Truth About Gifting: Is Cash Gifting Legal Or Is Gifting A Scam?

Gifting Programs Are Sprouting Up All Over The Internet-Many are Getting Rich BUT Some WILL go to jail. It Has already happened.

There are a number of programs out there, The Overnight Cash System, Elite Activity, Charity Begins At Home, Q, QBox, Cash Gifting, Private Cash Gifting, Cash Gifting Angels, Cash Gifting King. All are Promoting Some Form Of Cash Gifting as a legal method of receiving loads of tax free cash. These programs are growing in popularity every day and some people are in fact making wads of money, but there is not enough money in the world that is worth risking jail, your liberty, your reputation and ultimately your long term financial and personal freedom, especially when you can use the same skill set and effort required to make money from "gifting" to make tons of money without these risks.

As a retired attorney, and a successful home business coach, I felt obligated to write this blog to help dispell some of the misinformation out there. I hate to see so many people risking their personal freedom as well as their hard earned money on these programs. Read this carefully before you do something you will ultimately regret. There are many legitimate legal ways to make money.

Please note: I am not giving legal advice here. If you want to get legal advice about any gifting program you are looking at, you have two choices. One, speak to a competent attorney on your own. Speak with someone who is familiar with the Federal Trade Commission. (The illegality of gifting has nothing to do with the IRS) Two, go to the attorney general in your state. Show them everything you have about your potential program, and ask for their professional opinion. Ask whether they think that engaging in this activity is a prosecutable offense. Ask if someone brought this to their attention, whether it was something they would choose to prosecute. I'm guessing most of you will not do that...because in your gut you know the answer. DO NOT Rely on a statement on some website that some anonymous attorney has determined that it is legal.

Likewise, if you want to know whether any money you receive as a resulting of your participation in your gifting program is taxable, you should discuss this with a tax attorney or seek the answer from the internal revenue service. I am serious. If you are successfully promoting gifting, take some of the money you are receiving and talk to a tax attorney. Do not get your advice from some tax preparation franchise. They are trained to file taxes for empoyees, not entrepreneurs. And make sure that you put some money away for a good criminal attorney as well. Do not spend all your "gifting" money...you will need it later.

First, let me say this: I do not believe there is anything immoral or unethical about gifting programs in theory, assuming that no false promises or misrepresentations are being made. BUT From the numerous websites I have reviewed, this is not the case. Instead these websites rely on misstatements of the Internal Revenue Code and make comparisons to charitable contributions which are misleading too. FACT : People should know going in that making money this way will require effort on their part, and since most people are not comfortable asking for money, most people will fail at this. The people who succeed in getting money through cash gifting programs treat it like the business that it is.

My Personal Opinion On Whether "Gifting" Should Be Legal Doesn't Count and Neither Does Yours

Personally, I am a liberterian and I believe that we would all be much better off with less government and more personal accountability. If I were Queen, grown people who wanted to voluntarily engage in any gifting programs, or any so called money "schemes" would be free to do so. I believe that consenting adults should be free to engage in any activity they choose that does not cause harm to others.

Of course, the problem with all of the gifting programs out there is that they are not being truthful. While many of the people promoting these programs actually believe that what they are doing is legal, the people who are creating these systems and producing the websites that are being used to promote them know the truth. They know that people have gone to jail and that old programs have been shut down, and new ones have been created, usually by people with some relationship to the shut down programs.

Likewise, the promoters know that the only way to make money with gifting is to treat it like a business. But their website ad copy is specifically designed to lure in average people with no business background who are not confident enough to start a real business. They know that these people do not have a chance in a million of succeeding in gifting. Only those who treat it as a business have a chance to succeed. And even then...ask yourself this...How many hours a day every day do you want to spend having this conversation with the people you are trying to get to join your gifting program?

The conversation that starts with is it legal? Every person with half a brain who comes to your gifting website will ask this. The fact that you are reading this blog tells me that you are asking yourself that question. Unless you do what I suggest and do your own due diligence in checking out the legalities without relying on the program promoter, if you tell someone that it is legal and they believe you, are you prepared to accept the consequences of that statement. WIll you be able to sleep at night? How will you feel when someone you know gets arrested or faces the IRS all because of something you recommended?

So, while I believe that it is conceivable to have a gifting program that could be run in a moral and ethical manner, the reality is that since we have laws here in the U.S.A. and in most every other country that are designed to protect "consumers" from their own gullibility and foolishness...the fact is that these "gifting programs" are illegal. When people talk about illegal "pyramid schemes", this is the exact activity that the laws are designed to prevent.

I absolutely believe that you can make boatloads of money with cash gifting. Just as you can in any number of businesses online or offline. In fact, I admit that I have been tempted more than once to take my internet marketing experience and apply it in the gifting arena. I have no doubt that I could apply what I know about internet marketing and make a fortune with gifting....But I also know that the risk of ultimately suffering criminal and monetary consequences is real. And for me personally, the risk outweights the potential reward. Particularly because there are so many unquestionably legal ways to make a fortune using the same skills required to be successful in cash gifting.

The truth about the tax code "making it legal."

My concerns about the people who are promoting and creating these gifting programs is that they misrepresent the Tax code, and take advantage of the fact that most non wealthy people have no clue about Gift taxes.

