03/09/05, 05:46 PM
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Join Date: Dec 2002
Location: Wisconsin
Posts: 766
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Quote:
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Originally Posted by designer
I love this thread, great info. I checked out the website for Frontier and they ask for a sale tax ID. I was wondering do you have to turn in sales tax on the stuff you and your friends buy?
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You need to provide Frontier with either your Social Sercurity number or an EIN ( Employer Indentification Number) You can obtain an EIN # by contacting the IRS and requesting a form SS-4. This is a simple 1 page form. An EIN # is needed in case Frontier ( or any Co-operative ) pays you a patronage rebate. On the form, there is a space for you to check what type of enity that you are. Check "other" specifying that you are a buying club and not engaged in a trade or business. A buying club is buys for it's members. It does not sell to it's members, which it what gets you off the hook with the IRS. A buying club can very well consisit of one member.
You will, of course, be charged sales tax on the items that you purchase but will never be required to turn in any records of your " club's" activities to the IRS. I would recommend keeping a file of your purchases on the outside chance you were ever audited (I'm not saying that you would be targeted for an by running a buying club, just a general audit). By joining Frontier you own a small piece of the company which entitles you to profit sharing. In the 7 years that I have been a member of Frontier, I have received 1 patronage rebate to the tune on about $40.00. As long as you include any rebates as income of you personal tax forms, you have absolutely nothing to worry about.
I run two buying clubs. The one that I purchase my main food through is a formal buying club that deals with a major distributor. We have 6 families and some simple by-laws. We all share the work of meeting the truck and dividing up the order and decisions are made as a group. I have a separate EIN # and name that I use to order through Frontier. This is an informal situation as that allows me to decide when I want to order and then just pass my catalog around to whoever I want to ( which is all the members of my other buying club and some other folks).
I would be happy to answer any other questions. As you can tell I am a big proponent of buying clubs. I just don't see the need to involve a middleman when it comes to purchasing food for my family.
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