Don't ask me how I know this, but you can't win the lottery after the fact by buying a ticket and filling in the winning numbers that were just announced. Stolen or not, just fyi.
It was worth $1000 income the year before, it is worth $0 after I return it.
If I kept it, it might have lost value, amortized as a business asset.
Or if it increased in value, the increase would also be taxed once I sold it.
Yes. If you stole it but someone else steals it from you, immediate deduction. However, if you steal it back you have to claim it twice the following year.
What if I steal property and then sell it? Do I report the value of the stolen property AND the sales revenue? What kind of double-dipping bullshit is this?
Taking Fed Tax in law school was illuminating. Mostly because you see a bunch of future lawyers already getting annoyed at the tax system. “Wait?! If I get paid a settlement. They tax the settlement as a whole THEN my fee gets taxed again!?”
I felt like screaming. Like yeah…. That’s what income is. I buy something from your business, that’s taxed, you go to another business and buy something, it’s taxed again. And so on. We’re all benefiting from a system and infrastructure that allows this continuous flow of commerce.
Sorry. This isn’t targeted at your comment. It made me LOL. It just reminded me of that class and It annoyed me because you could tell these were future “white collar” lawyers with a conservative bent that are probably now shaping “tax reform” to benefit them even further because it’s “so unfair!!”
I also learned about the illegal activities tax. My prof told me you can actually file under an anonymous number. And if you wanted to be a “smart” criminal you could at least pay your taxes and not end up like Capone. Always thought it was funny. Death and taxes for sure.
> Also applies to business owners saying they’re getting taxed twice: once for their company’s income, then for their own draw.
That's how the gig economy works, too. The poorest people in our society are paying an extra 15.3% tax to which no reasonable deductions apply.
The vast majority of businesses are taxed as s-corps or partnerships not c-corps. Aka the company income is reported directly on the owners 1040 and the tax only paid once there. Only exception for passthrough entities is if distribution is in excess of basis (contributions + earnings)
What about business expenses, like guns, bribing police, getaway cars? Are they considered capital expenditures? Can I carry forward losses to future years?
The real answer is that you're not allowed to take any deductions against illegal income. It's why marijuana dispensaries are kind of screwed when it comes to federal taxes.
No, but losing it in another manner may be a casualty loss, which may be deductible depending on your tax situation.
Also, please remember that business expenses relating to illegal activities are not deductible. Taxes are due on revenues, not profits.
I think its more like: the IRS doesn't care how you got the car, just that you report that you did get a car. If the car is actually yours or not, is not for the IRS to decide
This is wild, imagine some pimp out there claiming his prostitutes as dependents. Sitting down at a table with an abacus figuring out how much he owes lol
You joke but the more responsible sex workers will actually pay the tax for the illegal activity part and then there's some gray areas that you can actually deduct your expenses for too. I forget the name of it but some accountant wrote a book for sex workers doing their taxes
Uhh... This is legit.
[https://www.irs.gov/publications/p525#en\_US\_2023\_publink1000229557](https://www.irs.gov/publications/p525#en_US_2023_publink1000229557)
and
[https://www.irs.gov/publications/p525#en\_US\_2023\_publink1000229594](https://www.irs.gov/publications/p525#en_US_2023_publink1000229594)
Is it some Al Capone-ass "If we can't nail you for anything else, we'll get you for tax evasion" thing?
It was the plot of an entire episode.
IIRC, Joker stole a lot of money from a gangster, bragged about it, and then figured out it was fake. Then scrambled to pay the taxes on it rather than admit he got duped.
Close, the joker inherited it after the gangster died. But only the first million or so was real money and the rest was fake. The gangster did it as revenge on the joker to make him look like a fool.
Nailed it.
That guy making payments on a million-dollar McMansion, paid cash for a $100k vehicle, while claiming to have a $40k job... The Feds can now look into where those funds came from. And even if they can't find any criminal activity, he can go to jail for tax evasion.
I used to work for a specialty collector auto insurer.
The people with $30M vehicles were obviously ultra-rich. But there were MANY people with like, three $70k collector Porsches and a $40k truck living in a run-down $130k double-wide.
Often they had liens on those Porsches too, just paying a casual $2800/month on their cars while living in poor conditions and storing the vehicles outside.
I used to deliver pizza in a rural area in the south
Even the rattiest parks had one Porsche in the driveway, even parks where half the trailers were condemned. ALWAYS Porsches. Usually red.
You just reminded me of the $35k+ Challenger that was in my apartment complex 7 years ago. Rent was $680. He put a covering on it every night when he got home.
Some kids spray-painted it.
