4 ms·

I'm not from the US but my understanding is that even if you're doing illegal stuff there's still no point in trying to evade taxes, as IRS is not allowed to no

by jhgb 5y ago

I'm not from the US but my understanding is that even if you're doing illegal stuff there's still no point in trying to evade taxes, as IRS is not allowed to notify anyone about where you got the money from anyway. "Illegal activities: Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8, or on Schedule C (Form 1040) if from your self-employment activity" They thought of everything!

Pfhreak 5y ago
This clause came from the era of Al Capone, who famously boasted, "They can't collect legal taxes from illegal money." (Which was true at the time.) They added this clause and then ended up catching Capone for tax evasion. https://www.forbes.com/sites/kellyphillipserb/2020/10/17/al-capone-convicted-on-this-day-in-1931-after-boasting-they-cant-collect-legal-taxes-from-illegal-money/?sh=32d97b381435 https://www.forbes.com/sites/kellyphillipserb/2020/10/17/al-...
ocdtrekkie 5y ago
I think the point of this is less that the IRS won't report it to someone else, but that it adds tax evasion as a reason a criminal can be pursued. You are probably thinking it's like where contact tracers or census workers or whatever aren't supposed to report illegal immigrants because it's more important that they get accurate info than report people to ICE. I don't think that's the case with the IRS, they're probably more than happy to let other agencies know about your illegal activity.
- jhgb 5y ago
  I got it from here (https://money.cnn.com/2013/02/28/news/economy/illegal-income-tax/index.html https://money.cnn.com/2013/02/28/news/economy/illegal-income...): "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." I have no idea if it is still valid or not.
  - muffinman26 5y ago
    Definitely still valid. When I trained as a tax preparer for the VITA program (which involves training specified by the IRS), this was a key point of the training. We were also told that information from clients was confidential and we couldn't report to anyone outside the IRS that someone was earning money illegally. The software (paid for by the IRS) even had built-in workarounds for reporting income for someone with a fake SSN on their W-2 because they didn't have work authorization. I did this for multiple years, and some of the volunteers had been doing tax prep for over a decade. The same clients came in year after year. If we couldn't guarantee that their tax information was safe from ICE, they would definitely have stopped coming.

by jhgb 5y ago

Pfhreak 5y ago

This clause came from the era of Al Capone, who famously boasted, "They can't collect legal taxes from illegal money." (Which was true at the time.) They added this clause and then ended up catching Capone for tax evasion. https://www.forbes.com/sites/kellyphillipserb/2020/10/17/al-capone-convicted-on-this-day-in-1931-after-boasting-they-cant-collect-legal-taxes-from-illegal-money/?sh=32d97b381435 https://www.forbes.com/sites/kellyphillipserb/2020/10/17/al-...

ocdtrekkie 5y ago

I think the point of this is less that the IRS won't report it to someone else, but that it adds tax evasion as a reason a criminal can be pursued. You are probably thinking it's like where contact tracers or census workers or whatever aren't supposed to report illegal immigrants because it's more important that they get accurate info than report people to ICE. I don't think that's the case with the IRS, they're probably more than happy to let other agencies know about your illegal activity.

jhgb 5y ago
I got it from here (https://money.cnn.com/2013/02/28/news/economy/illegal-income-tax/index.html https://money.cnn.com/2013/02/28/news/economy/illegal-income...): "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." I have no idea if it is still valid or not.
- muffinman26 5y ago
  Definitely still valid. When I trained as a tax preparer for the VITA program (which involves training specified by the IRS), this was a key point of the training. We were also told that information from clients was confidential and we couldn't report to anyone outside the IRS that someone was earning money illegally. The software (paid for by the IRS) even had built-in workarounds for reporting income for someone with a fake SSN on their W-2 because they didn't have work authorization. I did this for multiple years, and some of the volunteers had been doing tax prep for over a decade. The same clients came in year after year. If we couldn't guarantee that their tax information was safe from ICE, they would definitely have stopped coming.