What is a Patronage Refund?
Town & Country Supply Association is a cooperative and as such, pays patronage refunds to its members. Patronage is a return of profits to our member customers, who have both signed the Consent Form and who have met the minimum purchase requirements. These minimum purchases change from year to year, based on profitability, and do not include some items like sales tax, fuel taxes, and rentals.
Cooperatives are required to return a minimum of 20% of our patronage in cash and the remaining 80% is stock to be retired at a future date. Town & Country Supply Association is proud that we have been able to pay out 35% patronage in cash and have also kept our stock retirement at an age 67 level.
How is Patronage Determined?
Patronage is based on a percentage of our net income and the percentage of your purchases against the total purchases of all customers for our fiscal year that begins February 1st and ends January 31st. After the end of each fiscal year, the board of directors may authorize the issuance of patronage. When approved, the patronage is issued as a check, as long as your account is in good standing. The check is combined with form 1099-PATR for income tax purposes.
How Do I Become Eligible to Receive Patronage?
All that is required is for you to establish an account to track your purchases along with completing and signing a consent form. This form must be on file for patronage to be issued per IRS Guidelines.
What is the Minimum Purchase Amount?
The minimum purchase amount is the amount of your purchases from Town & Country Supply Association during its fiscal year. These are for all purchases including everything from propane to gasoline to pet food. The minimum purchase amount, which changes from year to year is based on profitability of each individual division, and does not include such things as sales tax or any fuel taxes.
What is Stock and How is it Returned?
Stock that is issued by Town & Country Supply Association is held in your account and no certificate is issued. The stock pays no interest and has no cash value until retired. Retiring stock is at the discretion of the Board of Directors. However, Town & Country Supply Association is proud that we have been able to keep our stock retirement on an age 67 basis. Each year after the fiscal year end audit is complete, the Board of Directors determines their ability to retire stock.
Example: Between February 2009 and January 2010 you purchased $5,000 in propane, gasoline and pet supplies, net of any taxes. That year, based on profitability, Town & Country Supply Association was able to return 6% of the net purchases in patronage. In this case that would be $300. The Board of Directors in that year voted to issue patronage of 35%. Typically in April of 2010, Town & Country Supply Association would issue you a check for 35% of $300 or $105. The remaining stock of 65%, or $195 would be returned to you in April of the year following your 67th birthday upon your written request. Please check with your tax advisor regarding the taxability of your patronage allocation.