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Page 1 of 2                        Instructions for Form 1028                                                          8:17 - 13-SEP-2006

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                                                                     Department of the Treasury
                                                                                                                     Internal Revenue Service
Instructions for Form 1028

(Rev. September 2006)
Application for Recognition of Exemption Under Section 521 of the Internal
Revenue Code

Section references are to the Internal                   representative to act in person or by             ruling recognizing its exemption under
Revenue Code unless otherwise noted.                     correspondence. Send the power of                 section 521 of the Internal Revenue Code
                                                         attorney with the application when you file       of 1986 or corresponding provisions of
                                                         it. Use Form 2848, Power of Attorney and          prior law.
General Instructions                                     Declaration of Representative, or Form

applicationKeep a copyformof thein yourcompletedpermanentthis8821,Taxpurpose.Information Authorization, forF. User Fees for Exempt
records.                                                                                                   Organization Ruling and
                                                         D. Attachments                                    Determination Requests
A. Who May Use This Form                                 Every attachment should state that it             The Internal Revenue Service is required
Form 1028 may be used by a farmers’                      relates to Form 1028 and identify the             to collect a fee from any organization
cooperative to apply for recognition of                  applicable part and line item number. The         seeking an IRS determination of its
exempt status under section 521. A                       attachments should also show the                  exempt status as an organization
farmers’ cooperative, as defined in                      organization’s name, address, and                 described in section 521. A fee also
section 521, is an association of farmers,               employer identification number (EIN), and         applies to any exempt organization’s
fruit growers, or persons with similar                   be on 81/2’’ x 11’’ paper.                        request for a private letter ruling.
occupations that is organized and
operated on a cooperative basis.                         In addition to the required documents              The nonrefundable fee must be
                                                         and statements, include any additional            submitted with the application or ruling
                                                         information citing court decisions, rulings,      request. Otherwise, the request will be
B. Where To File                                         opinions, etc., that may help to speed the        returned without any action being taken
Send the completed application, all                      processing of the application. Generally,         on it.
required information, and Form 8718,                     attachments in the form of tape
User Fee for Exempt Organization                         recordings are not accepted unless                 The fees are shown in Form 8718,
Determination Letter Request, with the                   accompanied by a transcript.                      which is used to transmit both the
appropriate user’s fee, to the address                                                                     appropriate fee and the application or
shown in the Instructions to Form 8718.                                                                    ruling request. User fees are subject to
Soon after we receive the application, you               E. Annual Return                                  change. Check our website at www.irs.
will be advised of the Internal Revenue                  An organization that is recognized as             gov and type “User Fee” in the keyword
Service’s determination and of the annual                exempt from income tax under section              box, or call Customer Account Services at
returns that the organization will be                    521 must file an annual return on Form            1-877-829-5500 for current information.
required to file.                                        1120-C, U.S. Income Tax Return for
                                                         Cooperative Associations. An
                                                         organization will not be considered
C. Power of Attorney                                     exempt, even though it operates within            Specific Instructions
If an agent or attorney will represent the               the provisions of sections 521 and 1381
organization, you must file a power of                   through 1388, unless it files this                Part I—Identification
attorney, specifically authorizing the                   application or has previously received a
                                                                                                           Line 1a—Organization’s Name.        Enter
Make sure the application is complete. Remember to...                                                      the organization’s name as it appears in
                                                                                                           its organizing documents, including
1.    Complete all parts of the application.                                                               amendments. If the organization will be
2.    Show the employer identification number (EIN):                                                       operated under another name, show that
      a.If the organization has one, put it on line 1b.                                                    name in parentheses.
      b.If the organization doesn’t have an EIN, you must apply for one (see the Specific
        Instructions for Part I, line 1b).                                                                 Line 1b—Employer Identification
3.    Enclose financial statements (see the Specific Instructions for Part IV):                            Number (EIN). Enter the organization’s
      a.Current year (must include the period that is within 60 days of the application’s filing           EIN. If the organization does not have an
        date) and 3 preceding years.                                                                       EIN, it must apply for one. An EIN can be
      b.Detailed breakdown of receipts and expenditures — no lump sums.                                    applied for:
4.    Include a conformed copy of the complete organizing instrument and a copy of the                     •Online—Click on the EIN link at www.
      bylaws.                                                                                              irs.gov/businesses/small. The EIN is
      a.An organizing instrument means:                                                                    issued immediately once the application
        1)        Articles of incorporation                                                                information is validated.
                  a)  Signed by the incorporators, and                                                     •By telephone at 1-800-829-4933 from
                  b)  Signed by an appropriate government official, or                                     8:00 a.m. to 8:00 p.m. in the local time
        2)        Constitution of articles of association (signed).
      b.A conformed copy is one that agrees with the original and all amendments to it.                    zone.
5.    Enclose Form 8718 and appropriate user fee (see General Instruction F).                              •By mailing or faxing Form SS-4,
6.    Have the application signed by one of the following:                                                 Application for Employer Identification
      a.An officer,                                                                                        Number.
      b.A director, or                                                                                      If the organization has not received its
      c.A person having power of attorney (submit the power of attorney too).                              EIN by the time the return is due, enter
7.    Give the name and phone number of someone we can call during normal business
      hours if we need additional information (Part I, line 3).                                            “Applied for” in the space for the EIN. For
                                                                                                           more details, see Pub. 583.
                                                                             Cat. No. 17139Y

