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IRS: We Don’t Care How You Get it. Just Be Sure and Report it!

By JLP | December 13, 2006

I was reading through the “Other Income” section (scroll down as the page doesn’t seem to be loading correctly) in Publication 17 and found some pretty funny stuff. The section deals with all sorts of “other income” and whether or not you have to report it. Here’s some of the funny stuff I found (word-for-word as the IRS has it written):

Bribes. If you receive a bribe, include it in your income.

Illegal income. Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity.

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.

LOL! That last one made me laugh out loud! My question is: If a person is dealing in these illegal activities, are they moral enough to pay taxes on them?

Funny stuff!

Topics: Humor, Taxes | 44 Comments »


44 Responses to “IRS: We Don’t Care How You Get it. Just Be Sure and Report it!”

  1. jaaron Says:
    December 13th, 2006 at 2:04 pm

    The reason is to that federal authorities have one more thing to through at criminals. Tax evasion is a useful way to prosecute otherwise difficult cases.

  2. Harm Says:
    December 13th, 2006 at 3:06 pm

    That’s how they got Al Capone, I think….
    Tax evasion.

  3. mphetameme Says:
    December 13th, 2006 at 3:23 pm

    That’s exactly how they got Capone. Haven’t you seen Goodfellas?

  4. Adderall Sotasty Says:
    December 13th, 2006 at 3:38 pm

    There is no law that you have to pay taxes so how do they prosecute under a law that doesn’t exist?

  5. jim Says:
    December 13th, 2006 at 3:41 pm

    It’s a great way to pile it on too.

  6. Movie Guy Says:
    December 13th, 2006 at 3:50 pm

    mphetameme… don’t you mean “The Untouchables”?

  7. Brian Says:
    December 13th, 2006 at 4:02 pm

    There is no law requiring payment of tax to the Federal government, but there is an amendment in the constitution.

    The way they’d approach it is this: If you recognize the Federal government as a governing body of your citizenship, then you have every requirement to follow the rules of the constitution.

    I knew a few people that are way, way, way libertarian. They refused to even get license plates on their vehicles because in part the fees fund the Federal coffers, and in turn would validate their recognition of the Federal government. They even call themselves “nationalists” versus “American”, since that also validates their recognition. Provocative stuff.

  8. IvyMike Says:
    December 13th, 2006 at 5:26 pm

    I’ve always wanted to put down like $1.29 in illegal income, just to see what would happen. Say I took some pocket change from my brother’s apartment last time I was there, and didn’t tell him…that’s theft!

    Although I suspect the answer is “lots and lots of paperwork for me”.

  9. dimes Says:
    December 13th, 2006 at 5:36 pm

    I’ve wondered how you’re supposed to handle “found money” like if you found $10 in the gutter. Is it a gift? Gifts are not taxable to the receiver. They are to the giver though. Do you remember the buzz around Mark McGwire’s record breaking ball? That whoever touched it would be responsible for income taxes on it, and if they gave it back to McGwire, they’d be responsible for paying gift tax on it? I think the IRS publicly waived that requirement in that instance, but it’s true in other ones.

  10. The Sarcasticynic Says:
    December 13th, 2006 at 5:44 pm

    Thank goodness “hit money” is not on the list.

  11. foo Says:
    December 13th, 2006 at 5:57 pm

    dimes: that is income.

  12. Foobarista Says:
    December 13th, 2006 at 6:31 pm

    This is why I’m becoming more of a fan of consumption taxes. It’s literally impossible for a person to be completely compliant with our current tax system. Who’s going to report couch money, the pennies found on the street, etc? But those are supposedly taxable income.

    And who, other than a recent poster, would bother to report random stuff won at a church raffle or whatever? Frankly, such a person is better than me – I only report “real” taxes, and regard the law as an ass.

  13. DenisM Says:
    December 13th, 2006 at 8:10 pm

    If a thief that steals from me has to report whatever he stole as income, then presumably I can claim the amount or value of items stolen as a tax deductible loss.

