Harold D. and Joan E. Edwards - Page 3




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          required by the State of Washington.2  He continued to sign all             
          of the Edwards agency’s payroll checks, examined the books and              
          records of the business regularly, and paid bills for business              
          items such as paper and stamps.  Mr. Edwards also retained the              
          power to fire Ms. Payne, and he reviewed the “folios”, which                
          reported the Edwards agency’s commission income from premium                
          renewals.  At no time was petitioner Joan E. Edwards (Mrs.                  
          Edwards) involved in the business operation of the Edwards                  
          agency, nor did she hold an insurance license.                              
               In 2003, the Edwards agency maintained three full-time                 
          employees and had gross receipts of $181,700.  Petitioners                  
          received $62,483 in net income from the Edwards agency.  Premium            
          renewals from clients accounted for 85 percent of the net income            
          of the Edwards agency,3 and the additional 15 percent came from             
          clients purchasing additional insurance on new cars, homes, or              
          other property.  The Edwards agency did not solicit premium                 
          renewals.  Instead, the regional or national Farmers Insurance              
          office sent Edwards agency clients renewal notices in the mail,             
          and the clients made their payments directly to the Farmers                 


               2  In order to own an insurance agency in Washington, a                
          person must have an insurance license.  Wash. Rev. Code Ann. sec.           
          48.17.060 (West Supp. 2008).                                                
               3  During 2003, Farmers Insurance made 12 monthly deposits             
          of such premium renewals into the NW Farmers Insurance Group                
          Federal Credit Union account of petitioners, and those deposits             
          totaled $154,179.                                                           






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