Page 2 of 2                         Instructions for Form 1028                                                                                                                                                                  8:17 - 13-SEP-2006

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Part II—Type of Entity and                                                                              purchase more than 50% of their supplies                                                            lease of premises, from investment in
                                                                                                        and equipment through the cooperative                                                               securities, or from the sale or exchange of
Organizational Documents                                                                                during the cooperative’s tax year.                                                                  capital assets constitutes income from
One of the basic requirements for                                                                                                                                                                           sources other than patronage.
exemption is that the organization be                                                                   Part IV—Financial Data                                                                              Also include in the schedule the total
“organized” for one or more exempt                                                                      The statement of receipts and                                                                       amount of per-unit retain allocations other
purposes. If the organization does not                                                                  expenditures and the balance sheets                                                                 than those reflected in cost of sales on
have an organizing instrument, it will not                                                              must be completed for the current year                                                              line 3b and the total amount of written
qualify for exempt status.                                                                              and each of the 3 immediately preceding                                                             notices of allocation other than those
  None of the documents submitted in                                                                    years (or for the time the organization has                                                         reflected on line 16. (See sections 1382
support of this application, including                                                                  existed if less than 4 years). We may                                                               and 1388.)
organizational documents, will be                                                                       request financial data for more than 4                                                              Line 16—Patronage Dividends.                                            In the
returned.                                                                                               years if circumstances warrant. All                                                                 attached schedule, show the amount of
  Instead of the originals, submit                                                                      financial information for the current year                                                          patronage dividends paid to patrons in
“conformed” copies of these documents.                                                                  must cover the period beginning on the                                                              money, qualified written notices of
A “conformed” copy is one that agrees                                                                   first day of your organization’s established                                                        allocation, or other property (except
with the original document and all of its                                                               annual accounting period and ending on                                                              non-qualified written notices of allocation)
amendments. If the copies are not signed,                                                               any day which is within 60 days of the                                                              and the amount paid to patrons in money
they must be accompanied by a                                                                           date of the application. If the date of the                                                         or other property (except written notices
declaration signed by an officer                                                                        application is less than 60 days after the                                                          of allocation) to redeem nonqualified
authorized to sign for the organization,                                                                first day of the current accounting period,                                                         written notices of allocation. (See sections
certifying that they are complete and                                                                   no financial information is required for the                                                        1382 and 1388 and the related
accurate copies of the original                                                                         current year. Financial information is                                                              regulations.)
documents.                                                                                              required for the 3 preceding years
                                                                                                        regardless of the current year                                                                      Paperwork Reduction Act Notice.                                             We
  Chemically or photographically                                                                        requirements. Please note that if no                                                                ask for the information on this form to
reproduced copies of articles of                                                                        financial information is required for the                                                           carry out the Internal Revenue laws of the
incorporation showing the certification of                                                              current year, the preceding year’s                                                                  United States. If you want your
an appropriate government official need                                                                 financial information can end on any day                                                            organization to be recognized as
not be accompanied by a declaration.                                                                    which is within 60 days of the date of the                                                          tax-exempt by the IRS, you are required
                                                                                                        application.                                                                                        to give us this information. We need it to
Part III—Activities and                                                                                 You may reproduce page 4 of the form                                                                determine whether the organization
Operational Information                                                                                 and complete the financial data for each                                                            meets the legal requirements for
Lines 17 through 19.                           The information                                          required year. Attach the financial data for                                                        tax-exempt status.
requestedcompletedonforlinesthe current17 throughyear19andmusteachbe                                    allTherequiredstatementsyears toshouldthe application.be consistent                                 informationYou are notrequestedrequiredontoaprovideform thattheis
offorthethe3timeimmediatelythe organizationprecedinghasyearsexisted(or                                ifwithorganizationthe methodusesofinaccountingmaintainingtheits books                                 subjectunless theto theformPaperworkdisplays aReductionvalid OMBAct
less than 4 years). The requested                                                                       and records.                                                                                        to a form or its instructions must becontrol number. Books or records relating
information for the current year must                                                                   Line 3b—Cost of Goods Sold.                                          Include
                                                                                                                                                                                                            retained as long as their contents may
cover the period beginning on the first day                                                             per-unit retain allocations paid to patrons                                                         become material in the administration of
of your organization’s established annual                                                               in money, qualified written notices of
                                                                                                                                                                                                            any Internal Revenue law. Generally, tax
accounting period and ending on any day                                                                 allocation, or other property (except                                                               returns and return information are
which is within 60 days of the date of the                                                              nonqualified per-unit retain certificates)
                                                                                                                                                                                                            confidential, as required by section 6103.
application. If the date of the application is                                                          and the amount paid to patrons in money
less than 60 days after the first day of the                                                            or other property (except per-unit retain                                                           The time needed to complete and file
current accounting period, no information                                                               certificates) to redeem nonqualified                                                                this form will vary depending on individual
is required for the current year.                                                                       per-unit retain certificates. (See sections                                                         circumstances. The estimated average
Requested information is required for the                                                               1382 and 1388.)                                                                                     time is:

