Ben Cox - Page 3

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                    The second form of payment to sales representatives is            
               net earned commissions.  Earned commissions are calculated             
               on a policy-by-policy basis as premiums are paid by                    
               policyholders.  Earned commissions are applied in the                  
               following order: (1) to recover outstanding loans in the               
               form of advance commissions; (2) to reimburse Primerica Life           
               for advanced business expenses such as license fees, etc.;             
               and (3) to cover outstanding loans that have been charged to           
               the sales representative's account ("chargebacks").  Net               
               earned commissions credited during any calendar year to a              
               sales representative's account are reported to the IRS as              
               income on Form 1099-MISC.                                              
          Ms. Wilson further stated that "the obligation to pay commissions           
          attributable to the sale of MILICO insurance products was the               
          responsibility of MapleLeaf Insurance Services" (MapleLeaf).                
               Petitioner testified that upon selling an insurance policy,            
          he received an immediate advance equal to a percentage of the               
          premiums due on the policy and was entitled to keep this amount             
          if and only if the policy was held by the insured for a minimum             
          of 7 months.  According to Ms. Wilson's affidavit, the advances             
          were intended as loans, and there was an unconditional personal             
          obligation on the part of petitioner to repay the advances either           
          with the future commission, credited to his account after the               
          relevant 7 months elapsed, or out of his personal funds.  The               
          advances were not reported by MapleLeaf to the IRS as income on             
          Form 1099-MISC until the 7 months elapsed, and petitioner had an            
          unconditional right to the funds or their equivalent.                       









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