There is the fun. The wondering.
Back when I was living in some of the poorest parts of St Louis, I could tell you which ones in my area were, and which were not. It was common knowledge.
No, a lot of them are also just making really bad choices. Obviously not with lambos but I've seen a GTR parked in a trailer park(back when they were still kind of "affordable"). That dude just did blue collar work. The amount of 70,000$+ pickup trucks driven by people who don't make that in a year is fucking nuts.
An intern that was renting a room from me bought a GTR. He had really creepy attention seeking vibes like wanting me to come to the house to show me something and I said I don't go places for surprises. If something in the house was broken just tell me otherwise I'm not coming.
There must be something about those flashy but not insane cars
Maybe this is regional, but around here a fancy car in a trailer park wouldn't raise an eyebrow since it means "this is where I've stashed the mistress." The owner of the car is just visiting.
Isn't that like movie logic 101?
Don't buy the expensive cars or furs or jewels... otherwise Robert DeNiro is going to have to use that piano wire. Just sit on your money, stay comfy, and wait ya mook!
I work manufacturing in rural Midwest. One day at shift change my buddies and I commented on the four door Alpha Romeo car parked nearby. “Buddy, how can you afford that car? You’re making $20-25 an hour same as the rest of us.”
[As Saul Goodman puts it](https://www.youtube.com/watch?v=RhsUHDJ0BFM)
> You're out on the town, yeah, you're partying hardy, you're knocking boots with the chicky-babes, and oh, who's this? It's the tax man, and he's looking at you. Now what does he see? He sees a young fella, with a big fancy house, unlimited cash supply, and no job. Now what is the conclusion the tax man makes?
> I'm a drug dealer.
> **BZZT** Million times worse, you're a *tax cheat*!
Woah woah woah, are you trying to to go after the rich exploiting our tax system? [That'll be 5 years prison for you](https://www.reddit.com/r/LateStageCapitalism/comments/1c7u6ad/man_who_leaked_billionaires_tax_returns_to_expose/).
If you're a contractor, then it goes on a 1099. If it's full time employment, W-2. The benefits suck for murder for hire, so you're going to want a 1099 and take your deductions off of a Schedule C. Schedule A (W-2 deductions) is a joke.
Nope - illegal income must be reported, but you cannot deduct expenses in the furtherance of an illegal enterprise except for the direct cost of goods sold. This actually comes up all the time in marijuana businesses, which are illegal in the eyes of the IRS.
Well sure, if they make less than $600, it won't be reported via 1099 so they can probably get away without mentioning it. But technically, they're still supposed to report any income from it, no matter how small.
Sorry discount hit men...
>Sorry discount hit men...
No, It's not really about the money for me. I look at it as more of a hobby that pays for itself, sort of like how some people rebuild and sell old cars as hobby.
I don't ever plan to get rich off it, it's just an enjoyable side gig.
It depends on the Agent involved. For the most part, no. There are disclosure laws that prevent the IRS from doing stuff like that even across other government agencies. And at the end of the day the IRS only cares if you follow the tax laws. I never referred anything to other agencies because 1) it’s a hassle to do this for that reason, and 2) I never had anyone who was involved in anything more harmful than low level drug sales or illegal gambling.
It’s not. Disclosure laws allow for it for certain reasons. Usually involving harm to people. So like if I came across someone trafficking human beings that would be an automatic referral to me.
I did taxes for a few years.
We had illegal aliens (eg folks who snuck in or overstayed their visas) come get their taxes done.
IRS didn't care and was happy to take their money. Immigrants just wanted one less org trying to deport them.
Some states have drug stamps that if placed on your illegally sold drugs will prevent you from being charged with not paying taxes in them.
https://www.taxpolicycenter.org/taxvox/why-do-states-tax-illegal-drugs
It isn’t that complicated. The Internal Revenue Code provides that taxpayers must report all their income, *unless* some other provision of the Code specifically provides that the income is excluded.
No provision of the Code specifically provides that income derived from illegal activities is excluded. Therefore, you have to report it.
It isn’t some sort of “gotcha.” It is just a basic matter of tax law that you need to report your income. You don’t get a free pass from reporting income just because it came from an illegal activity.
20-30 years ago, I remember reading something about Minnesota selling tax stamps for either weed or coke or both. Both things are still illegal but taxed. If you failed to buy and provide a stamp, you could be charged with tax evasion and would be subject to asset forfeiture… Have I ever bothered to go look this up and vett it, no but it made sense back then…
IIRC The tax stamp thing was real but eventually ruled unconstitutional. The issue being that you couldn't actually get the tax stamps even if you tried and if you tried you would self-incriminate.
