Are You a Drug Dealer or Thief? Don’t Forget to Give Uncle Sam His Due During Tax Season

Uncle Sam (Credit: Pixabay/TheDigitalArtist)

I’m pretty sure RedState doesn’t have any drug dealers, thieves, or people who earn revenue from illicit activities, but if you happen to know someone who is into these types of things, you might want to remind them to remember to give the government its cut of their profits.

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The Internal Extortion Revenue Service (IRS) still wants you to give the agency your money – even if you earned it in violation of the government’s laws – or else. In the most updated version of its general rules for filing federal income tax returns, the agency explains that even if you earned money by selling illicit substances or by bribing politicians, you still have to fork over the proceeds from these endeavors.

As just about every American adult knows and is dreading, Monday, April 15, is Tax Day. Each year, taxpayers scrounge together each income statement the government requires and any random receipt that may result in a modest deduction in the amount they're expected to pay.

The IRS wants taxpayers to know that if you made money from anything illegal last year—stealing, selling illegal drugs, taking bribes—then that's taxable, too.

Last year, Americans spent 6.5 billion hours doing their taxes, which translates to roughly $260 billion in lost productivity. That's in addition to the $104 billion they spent in direct costs on the actual tax filing and preparation.

Much of that complexity stems from the amount of deductions and carve-outs the tax law allows, as well as the types of revenue required to be treated as taxable income.

IRS Publication 17 "covers the general rules for filing a federal income tax return." In its most current edition, the IRS advises, "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity."

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Even more ludicrous is that the government expects those who steal property to report the full market value of any item the person stole. So, if you happen to have committed a carjacking, you better make sure you have the updated Kelley Blue Book value for that hot vehicle, or else you might make Uncle Sam upset.

The IRS also asks taxpayers to report any stolen property’s full market value as income in the year they stole it, unless, of course, they return the stolen goods to their rightful owner. Bribes should also be included in your reportable income. The only time monetary gains are not required to be included in your taxable income is when it’s exempted by law, which famously does not include illegally earned money.

Notably, the FBI convicted notorious crime boss and mobster Al Capone on tax evasion crimes for not paying taxes on his illegally-obtained riches. Capone ran a bootlegging crime syndicate during the height of the Prohibition Era of the 1920s. According to an account of Al Capone’s trial from the University of Missouri-Kansas City, Capone’s syndicate was grossing an estimated $105 million a year, but no income tax return had ever been filed in his name.

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This rule raises an interesting question, however. Since the government essentially seizes our money under the threat of prison time if we don’t pay up, who will they have to pay for the goods it steals from us? Oh, right. They are the only entity that is allowed to tell someone they will be punished if they don't shell out their hard-earned cash so that it can be sent to benefit Ukraine.

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