This is from TerminatedRamp on the Yahoo message board for Usana. He raises an excellent issue. The IRS already has a generally dim view on multi-level marketing because the odds of turning a profit are less than 1:100 (1%). In order for business deductions on a tax return to be legitimate, the “business” activity must be done with the intent of making a profit and with a likelihood of profit. Doesn’t sound like a Usana distributorship meets these guidelines if you listen to Usana CFO Gil Fuller.
Gil Fuller repeatedly called the majority of USANA distributors “Volunteer Army”. This implies that these distributors never joined the business opportunity with the intent to profit. Even the Wall Street Journal reported the following: “The company has previously said that most of its distributors join to secure a discount on vitamins, not to earn money.”
This is devastating for the hundreds of thousands of USANA distributors who aren’t making a profit and are deducting their losses with USANA. According to Gil Fuller, they have no intention to make a profit and only wanted vitamin discounts. Now hundreds of thousands of distributors may be subject to an audit to see if these distributors ever intended to make any money. Sadly enough, they will most likely get away with what they did unless the IRS steps into this battle.
Gil Fuller can’t have it both ways. Either the distributors joined with the intent to make a profit in a business and therefore legitimately deduct their loses, or they are just a “volunteer army” who are illegally deducting their USANA losses. If Gil Fuller lied about this notion that USANA distributors are a “Volunteer Army” and all actually joined to make money in a business opportunity, then USANA must admit that the loss rate amongst USANA distributors is infact close to 95% of the currently enrolled distributors. That is, out of about 500,000 USANA distributors, close to 475,000 USANA distributors are not turning a profit. We already know that 66% have not earned a single penny in commissions.
These losses are dramatic and real. And the money these profitless distributors pay into USANA are used to enrich the top 3% of the distributors in the pyramid scheme, which consists of a lot of the original & current management’s family members as well as those who got in very early on. If it was only about the product to these failing distributors, then they would ONLY be preferred customers. Once they join the BUSINESS Opportunity, their motive is Profit. If it isn’t, then they can’t deduct their losses, and if they are, they are breaking the law.
Gil Fuller really screwed the distributors if you ask me. The “Volunteer Army” that is…