Electronic Communications From Cooperatives
For avid readers of this blog you may remember this post from 2014: Patronage Dividend Notices Can Be Sent by Email or Posted to a Website. Well, the most recent USDA magazine Rural Cooperatives recently published an article that further discusses electronic communications from cooperatives. You can find the magazine here: https://www.rd.usda.gov/files/USDA-RDRuralCoopMagMar-Apr2017.pdf and the article starts on p. 14, although I would recommend the entire publication.
At the heart of the article I believe is the definition of “written,” and can required “written” allocations or notifications be electronic rather than printed communications. Some of the concepts the article discusses are:
- If a coop can track which members actually look at balances on the coop website, does merely providing information on its website count as “written” notifications?
- Members of a coop must consent up front to include patronage dividends in their taxable income. Does checking a box or typing their name equal consent the same way a written signature does?
- The IRS has agreed that email transmission of patronage dividend amounts is appropriate.
As the world moves to a more electronic, cloud based world it is only natural that cooperatives do the same. It is worth considering the next time you review and update your bylaws to incorporate electronic communications into the bylaws. Also, if your current bylaws were last updated on a typewriter, I would strongly recommend at least reviewing the bylaws.
The article does bring up some caution points for agricultural coops with electronic communications. Specifically affirmative consent under the Job Creation and Worker Assistance Act and Domestic Production Activity Deduction notifications being made via email. Both are very valid considerations and I don’t recommend any coop instantly changing to all electronic communications, however, I do recommend considering how to incorporate electronic communications between the coop and the members.
Special thanks to David Enquist for the post.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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