Farmers Insurance Agent Subsidy

A friend tried to help a buddy get his inital recruit sales finished by refering me to him. Long story short I started reading and ended up here. I have a question about he 'salary/subsidy' paid to career Farmers agents.

Now I understand that in year 1 and year 2 you get a subsidy (about $3000+/month based on sales) from FIG. This debt (not a salary) is to be forgiven at a rate of 1/3rd per year starting in year 3. So, if you stay for five years it is all paid off. Leave early you pay them the remainder based on time-served.

My question(s): You start year 3, what happens? Do you get more subsidy that you repay over years 4,5,6? Does the sudsidy turn in to a salary? Does it just stop coming in and you're on your own?

Thank you for your help. I'm trying to derail this guy before he screws up his life (I don't think he, or his family, has it in him to suffer for five years).

-D



Edited 1 time(s). Last edit at 10/04/2007 08:16PM by administrator.

Dana,

Prospective Farmers Insurance Agents should see these pages:
[www.farmers-online.com]

From Farmers Career Agent Program...
(http://www.farmers-online.com/farmers_career_agent_program.aspx)

"Subsidy = Debt

Max everything out and it can be incurred at a rate of $40,000 a year. What happens if you dont make your numbers and get your contract cancelled? You owe subsidy back to Farmers.

Can you honestly sell 24 overpriced Life policies to yourself for the next 24 months? Because it sure isnt easy to sell them to other people.
Can you afford the additional $1700 a month for 24 months?
Can you work 80 hours a week?
How do you feel about owing $80,000 if you fall just barely short of Run to Daylight numbers?
How do you feel about owing money if you dont make it through the program?
How many agents make it through the career program? 1 in 10? 1 in 5?

What makes that 1 person make it through? Do they have enough reserves? Did they get Lucky? Do they just work hard? Are you that agent? You have to be 100% sure, because you're financial future is on the line."



Edited 3 time(s). Last edit at 10/04/2007 08:32PM by administrator.

I was in the reserve program for 6 months until I sold enough PC & life policies to go career. When I went career, all hell broke loss. Farmer’s underwriters that approved policies were told that their office was being moved from Illinois to Kansas. Of course, nothing was getting approved as quoted with all the dissatisfaction in the home office. With premium increases I could not sell and make the numbers that I agreed to upon signing the contract. So I was terminated 1 year after going Career with demands of payment $3,400 subsidy and threats of being sued for violating the Farmers competition clause. The District Manager was absolutely no help. He knew problems and turned a deaf ear. Please let me know if and when a class action suit is filed.

My accountant brought it to my attention that Farmers incorrectly and illegally files their taxes by including subsidy payments on agent's 1099 statements. The 1099 is only to report business income and since the subsidy is supposedly a 0% interest loan, it should not be reported as income. When it's reported as income, Farmers writes it off as a business expense and the agents have to pay taxes on it. Instead of having a taxable income of 30,000, it should be listed as 20,000 and have the extra loan listed separately. After 2 years of employment with Farmers, I left to work for another insurance company. After leaving Farmers, I received a letter stating that I owed 20,000 in subsidy that I must pay back to avoid being sent to collections. So now, even though I've already reported that 20,000 on my taxes, Farmers can't now require me to pay it back. It's either a loan or it's taxable income. It can't be both. When you get a loan from a bank, you don't report this on your taxes as income. Farmers is trying to reduce their tax liability and also try to bully agents into paying them money back too because the agents don't know any better. 1099 should:

Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed or your trade or business by an individual who is not your employee

[www.irs.gov]

After consulting with my accountant, I was advised not to repay any subsidy. I advised Farmers that they illegally filed my 1099 and that if Farmers wants to pursue this further, I will be notifying the IRS of this practice. Since over reporting an agents actual income is a form of tax evasion, Farmers doesn't want this kind of attention. They only want to get as much money out of you as possible. Furthermore, if they trying to damage your credit or send anything to collections, they can be sued and brought to court. They could even be named in a class action lawsuit. Stand your ground and consult with your accountant or lawyer before paying Farmers anything.

