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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