Food Co-op Law

Interest in food cooperatives is growing, due both to increased interest in local, natural, and organic foods and to increased awareness of economic vulnerability in many of our communities.

More and more communities want the products, stability, and accountability that a cooperative can offer. The concept has been put in place in Haiti providing those same benefits.  “The Peasant Movement of Papay (MPP), the country’s largest peasant organization with over 60,000 members, unifies small farmers and rural peasants into farm or craft cooperatives, trains community leaders and conducts agroecological studies. According to a post by their international ally, Grassroots International, the MPP has recaptured 10,000 acres (40.5 sq kilometers) of arable land, planted over 20 million trees and created innovative barriers to mudslides such as stonewall terracing.” (Available at https://foodtank.com/news/2013/06/farming-cooperatives-in-haiti-a-chance-to-advance/).

Cooperatives are businesses owned by their members.

Joel Dahlgren of Black Dog Co-op Law encourages prospective members to incorporate themselves for a “shield” and to learn the relevant laws applicable in their state.

Dahlgren showcases four basic structures available to retail food cooperatives, the choice of which is generally driven by tax, financing, governance and corporate name considerations.

Dahlgren’s table below illustrates these considerations and compares four business structures.

 

 

Sources:

Joel Dahlgren, Legal Primer For Formation of Consumer-Owned Food Cooperatives, available at http://www.foodcoopinitiative.coop/sites/default/files/LegalPrimer.pdf.

(With contributions from Thane Joyal, Bill Gessner, Marilyn Scholl and Stuart Reid)

Publication was made possible through the financial support of Cooperative Development Services, CDS Consulting Co-op and Food Co-op Initiative; with additional funding provided by the USDA Rural Cooperative Development Grant program, through a grant provided to Cooperative Development Services.

 

See Also Black Dog Co-op Law, http://joeldahlgren.blogspot.com/.

Foreign Account Tax Compliance Act

 

The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.

  • FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
  • FATCA focuses on reporting:
    • By U.S. taxpayers about certain foreign financial accounts and offshore assets
    • By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest

 

The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.

To avoid being withheld upon, a foreign financial institution may register with the IRS, obtain a Global Intermediary Identification Number (GIIN) and report certain information on U.S. accounts to the IRS.

https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA