Form 1028 – Section 521 Cooperative Exemption Guide

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Form 1028 is the kind of filing an accountant may handle once or twice in a career, and the format catches people off guard the first time. It is paper-only on a September 2006 revision, mailed with Form 8718 and the user fee to the TE/GE unit in Covington, Kentucky. The same Section 521 determination is available electronically through Form 1024 on Pay.gov, so reaching for the paper form is sometimes the wrong first move.

If you do file it, match the carrier to the address: USPS goes to the P.O. Box, a private delivery service goes to the street address in Florence. Part IV asks for four years of financial data, the current year plus the three before it if the cooperative existed then.

Key Takeaways

• IRS Form 1028 is the application a farmers’ cooperative uses to request recognition of exemption under IRC Section 521, and the IRS expects a determination user fee with that request. As of late 2025, the Internal Revenue Manual shows a $600 fee when processing Form 1028 submissions. Confirm the current amount before you file.
• Publication 557 confirms cooperatives use Form 1028 for Section 521 and notes fee procedures, historically via Form 8718 or the IRS’s current payment process. Form 1028 itself remains paper-only; the only electronic path for a Section 521 determination is to file electronic Form 1024 on Pay.gov instead, so verify the latest pathway before submitting.
• If exemption is granted, the cooperative files Form 1120‑C each year. Keep a copy of your application in your permanent records, not just three years, and keep books and records as long as they may be material to tax administration.
• Form 1028 is paper-only (Rev. September 2006). Match the carrier to the address: USPS to P.O. Box 12192, Covington, KY 41012-0192; a private delivery service to 7940 Kentucky Drive, Florence, KY 41042.
• The application has four parts, and Part IV reports four years of financial data – the current year plus the three preceding years if the cooperative existed then.

What Is IRS Form 1028?

IRS Form 1028 is the “Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code.” A farmers’ cooperative uses it to request a determination that it qualifies for the special tax treatment available under Section 521. The IRS’ official overview page and Pub. 557 both anchor this point.

Who actually files Form 1028

• Farmers’ cooperatives and similar associations that meet Section 521 criteria for organization and operation.
• The application is not a general nonprofit filing and it is not used for tip reporting or payroll topics. If your need involves tip reporting, you are likely thinking of Form 8027 or payroll documentation, not Form 1028.

What the IRS expects in a complete 1028 packet

The IRS instructions emphasize a complete application with the cooperative’s EIN, organizing documents, and financial statements. They also remind filers to keep a copy in their permanent records. If the cooperative is recognized under Section 521, it files Form 1120‑C annually.

In plain terms, think of Form 1028 as your cooperative’s “proof packet” for Section 521. The packet shows how you are organized, how you operate, and why you qualify.

Fees and how to pay, 2026 checkpoint

The IRS processes exempt‑organization and Section 521 determinations with a user fee. The Internal Revenue Manual section on determinations shows that submissions using Form 1028 are returned as incomplete if the fee is not correct, and cites $600 for Form 1028. Always verify the current amount and payment channel on the IRS site before you send the packet, since user fees can change.

Publication 557 also references fee procedures for exemption requests and historically points filers to Form 8718, the fee transmittal, though the IRS continually migrates payments to newer channels. The IRS “About Form 1028” page, last reviewed December 3, 2025, contains the latest links and related products.

How To Prepare a Strong IRS 1028 Package

Over the years, our team has learned that reviewers move faster when the packet tells a crisp story. Here is the structure we hand new staff so they can prep with confidence.

Build your evidence in this order

1. Identity and charter

• Articles of Incorporation (for corporations) or a Constitution / Articles of Association (for unincorporated associations), plus bylaws as a supporting document – bylaws alone do not satisfy the organizing-document requirement. Include amendments and proof of adoption.
• EIN confirmation. If you need an EIN, the IRS provides several methods – obtain it before you submit Form 1028, since an EIN is required to be in hand at filing, not applied for at the same time.

2. Operations and member economics

• Narrative of how patronage works, who qualifies as a member, and how margins are allocated or retained.
• Policies that show adherence to Section 521 operational tests.

3. Financial statements and schedules

• Recent period financials, plus any schedules the instructions request.
• If a representative will deal with the IRS for you, include Form 2848 or 8821.

4. Fee and delivery

• Include the correct user fee and follow the current submission method on the IRS site. A wrong fee or missing signature can kick the packet back.

Quick checklist you can print

Section	What to include	Why it matters
Identification	Legal name, EIN, contact	IRS matches your entity across systems.
Organizing docs	Articles, bylaws, amendments	Proves you are organized for Section 521 purposes.
Operations	Membership and patronage narrative	Shows you operate on a cooperative basis.
Financials	Statements and requested schedules	Supports economic substance and tests.
Authorization	Form 2848 or 8821 if using a representative	Lets the IRS speak to your agent.
Fee	Correct user fee and proof of payment	Avoids immediate rejection or delay.