DanaJ Wrote:
-------------------------------------------------------
> A friend tried to help a buddy get his inital
> recruit sales finished by refering me to him. Long
> story short I started reading and ended up here. I
> have a question about he 'salary/subsidy' paid to
> career Farmers agents.
>
> Now I understand that in year 1 and year 2 you get
> a subsidy (about $3000+/month based on sales) from
> FIG. This debt (not a salary) is to be forgiven at
> a rate of 1/3rd per year starting in year 3. So,
> if you stay for five years it is all paid off.
> Leave early you pay them the remainder based on
> time-served.
>
> My question(s): You start year 3, what happens? Do
> you get more subsidy that you repay over years
> 4,5,6? Does the sudsidy turn in to a salary? Does
> it just stop coming in and you're on your own?
>
> Thank you for your help. I'm trying to derail this
> guy before he screws up his life (I don't think
> he, or his family, has it in him to suffer for
> five years).
>
> -D

I want to know if you can refuse the subsidy or immediately pay it back as soon as it is given to you. Does anyone know the answer to this?

You can not refuse, you are required to take it. Can't pay it back early either. They push it down your throat

I am going through this right now. I would like to know more about what happened to you and the steps you took. I gave up my agency due to personal problems, becoming a new mom, and i had a horrible DM that like to use me as a 'whipping girl' . The stress level to continue was so high I was having panic attacks and anxiety. I currently work for a Farmers Agent who is very cautious of Farmers and it's contracts. He has told me and informed a lot of the backside of farmers. He knows his contracts through and through and says that it is not a company for new agents to start with. the commissions are too little and the overhead is too high. He has been and agent for over 20 years.

Jim Snyder Wrote:
-------------------------------------------------------
> I was in the reserve program for 6 months until I
> sold enough PC & life policies to go career. When
> I went career, all hell broke loss. Farmer’s
> underwriters that approved policies were told that
> their office was being moved from Illinois to
> Kansas. Of course, nothing was getting approved
> as quoted with all the dissatisfaction in the home
> office. With premium increases I could not sell
> and make the numbers that I agreed to upon signing
> the contract. So I was terminated 1 year after
> going Career with demands of payment $3,400
> subsidy and threats of being sued for violating
> the Farmers competition clause. The District
> Manager was absolutely no help. He knew problems
> and turned a deaf ear. Please let me know if and
> when a class action suit is filed.


They're horrible, and someone needs to sue them BIG time in a class-action!

Quote
OK J
OK J
Re: Farmers Insurance Agent Subsidy
February 24, 2014 08:19PM
My accountant brought it to my attention that Farmers incorrectly and illegally files their taxes by including subsidy payments on agent's 1099 statements. The 1099 is only to report business income and since the subsidy is supposedly a 0% interest loan, it should not be reported as income. When it's reported as income, Farmers writes it off as a business expense and the agents have to pay taxes on it. Instead of having a taxable income of 30,000, it should be listed as 20,000 and have the extra loan listed separately. After 2 years of employment with Farmers, I left to work for another insurance company. After leaving Farmers, I received a letter stating that I owed 20,000 in subsidy that I must pay back to avoid being sent to collections. So now, even though I've already reported that 20,000 on my taxes, Farmers can't now require me to pay it back. It's either a loan or it's taxable income. It can't be both. When you get a loan from a bank, you don't report this on your taxes as income. Farmers is trying to reduce their tax liability and also try to bully agents into paying them money back too because the agents don't know any better. 1099 should:

Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed or your trade or business by an individual who is not your employee

[www.irs.gov]

After consulting with my accountant, I was advised not to repay any subsidy. I advised Farmers that they illegally filed my 1099 and that if Farmers wants to pursue this further, I will be notifying the IRS of this practice. Since over reporting an agents actual income is a form of tax evasion, Farmers doesn't want this kind of attention. They only want to get as much money out of you as possible. Furthermore, if they trying to damage your credit or send anything to collections, they can be sued and brought to court. They could even be named in a class action lawsuit. Stand your ground and consult with your accountant or lawyer before paying Farmers anything.

I tried to leave Farmers earlier this year and they made me stay another 6mos saying it was part of my contract to give 90 days notice. I was not paid any more commission and they still wanted me to service my book of business.

OK J - my question is, did you end up paying any or all of your subsidy? are you currently disputing it? I apparently owe $41,000 in subsidy for about 2 years of being a career agent. Looking at my 1099s in previous years, the numbers just don't add up. They have sent me to a 3rd party collections company already and and is offering to pay a lump sum of 50% or pay monthly over 3yrs which comes up to $1150mo....both options are impossible for me. I was a good agent. I was #1 in the entire district of 45 agents in quotes and activity and this is what I get.

I would love more information or anything you can shave about your subsidy payback experience. After reading your post, and it being so recent....I'm going to see if I can avoid paying this back and or filing bankruptcy and ruining my life.