  14. Keith Cash Says:
    December 13th, 2006 at 8:49 pm

    I have talked to the IRS this, I was auditing the books and found an employee had stolen hundreds of thousands of dollars. They told me as long a he reports it as in income it was ok with them.

  15. pat Says:
    December 13th, 2006 at 9:13 pm

    DenisM:
    Actually there is a line on the 1040 form for items lost due to theft. I used it a couple of years ago when my car stereo was stolen.

  16. American Dollar Says:
    December 13th, 2006 at 11:18 pm

    Im sure there has to be a legal checks and balances somewhere that the IRS must goes through in cases like this. Its hard to believe that stealing a million (or even a twenty dollar bill) is ok as long as its on your 1040.

  17. cryptogon.com » Archives » IRS: Make Sure You Declare Income from Criminal Activities Says:
    December 14th, 2006 at 6:45 am

    [...] Via: All Financial Matters: [...]

  18. MoneyFwd Says:
    December 14th, 2006 at 10:17 am

    It’s a pain enough to deal with taxes, who wants to add the burden of remembering every penny found each year?

  19. Mark Says:
    December 14th, 2006 at 11:16 am

    This is hilarious.. as someone else said, there is no law requiring a federal income tax to be paid by individuals.. and that “amendment” that someone mentioned, presumably the 16th Amendment – besides the fact that it was never ratified by the states (thus meaning there is no amendment, not legally anyway) – the amendment doesn’t give any nex taxation powers.. see http://www.freedomtofascism.com for some facts…

    And if you think I’m talking out of my ass, I’ve never paid a dime in federal income tax, and I never will, because there is no law requiring it.. but the IRS has got a good 99% of the American populace into believing that there is a law. How sad.. really it is.

  20. Independent George Says:
    December 14th, 2006 at 3:23 pm

    I think on my next return, I’m going to report $1 of “Ill-gotten gains.” The bigger question is whether one can deduct the interest paid on a deal with the Devil as an investment interest expense.

  21. Generation X Finance » December 15th Friday Five - Double Dose Edition Says:
    December 15th, 2006 at 11:14 am

    [...] IRS: We Don’t Care How You Get It. Just Be Sure To Report It! – JLP stumbles across some humorous bits of information from the IRS and what income needs to be reported. [...]

  22. charlie Says:
    December 15th, 2006 at 11:39 am

    “Mark Says:
    December 14th, 2006 at 11:16 am
    This is hilarious.. as someone else said, there is no law requiring a federal income tax to be paid by individuals.. and that “amendment” that someone mentioned, presumably the 16th Amendment – besides the fact that it was never ratified by the states (thus meaning there is no amendment, not legally anyway) – the amendment doesn’t give any nex taxation powers.. see http://www.freedomtofascism.com for some facts…

    And if you think I’m talking out of my ass, I’ve never paid a dime in federal income tax, and I never will, because there is no law requiring it.. but the IRS has got a good 99% of the American populace into believing that there is a law. How sad.. really it is. ”

    I agree: there is no law, or rather no constitutional law. But that doesn’t mean they won’t prosecute you and lock you up if “they” really want to.

  23. JM Says:
    December 15th, 2006 at 1:35 pm

    uh, I wouldn’t rely on a conspiracy theory movie website for tax advice. Feel free to do so if you want to, of course, I’m just saying that *I* wouldn’t do it.

  24. Labnotes » Rounded Corners - 75 Says:
    December 15th, 2006 at 3:11 pm

    [...] Be prepared. How to report bribes, kickbacks, illegal drugs and stolen property as income on your next tax return. (And no, you can’t report bribes and kickbacks as deductions) [...]

  25. James Says:
    December 15th, 2006 at 6:19 pm

    After representing four clients who sell sex for money and average about $100,000 per year; we quickly decided to report their income, claim the deductions for the taxi, toys and attire; we have now moved them into corporations as Adult Entertainers and Professional Escorts and can now reap even more tax advantages including retirement planning.
    I love this country!

