[HN Gopher] IRS guidance for thieves, drug dealers, and corrupt ...
___________________________________________________________________
IRS guidance for thieves, drug dealers, and corrupt officials
Author : reese_john
Score : 198 points
Date : 2021-04-02 18:26 UTC (4 hours ago)
(HTM) web link (taxfoundation.org)
(TXT) w3m dump (taxfoundation.org)
| mmhsieh wrote:
| does income derived from tax evasion have to be reported? not
| joking.
| antisthenes wrote:
| Tax evasion is not extra income.
|
| It just means you underreported another type of income in some
| other form and ended up paying less taxes as a result.
| geofft wrote:
| You can't derive income from tax evasion. You already have the
| income from some other source, you're just evading being taxed
| on it. (It's like how, if you buy a video game on sale at $10
| off, you didn't make $10, you just avoided spending $10 that
| you already have in your bank account.)
|
| So you've already reported it (or, if you're evading taxes,
| perhaps you've already decided not to report it, in which case
| the answer is simply that you have to not evade taxes...).
|
| If you advise other people on tax evasion and they pay you for
| your services, then that's presumably employment income of some
| sort that you should report.
| frongpik wrote:
| A better question is what if your tax evasion savings had been
| stolen by your friend who has already paid taxes on the
| property he had stolen, but not returned, last year?
| hellbannedguy wrote:
| Remember too if anyone rights off your debt for tax purposes,
| like a credit card company; you are expected to pay tax on the
| amount they right off---even all the late fees, and other crap
| they load on your account.
|
| Now if you are basically insolvent, you can give them a letter,
| and a rudimentary asset/liability statement.
|
| If you get the right (I guess in a good mood) IRS agent they will
| disavow the tax.
|
| (Personally, I would like to see penalties for tax violators tied
| to personal assets. A wealthy guy gets a penalty much higher than
| a poor person. Jail should never be a punishment too.)
| oh_sigh wrote:
| Is there any better way to fund the government other than them
| inserting themselves in-between every transaction that occurs?
|
| Land value tax is there...anything else? It seems like such a
| weird concept that if I have $X and my friend has a bike, I can
| buy the bike from him, and then he can buy the bike from me, etc
| until we owe the government more than the bike is worth because
| we swapped money<->bike too many times.
| closeparen wrote:
| It's an interesting question. One nice thing about transactions
| is they have a market clearing price attached. This keeps
| valuation grounded in reality.
|
| Another "nice" thing is that it keeps the tax burden on the
| suckers who actually exchange goods and services, and away from
| the owners of capital. It is pretty sweet for Bill Gates types
| that tax policy thinks his senior engineers are "the rich" and
| pretty much ignores him.
| CodesInChaos wrote:
| In Europe (typical) businesses can deduct VAT they paid, and
| you don't need to pay VAT on private sales. So effectively you
| have a sales tax which only applies to B2C sales.
| calderarrow wrote:
| I love tax law, honest to goodness, and the US's tax code is so
| fascinating. Regardless of the political/economic reasons why a
| tax law exists, so many of the rules are so oddly specific that
| upon reading them I find myself smiling trying to think of the
| situation that caused a specific law to be made.
|
| When I read these rules, I thought of a potentially amusing tax
| loophole with regards to the stolen property section:
|
| >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.
|
| There's another rule[0] on the books that says interest-free
| loans to friends and family can have tax implications, but if
| your friend/family _steals_ the money from you and repays it
| later that year, they could potentially get a short-term,
| interest-free loan without incurring the tax implications. I'd
| have to dig into the details to see if this would actually work
| out, but it's an entertaining thought exercise nonetheless.
|
| [0] https://www.law.cornell.edu/uscode/text/26/7872
| rev_d wrote:
| I'm not sure I'd describe it as fascinating, so much as
| abusive.
|
| The really complicated and intricate bits are the web of Tax
| Treaties, Tax Treaty Protocols, Revenue Procedures, and memos
| that redefine how a foreign concept maps on to US tax code.
|
| All of this complexity (and the accounting cost that goes with
| it) is because the United States is the only developed country
| in the world that taxes nonresident citizens. You end up with
| so many situations where it's hundreds to thousands of dollars
| to compliantly report foreign income, even though the total tax
| owed is $0.
| treyfitty wrote:
| I don't see the specific term "steal." Which paragraph are you
| referring to?
| heavenlyblue wrote:
| Wouldn't your friends then end up in jail? Or is that the type
| of crime that is not prosecuted unless "charges are pressed"?
| calderarrow wrote:
| If somehow the IRS found out that you and your buddies were
| doing this elaborate stealing-to-borrow plan, they could slap
| down tax evasion charges on you since that's definitely
| breaking the spirit of the law.
|
| But that's a pretty big if ;)
| alien_ wrote:
| Yeah, the way I read it this allows them to prosecute tax
| evasion in addition to theft for all property stolen in the
| previous years that wasn't declared to IRS as income from
| illegal activities.