If anyone else has any experience, I would love to hear about it. Thank you in advance!

Marc in Washington

3yr career Wrote:
-------------------------------------------------------
> I am going through this right now. I would like to
> know more about what happened to you and the steps
> you took. I gave up my agency due to personal
> problems, becoming a new mom, and i had a horrible
> DM that like to use me as a 'whipping girl' . The
> stress level to continue was so high I was having
> panic attacks and anxiety. I currently work for a
> Farmers Agent who is very cautious of Farmers and
> it's contracts. He has told me and informed a lot
> of the backside of farmers. He knows his contracts
> through and through and says that it is not a
> company for new agents to start with. the
> commissions are too little and the overhead is too
> high. He has been and agent for over 20 years.


We are in the same boat. Are you able to share anything more about your experience? How much subsidy debt are you? I owe almost $42k and already in collections, because there is no way I can afford their terms. Hello Farmers.... I no longer have a job.

Any input that anyone can provide is appreciated. I would really love the support. Thank you.

Marc in Seattle, WA.

I owe almost 26k. I do start my own topic post her on this website. It is under My subsidy payback story. It is my whole story thus far. I will try to post the letter that i used to stop the collections calls and farmers harassment mail. Look at your contract through and through. Find the spot (which i have looked over mine and i haven't seen it) where it says you have to payback subsidy once you leave. I also faxed to agency services for my contract. They sent me one that was signed a few months AFTER i signed my original. I was smart enough to have a copy of my ORIGINAL contract.

3yearcareer Wrote:
-------------------------------------------------------
> I owe almost 26k. I do start my own topic post
> her on this website. It is under My subsidy
> payback story. It is my whole story thus far. I
> will try to post the letter that i used to stop
> the collections calls and farmers harassment mail.
> Look at your contract through and through. Find
> the spot (which i have looked over mine and i
> haven't seen it) where it says you have to payback
> subsidy once you leave. I also faxed to agency
> services for my contract. They sent me one that
> was signed a few months AFTER i signed my
> original. I was smart enough to have a copy of my
> ORIGINAL contract.

3yearcareer - Thank you so much for replying to me. This is all a horrible nightmare. I'll be reviewing all my documents. I have reviewed my 1099s from my 3yrs and my subsidy is included in my income each time. The collect that calls me keeps threatening that I will be in trouble with the IRS if I don't pay and my debt will be recorded as taxable income. (when they have already done that) So I just don't pick up or return their phone calls anymore. I faxed farmers about copies of my subsidy/commission statements and they have yet to reply. To date, I have not heard anyone's story about how they actually paid their subsidy. So I will follow your story and I hope yours (and mine) ends soon and on a positive note. Thank you for sharing your experience.

I am in the same boat as you after 2 years with Farmers I owe $39,000 in subsidy the only option I am going with that me and my attorney thinks is best is claiming bankruptcy. It hasnt happen yet but a few of my colleagues got stuck with a large tax bill once Farmers decides to show it as taxable income to you and write it off I am not taking that chance. Farmers is a joke

I spent seven years as a district recruiter and reserve DM for farmers. I always tried to make sure new agents understood how the subsidy worked, but the reality was that there was tremendous pressure from upper management to sugar coat and gloss over these details in the interest of bringing on new agents. Because of this pressure, most of the DMs in Farmers are at least a little bit crooked. Many of the DMs don't make it known that subsidy is a LOAN until your about to sign the paperwork. Other DMs make it sound easy to make enough money to pay it back without any trouble, or to get it waived entirely. Most agents who make it to career don't survive, so they all leave with some amount of debt to farmers.

Once you make it past year three you are off the subsidy and even if you are still around you have to pay it back unless you hit the run to daylight numbers which are pretty much impossible. I had five agents make it through the career stage in my seven years and they are all still making payments to farmers. All five of those agents who survived also came during my first three years with the company. More recently, less competitive pricing and reduced commissions have made it even tougher to survive.

Hi dkman,

I'm sorry to hear you are also in this mess. It's the most ridiculous thing I've ever experienced.

I'm wondering why your attorney is recommending you file bk... didn't Farmers already report your subsidy/commissions to the IRS when they paid you? Doesn't your 1099 include earned commission AND subsidy? and isn't that what you used to file/pay your taxes? So doesn't that mean that the IRS already knows about this money? And can it be made taxable income AGAIN? Ask your attorney about that angle and see what they say...

