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Primerica would apply Mrs. Harper’s accumulated earnings for that
month to her negative balance. This process was repeated through
November of 2003, when Primerica applied the remaining amount of
Mrs. Harper’s earnings to zero out her commission account. At
the end of 2003, Mrs. Harper’s commission account (including
recovery of advances made and chargeback amounts owed) had a
negative yearend balance of ($1,113.17). The monthly records
show that Primerica applied $1,113.17 from Mrs. Harper’s earnings
recorded throughout that year to essentially pay back the
negative balance in her account.
We believe, despite the lack of any contract stating
otherwise, that this accounting shows that Mrs. Harper was under
an obligation according to her affiliation with Primerica to
rectify any outstanding balance in her commission account and, to
that end, her advances were not taxed upon receipt, but her
actual earnings were taxed. In this case, those earnings were
used to pay back a deficit accumulated in her commission account.
At the end of 2003, Mrs. Harper’s commission account was
credited with $1,113.17. Primerica, however, did not pay Mrs.
Harper this amount by check but rather applied it to a then-
existing deficiency in her commission account. Before applying
the funds, Mrs. Harper’s commission account had a total negative
balance of ($1,271.87). After crediting the account with $158.70
in “institutional recovery” and applying the $1,137.17 credit
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Last modified: November 10, 2007