|
| Is that a common practice?
| vimax wrote:
| It has been used several times against organized crime,
| most famously against Al Capone.
|
| You can't prove they did anything illegal to profit, but
| the IRS can audit them and prove they have not paid taxes
| on all their assets.
| [deleted]
| gh-throw wrote:
| I've never known cops to investigate theft unless you
| basically hand them the culprit yourself. You just get your
| police report and hand it to insurance, if relevant. That's
| their whole and entire role in the process. Even where
| there's a 99% chance there's, say, a gas station with video
| of the thief _and_ their car (=license plate). They don't
| even bother to check it out. You really do have to give them
| everything yourself to get them to _maybe_ do anything.
| therein wrote:
| > Even where there's a 99% chance there's, say, a gas
| station with video of the thief and their car (=license
| plate). They don't even bother to check it out. You really
| do have to give them everything yourself to get them to
| maybe do anything.
|
| You might as well have declared your location to be San
| Francisco Bay Area.
| baumy wrote:
| True in Seattle as well, and Portland too from what
| friends tell me but I don't have first hand knowledge of
| that one.
|
| Had my wallet stolen at a community rec center in the
| Northgate area (a few miles north of downtown Seattle for
| those unfamiliar). There was video of the thief taking
| it. I was able to find out from regulars his name + phone
| number + address, from which I found his facebook account
| with several public pictures of him that made it clear he
| was the same man from the security video. Also was able
| to find some public police reports of prior arrests of
| the same man on various counts of theft/larceny, although
| no convictions that I could find. Gave all of that
| information to the "detective" assigned to my case.
| Nothing ever came of it. As best I can tell, nobody did
| anything beyond write down some of the information I gave
| them.
| 13of40 wrote:
| It's not even an urban thing. I used to live in
| Woodinville, across the lake from Seattle, which for the
| uninitiated is one of those vast suburban sprawls with a
| Starbucks and a Mongolian Grill in the middle. Someone
| broke into my car and stole my wife's purse, and we tried
| contacting the police for hours to file a report. Their
| office was closed in the middle of the day, the person
| who answered their phone wouldn't connect us to anyone,
| and we finally ended up following a cop car to a sandwich
| shop and flagging the driver down when he got out.
|
| Someone did eventually take it seriously when the thief
| stole thousands of dollars from a series of banks with my
| wife's checkbook. I guess cash is king.
| adflux wrote:
| Also anywhere in the Netherlands
| vgeek wrote:
| https://ucr.fbi.gov/crime-in-the-u.s/2017/crime-in-
| the-u.s.-...
|
| Property crimes typically have a 10-20% clearance rate.
| Police are too preoccupied writing traffic tickets and/or
| harassing poor people. If anything, reported property
| crimes track against unemployment/economic prosperity--
| probably much stronger than police payroll.
|
| The FBI's UCR is even more accessible at https://crime-
| data-explorer.app.cloud.gov/ -- where you can look at crime
| rates, clearance rates, types of crime all the way down to
| the municipality level.
| heavyset_go wrote:
| I've lived in places where cops don't even show up for
| theft and burglary. If you want a police report, you're
| visiting the station where they begrudging take your report
| and roll their eyes at any implication that they should
| investigate the crime or look for whoever committed it.
|
| What were the biggest line items on those municipalities'
| budgets? Police salaries, benefits, pensions and the
| purchasing and maintenance of law enforcement equipment and
| assets.
|
| If you visit the police departments' Facebook pages, they
| frequently celebrate months long investigations on literal
| children who sell pot to their friends. There's apparently
| no time to solve potentially difficult-to-investigate crime
| when there are easy targets out there like kids smoking pot
| and people speeding.
| Black101 wrote:
| > I love tax law
|
| Why do they have a wash sale rule for stock sale losses but not
| for gains?
| HideousKojima wrote:
| Reminds me of how the National Firearms Act registry and tax
| stamps only apply to law-abiding citizens. People with a
| criminal record cannot legally own firearms of any sort (let
| alone NFA items), and forcing them to register them would
| violate their 5th amendment rights against self-incrimination:
|
| https://en.wikipedia.org/wiki/Haynes_v._United_States
| jfrunyon wrote:
| > People with a criminal record cannot legally own firearms
| of any sort
|
| That's not true at all... It depends on the crime, it depends
| on the state, and it depends on the firearm.
| HideousKojima wrote:
| Sorry, I should have specified felon rather than simply
| having a criminal record. Generally speaking any crime that
| carries a possible prison sentence over a year, though
| you're right that it can vary by state etc. And blackpowder
| guns and a few others aren't legally considered "firearms"
| by the ATF, so a felon can own them.
| chiph wrote:
| Which is why in _The Dukes of Hazzard_ , Bo & Luke
| carried compound bows (with dynamite tied to the
| arrows!). Because they were moonshiners (a federal
| felony) they couldn't have guns.