I'm torn. The information does not seem to add up. Again...does anyone know any former agent...(that left Farmers) that has paid for their subsidy? I'm sure if you say with Farmers, they will get it from you. but what about in our situations?

And what if THEY DO submit it to the IRS as taxable income??? then you owe the IRS taxes which are only a fraction of the subsidy amount...let's say 25%.... I'd rather let them do it and pay the $10k to the IRS... and $10k is nothing to file bk over...

I'm just trying to find some logic here... anyone have any ideas or thoughts on my angle here? I would love to hear it..... Thanks!

FARMERS IS A BIG JOKE!

I watched my crooked, unethical DM give all the orphan policies to families agencies... what a coincidence that his wife and 2 son in laws all have flourishing agencies... What a crock... and Farmers allows this....

Hi wanted to know if you or anyone came across this problem:
I got an IRS notice today:
IRS notice says I owe over $2000 in back taxes for "income" I "failed" to report on 2014 income for income of over $8000 earned from Farmers in 2014. I stopped worked in their program officially January 2013 and sold my last policy December 2012. I did not receive any kind notice at all. I still get notices that say I owe the subsidy balance and I understood that any renewal commission would be applied to the balance of "loan" which was reported as income earrings for 2012. I have been working for a completely differently company since 2013 until now. Where is this supposed "income" earned because I definitely did not see it and I did not see it applied the subsidy balance. If anyone could give any advice I would appreciate it.

Hi!

Has anyone found a way out of the subsidy payback that is reasonable?

If you let it go to collections - does it affect your credit?

Anyone have a follow up story?

Thank you

Can you post the letter or email it to me? It would be greatly appreciated!

8 months as an agent and 17k owed and cant even find a phone number to contact them to find out about my remaining balance

Angry.Much Wrote:
-------------------------------------------------------
> Hi!
>
> Has anyone found a way out of the subsidy payback
> that is reasonable?
>
> If you let it go to collections - does it affect
> your credit?
>
> Anyone have a follow up story?
>
> Thank you


Angry.Much - I have been dealing with the subsidy payback for just over a year now. It has been a whole year and I don't know if there is any way out of it. I am happy to share my experience since it's tough to come by anyone that is willing to take some time to share. It's frustrating since no one will talk to you about it or directly answer your questions. By now, my subsidy debt has been thru Farmers collections, RMS collections which is a 3rd party, and most recently I have been told the Farmers has acquired a law office for legal council. Hinting that if I do not pay 50% in a lump sum or 100% monthly over 3yrs...that an attorney will be assigned and I might be sued. What's interesting (and to answer your question) i checked my credit after getting a call from the law office and my subsidy debt is not on my credit at all. I find that pretty interesting to have a loan which was due a year ago and I have not paid 1 cent on....has not hit my credit. I told Farmers, RMS and the law office that Farmers is unethical and has been illegally submitting my subsidy along with my commissions to the IRS. for the past 3yrs, I have been filing my taxes with the subsidy included. No one will accept or admit that this is wrong....yet every accountant will tell you it is.

At this point, I have to protect myself and I have contacted my own lawyer and will be discussing options. If I get sued, they will not get a cent from me for sure. Farmers is the biggest mistake I have ever made in my life, I put everything into my business (much more than the subsidy they are coming after me for.

I hope everyone that is considering becoming a farmers agent sees this. Unless you go ALL THE WAY...you lose. You can't go all the way...unless your DM plugs hundreds of orphan policies into your agency. This is NOT your own business. Farmers will tell you what you have to do from A-Z... what kind of marketing you can do (mainly through Farmers and you pay them directly), what staff you can hire, what hours you need to be open, what events you have to attend. Other than some of the gaps/loopholes in your contract....THEY WILL OWN YOU... If you fail...they win... they keep all of your warm market clients and require you to stay away from them for 12mos or they will sue you for breach of contract...they will keep you active 90 days after you are terminated making it hard for you to immediately associate yourself with other carriers....then they will go after you for the subsidy they said would help you build your agency...you cannot pay because it's ridiculous and the thought of going to collections, getting sued, or filing bankruptcy will mentally exhaust you. If you voluntarily QUIT like I did, they will change the wording on your termination to...that you failed. Farmers will rape you of all this... most fucked up opportunity in the world. Anyone would be better off starting an Amway business or other MLM.