  26. Mario Says:
    December 17th, 2006 at 9:43 pm

    Yeah Mark, please publish your real name so I can report you and you can test your theories. I’m sure you are willing to stand up for your beliefs, right?

    You can then have an up close and personal extended visit with your pal, Irwin Schiff.

    http://www.nytimes.com/2004/02/07/business/07tax.html?ei=5007&en=edc91383306ff982&ex=1391490000&adxnnl=1&partner=USERLAND&adxnnlx=1145797695-hHKTsa+4UiU+ZKWvfyO1Xw

  27. fivecentnickel.com Says:
    December 17th, 2006 at 11:16 pm

    Weekly Roundup – 12/15/06

    Here’s a quick look at some of the personal finance articles that caught my eye over the past week.

    Jim talks about his six biggest tax deductions of the year.
    FMF talks about the types of insurance that you need.
    Flexo is amongst the wealthiest 10…

  28. John Hedtke Says:
    December 20th, 2006 at 12:23 pm

    I enjoy the folks who say “Oh, there’s no law about this.” In fact, the tax code, which has been approved by Congress on many occasions, does indeed represent law. I think a fair case could be made that there are an awful lot of things the IRS does that are beyond its authorized scope (and thereby questionable) and I also think we’d all be a lot better off with a flat tax up and down the line, but the days when this country could support itself with trade tariffs passed away with the 19th century.

  29. The Classless Society » Miscellaneous income Says:
    December 21st, 2006 at 11:37 am

    [...] These gems were discoverd by JLP of the excellent blog AllFinancialMatters.com . [...]

  30. Plenty of Holiday Weekend Reading » My Money Blog Says:
    December 22nd, 2006 at 4:36 pm

    [...] I mean, the IRS doesn’t care whether you take bribes, deal drugs, or steal things, as long as you pay income taxes on it. From AllFinancialMatters. [...]

  31. Andy Says:
    December 23rd, 2006 at 2:13 pm

    The 16th amendment was in fact ratified by 42 states. There have been many court cases that have affirmed this fact. It’s not up for debate at this point.

    And there is a law that requires individuals to pay taxes: the Internal Revenue Code. In particular see § 6151:

    “Except as otherwise provided in this subchapter, when a return of tax is required under this title or regulations, the person required to make such return shall, without assessment or notice and demand from the Secretary, pay such tax to the internal revenue officer with whom the return is filed, and shall pay such tax at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return).”

  32. zaw Says:
    January 6th, 2007 at 1:10 am

    make sure you include those change you use from “take a penny jars” as well.

  33. Prison term humbles broadcaster Bruce Drennan - MajorWager Forums Says:
    March 28th, 2007 at 12:14 am

    [...] Saw this here AllFinancialMatters Blog Archive IRS: We Don’t Care How You Get it. Just Be Sure and Report it! Quote: [...]

  34. eluzion062 Says:
    May 4th, 2007 at 7:37 pm

    that information isnt posted on the irs website. did you just make that up?

  35. JLP Says:
    August 7th, 2007 at 10:40 am

    eluziono62,

    It’s there. You have to scroll down before the print even shows up.

  36. Bob Jones Says:
    December 12th, 2008 at 11:33 am

    Yes Mark, I’m sure you’ve never paid a dime in tax…but wait, what about your W-2…something tells me you’ve paid unless you are out of work in which case you should not be spending time on the web

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  38. Yana Says:
    January 14th, 2009 at 4:06 pm

    LOL – those are hilarious!

  39. thomas Says:
    January 14th, 2009 at 11:01 pm

    Once again I will say how much I hate income tax

  40. THE FATHER LIFE » Current Events » Tax Tips Your Accountant Won’t Tell You Says:
    January 29th, 2009 at 4:36 pm

    [...] thanks to Curtis Weyant and allfinancialmatters.com and, of course, the IRS. Image by: Matt Gibson, [...]

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  44. Illegal Activities | Vaclav Elias Says:
    January 7th, 2011 at 9:01 am

    [...] IRS: We Don’t Care How You Get it. Just Be Sure and Report it! [...]

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