I have seen multiple times on Lemmy that the IRS wants people to report income from illegal means and that they don’t care to bust someone for it. For example, an illicit drug dealer is expected by the IRS to report their drug sale revenue without having to worry about being caught for drug dealing.

Will the IRS seriously not report illegal activities or individuals that report they earned income through vague illegal means?

If they don’t, do law enforcement agencies skim IRS tax reports to find people that report illegal income to further investigate?

Can IRS tax forms that report illegal income be used against someone in court?

It just seems ridiculous that reporting illegal activity, however undefined, to the federal government would be a safe option.

  • makeshiftreaper@lemmy.worldEnglish
    87·
    5 months ago

    American tax forms have an “other income” field. That’s where you can report any money you’ve made not covered by the other fields including any ill gotten gains. That section doesn’t require you to list a source, and even if it did nobody expects you to list “$7,800 - meth sales, $32,200 - crack sales, $50,000 - robberies”. You’d just say “Other income - $90,000”

    The logic being that if the government never gives you the opportunity to pay taxes on something, then they can’t charge you with tax evasion. Plus there’s a lot of money in crime! If the US can get a piece of that pie they will!

    Finally, the IRS is an already underfunded organization and contrary to the popular narrative, is very easy to work with. If you make a genuine good faith effort to pay your taxes and they find issues, an agent will work with you to resolve it. They’ll set up payment plans, defer payments, and more if you’re cooperative. All this is to say that reporting people for crimes besides tax ones and terrorism (the only one they’re legally required to report to outside agencies) just makes their job harder, so they don’t