By Stacie Clifford Kitts, CPA
This is a multipart series about a girl enticed into the indentured life of a door-to-door seller of magazine subscriptions. Her recount of industry practices and the resulting tax consequence is truly shocking.
This story also illustrates the importance of understanding your worker status for employment tax purposes, understanding contracts your employer asks you to sign, the need to research industry practices particularly in door to door sales, accounting and tax issues associated with cash transactions, tax consequences of self employment and Form 1099, the importance of having a Plan B and consulting with the right advisors before making life decisions, oh and gee a bunch of other scandalous stuff.
This story also makes me question why our lawmakers continue to allow this industry to persist in its abuses against America’s youth!
Need to catch-up? Start here:
Part Three – Nonexistent Commissions and other Revelations
Abigail was surprised to find that she was a natural seller. On many days, she was able to bring in more subscription sales than all of the other crewmembers combined. She was elated when Nick pulled up her account on his computer screen and pointed out the commissions she had earned.
Each day Nick would give her a $20 allowance to cover her food and other essentials. But she didn’t care that he wasn’t paying her everything. The small allowance just meant that her commission account was growing.
After weeks of being on the road, Abigail began to notice that all the door-to-door walking was contributing to a significant weight loss. Her old cloths were baggy and looked out of place on her smaller frame. Abigail was ready to draw on her account to buy something new. “Nick, I need some money. These old clothes are falling off. ”
But his answer was not what she expected. “Someone stole the money out of my room,” he explained. “I can’t give you anything.”
“Stole it? What does that mean? When will I get paid?”
“Ask me later,” he told Abigail.
Over the next few days, Abigail continued to inquire about her commissions. But each time, Nick had an excuse for not being able to pay her.
“How can I pay you? He told her one day. “You need to collect cash not checks from your customers. If you don’t collect cash, I wont have any to give you.”
And so the days and then weeks dragged on, and so did Nick’s excuses. She slowly began to accept that he was never going to give her the commissions she had worked so hard to earn.
Not long after her disillusionment over the nonexistent commissions, Abigail began to develop a loathing for many of her fellow crewmembers. She watched in dismay as they became dependent on the drugs and alcohol that Nick fed them. And she grew to dread the drug fueled party nights and the indiscriminate hookups between the crewmembers.
Even more disturbing to Abigail was the instances of pregnancy. With the close living conditions, access to drugs and alcohol, and little opportunity to seek out birth control, pregnancy turned out to be a direct hazard of the job, a hazard that finally ended the journey for many crewmembers.
For months, Abigail tried to think of ways to get out. She was afraid to call her parents. She had abandoned school and skipped out on the apartment her parents had gotten for her. What could she say to them now? How could she explain her behavior?
Worse yet, the company, by design it appeared, hadn’t given her enough money to leave. Nick continued to deny her the commissions she had earned. While on the road, she was transported far from her home state of California to Oregon, Washington, Idaho, and Montana. She wondered how she would get home. She was worried that leaving the crew meant homelessness with nights spent sleeping on the street. She felt trapped by the Company. She was under their control, completely indentured to the crew. She felt like their slave.
Desperate to get out, Abigail finally confronted Nick, demanding that he pay over her commissions. He responded by driving her to a bus stop and stranding her there. Alone and without enough money to get home, Abigail finally relented and tearfully called her parents to beg them to let her come home.
If you would like to learn more about the abuses of this industry – Stay tuned for Part Four – Tax Consequence.
Note: This story is based on true events and is told with the permission of the taxpayer. Names and some events are changed at the taxpayer’s request.