William C. and Dorothy M. Smith - Page 4




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          called the “Founders Pack”, which included four Tax Relief                  
          Systems that could then be resold.  Among the benefits claimed in           
          the Tax Relief System materials were:  (1) A guaranteed minimum             
          of $5,000 in Federal tax deductions, (2) that participation in              
          the system was itself evidence of operating a business for                  
          profit, and (3) that opening a home-based business would allow              
          taxpayers to enjoy double deductions by claiming both the                   
          standard deduction as well as itemized deductions claimed on                
          Schedule C.  In addition to the written materials, customers                
          could purchase Renaissance’s monthly tax service with costs                 
          ranging from $10 a month to the platinum service, which Mrs.                
          Smith purchased, for $100 a month.                                          
               As a distributor in a direct marketing operation, an                   
          individual commits to purchasing or selling a certain amount of             
          the product each month.  The individual then earns commissions on           
          the products he or she is able to sell.  The individual also                
          enjoys a discount on products purchased for personal use.  In               
          addition to the commissions based on his or her sales, a                    
          distributor can earn income by recruiting other individuals to              
          sell the product.  The original distributor then becomes the                
          “upline” distributor and the recruit, the “downline”                        
          distributor.2  The upline distributor then receives additional              


               2These operations are also sometimes referred to as                    
          multilevel marketing companies.                                             






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Last modified: November 10, 2007