Pro tip, label attachments with the form name, the part, and the line item, and include the cooperative’s name and EIN on each attachment. IRS reviewers appreciate packets that are easy to navigate.

Recordkeeping after you file

The IRS instruction language is simple here, keep a copy of the completed application in your permanent records, and keep books and records as long as they may be material to any federal tax administration. If the exemption is recognized, file Form 1120‑C each year.

Common Mistakes And How To Avoid Them

The same handful of mistakes show up across §521 packages. Each one is process driven, not technical, which is why they keep repeating.

Where Accountably Fits, Only When It Truly Helps

A §521 application is a heavy, attachment-rich packet that lands on the desk once for the life of the cooperative, and the work is easy to let slip while production deadlines compete for attention. The problem is rarely the form itself, it is the delivery system around it. Accountably is a U.S. accounting and tax outsourcing & offshoring services company that integrates trained teams into your workflow, uses your templates, and protects review time with layered quality checks, so the organizing documents, financial schedules, and fee transmittal are assembled cleanly the first time.

The win is predictability, a standard intake, a clean packet every time, and a record you can audit. That is how the determination clock starts on the first submission instead of the second.

We keep mentions of ourselves light in this piece on purpose. The main point is your process, clear, fast, and accurate. If you want help building that process, we can talk when you are ready.

Reusable Checklists

These are copy-paste ready for firm SOPs. Drop them in your engagement playbook, adjust the language to fit your shop, and use the data-checklist ids to track completion per engagement.

Keep 1028 Season From Stalling

Form 1028 work does not show up on a calendar the way a quarterly 941 or a March 15 1120-S does. A §521 application lands on the desk once for the life of the cooperative, the package is heavy with attachments, and the user-fee amount is reset every year by IRS revenue procedure (per IRS Publication 557, exempt-organization determination user fees are set annually). Because it is rare, it is the kind of filing that quietly slides while routine production work crowds the queue.

The fix is to treat the packet as a delivery system, not as a one-off favor. A clean intake plus a documented assembly order does more than another reminder email ever will.

• Build a one-page §521 intake covering EIN, organizing documents, current Form 8718 user-fee amount, and the chosen carrier address (Covington P.O. Box for USPS, Florence street address for PDS).
• Lock the Form 1028 Part III and Part IV inputs against a four-year financial roll-forward (current plus three prior years) before any drafting begins.
• Confirm signature authority early, so the authorized officer signs the final assembled application under penalties of perjury rather than a draft.
• Label each attachment with the cooperative's name, EIN, and the Part and line item it supports, so a reviewer can navigate the packet without calling you.
• Calendar the 30-day appeal window the day any proposed adverse §521 determination lands, so the appeal opportunity is not missed while the team triages other work.

That is the kind of workflow we build for teams that do not want these filings stuck in someone's inbox. Our tax delivery teams integrate into your existing intake and review process, document the SOPs once, and keep the queue moving without partner time being eaten by paperwork.

FAQs

What is the IRS 1028 tax form?

It is the application a farmers’ cooperative uses to request recognition of exemption under Section 521. You assemble organizing documents, operations detail, financials, and pay the required user fee. Keep a copy in your permanent records and, if approved, file Form 1120‑C each year.

Is there a fee for IRS Form 1028?

Yes. The IRS uses a user fee for determinations. For paper Form 1028, the fee must be transmitted via paper Form 8718 in the same envelope – Pay.gov user-fee payment is wired to Forms 1023, 1023-EZ, 1024 and 1024-A, not Form 1028. Always check the current amount and payment method on the IRS site before you file, since fees can change and the IRS will reject incomplete submissions.

Can a Section 521 determination be requested electronically?

Form 1028 itself is a paper application (Rev. September 2006) and cannot be filed on Pay.gov. The electronic alternative for a Section 521 determination is Form 1024 on Pay.gov, available since January 3, 2022. Decide the channel at the start of the engagement and do not mix the two mid-application.

Where do I mail a paper Form 1028?

Match the carrier to the address. USPS goes to Internal Revenue Service, TE/GE Stop 31A Team 105, P.O. Box 12192, Covington, KY 41012-0192. A private delivery service goes to Internal Revenue Service, 7940 Kentucky Drive, TE/GE Stop 31A Team 105, Florence, KY 41042. Include Form 8718 and the current user fee in the same envelope.

What does a Section 521 cooperative file each year after recognition?

If exemption is recognized, the cooperative files Form 1120-C each year. Keep a copy of the completed Form 1028 application in your permanent records, and keep books and records as long as they may be material to federal tax administration.