| bonyt wrote:
| > if your friend/family _steals_ the money from you and repays
| it later that year, they could potentially get a short-term,
| interest-free loan without incurring the tax implications
|
| If we want to close this loophole (if it's not closed elsewhere
| in the code) - I feel like the logical way to handle it would
| be to treat it as if they stole the imputed interest as well. I
| don't think SS 7872 applies, but this would be in the spirit of
| that section to balance things out.
|
| So, you'd treat the transaction as though they stole the item
| plus the interest required to "borrow" it, and then only
| returned the item without returning the interest. They'd need
| to report the imputed interest as income (since they stole
| it!), and you could report it as a loss (since they stole it
| _from you_!).
| jerf wrote:
| So... if hypothetically we ever went to negative interest
| rates, you could screw up somebody's taxes by stealing some
| item from them Jan 1st that doesn't depreciate, and returning
| it to them December 31st. Then report this action to the IRS,
| and the victim of the theft now owes the government because
| the negative interest you saved them by taking this asset off
| their hand and returning it to them December 31st is now
| income.
| saalweachter wrote:
| I mean, we talk occasionally about the "negative interest
| rate" of owning gold, ie, the cost of securing it against
| theft.
|
| And you provided that service for free!
| StavrosK wrote:
| ...by stealing it.
|
| I love the irony.
| gher-shyu3i wrote:
| > on the books that says interest-free loans to friends and
| family can have tax implications,
|
| Simpler loophole: you gift it to them, then they gift it back
| at the end of the term. Or perhaps sue the IRS because Islam
| and Judaism prohibit lending money with interest, sounds like a
| case of discrimination (Christianity prohibits it as well, but
| basically no one follows nowadays).
| Judgmentality wrote:
| You can't legally gift money above a certain value though
| without paying taxes on it. The situation depends a lot here,
| but if it were legal to just gift everybody money without
| interest nobody would ever have to deal with inheritance
| taxes.
| birken wrote:
| The lifetime gift exemption is more than $10 million
| dollars, so unless you are _really_ doing a lot of gifting
| back and forth then you are unlikely to run into that.
| adflux wrote:
| Hahahah it's like 3500 euro's in Europe. _cries in
| socialism_
| Vespasian wrote:
| Not at all true in this generality.
|
| Germany allows a few 100k tax free every 10 years
| depending on the exact relationship.
|
| + "Usual" Christmas / birthday / marriage gifts etc which
| can be substantial
| outside1234 wrote:
| That's not correct - you can only gift up to $15000 a
| year.
|
| ref: https://www.nerdwallet.com/article/taxes/gift-tax-
| rate#:~:te....
| kinghajj wrote:
| "Two things keep the IRS' hands out of most people's
| candy dish: the $15,000 annual exclusion in 2020 and
| 2021, and the $11.58 million lifetime exclusion in 2020
| ($11.7 million in 2021). Stay below those and you can be
| generous under the radar. Go above, and you'll have to
| fill out a gift tax form when filing returns -- but you
| still might avoid having to pay any gift tax."
| mminer237 wrote:
| It's $15,000 to avoid filing a gift tax return. Anything
| over comes out of your 10 million dollar lifetime
| exemption though, so you're still never going to have to
| pay anything.
| kileywm wrote:
| That is close, but not quite correct. You can gift <=
| $15000 per year without reporting it. You can gift >
| $15000 federal tax-free (state tax may apply), but must
| report it. Reporting it doesn't incur federal taxes until
| your lifetime gift total exceeds your lifetime gift
| exclusion of $11,700,000 (2021).
| birken wrote:
| You can gift $15,000 per person, per year, without
| counting against the exemption. If you go above that you
| start to chip into the massive lifetime exemption.
|
| Unless you have a net worth way above $10 million dollars
| you don't need to worry about the gift tax. If you
| accidentally forgot to report a $30,000 "loan" that turns
| into a gift to a friend, the IRS isn't going to care. You
| might have to go back and fix it if they notice but it
| isn't going to be a problem.
|
| The gift tax exists to prevent extremely rich people from
| cheating the estate tax. If you've never heard of the
| gift tax before you don't need to worry about.
| frisco wrote:
| No basis to sue here: you are perfectly allowed to lend money
| without interest, you just have to pay gift taxes on it. (If
| it is really a loan, the gift taxes only apply to the forgone
| interest. But, keep in mind that if they can't repay it, they
| will owe income taxes on the whole amount!)
| solatic wrote:
| FWIW, Judaism permits lending money with interest as long as
| you engage in accepted loopholes and draw up complicated
| paperwork to call it an investment.
| nwah1 wrote:
| Same with Islam and Christianity.
| gher-shyu3i wrote:
| Not true with Islam. Many Hadiths warn against using
| loopholes, there's no "tricking" God in Islam.
