(visit the link for the full news article)
As ridiculous as it sounds, the federal government requires that money acquired through illegal means be reported and taxed just like legitimate income. It’s right there on the official IRS tax instructions: “Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.”
If you tell the IRS you made $1 million from stealing money or dealing drugs, does the agency tip off the cops?...Legally, it can’t, unless a law-enforcement agency gets a court order granting it access to a specific taxpayer’s return. The IRS isn’t supposed to proactively alert other agencies about misdeeds unless terrorism is involved. In that case, it still needs a court order to disclose anything, but the IRS can initiate the legal process on its own....In practice, Moskowitz says he thinks information about illegal activities gets shared.
“Do they report you to other agencies?” he asks. “Absolutely.”
Other experts agree.
“The IRS would most certainly immediately report it to law enforcement,” says Joseph Henchman, vice president of legal and state projects at the Tax Foundation, a think tank.
The IRS’ spokesman declined to comment on the issue.
Would you actually report your illegal income if you had it? Apparently some do in order to avoid more charges but isn't this just setting yourself up for investigation?
Originally posted by Agarta
reply to post by watchitburn
Hmm... I'm wondering if the big dealers out there that have a lot of employees would get the tax cuts and end up getting paid by the IRS rather than paying in. LOL
Originally posted by watchitburn
Oh yeah, all the time.
I have been reporting the income from my counterfeit jeans gig for about ten years now.
You would be amazed at how much of a write off you get from having to deal with shady characters. New phones every week, compensation for incarcerated employees. Not to mention recycling old license plates from acquired vehicles.
It adds up to a nice take.
Seriously though, our Govt. just makes me scratch my head in bafflement sometimes.