I see statements in website after website stating that the Internal Revenue Service clearly makes it legal to make gifts up to $12,000 a person. And adding that everyone has the legal right to receive gifts up to $12,000 without paying taxes. I do not intend to go into a lengthy explanation of gift taxes except to state that this is an area of tax law which goes hand in hand with estate planning. The issue of gift taxation is a subject dealt with by wealthy families who want to pass their assets to their children and other family without having to lose most of their assets to the government through the payment of estate taxes. Gift taxes are paid by the gift giver. If your wealthy parents or a wealthy friend wants to give you $500,000 as a true gift, I promise you that they will not be breaking any laws. Your wealthy friend or relative will have to pay gift taxes on the amount of the gift that exceeds the yearly allowance set by the Internal Revenue Service. But they will not be breaking any laws. And neither will you. In fact you can receive "true gifts" of any amount without breaking any laws.

Nothing in the Tax Code makes the giving of gifts of any amount legal or illegal.

First, with the exception of political contributions, and other specific instances like gifts to public officials who have authority to make decisions, ie. bribery, people are free to make "gifts" of any amount to anybody or any organization. Giving gifts of any amount except for those specific exceptions is entirely lawful. Those exceptions do go to the heart of why gifting programs are illegal. The real issue is whether they are in fact gifts. The reason that there are laws which limit the amount of political contributions any person or group can give, or the reason that it is unlawful to give gifts to police officers or judges or any public employees is that there is a question as to whether it is a gift, meaning that there is no expectation of any benefit to the gift giver (other than the warm fuzzy feeling that goes with giving). If you give a "gift" to a politician, the question becomes whether you are simply giving a gift OR are you giving money with the expectation of some benefit to you. (Gift = no expectation of return Bribe= expectation of benefit = if you are caught you will go to jail)

THE Reason that "Gifting Programs" are illegal is this: By definition: A "GIFT" is money or services or anything of value which is given freely with no expectation of receiving anything in return.

The Fact that you and everyone you promote your "gifting business" to signs a piece of paper stating that they are freely giving a gift and are expecting nothing in return DOES Not MAKE IT A GIFT. The Fact that you sign a piece of paper that states that you are not engaging in a business does not change the fact that you are engaging in an activity with the express purpose of making a profit which is by definition a business.

I hate to be the bearer of cliches, but if it looks like a Duck, and walks like a Duck, and quacks like a Duck....signing a piece of paper that declares it a Cow does not make it so.

Prosecutors, Judges and the Internal Revenue Service will not care what your piece of paper says. They will look at your actions, they will look at the reasonable intentions of anyone doing this. They will look at the websites you are using and at the ads you are posting. If turning any money making activity into a tax free gift was as simple as signing a piece of paper that states that you are giving a gift, then every business out there could do the same. Have you ever heard of Barter. People exchange services and goods every day...but you can't just sign a paper that says I am giving this service as a gift and make it so.

If you truly want to give a gift...go ahead. In fact, while I will never risk my liberty to engage in any gifting programs, I would love to receive gifts and will be glad to accept any gifts from any of you who have recently been inspired to be a professional gift giver. I will gladly accept gifts of any amount...unlike most of the programs out there, I do not ask for gifts in specified amounts. You will not have to pass up any gifts. I was discussing the issue of gifting with a highly competent attorney I know, and I jokingly suggested that I could contact all the people who are promoting their gifting programs and suggest that they could send me a gift as evidence that they are not engaged in a business, but just truly are into gifting as a way of life. Giving a gift to me, even though I am not part of their program could be evidence that they really and truly just like to give gifts....and I could testify on their behalf when some attorney general comes after them....BUT oops I just ruined it...now its not a gift.

So, I am still open to receiving gifts, but I cannot agree to testify on your behalf.

Let Me ask you this...Did you learn about gifting from a person or website who more or less just told you...hey its better to give than to receive...I love giving gifts and I hang out with a bunch of other people who also just love giving gifts, and if you want to join our organization you can give gifts too. We are just a bunch of people who love to give, and if you join our private club, who knows... maybe some of our members who just love giving without expecting anything in return (definition of a Gift) will just randomly give you a gift.

OR DID YOU RESPOND TO A WEBSITE THAT PROMISED YOU A WAY THAT YOU COULD MAKE BOATLOADS OF TAX FREE MONEY ?

Ask yourself this...if you are joining a freewheeling group of "gift givers" why do you first have to Make a Gift to join. Why do you make 1 "gift" and then receive unlimited "gifts" Why is it that you only make 1 gift or maybe more to qualify for greater "compensation" HINT-True Gifts do not come with compensation plans and different levels of participation. When was the last time you gave a true gift and the gift receiver set out rules and requirements about how much, how to advertise, online marketing etc. (BRIDEZILLA stories don't count!)

I have actually seen some programs that are trying to establish gifting as some sort of religious group. There are tax protesters that will tell you that the government has no right to tax you and will tell you it is legal to not pay taxes. There are groups online who tell you that due to some legal loophole, you do not have to pay your credit card debt. And now there are many people trying to tell you that "gifting" as a way of earning money is legal and tax free and maybe even a new religion. Don't be fooled.

One final note: Ask the promoters of your gifting program to back up their claims that this is legal. It's really simple, ask if they will sign a simple document that they will pay your legal expenses in the event that engaging in gifting as they are promoting it causes you to be arrested or audited.

Then just trust your instincts.