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IRS approves electronic version, cooperative’s patronage application and eligibility forms

IRS approves electronic version

The IRS today publicly released a private letter ruling* concluding that a cooperative’s plan to change its patronage eligibility process to allow members to file their patronage application and eligibility forms electronically, via the taxpayer’s website, satisfies the rules for “consent in writing” under section 1388(c)(2)(A). PLR 201619003 (release date May 6, 2016, and dated February 10, 2016)


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Read the PLR 201619003 [PDF 82 KB]


The taxpayer (described as “one of the nation’s leading integrated agricultural companies”) operates as a grain marketing and agricultural supply cooperative, and provides its members with a variety of services.

The taxpayer has proposed to revise its patronage eligibility process, to allow its members to file their patronage application and eligibility forms electronically—via an online system on the taxpayer’s website (in place of the current paper version). The taxpayer requested a ruling from the IRS that its plans for electronic versions of patron consents would be a valid “consent in writing” pursuant to the rules of section 1388(c)(2)(A).

In the letter ruling, the IRS explained that the Code does not specify how cooperatives are to go about obtaining a “consent in writing” from patrons, and found there is no guidance as to whether consent obtained via an electronic form and transmission over the internet can qualify as a “consent in writing.” However, looking to other authority interpreting the term “written,” the IRS concluded nothing in the Code or regulations precludes delivery of written notices electronically.  Therefore, the IRS ruled that a consent from a patron that the taxpayer obtains electronically under its new process would be a valid “consent in writing” within the meaning of section 133(c)(2)(A).


*Private letter rulings are taxpayer-specific rulings furnished by the IRS National Office in response to requests made by taxpayers and can only be relied upon by the taxpayer to whom issued. It is important to note that, pursuant to section 6110(k)(3), such items cannot be used or cited as precedent. Nonetheless, such rulings can provide useful information about how the IRS may view certain issues.


For more information, contact KPMG’s National Director of Cooperative Tax Services:

David Antoni | +1 (267) 256-1627 |

Or Associate National Director of KPMG’s Cooperative Tax Services:

Brett Huston | +1 (916) 554-1654 |

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