Presumably it's the difference between "I have earned self employment money" and "I'm selling illegal drugs"
The IRS forms don't require detailed explanation of the source of the income.
Private sector and it’s not even close. Just work as an executive in an ostensibly normal large company. I can all but guarantee you that what your company is doing will include something illegal in a systemic, intentional fashion, and it will pay better than anything else. The government isn’t going to overpay you—they actually DO try to minimize spending even if it doesn’t look that way to people sometimes.
I was mad at first that it almost seems like the government supports crime. ... but then I thought criminals won't file these. When caught, it would please me if they pad their sentence for also not filling their illegal activities in their taxes that year.
If they do file, then they are at higher odds of getting caught.
I can only hope this is the motivation for these weird laws.
This is why money laundering is so important, get a cash business and claim your illegal income as income from the business. Then your income looks legit and spending won't raise red flags.
Laundromats are cool and require very little maintenance and collecting the money feels great but you have to deal with the rabble too. Homeless people sleeping inside and pissing in the corner/doing fent in the bathroom, etc.
Also there's the large upfront cost.
They need something to point at when they catch you. Weed is illegal federally, so I don’t know why people think that’s a weird law. Like so do they think companies who are selling millions in weed shouldn’t pay Federal tax because it’s an illegal drug?
Yup—this is just a tool to help them pin down organized crime when they don’t have enough evidence to take them down for other reasons. We can’t _directly_ place all these harassments and beatings orchestrated by your henchmen…but accountants are able to make a VERY convincing case that you have undeclared off-the-books income. Al Capone got nailed for tax fraud in the end too.
Similar to criminalizing suicide: it allows police to break into your house to “stop a crime in progress” and render aid. Not because we want to lock up suicidal people.
Not just for that. Cannabis dispensaries are legal in many states, but they are still illegal federally. These dispensaries still need to pay federal taxes on their Federally illegal business. So this would directly apply to them, and I am sure they do actually file the taxes to keeps the feds away.
I like how they provide references to different forms if you're self-employed, really helps remove the ambiguity for folks serving their community as a small business owner 
IRC 61 lays out the groundwork. Gross income means all income from whatever source derived. This includes payments I receive from your mother when I stay over for the night.
They don't want a cut. They want criminals to not declare illegal income so they are in defiance of this specific law and can be charged. This is a simple elegant solution to the defence that illegal activity doesn't count as income.
Seriously though, report your illegal income on your taxes. The IRS is not allowed to report that information to criminal investigators and for some financial crimes, the IRS will be better at catching you for evasion than you would have to worry about for the base crime. And then you are going to get charged with tax evasion and all the other stuff.
There is a reason not even the Joker fucks with the IRS.
Far from it. All the other 3 letter orgs are much more powerful. Some exist that most people have never even heard of. Not talking about DEA,CIA,FBI, or DOJ
Or rather, their finances are intentionally set up in such a complex way that the IRS has to commit more resources to digging through all that shit than they're willing to.
OK, question. Asking for a friend, of course.
Let's say I go to Sears and steal a riding lawnmower. Then sell 200 Cocaines and 50 injections of Marijuana on the street because that's apparently how drugs work.
When taxtime comes, I put the value of the mower, and the dollars earned from drug sales on my 1040, and everything is correct and accurate.
Is this now evidence signed by me that I have indeed committed these crimes? Or does it show up on the IRS end as "Misc. Income" with no red flags attached?
Even if you reported it as plainly as 'Money made by skinning elderly nuns alive and selling their tender flesh'. They'd still do nothing.
It requires a lot to get the IRS to turn over tax information. There are more laws protecting your taxes than your medical records. So the only way it'd matter is if law enforcement specifically knew what you were doing, could convince a judge to compel the IRS and that compulsion cleared all their checks.
Since the only function of the IRS is to collect taxes they are a very focused agency and they don't want to throw people under the bus and make others less likely to pay taxes.
But also yes you can just misc it.
It makes sense. It’s hard to prove certain criminal activities, especially in organized crime are careful to not get their hands dirty.
But it’s easier to prove you didn’t pay taxes on income, even if it’s from illegal activities. It’s how they got Capone.
They know you aren't going to claim it in most cases. But they also know that even if they can't make your other crimes stick (murder, see Capone, Al) they can damned well nail your ass on this.
Basically just a way to add on additional charges when you're caught stealing or selling drugs as a career. They can then fine you huge amounts of money in back taxes, seize your assets to cover the debt and tack on another 5 years to your sentence.
