farmers "or the like."
- The producer members were to sell non-crop items, and surplus funds were allowed to be held.
- There was no distribution of profits to the members cooperatively.
Based on these and other factors, the IRS concluded the entity was not a farmers' cooperative pursuant to the rules under section 521.
For more information, contact KPMG’s National Director of Cooperative Tax Services:
David Antoni | +1 (267) 256-1627 | dantoni@kpmg.com
Or Associate National Director of KPMG’s Cooperative Tax Services:
Brett Huston | +1 (916) 554-1654 | bhuston@kpmg.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
