My friend is trying to cheat the IRS

[jcx]

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I've only skimmed the responses here, and I understand 300k of unreported income is a lot. But what exactly is the 'cutoff' for serious jail time, if there is one? I'd imagine the IRS doesn't put the hammer down as hard on say, 3k than they would for 300k, do they? And is this a per-year thing? In other words, would 3k/year of unreported income over 10 years be the same as not reporting 30k of income for one year? I've always wondered about this.

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I am an ex- revenue officer. Many, many factors go into deciding whether a case is prosecuatable. Revenue officers pull their hair out trying to get Criminal Investigations to take cases but a very small % of cases referred are taken. There are many reasons for this.

There are a limited # of CI agents at the IRS. They take a long time to train and their time is expensive. Criminal cases take a long time to build, in many instances well over a year. For this reason the IRS tends to prosecute cases that are large (over $1MM) or will generate publicity. The IRS loves, loves, loves for successful prosecutions to make the paper because it reinforces so-called "voluntary" compliance. If the case involves a celebrity the IRS gets happier than a puppy w/ 2 peters. I can tell you I was involved in many cases where the taxpayer owed more than Mr. Hatch but there was no prosecution. He was just a supreme idiot because he was a high profile individual and CBS certainly sent a 1099 to the IRS to document his win. When he didn't report this income on a return, it was manna from heaven for the media whores within the IRS.

IRS Counsel is also greatly involved in the decision on whether or not to go to court. What are the hazards of prosecution? Many tax avoidance cases are subtle and complex. Will a jury understand the case? How will the defendant present to the jury? Is the tax avoider a family man living in a middle class house with 3 kids in college? Or is he a hot shot playboy living an outrageous over-the- top lifestlye that will piss jurors off and make them more likely to convict?

If this doesn't sound like a fair administration of the tax code, welcome to the real world. There are hundreds of thousands if not millions of individuals not paying their full share of taxes, in many cases not filing tax returns at all (incidentally, if you are cheating on your taxes and it is for a significant sum, you are better off not filing a return at all. Filing a fraudulent return is one of the most common prosecutions). The IRS knows this. Yet the problem remains. This is partly becauae the IRS is severely short staffed in enforcement positions and partly because much of the workforce they do have is lazy and unproductive.

If you are thinking of cheating on your taxes, there are many things you should concern yourself with. Prison is not at the top of the list. Prison is normally reserved for the hard core unrepentant tax cheat or the occasional high profile idiot like Mr. Hatch. If you are caught red handed, come clean. If you are a productive member of society & the IRS believes it can collect the debt from you they would much rather you make restitution and get back on the tax rolls than spend tens of thousands incarcerating you.

If you are going to cheat on your taxes, do not own real property. As sure as the day is long, if you are discovered a Notice of Federal Tax lien will be filed. You can then say bye-bye to any equity in your house. Also do not leave a large portion of your net worth in a financial institution under US jurisdiction. The IRS does not need a court order to seize your accounts with a levy. Similarly, do not cheat on your taxes if your primary source of income has a paper trail (W2 or 1099). The IRS can staple your nuts to the floor and your only recourse is to quit your job. Most successful tax cheats are self employed, hence Sch C filers get audited more. Know your risk group and plan accordingly.

[NapoleonDolemite]

[ QUOTE ]
"What is justice, anyhow?"

What is truth?

Do I exist?

Will the Cubs ever win the World Series?

These are the questions that men will ponder while a guy is getting assraped for not paying taxes and a murderer is golfing.

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Excellent.

[mikechops]

I got busted a few years back. My ex-employer paid me 30k in royalties (no deductions since I had left the company by then) and went bankrupt before sending me a 1099. It took them 3-4 years, but eventually somebody got around to sending the paperwork to the IRS.

They sent me a letter asking for 20k with interest and penalties. I figure that was at least twice as much as I would have paid, but really I had no complaints. OK I didn't get a 1099, but it wasn't as if 30k was pocket change that I had forgot about.

Pay your taxes as you earn the income. If it is significant they will catch up.

[LockLow34]

Actually OJ was aquitted (wrongly, IMO) by a jury of his peers. Had he been found guilty, like Richard Hatch was, then your argument would carry weight.

[driller]

He isn't cheating the IRS, he is cheating everyone who pays taxes. Sure it's just a drop in the bucket, but the IRS is us.

[Thremp]

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He isn't cheating the IRS, he is cheating everyone who pays taxes. Sure it's just a drop in the bucket, but the IRS is us.

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And why is your friend such a dirty [censored]? Make better friends man.