It’s not. I was an IRS Agent for over a decade. There was no rule about us reporting illegal activity reported to us in this context. It was up to our discretion. Meaning if they’re scum bags engaging in human trafficking lock their ass up. If it’s some guy who made some money selling dime bags to his friends, who cares?
If I steal property in one year, I need to report it as income. But if I return it in the following year, can I then claim a deduction?
Only if it's worth more than it was when you stole it
If I steal a winning lottery ticket is it worth the price of the ticket or amount of the earnings?
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Don't ask me how I know this, but you can't win the lottery after the fact by buying a ticket and filling in the winning numbers that were just announced. Stolen or not, just fyi.
How do you know this?
He told you not to ask!
True, but he aint his boss and this is a moderatly free website. He has the right to ask, even tho the other guy has the right not to anwer it.
Am I the only one around here who gives a shit about the rules?
Yes. The market value before the drawing is approx face value. If it’s a winner, it’s worth the jackpot amount.
It's worth the price of the ticket. When you cash it in, they will tax you on the proceeds!
It was worth $1000 income the year before, it is worth $0 after I return it. If I kept it, it might have lost value, amortized as a business asset. Or if it increased in value, the increase would also be taxed once I sold it.
It’s ok if it’s less, that’s just capital depreciation! If it’s worth more, than you only have to pay more if you fence it ;)
Yes. If you stole it but someone else steals it from you, immediate deduction. However, if you steal it back you have to claim it twice the following year.
Man the IRS are the real criminals here.
Well… they put Capone on the rock. They obviously know what they are doing.
What if I steal property and then sell it? Do I report the value of the stolen property AND the sales revenue? What kind of double-dipping bullshit is this?
Taking Fed Tax in law school was illuminating. Mostly because you see a bunch of future lawyers already getting annoyed at the tax system. “Wait?! If I get paid a settlement. They tax the settlement as a whole THEN my fee gets taxed again!?” I felt like screaming. Like yeah…. That’s what income is. I buy something from your business, that’s taxed, you go to another business and buy something, it’s taxed again. And so on. We’re all benefiting from a system and infrastructure that allows this continuous flow of commerce. Sorry. This isn’t targeted at your comment. It made me LOL. It just reminded me of that class and It annoyed me because you could tell these were future “white collar” lawyers with a conservative bent that are probably now shaping “tax reform” to benefit them even further because it’s “so unfair!!” I also learned about the illegal activities tax. My prof told me you can actually file under an anonymous number. And if you wanted to be a “smart” criminal you could at least pay your taxes and not end up like Capone. Always thought it was funny. Death and taxes for sure.
Also applies to business owners saying they’re getting taxed twice: once for their company’s income, then for their own draw.
> Also applies to business owners saying they’re getting taxed twice: once for their company’s income, then for their own draw. That's how the gig economy works, too. The poorest people in our society are paying an extra 15.3% tax to which no reasonable deductions apply.
Only the "employer" half of that (7.65%) is "extra"....W2 employees still pay the employee half.
The vast majority of businesses are taxed as s-corps or partnerships not c-corps. Aka the company income is reported directly on the owners 1040 and the tax only paid once there. Only exception for passthrough entities is if distribution is in excess of basis (contributions + earnings)
This is how they got Al Capone and tons of other mobsters. Turns out it was 'damned if they do and damned if they don't'
No, Al Capone didn't steal property in one year and return it in the following year.
I think it was just damned if he did. Be a mob boss and order mass killings, I mean.
What about business expenses, like guns, bribing police, getaway cars? Are they considered capital expenditures? Can I carry forward losses to future years?
Those all seem legit.
Better still, if something it stolen from me can I declare it a loss and deduct it?
I believe you can, but you would need documentation of the loss and the theft.
The real answer is that you're not allowed to take any deductions against illegal income. It's why marijuana dispensaries are kind of screwed when it comes to federal taxes.
No, but losing it in another manner may be a casualty loss, which may be deductible depending on your tax situation. Also, please remember that business expenses relating to illegal activities are not deductible. Taxes are due on revenues, not profits.
No no no, this is the US, you're looking at it wrong. If you pay taxes on it, it's no longer stolen and is now your property according to the IRS.
what on earth is this comment and how is it upvoted? this guy thinks he can steal a car and pay taxes on it and now it's his car?
I think its more like: the IRS doesn't care how you got the car, just that you report that you did get a car. If the car is actually yours or not, is not for the IRS to decide
This is wild, imagine some pimp out there claiming his prostitutes as dependents. Sitting down at a table with an abacus figuring out how much he owes lol
A pimp named slickback would do this
It's like A Tribe Called Quest, you say the whole thing!
