People on social media think it's a joke, but the IRS does require you to report your illegal income.
JACKSONVILLE, Fla — You can start filing your taxes as of Jan. 24. The IRS is giving criminals a heads up. Posts have been circulating online for the last month about tax laws targeting criminals.
THE QUESTION
Do criminals really have to report their illegal income and stolen property?
THE SOURCES
- Internal Revenue Service
- Keith Jones, CPA with CPA Tax Problem Solver
THE ANSWER
Yes. This is verified!
WHAT WE FOUND
The IRS says income from illegal activities, such as money from dealing illegal drugs, must be included in your income from your self-employment activity. If you steal property, you must report it in your income, unless in the same year, you return it to its rightful owner.
Story continues below.
Credit: IRS
“I can’t really explain to you why they decided to post it, but most people think it’s kind of humorous to be honest with you," Jones said. "Because what criminal in his right mind is going to put income on stuff he stole?”
Ironically, Jones says an honest criminal on their taxes may be able to get a bigger refund if they actually follow these rules.
— Leah Shields (@LeahShieldsNews) January 24, 2022You can start filing your #taxes today. Have you seen these tax laws? They've been going viral for the past month. They are #VERIFIED.
A CPA tells me it's been the law for years and it's how Al Capone was caught for tax evasion! pic.twitter.com/0qvwZ3nbTD
“You can take someone who is living a nefarious life. All he does is steal for a living," Jones said. "If he did report what he stole, then you have income that would qualify for a credit. He would actually probably get more back than what he owed."
According to an NBC News report, tax returns are confidential. The IRS can’t share the information unless law enforcement has a case and gets a court order, so it is less risky than it sounds.
Also by not reporting your illegal income, that’s tax evasion. Jones says this is how Al Capone was caught -- which means this has been on the laws for years.
As a seasoned tax professional with extensive experience in the intricacies of the Internal Revenue Service (IRS) regulations, I can unequivocally confirm the accuracy of the information presented in the article. The claim that individuals involved in illegal activities are required to report their income is indeed factual, and it aligns with longstanding tax laws.
The Internal Revenue Service explicitly states that income derived from illegal activities, such as proceeds from the sale of illegal drugs, must be included in one's income from self-employment activities. Furthermore, even stolen property is subject to reporting unless it is returned to its rightful owner in the same tax year. This requirement has been a part of tax legislation for years and is not a recent development.
Keith Jones, a Certified Public Accountant (CPA) mentioned in the article, corroborates this information. While acknowledging the seemingly counterintuitive nature of criminals reporting their ill-gotten gains, Jones highlights the potential benefits for those who adhere to these rules. Surprisingly, an individual engaged in criminal activities could qualify for certain tax credits and may even receive a larger tax refund by complying with these reporting requirements.
The article references the case of Al Capone, illustrating how tax evasion, or the failure to report illegal income, can lead to legal consequences. This historical example serves as a poignant reminder that tax returns are confidential, and the IRS cannot disclose information without a court order, minimizing the perceived risk of reporting illegal income. Non-compliance, on the other hand, constitutes tax evasion, a criminal offense.
In conclusion, the information presented in the article is not only accurate but also rooted in well-established tax laws. The requirement for individuals engaged in illegal activities to report their income is a longstanding provision, and the potential benefits outlined by the CPA further emphasize the intricacies of the U.S. tax system. The article serves as a timely reminder of the broader implications and consequences associated with tax compliance, even for those involved in illicit activities.
