As a co-op member, you are an owner of Frontier Co-op, and you receive a portion of our profit each year according to the amount of your purchases. (We've returned more than $22 million in profits to our members over the last 10 years.) Some of this patronage refund, as it's called, is paid out immediately as cash. A portion of it remains invested in the co-op in your name, providing the capital necessary to operate and expand the cooperative. This retained portion of the annual patronage is later paid out as deferred patronage.
Deferred patronage is returned separately from the annual patronage refund on a regular Board-approved schedule, with the oldest investments returned first. When you receive a check for either an annual patronage refund or deferred patronage, you may choose to 1) accept the money or 2) decline it, in which case it will be donated to the Frontier Foundation for charitable purposes.
1) Accepting the patronage check. You accept your allocated patronage by cashing your annual patronage refund check within 90 days and a deferred patronage refund check within 180 days. If it's an annual patronage refund check, you're required to pay taxes on the entire amount of the allocation, including the deferred portion, in the year you cash the check.
Deferred patronage has no tax implications in the year you receive it. Since you paid tax on the full patronage amount when you received the annual patronage check, you pay no additional taxes when you receive the retained portion later.
2) Declining the patronage check. You can decline your initial annual patronage refund by simply not cashing the check.
If you don't cash your initial patronage allocation check within 90 days for any reason, you will be considered to have refused the entire patronage dividend, which will be donated to the Frontier Foundation for charitable purposes. No amount will be taxable to you and no reporting will be made to the IRS (but this refusal does not constitute a tax deductible charitable donation). Not cashing a check does not affect your future patronage dividends.
Uncashed deferred patronage checks will be voided at the end of 180 days.
Your options as a member-owner of the cooperative offer a win-win choice of either accepting your share of Frontier Co-op profits and adding it to your year's income or donating your patronage to the Frontier Foundation and supporting deserving non-profit charitable organizations.