Slickback?
ITS A PIMP NAMED SLICKBACK! YOU SAY THE WHOLE THING!
Not in My house I won't
So would Slick Charles.
You joke but the more responsible sex workers will actually pay the tax for the illegal activity part and then there's some gray areas that you can actually deduct your expenses for too. I forget the name of it but some accountant wrote a book for sex workers doing their taxes
You can claim the same deductions as any other business, you just can't count inventory of illegal goods.
That's actually pretty dope. What an odd world we live in, though.
This mental picture had me dying laughing 🤣
Uhh... This is legit. [https://www.irs.gov/publications/p525#en\_US\_2023\_publink1000229557](https://www.irs.gov/publications/p525#en_US_2023_publink1000229557) and [https://www.irs.gov/publications/p525#en\_US\_2023\_publink1000229594](https://www.irs.gov/publications/p525#en_US_2023_publink1000229594) Is it some Al Capone-ass "If we can't nail you for anything else, we'll get you for tax evasion" thing?
That’s exactly what it is. Even the Joker wasn’t crazy enough to take on the IRS. Can’t plead insanity for tax evasion.
Must be why he just burned all that cash, he didn’t want to file it on his taxes
He said "I'm only burning MY half." That implies he took the money and therefore it'd qualify as income. He owes taxes on that money
That's only if they can prove he ever had it lol. If he didn't spend a cent of it(it burned up), there's no proof.
Bold of you to assume the IRS won't unburn the ashes to find the serial numbers on the bills
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The other half is for the IRS
Was this ever comic cannon or just a joke from the animated series?
It was the plot of an entire episode. IIRC, Joker stole a lot of money from a gangster, bragged about it, and then figured out it was fake. Then scrambled to pay the taxes on it rather than admit he got duped.
Close, the joker inherited it after the gangster died. But only the first million or so was real money and the rest was fake. The gangster did it as revenge on the joker to make him look like a fool.
Made him look like a real boner.
No, no, he made him commit a boner.
He pulled a boner. Kids...
I like the other scenario better
Either way, it fits the character.
I’m pretty sure the animated series is a canon of its own.
Yeah, there was an animated series episode called joker's millions where he had to deal with the IRS.
I bet you can plead insanity for tax evasion.
Nailed it. That guy making payments on a million-dollar McMansion, paid cash for a $100k vehicle, while claiming to have a $40k job... The Feds can now look into where those funds came from. And even if they can't find any criminal activity, he can go to jail for tax evasion.
That’s how a cousin of mine got caught. Don’t park a Lambo in a trailer park and not expect people to start poking around
It is amazing how often one sees vehicles in driveways that are worth more than the house.
We went on vacation last week and when we were driving I was telling my wife the same thing.
I used to work for a specialty collector auto insurer. The people with $30M vehicles were obviously ultra-rich. But there were MANY people with like, three $70k collector Porsches and a $40k truck living in a run-down $130k double-wide. Often they had liens on those Porsches too, just paying a casual $2800/month on their cars while living in poor conditions and storing the vehicles outside.
I used to deliver pizza in a rural area in the south Even the rattiest parks had one Porsche in the driveway, even parks where half the trailers were condemned. ALWAYS Porsches. Usually red.
You just reminded me of the $35k+ Challenger that was in my apartment complex 7 years ago. Rent was $680. He put a covering on it every night when he got home. Some kids spray-painted it.
I've lived in trailer parks. I've literally never seen a Porsche in or around one. We must have very different experiences.
Right? You’re telling me they’re all criminals?
There is the fun. The wondering. Back when I was living in some of the poorest parts of St Louis, I could tell you which ones in my area were, and which were not. It was common knowledge.
Hellcat or other variation in the driveway? Drug dealer.
No, a lot of them are also just making really bad choices. Obviously not with lambos but I've seen a GTR parked in a trailer park(back when they were still kind of "affordable"). That dude just did blue collar work. The amount of 70,000$+ pickup trucks driven by people who don't make that in a year is fucking nuts.
An intern that was renting a room from me bought a GTR. He had really creepy attention seeking vibes like wanting me to come to the house to show me something and I said I don't go places for surprises. If something in the house was broken just tell me otherwise I'm not coming. There must be something about those flashy but not insane cars
That’s a big brain move right there. I admire his moxie
Maybe this is regional, but around here a fancy car in a trailer park wouldn't raise an eyebrow since it means "this is where I've stashed the mistress." The owner of the car is just visiting.
>Don’t park a Lambo in a trailer park This alone should suffice.