| WJW wrote:
| It's so fascinating. There is no tricking God in Judaism
| either, but in a completely different way. Since God is
| by definition all-knowing, you cannot trick him by using
| a loophole. Rather, He put the loophole there for His own
| inscrutable purposes and you are not more or less holy
| for using it. (Unless it's a loophole in a holy text,
| then you are clearly more holy since you managed to find
| the loopholes that He himself put in there for the
| faithful to find)
| gher-shyu3i wrote:
| The Islamic perspective is different. If something is
| prohibited, then there is no trying to get around the
| prohibition by stitching together a series of
| individually permitted transactions, such that the end
| result is a transaction that mimics the original
| prohibited one. The prohibition is because the act itself
| is impermissible, and hence, we are not to try to get
| around it.
| skeletal88 wrote:
| Then the islamic students who we had here for an event 10
| years sgo and refused ti eat pork but really liked to
| drink booze were full of shit when they answered "we are
| under a roof, god can't see here" when questioned about
| their drinking
| gher-shyu3i wrote:
| Which Islamic students? One of the most basic tenants of
| Islam is that God is Omniscient. If what you're saying is
| really true, then they're ignorant and/or foolish.
|
| Plus, this doesn't have anything to do with the original
| topic.
| plorkyeran wrote:
| Nonetheless there is a widely used system of loans which
| use a fixed fee rather than interest payments which for
| fixed-term loans ends up being functionally identical.
| gher-shyu3i wrote:
| That doesn't make them Islamic, as a matter of fact, many
| scholars have spoken out against them.
| alert0 wrote:
| This sounds like a good approach because it removes the
| possibility for consumer credit. In my opinion, you should
| only borrow money to make a profit on it.
| sigstoat wrote:
| > In my opinion, you should only borrow money to make a
| profit on it.
|
| only monetary profit counts? i shouldn't borrow to buy
| something that makes my household more efficient, like a
| dishwasher?
| boogies wrote:
| > the rules are so oddly specific that upon reading them I find
| myself smiling trying to think of the situation that caused a
| specific law to be made
|
| I don't think this is unique to taxes at all, I don't have a
| Twitter account or really use it but there's one account I
| check regularly: https://nitter.cc/crimeaday (random example
| https://nitter.cc/CrimeADay/status/1091488611269332993#m).
| drdec wrote:
| I thought the dodge was going to be, steal something, say a
| car, return it on 12/31 and then re-steal it 1/1.
| 29athrowaway wrote:
| This is an excellent reason to hide your tax returns. /s
|
| Is this why some known politicians avoid showing their tax
| returns at all costs?
| imwillofficial wrote:
| This was an awesome, informative, and concise read. I'd like more
| like this.
| gumby wrote:
| What's important is that what the IRS learns this way should
| _not_ be shared with other agencies. That should improve the
| level of tax collection. In fact information sharing would be an
| incentive _not_ to share, which, as most tax evasion is goes
| undetected or at least not followed up, would be a kind of
| subsidy or tax break to lawbreakers (much as drug laws are a
| price support and subsidy for drug dealers -- regulatory capture
| at its most raw).
|
| The same applies to TSA: they should look for weapons and nothing
| else. No drugs, no other contraband. Narrowing the search space
| should (hopefully) improve threat detection, so leave unrelated
| factors to the professionals.
|
| As a general principle this seems to be poorly understood by both
| legislators and the general public.
|
| Oh and PS: follow this same rule with your code.
| spookthesunset wrote:
| > to TSA: they should look for weapons and nothing else
|
| I routinely carry various marijuana products in my carry on.
| Even to Hawaii who scans your baggage on the way to the
| mainland.
|
| Never once been given a hassle.
| ceejayoz wrote:
| It's far more likely to go _missing_ than reported.
| spookthesunset wrote:
| Which is exactly why I carry it on in my backpack right
| along with all my medications and stuff.
| whimsicalism wrote:
| From your carry-on?
| ceejayoz wrote:
| "You can't have this, we're taking it" is already
| standard for oversized liquids in carry-on baggage. Are
| you gonna make a big fuss calling over a supervisor over
| something that's illegal at the Federal level?
| smabie wrote:
| I've been caught for this, but only because I accidentally
| tried to carry on a bottle of water. The TSA definitely saw
| it, but didn't say anything (it was not legal in the state I
| was in). Probably not worth their time, though I'm guessing
| minorities might have a different experience (or maybe not, I
| dunno).
| vmception wrote:
| always reminds me, is the TSA's liquid carrying exemption
| for saline solution, or bottles that say saline solution?
| csomar wrote:
| > What's important is that what the IRS learns this way should
| not be shared with other agencies.
|
| I'm not sure if it does; but regardless, it's not admissible in
| a court of law. So if you did hid your steps well, or it was
| foreign income (which the police/FBI is less enthusiastic to
| resolve), then you might get off free :)
| voxic11 wrote:
| It certainly is admissible, and it does get shared with other
| agencies.
