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year. The second form of payment was in the form of net earned
commissions. These earned commissions were calculated on a
policy-by-policy basis as premiums were paid by policyholders.
Earned commissions were applied in the following order: (1) To
recover outstanding debits in the form of advance commissions;
(2) to reimburse Primerica for advanced business expenses such as
license fees, etc.; and (3) to cover any outstanding amounts that
had been charged to a sales representative’s account (Chargeback
Recovery). Primerica would report any net earned commissions
credited during the taxable year to a sales representative’s
account to the IRS on Form 1099-MISC, Miscellaneous Income.
Upon selling an insurance policy, Mrs. Harper 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 1 year. These advances
were not reported to the IRS as income until the 1-year mark
elapsed, and Mrs. Harper had an unconditional right to the funds
or their equivalent.
Primerica recorded monthly commission account statements for
Mrs. Harper for each month of 2003. Consistent with the dates of
her affiliation with Primerica, the last monthly statement
showing policy sales was dated July 31, 2003. The final monthly
summary is dated December 31, 2003, and reports the following:
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Last modified: November 10, 2007