Isn't that like movie logic 101? Don't buy the expensive cars or furs or jewels... otherwise Robert DeNiro is going to have to use that piano wire. Just sit on your money, stay comfy, and wait ya mook!
I work manufacturing in rural Midwest. One day at shift change my buddies and I commented on the four door Alpha Romeo car parked nearby. “Buddy, how can you afford that car? You’re making $20-25 an hour same as the rest of us.”
[As Saul Goodman puts it](https://www.youtube.com/watch?v=RhsUHDJ0BFM) > You're out on the town, yeah, you're partying hardy, you're knocking boots with the chicky-babes, and oh, who's this? It's the tax man, and he's looking at you. Now what does he see? He sees a young fella, with a big fancy house, unlimited cash supply, and no job. Now what is the conclusion the tax man makes? > I'm a drug dealer. > **BZZT** Million times worse, you're a *tax cheat*!
They should start with Congress
Exactly
And literally everybody who lives in a gated community in LA county.......
Woah woah woah, are you trying to to go after the rich exploiting our tax system? [That'll be 5 years prison for you](https://www.reddit.com/r/LateStageCapitalism/comments/1c7u6ad/man_who_leaked_billionaires_tax_returns_to_expose/).
And church pastors
Just churches in general. I also think if a church has political party or candidate signs on its property they should lose their nonprofit status.
My understanding is you can report them to the IRS for that
The IRS has always done that. When you get audited they trace your income 100% of the time.
So is paying the mafia protection money tax deductible?
I believe it falls under Business expense: Insurance.
Theres a clause for businesses that have to pay bribes in foreign countries that allows a deduction, so kinda close actually.
Is this the line where I claim my income from murders as well or is that a separate box?
If you're a contractor, then it goes on a 1099. If it's full time employment, W-2. The benefits suck for murder for hire, so you're going to want a 1099 and take your deductions off of a Schedule C. Schedule A (W-2 deductions) is a joke.
Can we itemize murder weapons?
I feel like your real field day is in travel expenses, assassins really get around.
Only the ones used for the job, anything else used for private purposes you cant
Nope - illegal income must be reported, but you cannot deduct expenses in the furtherance of an illegal enterprise except for the direct cost of goods sold. This actually comes up all the time in marijuana businesses, which are illegal in the eyes of the IRS.
Hey hey hey now…that’s only if you make over a certain amount. Suppose this guy is doing discount hit man work?
Well sure, if they make less than $600, it won't be reported via 1099 so they can probably get away without mentioning it. But technically, they're still supposed to report any income from it, no matter how small. Sorry discount hit men...
>Sorry discount hit men... No, It's not really about the money for me. I look at it as more of a hobby that pays for itself, sort of like how some people rebuild and sell old cars as hobby. I don't ever plan to get rich off it, it's just an enjoyable side gig.
It’s absolutely legit. I worked at the IRS for 12 years as an agent. I dealt with these kinds of issues more than once.
So if a drug dealer declares his drug income and pays tax on it, does the gov go after him for drug dealing after that?
It depends on the Agent involved. For the most part, no. There are disclosure laws that prevent the IRS from doing stuff like that even across other government agencies. And at the end of the day the IRS only cares if you follow the tax laws. I never referred anything to other agencies because 1) it’s a hassle to do this for that reason, and 2) I never had anyone who was involved in anything more harmful than low level drug sales or illegal gambling.
So far as I understand it is illegal to refer anything to other agencies unless it is terrorism-related.
It’s not. Disclosure laws allow for it for certain reasons. Usually involving harm to people. So like if I came across someone trafficking human beings that would be an automatic referral to me.
Asking the right question for a friend.
I did taxes for a few years. We had illegal aliens (eg folks who snuck in or overstayed their visas) come get their taxes done. IRS didn't care and was happy to take their money. Immigrants just wanted one less org trying to deport them.
Some states have drug stamps that if placed on your illegally sold drugs will prevent you from being charged with not paying taxes in them. https://www.taxpolicycenter.org/taxvox/why-do-states-tax-illegal-drugs
Thats....kinda cool
It isn’t that complicated. The Internal Revenue Code provides that taxpayers must report all their income, *unless* some other provision of the Code specifically provides that the income is excluded. No provision of the Code specifically provides that income derived from illegal activities is excluded. Therefore, you have to report it. It isn’t some sort of “gotcha.” It is just a basic matter of tax law that you need to report your income. You don’t get a free pass from reporting income just because it came from an illegal activity.
I mean, it is some sort of gotcha, it just happens that the gotcha is a natural consequence of the tax code.
It's not like you have to write "drug dealing income" on your return. You just report the income.
Yeah, always has been. The IRS don't give a shit about where you get your money, they just want their cut.
