The IRS wants to tax your illegal income

The IRS wants to tax your illegal income

fox43.com

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.”

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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.

Seriously, 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? I don't condone illegal activity* and I guess I don't know enough to be sure, but to me this seems like a hidden form of entrapment and a violation of the 5th Amendment.

*any form of dissent or acting against the Government is considered illegal however there does come a time.Not that I am in any way perusing illegal action.

fox43.com
(visit the link for the full news article)

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.

Not exactly breaking news. That's been in the instructions for quite a while. As long as I remember bothering to read them. As far as I can tell you don't have to list the source, you just have to include the amount.

Publication 17, 2001.
Page 97
www.irs.gov...

Maybe this is a way for a few "Al Capone-like" people to stay free for a couple more years.

reply to post by Phage


I guess that just goes to show just how far behind MSM is to just be reporting it yesterday.

reply to post by Agarta


I'm not surprised to see something so stupid coming from our government. lol

On a conspiracy note, I think this is why technology like 'the mark' will be inevitable in a future cashless society. Not one single cent could be exchanged that the government wouldn't know about and tax.

You couldn't give your babysitter $20 or pay the neighborhood kid to rake your leaves without them knowing about it.

Double posts are the virtual version of accidentally spitting on someone you're talking to.

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

News flash.....this has been the standard, dating back to Al Capone.

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?

You're correct...It sounds like it's mostly people that are already under investigation or already busted for embezzlement. In that case, it probably makes some sense.

I don't guess there are a lot of drug dealers out there claiming their income on a 1040. If they are then they are likely using too much of their sales inventory.

reply to post by Agarta

Only if their quarterly estimated tax payments exceed their actual tax liability.

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

I suppose that depends on if their employees are part time or full time...and if they provide their full time employees with health insurance.

I was a tax accountant for 10 years - this is nothing new. But, it was one of the topics I liked to touch on when I used to teach classes because it got people's attention. As someone stated - remember, it wasn't the crime that got Capone, it was tax evasion.

Very very old news, why is it being reported now?

Perhaps because ignorant people will attribute this bit of tax code to our current government? So people can run around saying "Obama doesn't care if you are a criminal, he just wants you to pay taxes on that income"

When in fact Obama has nothing to do with it and it's been around for decades. But the ignorant people won't know that.

Sound realistic? What other possible reason could they have for talking about this now, as if it's some sort of new thing?

Smart criminals simply launder their money and pax taxes that way, or save their money away and live like paupers until they retire to a foreign country.

reply to post by Mountainmeg


Yep! That's exactly how they got Capone indeed. Basically, even if they don't have the evidence of illegal activity, they can still nail you on tax evasion if they can prove that you had unreported income. It's also the reason why the IRS special agents have guns because sometimes they have to go after racketeers, drug dealers, and other lovelies.

One thing to note--if you report illegal income, you cannot deduct your expenses like a regular business would be able to. So if someone has a legitimate seeming front for an illegal business and they process it all through that front with the expenses for it deducted, they can still be nailed for tax evasion.

Shoot the gov't are the kings of illegal money. They want all your cash illegal or not. Doesn't suprise me a bit.

-SAP-

Well the IRS isn't getting jack from me and never will again Im done I have excempt my self from Federal taxes they waste the money and do as they plz I'm done I will never pay a dime to this corrupt gov

Everyone needs to do the same stop feeding the beast and it will die

Before u say u can't u will go to jail nope I'm a truck driver I get per diem Which gives me a deduction and I never pay a dime in.

Per diem is for travel expenses if u don't know meals/ ect

reply to post by Agarta


If I am correct this is law in the UK already. I read about a burglar that claimed tax back for the tools used on a job..

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.

Same here man. I still declare all that tobacco I grow under heat lamps in my basement, and the homemade corn whiskey I make in my bathtub and sell to minors on weekends. Honesty is the best policy. Am I right?

LOL.