I don't have any new MLM stories lately, but someone I went to high school with has a conflict of interest on her sleeve that nobody else seems to notice (and pumping personal contacts for financial gain which this thread got me thinking). A couple years ago she started hitting us all up on Facebook to go on a cruise. I thought it was out of the blue and aside from accepting her as a FB friend ages ago I never even looked at her profile. This time I took a notice that her profile pic was of her in a Dominoes uniform which seemed odd for someone trying to put together a cruise. I dug a little deeper and saw that she is part of some travel agency group of which she appears to be the only employee (their facebook page is nothing but photos of her). The cruise idea died on the vine from lack of interest. Fast forward to this weekend where she's taken it upon herself to organize our 20th class reunion. She wants to do it at a casino a couple hours from where we all grew up which will include a venue, group hotel reservations, flights, and some other things that have to be booked well in advance (that she needs to be in the loop on for some reason). I can't help but wonder if she's getting some kind of deal or kickback out of this arrangement that she's not disclosing.
So the reunion this summer is officially dead. We're within the window for making venue reservations and only a handful of people confirmed their attendance. A smaller group of us decided we're going to just barbecue or get together at a restaurant that we can reserve later this summer when more of our schedules intersect. The "organizer" who complained in the Facebook group chat all morning long about how we need to put some more effort into this put forth "let's just plan something next summer that we can properly organize like trying the casino again or a cruise." Nobody in our class but her is suggesting a cruise. Most of the folks I went to school with can't afford it. Nobody has called her out directly, but a couple other classmates who know she's doing this to try get some kind of booking fee have made it loudly known these ideas of her will never work with our class.
She struck again. One of our favorite high school teachers is retiring this summer. Word is spreading like wildfire through Facebook for everybody who had him that we should do "something" for him. What that will be has not materialized yet. She joined the conversation tonight with this contribution:
"I have a 501c3 within my music company [company name is her initials] so we can make donations and get tax write offs for money's donated to the placards. We can bless him and give him an Ed McMahon check with the placard."
Every time we have a group discussion like this she's trying to get a piece of the action.
That bimbo is advocating tax fraud.
First, she's probably lying about "having" a 501(c)(3). A tax exempt charity, by definition, is a not-for-profit corporation. It cannot be "within" or even closely related to a privately owned for-profit company such as a LLC, a sole proprietorship, or corporation. All not-for-profit corporations are set up with no shareholders. Decisions are made by the Board of Directors and the elected executives. The charity must be set up with a specific charitable purpose. On the off chance that she actually got a charity approved with a TIN number and a letter from the IRS confirming her tax exempt status, if she's collecting donations to benefit someone she knows and encouraging people to write off their gifts, she's breaking the law.
When you run a tax exempt charity, there must be a mechanism in place to ensure that decision makers in the charity do not abuse their authority to enrich themselves or their friends and family. If there are close ties to a for-profit business, such as owners who also function as executive directors, Board members must recuse themselves from decisions made that could potentially benefit themselves or their families. Self-dealing, for example, is no-go. So is collecting money for a specific individual who is not a member of a disadvantaged group. Buying someone a retirement gift or handing him a check isn't the same as raising money for kidney research. There are people who receive financial help from certain kinds of charity, yet there's typically an application process and a way of determining who gets help and who doesn't.
Donations that are directed to an individual by using a 501(c)(3) as a "pass-through" cannot be written off as charitable donations by the donor. Any attempt to do so will create delays in processing and (if IRS workloads allow) flag the account for audit. Donations like these are taxable income to both the charity and the gift recipient. That kind of income is in the same category as what might be raised through vice transactions (such as alcohol sales or gambling), for-profit activity that competes with mainstream businesses that pay taxes, or other income that isn't tax exempt. If a non-trivial (not explicitly quantified by the IRS but usually more than 10%) proportion of a charity's annual income is tied up in activities that aren't tax exempt, established case law dictates that the charity will lose its tax exempt status if the state ever sees fit to challenge it.
Bibble-babbling about how to "bless" someone through tax fraud is disgusting. I wouldn't care to commit tax fraud myself, nor do I see any merit in benefiting from someone else's fraud. Of course, since she seems to have trouble with writing and spelling an intelligible sentence in English, she clearly isn't qualified to run even a vanity charity.