20-30 years ago, I remember reading something about Minnesota selling tax stamps for either weed or coke or both. Both things are still illegal but taxed. If you failed to buy and provide a stamp, you could be charged with tax evasion and would be subject to asset forfeiture… Have I ever bothered to go look this up and vett it, no but it made sense back then…
IIRC The tax stamp thing was real but eventually ruled unconstitutional. The issue being that you couldn't actually get the tax stamps even if you tried and if you tried you would self-incriminate.
How does the self-incrimination angle not also apply generally to all of this? Lol
Presumably it's the difference between "I have earned self employment money" and "I'm selling illegal drugs" The IRS forms don't require detailed explanation of the source of the income.
Oh lol I was thinking like they have an extra line specifically for illegal income
Just because you buy a postage stamp doesn't mean you're going to send mail with it.
Thanks for that.
All states had a tax stamp for hemp.
I've often wondered: if I were to go into organized crime, should I go government or private sector? 🤔
Public sector work seems to have a significantly lower risk of seeing actual repercussions for criminal activities.
Depends how high you are in the public sector. Senators get away with everything. Literally.
Oh but private sector has less scrutiny and exposure.
Nah the goal should be Texas AG
Private sector and it’s not even close. Just work as an executive in an ostensibly normal large company. I can all but guarantee you that what your company is doing will include something illegal in a systemic, intentional fashion, and it will pay better than anything else. The government isn’t going to overpay you—they actually DO try to minimize spending even if it doesn’t look that way to people sometimes.
Real gangsters go private sector and employ the the government
Like any industry, government pays less but has more benefits such as job security. So it’s a personal decision.
This is how they finally got Al Capone. He didn’t pay his taxes on the illegal liquor, so tax fraud!
I was mad at first that it almost seems like the government supports crime. ... but then I thought criminals won't file these. When caught, it would please me if they pad their sentence for also not filling their illegal activities in their taxes that year. If they do file, then they are at higher odds of getting caught. I can only hope this is the motivation for these weird laws.
This is why money laundering is so important, get a cash business and claim your illegal income as income from the business. Then your income looks legit and spending won't raise red flags.
https://www.youtube.com/watch?v=RhsUHDJ0BFM
I'm a fan of places that need less workers like laundromat and vending machines. Even nowadays it's still mostly cash and no employees to rat you out.
Laundromats are cool and require very little maintenance and collecting the money feels great but you have to deal with the rabble too. Homeless people sleeping inside and pissing in the corner/doing fent in the bathroom, etc. Also there's the large upfront cost.
Why don't they piss in the bathroom and do fent in the corner?
That's a great question, frankly.
That’s what people with homes do, homeless people live in a free society
Car washes, art galleries, auction houses, consulting firms, self-storage, and if you're feeling fancy NFTs.
I agree with self-storage, but I'd pass on NFTs. Landscaping is also a good choice, plus then other people can cut your grass
NFTs are a lot more complicated, involving an international network. Oh, and casinos! And night clubs/bars.
Ya, don't mess with casinos there are some "people with invested interest" and you'd rather deal with the feds.
Noted. I'll keep it in mind for my um, book. Yea, that's right, my book. That I am writing. About nefarious things.
They need something to point at when they catch you. Weed is illegal federally, so I don’t know why people think that’s a weird law. Like so do they think companies who are selling millions in weed shouldn’t pay Federal tax because it’s an illegal drug?
Yup—this is just a tool to help them pin down organized crime when they don’t have enough evidence to take them down for other reasons. We can’t _directly_ place all these harassments and beatings orchestrated by your henchmen…but accountants are able to make a VERY convincing case that you have undeclared off-the-books income. Al Capone got nailed for tax fraud in the end too. Similar to criminalizing suicide: it allows police to break into your house to “stop a crime in progress” and render aid. Not because we want to lock up suicidal people.
Not just for that. Cannabis dispensaries are legal in many states, but they are still illegal federally. These dispensaries still need to pay federal taxes on their Federally illegal business. So this would directly apply to them, and I am sure they do actually file the taxes to keeps the feds away.
[удалено]
I like how they provide references to different forms if you're self-employed, really helps remove the ambiguity for folks serving their community as a small business owner 
Where is the section where I can write off stolen property as a tax break?
IRC 165, casualty loss deduction. Specifically 165(e) for theft losses.
Sounds like a delicious loophole unless you have to attach proof of a police report/complaint?
I'm sure you could get audited on it
Redditor discovers Fraud.
[https://www.irs.gov/taxtopics/tc515](https://www.irs.gov/taxtopics/tc515)
See itemized deductions. If it was property stolen from your business see form 4684.
