IRS: Make Sure You Declare Income from Criminal Activities
December 14th, 2006Via: All Financial Matters:
I was reading through the “Other Income†section (scroll down as the page doesn’t seem to be loading correctly) in Publication 17 and found some pretty funny stuff. The section deals with all sorts of “other income†and whether or not you have to report it. Here’s some of the funny stuff I found (word-for-word as the IRS has it written):
Bribes. If you receive a bribe, include it in your income.
Illegal income. Illegal income, 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.
Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity.
Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
They used these laws against old chicago mobsters, back in the day — took them down for tax evasion. Couldnt get evidence on the actual murders, extortion, etc> But they could prove they had income and no job, and so weren’t declaring income properly. = tax evasion.
These and the Racketeering laws are very powerful tools against organized crime.
…heh – especially when the prosecution is administered *by* organized criminals.
_____
also used in the “drug wars” — you can be sentenced both for the illicit activity, and for tax evasion. gives lengthier sentence, and more tools for the prosecution.
The deck is pre-stacked.
I’d love to see Abramoff’s 1040. Or the 1040’s of anyone on AIPAC’s payroll. Not that the elite pay taxes…
Thanks for the laugh… I normally don’t come to your site to read humorous things, usually I go to ebaumsworld.com for that.
But this was excellent! I didn’t realize the IRS were in the comedy business. This is just too good, I’ve gotta forward this link to some people 🙂
If the IRS start taxing these things, doesn’t it make it quasi-legal?
having once, long ago, worked in what the IRS rather humorously calls “Taxpayer Service”…i can attest to this not being a new policy!
working in the Federal Building, downtown in a medium sized mid-western city, we actually would have prostitutes come to the offices for help in filling out their tax returns ever spring. oddly enough, as self-employed persons, prostitutes can pay into social security, should they expect to retire early enough to collect some before the whole system crashes.
but no, paying taxes on your income from an illegal activity does not make you “legal” nor does it protect you from other criminal prosecution, but the IRS generally says they do not care where or how you made the income, so long as you declare it and pay tax on it, you are fine by them (this may of course change as the various fed & state law enforcement agencies continue to meld more into one another.)