Cash Gifting has been around for decades under various names and operating schemes. This runs the gambit from the old chain letters to “clubs” like women helping women and now online.
The latest iteration of this scheme has been labeled as “Cash Gifting”. The various names of this scheme have been used over the years to convince people that the scheme being presented is legal. Convincing people that the cash gifting scheme is legal is vital to the success of the scheme.
Although cash gifting is basically the raw definition of a pyramid scheme, people are often easily convinced it is legitimate. It’s not as shocking as you might think since people are more easily convinced if they want it to be true. Such is the case when you tell someone the can get a thousand times return on their money.
With this latest iteration of the basic pyramid scheme it is in fact the term cash gifting that is used to convince people that it is legal.
Cash Gifting is actually a term utilized in estate planning. Unfortunately the government takes a huge bite out of our estates when we pass them on to our heirs, unless we take action to protect our family’s inheritance. Estate lawyers can assist in many ways to keep the government from grabbing up to 50% of your estate.
One of these methods is cash gifting. This allows you to gift up to $12,000 to you heirs without paying taxes. This is spelled out under IRS Tax Code Title 26, Sections 2501-2504 and 2511.
There are guidelines that have to be met for the gifting to benefit from the tax break. One of which is that the gift is given with no strings attached and requiring noting in return.
So if I were trying to induce you into a cash gifting scheme and showed you an IRS tax code that allows cash gifting and then a document that all members sign saying they expect nothing in return and such to meet the IRS tax code, then it all looks good and legal.
An IRS Tax code does not legitimatize a pyramid scheme!
The IRS only determines how taxes are applied in the transition of money or property. They do not set regulations concerning income opportunities.
Is Cash Gifting Legal? Yes for people actually giving gifts such as to heirs to avoid huge taxes.
Is Cash Gifting as an income opportunity legal? NO The are in fact Pyramid schemes.
Many people will read this and think they can still make money so why not? If people are making money who is going to complain.
The fact is they all will implode. Many people will put their money in and not tell anyone else. So the “chain” breaks. In the pyramid structure the bottom keeps growing wider. The people at the top make a lot of money and the people at the bottom lose money. Unfortunately there are many more people at the bottom than the top.
Cash Gifting programs always implode and the people that lost money always file complaints. It doesn’t matter that they made their own decision to join and sign documents that they acknowledge all the facts and risks involved and on an on.
People feel like they shouldn’t be responsible for their own actions and our government agrees. Anyone managing or promoting an illegal pyramid scheme is breaking the law.
NOTE: We want to make it CLEAR that we are discussing only cash gifting as a pyramid scheme. Many people with a limited knowledge on the subject will call legitimate network marketing opportunities a Pyramid Scheme. In fact the opposite is true. Illegal pyramid schemes are made to resemble legitimate network marketing opportunities.
Can you as a participant be held legally responsible?
Yes you can. One example occurred in 2002 and 2003 in Sacramento. The program was a gifting club called Women Helping Women. All the members signed documents acknowledging the gifting rules and that they would not sue anyone involved.
Not only were the program managers arrested but a total of 20 women who were top earners were as well. Each pled guilty to avoid prison and were sentenced to significant public service and fines up to $150,000.
If you get involved with a cash gifting program you will either lose your money or make money and be in jeopardy of being legally responsible for those that did loose money.
We include this just as a bit of humor in an unpleasant topic. The biggest fools are those that make videos of themselves receiving cash. They count it out and go on to tell you how much money they made. This is basically filming yourself committing a crime then putting it on You Tube.
Cash Gifting as an income opportunity is illegal. It’s pretty obvious. This is the basic definition of a pyramid scheme.
There are many legitimate network marketing and home business opportunities. The primary factor in differentiating a legal network marketing opportunity from an illegal pyramid scheme is having a product change hands.