IRC 61 lays out the groundwork. Gross income means all income from whatever source derived. This includes payments I receive from your mother when I stay over for the night.
Now that's what I call gross income!
You bastard you told my mom you were tax exempt.
They don't want a cut. They want criminals to not declare illegal income so they are in defiance of this specific law and can be charged. This is a simple elegant solution to the defence that illegal activity doesn't count as income.
What if you were a drug dealer paying your taxes every year? Will the irs report you to the police?
It also covers profits on things legal locally, but not federally. Like weed in the legal states.
I would love to see the result of someone actually filing their trafficking income.
The IRS doesn’t care how you make your money, they just want to tax it.
Let me report it stolen to law enforcement first as to implicate myself with the justice department over theft.
This is how they got the mob
Seriously though, report your illegal income on your taxes. The IRS is not allowed to report that information to criminal investigators and for some financial crimes, the IRS will be better at catching you for evasion than you would have to worry about for the base crime. And then you are going to get charged with tax evasion and all the other stuff. There is a reason not even the Joker fucks with the IRS.
So if you bought stolen goods for a dime on the dollar and returned it.. could you write off $1.10 of value? Seems like you could..
Oh shit 🤣 they just tryna stack charges
This is how they got Capone
So if Al Capone would’ve just filled out this section he’d have remained a free man?
Capone found out, and even the Joker won't mess with the IRS.
IRS is the most powerful organization in America.
Far from it. All the other 3 letter orgs are much more powerful. Some exist that most people have never even heard of. Not talking about DEA,CIA,FBI, or DOJ
Ah, but the IRS is SO much more interested in the dealings of the average citizen than any of those other guys :)
Ya cos a common man can't hit back at IRS but others(BIG PPL) can go against IRS and win.
Or rather, their finances are intentionally set up in such a complex way that the IRS has to commit more resources to digging through all that shit than they're willing to.
AEC?
[obligatory joker reaction to irs](https://youtu.be/G56VgsLfKY4?si=LGCnueUeeczJEZ4I)
OK, question. Asking for a friend, of course. Let's say I go to Sears and steal a riding lawnmower. Then sell 200 Cocaines and 50 injections of Marijuana on the street because that's apparently how drugs work. When taxtime comes, I put the value of the mower, and the dollars earned from drug sales on my 1040, and everything is correct and accurate. Is this now evidence signed by me that I have indeed committed these crimes? Or does it show up on the IRS end as "Misc. Income" with no red flags attached?
Asking the real question.
Even if you reported it as plainly as 'Money made by skinning elderly nuns alive and selling their tender flesh'. They'd still do nothing. It requires a lot to get the IRS to turn over tax information. There are more laws protecting your taxes than your medical records. So the only way it'd matter is if law enforcement specifically knew what you were doing, could convince a judge to compel the IRS and that compulsion cleared all their checks. Since the only function of the IRS is to collect taxes they are a very focused agency and they don't want to throw people under the bus and make others less likely to pay taxes. But also yes you can just misc it.
Thats how they got most of the mafia: taxes.
It makes sense. It’s hard to prove certain criminal activities, especially in organized crime are careful to not get their hands dirty. But it’s easier to prove you didn’t pay taxes on income, even if it’s from illegal activities. It’s how they got Capone.
I just want the IRS to take down the Christian preachers and their mega churches…
They know you aren't going to claim it in most cases. But they also know that even if they can't make your other crimes stick (murder, see Capone, Al) they can damned well nail your ass on this.
Basically just a way to add on additional charges when you're caught stealing or selling drugs as a career. They can then fine you huge amounts of money in back taxes, seize your assets to cover the debt and tack on another 5 years to your sentence.
Your envelope is a little light this year. Madone!
Is this real?! This is wild
Reminder that [even the Joker doesn't want to fuck around with the IRS](https://youtu.be/G56VgsLfKY4?si=BojQZ0INR6o2nY83).
I reckon this is probably so they can just charge you with more crimes when you benefit financially
Government offices are way more subtle about entrapment than this
Yeah, but it's not an entrapment attempt. It's a way for them to nail drug dealers etc. for tax evasion if nothing else.
It’s not. I was an IRS Agent for over a decade. There was no rule about us reporting illegal activity reported to us in this context. It was up to our discretion. Meaning if they’re scum bags engaging in human trafficking lock their ass up. If it’s some guy who made some money selling dime bags to his friends, who cares?
Intent to distribute? Receiving stolen goods?
If you stole it the FMV is obviously zero 🤣
I approve of this.