|
| > Under SS6103(i)(1), an assistant U.S. attorney may obtain
| tax returns as part of a non-tax criminal investigation or
| grand jury proceeding by submitting an ex parte application
| to a federal district judge. Taxpayers have no right to
| notice, a hearing, or dis-closure of the application,1 and
| prosecutors may file simultaneous motions to seal both the
| application and subsequent order granting or denying the
| application.2 The district judge "may" grant the order if (1)
| there is reasonable cause to believe a criminal act has been
| committed, (2) there is reasonable cause to believe the tax
| return is relevant to the commission of the criminal act, and
| (3) the return is sought exclusively for use in a federal
| criminal investigation or proceeding and the information
| sought cannot reasonably be obtained from another source.
|
| > In preparing for trial, defense counsel in both tax and
| non-tax cases need to anticipate that the government might
| attempt to offer tax returns not directly at issue in the
| case to show knowledge and intent, unexplained wealth, or
| even the falsity of rep-resentations made in connection with
| a fraudulent scheme. While some courts have permitted the
| gov-ernment to introduce tax returns as circumstantial
| evidence of some disputed fact...
|
| https://www.maglaw.com/publications/articles/2015-05-21-the-.
| ..
| jedberg wrote:
| The IRS does not share information unless given a subpoena. But
| regardless, you don't have to tell them where the income came
| from, and they won't ask.
| csomar wrote:
| This might seem surprising, but I think this makes sense. The IRS
| is out there to collect money, and should be _neutral_ regarding
| the legality of the source of the money. It 's up to the
| prosecutor to decide if the tax payer did something wrong and
| prove that.
|
| Take drugs for example. Marijuana is legal is some states and
| illegal in other states. The IRS is federal and should not care
| about the legality of weed on a particular state. It's up to the
| tax payer to figure out if what he is doing is legal.
| joe_the_user wrote:
| I don't think there's an answer to this. It's easy to start
| with drug dealing and go to "sure, let them report income and
| it's prosecutor's problem to prosecute that". But jump to
| horrific crime X, say murdering people and harvesting their
| organs. Should someone able to partially launder their profit
| from doing this?
|
| I'd prefer that drugs use (and all victimless crimes) be legal
| and that those who do actual bad things have a hard time
| profiting from those bad things.
| tenebrisalietum wrote:
| How do taxes work with civil forfeiture? Do the police
| departments pay taxes on that? Is seized money income?
| freeone3000 wrote:
| Government agencies do not pay taxes.
| R0b0t1 wrote:
| There is a more concrete reason. The IRS actively defends
| people who have tax documents used against them in court,
| because if those documents _can_ be used against them in court
| you can no longer be compelled to report income, any income,
| under the fifth amendment.
|
| But how do you reconcile this with parallel construction? Your
| divulsion of a stream of income may cause suspicion regardless
| of its legality and even if it is not directly used as
| evidence. In many cases you have no obligation to help the
| government with its job, so frankly it seems like income
| reporting in general may violate the fifth simply because there
| is no adequate check on police power.
| Spivak wrote:
| So what goes wrong with the obvious solution? Treat your tax
| documents are like a confessional, tax and financial
| documents found by police are inadmissible in any criminal
| proceedings (civil is fine), and police aren't allowed to get
| someone's tax documents from IRS.
| masklinn wrote:
| > Treat your tax documents are like a confessional, tax and
| financial documents found by police are inadmissible in any
| criminal proceedings (civil is fine), and police aren't
| allowed to get someone's tax documents from IRS.
|
| While the second is perfectly fine, the first makes no
| sense. The confession is your report to the IRS. What you
| keep around is your problem and would be fair game, in the
| same way that the sacramental seal only applies the scope
| of the sacrament: if you confess, then say what you
| confessed within the priest's ear outside of confession the
| sacramental seal is void, to say nothing of writing it in
| your diary or shouting it from the rooftop.
| ethbr0 wrote:
| One could argue that it's the transmission of this
| information that constitutes the paradox.
|
| I.e. if the IRS held certain records as confidential, even
| from law enforcement, no paradox would exist.
| 35fbe7d3d5b9 wrote:
| A very concrete example, from the federal level:
|
| https://en.wikipedia.org/wiki/Marihuana_Tax_Act_of_1937
|
| > Shortly after the 1937 Marihuana Tax Act went into effect
| on October 1, 1937, the Federal Bureau of Narcotics and
| Denver City police arrested Moses Baca for possession and
| Samuel Caldwell for dealing. Baca and Caldwell's arrest made
| them the first marijuana convictions under U.S. federal law
| for not paying the marijuana tax.
|
| > In 1969 in Leary v. United States, part of the Act was
| ruled to be unconstitutional as a violation of the Fifth
| Amendment, since a person seeking the tax stamp would have to
| incriminate him/herself
|
| Some states still have drug tax stamp laws enacted today.