Louis,

Here is the contact information I have received on my Farmers collections documents:

Farmers Insurance
PO Box 2959
Shawnee MS, KS 66201
Bus. (877)-720-2201 Fax (860)-282 -6691

I hope this helps. Keep posting on this site and share with others in hopes to spread the word about this ridiculous opportunity. Feel free to PM me directly also. good luck!

they literally made me file bankrupt. They will suck you for every penny you have if they can and they will also do anything to make you fail only to keep your book of business and distribute to other agents to pay them 50% commission. ....are a monster company....but they're time will come.....its been happening to often...my contract was cancelled for a good reason...I understand this happened 3 years ago...I'm a female.....another local agent also broke the same rules of the contract he's a male and buddy with the DM's Boss and till today he is still there. I proved to the appropriate people how this agent would take policies out of farmers and place them in other companies he would sale...again the district manager and his boss knew about his practices because he took one of my clients and put them thru another carrier I took all the evidence in black and white....and nothing was done to him and today he is still there. I can't sue them for discrimination since my statue of limitations has ended. I was there up until 2013....and today I'm still being haunted by them....

what do you mean they made you file bk? how many year did you not pay the loan?

I worked for Farmer's for only 6 months, and I never made it to Career (which, after reading this, I am SO thankful for). I didn't do very well, I didn't get that many policies, and I made very little commissions. I NEVER got paid any subsidy. A few weeks ago I got a call from them saying I owe them money? I told them to send me a letter explaining exactly why I owe them money. Essentially the letter I got was a bill saying I owed them back the commission I had earned?

This doesn't even make sense. I have been refusing to pay the money, and now they've threatened to send me to a collections agency because I won't pay them the money. I don't want them to ruin my credit but I also don't want to pay them the money because that's wrong!

Has anyone filed a lawsuit against them yet?

DanaJ Wrote:
-------------------------------------------------------
> A friend tried to help a buddy get his inital
> recruit sales finished by refering me to him. Long
> story short I started reading and ended up here. I
> have a question about he 'salary/subsidy' paid to
> career Farmers agents.
>
> Now I understand that in year 1 and year 2 you get
> a subsidy (about $3000+/month based on sales) from
> FIG. This debt (not a salary) is to be forgiven at
> a rate of 1/3rd per year starting in year 3. So,
> if you stay for five years it is all paid off.
> Leave early you pay them the remainder based on
> time-served.
>
> My question(s): You start year 3, what happens? Do
> you get more subsidy that you repay over years
> 4,5,6? Does the sudsidy turn in to a salary? Does
> it just stop coming in and you're on your own?
>
> Thank you for your help. I'm trying to derail this
> guy before he screws up his life (I don't think
> he, or his family, has it in him to suffer for
> five years).
>
> -D

Hey all. I was a Farmers traditional agent from 2015-16. Ended up leaving because i wasn't ready to be on my own. I racked up 18,000 in subsidy money and am having a hard time affording the payments right now. They aren't very flexible with payment dates.
I know I'm not alone here and just want to know what everyone's doing in terms of repayment.

Thanks for helping.

I understand how bad it was. No agent that left farmers will not face any debt. Please contact IRS and file SS-8 form. Either you are employee or independent contractor. Those money are given to you and you paid tax on it, they can't get it back taxes free from you.

I worked for this abortion of a company Sept. 2011-Sept. 2012...

I racked up a subsidy bill for about 24k, I had worked for a Farmers agent for a couple of years prior to joining up so when I left I knew quite a few former agents that had come through his office...

I was told to sit on the debt, do nothing, don't take their calls or negotiate and eventually they would 1099 me for the $$$ so they could write it off.

So I waited, then yesterday a letter from the IRS showed up amending my return for the 2016 Tax Year, turns out Farmers decided to do that and never sent the proper 1099 to me! I'm at the same address and I save all of their correspondence just in case and I am really glad I did.

I can't speak to other's experiences, but in the 12 months I worked for them I was asked to sign 3!!! different versions of my AAA (contract) and used this to my advantage when my DM told me I'd have to pay that subsidy back.

I let him know that they had breached my contract and if there was to be collection action I would be filing a lawsuit. If you are a newly minted licensed agent go anywhere but Farmers... knowing what I know now the alarm bells would be going off pretty loudly when they were selling me on the idea of working there!

I recently left Farmers after about 2.5 years. I owe about $35k to Farmers. I also have a ton of other debt that I accrued from credit cards I had to get to survive and haven’t been able to keep up on payments. I’ve consodered filing Chapter 7. Has anyone filed Chapter 7 and successfully discharged the subsidy debt?

I was advised to contact Il department of insurance the subsidy was a 0 interest loan how can you pay income tax on a loan ? Something needs to be done !!!