Agricultural Cooperatives and Federal Income Taxes

Excerpts from the report: Every Federal income tax statute, except that enacted in the sixties to finance the Civil War, has contained a provision exempting agricultural cooperative associations from the payment of such taxes. The scope and terms of the exemption language which was included in the earlier income tax statutes varied considerably. Generally, the exemption provisions appearing, in a later income tax statute were broader and more comprehensive than those which appeared in the preceding one. In I926, however, an income tax statute was enacted which contained provisions for the exemption of agricultural marketing and purchasing associations of farmers, and these provisions, with a minor addition, are contained in all subsequent income tax statutes passed by Congress. Agricultural cooperative associations are finding the exemptions from Federal income taxes granted by acts of Congress increasingly important. Since this is true and since the application of the principles of exemption is becoming more complex as farmers' cooperatives themselves become more complex, this entire subject is being studied. The purpose of these studies is to clarify the application of the principles of exemption to the actual operations of agricultural cooperatives. This is one of several publications to be issued dealing with the income tax problems of farmers' cooperative associations.