thatcurrent3 precedingif noyearinformationyearsrequirement.regardlessis requiredPleaseof thefornotethe  Lineincludeattached15—OtheraschedulebreakdownExpenditures.forforothernonpatronageexpenditures,In thetheLearningRecordkeepingformabout..............the.........law or41  4  hr.,hr.,4414min.min.
current year, the preceding year’s                                                                      distributions paid as dividends on capital                                                          Preparing the form               .......                         4   hr., 23 min.
information period can end on any day                                                                   stock and nonpatronage distributions                                                                Copying, assembling, and
which is within 60 days of the date of the                                                              made on a patronage basis. This                                                                     sending the form to the IRS                                             32 min.
application.                                                                                            breakdown should include only
Definitions.                   The term “producer” means                                                distributions of earnings derived from                                                              If you have comments concerning the
an individual or corporation engaged in                                                                 business done for the United States                                                                 accuracy of these time estimates or
farming as a business receiving income                                                                  Government or any of its agencies or                                                                suggestions for making this form simpler,
based on farm production rather than                                                                    income from sources other than                                                                      we would be happy to hear from you. You
fixed compensation. For example, a                                                                      patronage, but only to the extent such                                                              can write to the Internal Revenue Service,
corporation leases its land to a tenant                                                                 amounts are paid in the same manner                                                                 Tax Products Coordinating Committee,
farmer who agrees to pay a rental fee                                                                   provided for patronage dividends below.                                                             SE:W:CAR:MP:T:T:SP, 1111 Constitution
based on a percentage of the farm crops                                                                 The term “income from sources other                                                                 Ave. NW, IR-6406, Washington, DC
produced. Both the landowner and the                                                                    than patronage” means incidental income                                                             20224. Do not send the tax form to this
tenant farmer qualify as producers.                                                                     derived from sources not directly related                                                           address. Instead, see Where To File on
  “Current and active” producers are                                                                    to the marketing, purchasing, or service                                                            page 1.
patrons of a cooperative who market                                                                     activities of the cooperative association.
more than 50% of their products or                                                                      For example, income derived from the

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