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One question constantly that needs clarification for the anti MLM Community is whether an MLM Distributor owns a business or not. Here's the answer:
Yes, the IRS generally considers an MLM (multi-level marketing) distributor to be operating a business if they are actively engaged in selling products or recruiting others for profit. The IRS treats MLM distributors as self-employed individuals, typically classifying their activities as a sole proprietorship unless they've set up a formal business entity like an LLC or corporation.
Key points:
Income Reporting: Distributors must report earnings (from sales, commissions, or bonuses) on their tax return, usually via Schedule C (Profit or Loss from Business).

Expenses: They can deduct ordinary and necessary business expenses, like marketing materials, travel, or inventory, subject to IRS rules.

Independent Contractor Status: Most MLM distributors are considered independent contractors, not employees, meaning they're responsible for self-employment taxes.

However, the IRS evaluates each case based on factors like profit motive, time spent, and business-like operations. If the activity is deemed a hobby rather than a business (e.g., minimal effort, consistent losses), deductions may be limited. Always consult a tax professional for specifics.

is an mlm distributor considered a business owner by the IRS?

Yes, an MLM distributor is generally considered a business owner by the IRS if they actively engage in selling products or recruiting others with a profit motive. The IRS typically classifies them as self-employed, operating as a sole proprietor unless they've formed a separate business entity (e.g., LLC or corporation). They report income and expenses on Schedule C and are responsible for self-employment taxes as independent contractors. However, if the IRS views the activity as a hobby (e.g., minimal effort or consistent losses), it may not qualify as a business. Consult a tax professional for clarity.

Modere, a multi-level marketing (MLM) company specializing in clean wellness, beauty, personal care, and nutritional products, announced its abrupt closure on April 11, 2025, after 23 years in operation. The announcement was made via a brief statement on its website, expressing gratitude to customers and distributors but providing no specific reason for the shutdown. This lack of transparency left its global community of over 1 million customers and numerous distributors in shock and confusion.

Key Details Surrounding the Closure:

Implications for MLM Distributors as Business Owners:

Given your earlier questions about MLM distributors and IRS classification, Modere's closure highlights risks for distributors considered business owners:

Current Status:

As of April 13, 2025, Modere's website remains down, showing only the closure statement. No further official updates have been provided, and the lack of clarity continues to spark speculation. The closure has prompted renewed debate about the sustainability of MLM businesses, with some distributors reportedly moving to other MLMs, while others are reevaluating the risks of such ventures.

If you're a former Modere distributor or seeking specific tax advice related to this closure, I recommend consulting a tax professional to navigate potential deductions or losses. Would you like me to dig deeper into any specific aspect, like tax implications or MLM industry trends?

Next we speak about the idea that BINT (Blessings in no Time) Founders are trying to use the Sovereign Citizen argument as a defense.

The sovereign citizen movement is a loosely organized ideology that asserts individuals can declare themselves independent of government authority, rejecting the legitimacy of laws, taxes, and regulations. Adherents believe they are not subject to statutes, courts, or law enforcement, claiming a "natural" or "common law" status that supersedes legal systems.

Core Ideas:

Practices:

IRS and Legal Context:

The IRS explicitly rejects sovereign citizen claims, viewing their tax avoidance tactics as frivolous. The agency lists such arguments (e.g., taxes are voluntary or only apply to government employees) as grounds for penalties or criminal charges. Courts consistently uphold the IRS's authority, and sovereign citizens often face fines, liens, or imprisonment for tax evasion or fraud.

Reality Check:

Broader Implications:

While rooted in distrust of government, the ideology's rejection of legal systems creates practical issues, especially for adherents entangled in tax disputes or criminal cases. It contrasts sharply with MLM distributor status (per your earlier questions), as the IRS clearly defines distributors as taxable business owners under federal law, a reality sovereign citizens dispute.

The post Scott Johnson and Peter Mingils on MLM Modere Closing, Missouri Bill on Pyramid Selling, and Sovereign Citizens appeared first on Building Fortunes Radio Network.