| joecool1029 wrote:
| >> In 1969 in Leary v. United States, part of the Act was
| ruled to be unconstitutional as a violation of the Fifth
| Amendment, since a person seeking the tax stamp would have
| to incriminate him/herself
|
| >Some states still have drug tax stamp laws enacted today.
|
| I was reading about this last night, not knowing about
| Leary vs. United States. The modern state tax stamp laws
| seem to get around the court's ruling/interpretation by
| allowing for the anonymous purchase of the stamps. Before
| the ruling and the 1970 Controlled Substances Act, the 1937
| Marihuana Tax Act required dealers to register and implied
| their own self-incrimination.
| chiph wrote:
| The North Carolina Unauthorized Substance Tax Stamp [0]
| is one such. I met someone who worked for the Department
| of Revenue, and to his knowledge, the state has never
| sold a single one to an actual possessor of an
| unauthorized substance. Just to philatelists.
|
| > If I purchase stamps will I then be in legal possession
| of the drugs?
|
| > No, purchasing stamps only fulfills your civil
| unauthorized substance tax obligation. You will still be
| in violation of the criminal statues of North Carolina
| for possessing the drugs.
|
| [0] https://www.ncdor.gov/taxes/unauthorized-substances-
| tax-info...
| klyrs wrote:
| > Just to philatelists.
|
| Interesting business. Stamp collectors are free to resell
| those stamps.
| frongpik wrote:
| What do you do if you're a high profile criminal with state-level
| enemies and can't file tax returns under your real name and
| address? Can you ask IRS to send you a tax return via a mediator
| accounting firm (an outlaw entity with headquarters on ships in
| international waters)?
| gwbas1c wrote:
| Use cash and pre-paid gift cards only?
|
| From what I understand, a lot of people "hide in plain sight"
| by only using cash and not filing their taxes.
| vmception wrote:
| You launder it.....
|
| The money laundering conviction requires that the state has
| proven that the source of money was illicit, successful money
| laundering only has an indistinguishably licit source.
| Basically the stigma on simply having a lot of money moving
| around isn't based in any legal reality. The state has to prove
| what the source is, that the source was illegal, and _then_
| that you are obfuscating the source, in order to prove money
| laundering, but not a tax evasion conviction. An obfuscated but
| legal source would not be money laundering, it would be
| business expenses and compliantly paid taxes.
|
| You don't file taxes on stuff you steal or earn from illegal
| means, if you do that means you missed a step and incriminated
| your criminal activities that earn you the funds all to avoid a
| tax evasion conviction. You pay taxes on the converted money
| that looks no different from employment or tech sales.
|
| (or like the other person said, not paying taxes at all and
| keeping a low profile, but I don't agree with that, the goal is
| to mitigate all technical liability)
| dyingkneepad wrote:
| If you get caught and arrested for the stuff you stole, can't the
| judge tell IRS that you owe them since you didn't declare stuff
| you stole? Especially if you get arrested only in the next fiscal
| year.
| mbostleman wrote:
| One of the great benefits of sales tax is that all forms of
| income get taxed. There are no shelters from consumption taxes
| collected at point of sale.
| csw-001 wrote:
| Good point. Although it's not a flawless solution. It's a good
| solution to the extent you can't practically shift your
| consumption to a different jurisdiction (or nation) that
| doesn't tax the sale of the item. Tricky part becomes capturing
| consumption tax at customs for items purchased elsewhere to
| dodge taxes. When you think about the large purchases you can
| make elsewhere and import with relative ease (like an expensive
| car) versus the things that can't practically be purchased
| elsewhere (like groceries), a consumption tax can end up
| looking regressive. I am a fan of a consumption tax that
| doesn't kick in until you are over a certain level of spending,
| so if you consume below a taxable minimum you pay nothing. It's
| hard to imagine how this would be administered in real life.
| gwbas1c wrote:
| For things like cars, you have to provide documentation that
| you paid the tax when you registered the car.
|
| On the other hand, it's really worth it to drive across state
| lines when making a $2-3000 purchase.
| hrasyid wrote:
| I wonder how the "without revealing its precise source" part
| works. Probably it's this form, https://www.irs.gov/pub/irs-
| pdf/f1040s1.pdf do you just add it in line 8 with type = "stuff"?
| What happens if they need to audit you if it's the correct
| amount, won't you have to reveal the source then?
| diplodocusaur wrote:
| https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion
| drummer wrote:
| The IRS itself are thieves and corrupt officials.
| lifeisstillgood wrote:
| So, Capone _could_ have declared his income, but not its source,
| paid the tax and it would have been impossible to prove he
| ordered murders (cos everyone was scared) and / or
| unconstitutional to use his own declaration to convict him of a
| criminal act.
