NMBJ News

The California Assembly passed SB 17 on a majority vote on June 28th, which contains a provision for a three percent withholding on independent contractors. If this bill becomes law, all network marketing companies will be required to withhold three percent of your monthly check and remit this amount to the state.

We [the MLMIA] are voicing our strong opposition to this bill because, if enacted, it will decrease the size of your monthly checks and create substantial administrative burdens and expenses for all MLM companies. Throughout history, across the country, direct sellers as well as other independent contractors have been exempt from withholding taxes because many of their expenses are deductible. This legislation sets a dangerous precedent that other states and even the federal government could follow.

If you share our concerns, please voice your opposition to this bill ASAP by contacting the governor and Senate President Pro tem Darrell Steinberg and let them know how you feel. A sample letter appears below for your convenience, but your communication will be most effective if you use your own words. Contact information for the governor and senate president also appears below.

The following is the Governor’s contact information:

Governor Arnold Schwarzenegger

State Capitol Building

Sacramento, CA 95814

Phone: 916-445-2841

Fax: 916-558-3160

The following is Senate President Pro tem Darrell Steinberg’s contact information:

Senate President Pro tem Darrell Steinberg

State Capitol, Room 205

Sacramento, CA 95814

SAMPLE LETTER:

Dear [ ]:

Withholding on independent contractors, like me, a (name of Company) Distributor, would place a large burden on my family. Unfortunately, once again, the California Legislature is considering an independent contractor withholding proposal.

[Tell your personal story in your own words] I have been a (name of Company) Distributor for more than [Insert the number of years you have been working with your company] years. Originally, I enrolled because I liked the products and wanted to earn some additional money. Now my family depends on this extra income to supplement our budget.

I am not opposed to paying my share of taxes, but it makes no sense to me to send the state my money and then have the State send it back to me when I file my tax returns. I need every dollar I make to run my business. I have to pay my business expenses from the commissions I earn. While I of course support the need to pay taxes, withholding up front on taxes I may never really owe will cause severe cash flow problems for me. My business is already difficult enough. If you burden us with more administration and paper work it only serves to make the business more difficult and less attractive and therefore it will be more difficult to grow my business.

In the end, the State will not end up with any more money. If you do consider a withholding proposal, I request that you exempt direct selling companies.

Please do not sign any budget resolution that contains independent contractor withholding for direct sellers. It would hurt my family and my business as well as tens of thousands of others in my occupation.

Sincerely,

[ ]

Take action today!

For more legal and governmental up-to-date news, be sure to attend our 2009 Distributor Cruise in Florida, October 16-19, 2009.

About MLMIA

The Multi-Level Marketing International Association (MLMIA), is “The Association for Network Marketing – Worldwide.” A professionally managed non-profit trade organization, it is strongly committed to the advancement of the rapidly growing network marketing industry. Website: http://www.mlmia.com

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