Customers who are agricultural producers, owners of land used for agriculture production and other cooperative associates who purchase at least $100 of product from MFA Oil Company in a calendar year are welcome to apply for membership.

Benefits

Members vote on delegates who represent the local plant and elect MFA Oil Company’s board of directors. In addition, members earn dividends based on the sales they have with the company through their bulk, propane and Petro-Card 24 accounts tagged with membership

Patronage Dividends

Each year, the board of directors determines the amount of patronage dividends to be disbursed to members based on profit. Once the total dollar amount is determined, a formula is used to figure each member’s earnings on each account tagged with membership.

In February, following the end of the fiscal year, checks are issued to members for each account tagged with membership. Only a portion of the entire amount allocated to the member is paid at this time. Usually, the initial payment amount is 35% of the total allocated dividend. The remaining portion of the patronage dividend is retained in an equity account for the member and released at a later date determined by the board of directors.

Patronage dividends are considered taxable income by the federal government and must be reported to the IRS. The entire amount allocated to the customer is reported on a 1099-PATR that is issued in January the year following initial payment.

For example:
 

• John Doe is allocated $100 for fiscal year 2004.
• He receives a check for $35 in February 2005 and $65 is placed in his equity account.
• He will receive a 1099-PATR in January 2006 in the amount of $100. The entire $100 will need to be reported to the IRS for 2005.

Because 1099s are issued in January and checks are issued in February, our customers often get confused over which amount is being used for the 1099. They often think the 1099-PATR received in January is for the check they receive a month later. Actually, the 1099 amount is reporting the dividend allocated to them the year before.

Accelerated Equity Retirement

Occasionally, members will ask to have their equity balance paid to them in a lump sum. The only provision allowing accelerated issuance of equities is upon death of the equity holder, at which time any equities may be paid to the equity holder’s estate. We can not pay out an equity balance because a business or partnership has dissolved.

If you have any questions, please feel free to contact Lora Sedgwick or Mandy Schebaum at
(573)442-0171.

Since equity may build up over a long period of time, it is important that we keep current addresses and/or contact information on our patrons. Please contact us should you move or change your mailing address.