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Is someone safe if they report income from illegal means to the IRS?

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.

TotesIllegit ,

Tax evasion on top of the other illegal activity can increase the consequences if you’re caught. They tend to require warrants before divulging information to other authorities, however any information gathered through legal means can be used against you.

The main benefit of reporting the income is to reduce the likelihood that somebody gets suspicious of the change in buying habits and starts in investigation in the first place.

EleventhHour ,
@EleventhHour@lemmy.world avatar

while it’s probably true that the IRS is more interested in you paying your taxes than prosecuting you because that income may have been “illegitimate,” that doesn’t mean that other agencies might not be interested in the information you provide to the IRS. The FBI/DEA/DHS could easily get a hold of those records and use them to pursue an investigation.

and, yes, your tax returns can be used as evidence in court.

this is why money laundering (obfuscating the origin of illegitimate earnings to make them appear legitimate, esp for tax purposes) is such a lucrative trade.

my advice: never volunteer information which could later be used against you.

slazer2au ,

Why would the IRS need to know the source of the money? You generally don’t have to report the source of income, just the income itself to IRS.

Now no person is going to directly report the drug money, it will be reported via a front company where cash transactions are normal and expected.

EleventhHour ,
@EleventhHour@lemmy.world avatar

Now no person is going to directly report the drug money, it will be reported via a front company where cash transactions are normal and expected.

aka money laundering

best_username_ever ,

Why would the [government] need to know [whether money has been illegally acquired or not]?

I think you have the answer to your question.

slazer2au ,

I didn’t say government, I said IRS.

The FBI however, they would like to know.

best_username_ever ,

I’m not American though. I didn’t realize that the IRS is not a branch of the government and definitely does not share its data with other people.

slazer2au ,

Still missing the point mate.

From a tax pov the gov doesn’t care as long as it gets it cut.

tarmarbar ,

The tax pov is not the only pov that interests you if you sell drugs tho.

Maeve ,

Street preachers?

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