|
| I think even Saul from Breaking Bad would have struggled to sell
| that as a tactic.
| jandrese wrote:
| Back when Capone was operating there weren't even KYC laws to
| catch him in. This could have worked.
|
| Or it would have just pressed the feds to go for a real
| conviction instead. I always thought the tax stuff was a cop
| out.
| BitwiseFool wrote:
| If the government wants you imprisoned they'll find a way.
| closeparen wrote:
| I wonder. Walter laundered his drug income through his car wash
| business. He could have rigged the business to be loss making,
| but then it wouldn't work to explain the source of his wealth.
| So presumably it reported a profit and paid taxes on it.
| jcpham2 wrote:
| Speculation on a fictional universe, super
| closeparen wrote:
| Money laundering happens in this universe too.
| bob1029 wrote:
| At the end of the day, everyone just wants your money. Keep the
| IRS and your various debtors well-paid and they probably won't
| have a good reason to ruin your life.
|
| As the saying in the business goes: Only break 1 law at a time.
| 11thEarlOfMar wrote:
| That makes me ask the question: How much tax revenue does the IRS
| collect from illegal income each year?
|
| I couldn't find a number, but here's a guy[0] who stole from his
| clients and the declared the proceeds on his tax returns. Of
| course, he's an accountant...
|
| [0] https://money.cnn.com/2013/02/28/news/economy/illegal-
| income...
| jedberg wrote:
| Yep, if you're a drug dealer and you don't want them to get you
| on tax evasion, make sure you report it.
|
| Or really any cash income. You don't have to tell them where it
| came from. You just tell them you got cash. Like when you do a
| garage sale and want to be legit, you report it in the same
| place.
| cperciva wrote:
| Why are you paying income tax on a garage sale? If you're
| selling used goods it's extremely unlikely that you're making a
| profit...
| jedberg wrote:
| Technically you've already depreciated the assets to $0, so
| any money you make is profit, minus the cost of marketing the
| garage sale.
|
| But I doubt most people claim their garage sale income.
| cperciva wrote:
| Ok, maybe the US tax system is very different from the
| Canadian tax system, but I've never heard of someone
| claiming depreciation on personal use of children's toys.
| ivalm wrote:
| If you didn't claim depreciation previously then why is it
| depreciated?
| jedberg wrote:
| The IRS says that the item depreciates whether you claim
| it or not. It is in your best interest to claim it,
| because when you sell the item, they assume the
| depreciated value.
|
| This comes up when you own rental houses. If you sell the
| house later, they reduce the base price by the assumed
| depreciation of the structure, whether you took the
| deduction or not.
| sokoloff wrote:
| Tax code deducts from your basis in an item the
| "depreciation allowed or allowable".
|
| For personal property [such as typically sold in a garage
| sale], there is no depreciation allowed or allowable, so
| your basis in the good is whatever you paid for it.
| jandrese wrote:
| Unless you are selling a boat or a car at a garage sale you
| probably can't calculate depreciation. Typically only
| capital items can depreciate.
| jedberg wrote:
| The IRS has a publication for that!
| https://www.irs.gov/pub/irs-pdf/p946.pdf
|
| You can pretty much depreciate any physical object that
| wears out over time.
| voxic11 wrote:
| Only ones that you use for business or income. Personal
| property used for non-buisness or income producing
| activities is not depreciable.
|
| > To be depreciable, the property must meet all the fol-
| lowing requirements... It must be used in your business
| or income-producing activity
| jedberg wrote:
| If you're selling at a garage sale it just became part of
| your income producing activity.
| pdonis wrote:
| Even if you take this viewpoint, it still means you can't
| depreciate the item, because it wasn't part of your
| income producing activity until just that moment, which
| means the depreciation is zero, since depreciation can
| only be taken based on the time the item was used for
| your income producing activity.
| mindslight wrote:
| You can, but why would you? Buying into the accounting-
| uber-alles paradigm only makes sense for business that
| can actually benefit by deducting the depreciation.
| Individual taxpayers get no such benefit, and therefore
| have no need to depreciate items. And without
| depreciation, yard sales consist chiefly of capital
| losses.
| [deleted]
| jandrese wrote:
| I want to see the guy who lists his Bic pens that he lets
| customers use to sign contracts. Yes, it has a limited
| lifetime. Yes it will last over a year. Yes you'll be
| audited if you claim depreciation on them.
| jedberg wrote:
| You would probably just do a Section 179 on the entire
| bag in the year you purchased it, which would be totally
| legit.
| suresk wrote:
| This is not my understanding of how the tax code works. If
| the garage sale is not part of a business and you are
| selling an item you used for less than you paid for it, you
| generally have no reportable income. Everything I could
| find online seems to agree, [1] for example.
|
| Do you have any sources?
|
| 1. https://www.findlaw.com/tax/federal-taxes/do-you-need-
| to-rep...
