Hi everybody!
I'm new to the forum. I've been searching the internets for answers about some of the nitty-gritty of CSA management (specifically, taxes), and I am coming up short. I wonder if any of you who have been dealing with farm income (especially in cooperatives) might be able to help!
I am the manager of our
local multifarm CSA. We have a bank account into which we deposit subscriber payments (at the beginning of the season) and disburse grower pay (weekly throughout the season). We bring in between $7,000 and $9,000 at the beginning of the season, and by November we are down to about $400 (which we use in early spring for
advertising, etc, with a couple hundred held back as emergency funds). We don't even pay the manager (me) - it is a
volunteer position. So essentially, all of the money that comes into our bank account is disbursed to the growers as income. If our gross receipts were under $5,000, we wouldn't have to bother submitting tax forms, but we are just above that threshold.
My concern is that, since we are not a registered nonprofit, somebody has to pay taxes on what we've taken into our account. Right?
But our growers are already paying taxes on that money when THEY report their yearly income. Since the money we receive is distributed to the growers as income, it is already being taxed once in their income taxes.
Essentially, our bank account is a holding tank - a momentary pause in the transaction between subscriber and grower. To tax the growers association is to tax the same income twice.
The vision and scope of our CSA is not (at this point) sufficient to qualify us as a 501(c)3 by IRS standards, as far as my research can tell me. Unless we want to expand our vision significantly (something we absolutely want to do at some point but aren't ready to do yet), I don't
think an application for tax-exempt status will be successful.
Have any of you been in a similar situation? Is there an easy solution (besides not reporting our taxes - something I don't want to do) that you have found? Am I over-thinking this or getting something completely wrong?
Thanks for your help!