| SilasX wrote:
| Agreed. I think the parent is confusing it with the case
| where you buy an item for your business, depreciate it to
| zero (thus deducting its full value as an expense), and
| then later find out you can salvage some value on resale.
| In that case, you would have reportable/taxable income
| from that resale, which you can think of as "correcting
| the overdeduction for depreciation."
| jedberg wrote:
| The link you posted explains the difference between
| business income and hobby income. It just depends on how
| often you have a garage sale. Like everything with the
| IRS, it's complicated, and also they usually don't care
| with small amounts anyway.
| jandrese wrote:
| Because you don't want to go to jail for tax evasion? You
| don't pay tax on the profit, you pay tax on the sale.
|
| My state also requires that you report everything you bought
| online from out of state so they can charge sales tax on it.
| Luckily Amazon has a distribution center in my state that
| charges sales tax so this is a much shorter list than it used
| to be.
| gwbas1c wrote:
| No one goes to jail for underreporting a small amount of
| income, like a weekend garage sale.
|
| When the IRS figures out that you underreported something,
| they assume it's a minor mistake and send you a bill for
| the difference, plus minor interests.
|
| And, as far as out-of-state sales tax... Who actually keeps
| a list around of all the trinkets that they bought out of
| state so they can pay the extra $10 of tax at the end of
| the year? There is a reason why big-box stores are located
| immediately on the tax-free side of a state line.
| mattm wrote:
| > No one goes to jail for underreporting a small amount
| of income, like a weekend garage sale.
|
| Almost no one goes to jail for tax-related issues,
| period. Only about 600 people are convicted of tax fraud
| per year and they usually do so because of amounts of
| more than $100,000.[1] If the IRS finds discrepancies,
| they'll work with the taxpayer to pay the appropriate
| penalties. You have to be doing something particularly
| egregious to end up going to prison.
|
| The IRS is not the big, bad bully that it is usually
| portrayed as.
|
| [1]
| https://www.ussc.gov/sites/default/files/pdf/research-
| and-pu...
| skot9000 wrote:
| With this you can get busted for stealing _and_ not paying taxes
| on the fair market value.
| onetimemanytime wrote:
| So El Chapo's daughters (US citizens) declare $50 Million, 10
| years from now and nothing happens? I doubt it. Bells will ring
|
| If you sold drugs...might as well break tax laws too or you risk
| your profession:)
| yesco wrote:
| Might be wrong about this, but I believe how it works in
| practice is that a tax return just can't be used as evidence in
| a court of law (for non-tax related reasons). So if the FBI
| just so happened to obtain these tax returns through some
| means, then found /different/ evidence, then using that instead
| would be fine.
|
| https://en.wikipedia.org/wiki/Parallel_construction
| namank wrote:
| I don't think these laws are meant for ordinary citizens. They
| are meant to aid policing orgs in catching and stopping criminals
| when police can't catch them. For example, the police can't come
| up with evidence that someone is selling drugs but they might be
| able to prove that someone is making money from drugs (which is
| not a crime) and not paying taxes on it (which is a crime.)
| isbvhodnvemrwvn wrote:
| A semi-related thing - in Poland there is a law stating that
| income from prostitution is not taxable.
|
| When some people tried to take advantage of that (to cover
| illegal income of other kind), they were audited to prove that
| the money actually comes from prostitution:
|
| - the family was asked whether the person was in fact a
| prostitute
|
| - the tax payer was asked to specify where the services were
| performed
|
| - if they said that these were performed at the client's flats,
| they were asked to specify the addresses (and names of clients)
| who might also be interviewed
|
| - if they said they did it from clubs and so on, the club owners
| were asked about it (and likely denied, as even if the people
| were in fact prostitutes, it is a criminal offense to profit from
| other people's prostitution)
|
| - if they said they did this at home, the neighbors were
| interviewed whether the prostitution did in fact take place at
| home
|
| In some cases they also rejected these income statements because
| based on the age and looks, the amount of money was much higher
| than the woman could have been paid.
|
| And if you appeal this decision, you'll likely get a court
| decision supporting the tax authority, saying that you are in
| fact an ugly prostitute and that you have to pay 75% taxes since
| the source of income was not determined.
| lordnacho wrote:
| Couldn't you claim you work on the web?
| isbvhodnvemrwvn wrote:
| Prostitution only covers physical services, camgirls pay the
| taxes on the normal tax scale (same as e.g. bitcoin profits).
|
| More than that you'll likely need to show your profiles on
| these portals, so if you were not a camgirl, good luck
| proving that.
| croshan wrote:
| "The constitutional questions are tricky, but this is good
| neutral tax policy from the IRS. In a nice touch, income from
| stolen property is offset with deductibility of many classes of
| stolen property."
|
| And from the inline link to IRS.gov:
|
| "Theft losses are generally deductible in the year you discover
| the property was stolen"
|
| That's nice to know, actually.
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