Is this a joke or the IRS promotes stealing?

[kuikui]

I was not sure if this is real or not, isn't the IRS a government agency and as such needs to abide by the law and not promote unlawful activities?

Please take a look here, page 34:

http://www.irs.gov/pub/irs-pdf/p525.pdf

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.

What the hell...

[BizAdvisor]

It was implemented primarily as a loophole for the government to legally apprehend mobsters whom where otherwise untouchable in their illegal dealings; such as Al Capone. If you can't get them on murder charges or stealing... Get them for tax evasion.

[Brian Altenhofel]

There are many laws with a primary purpose of convicting on something unrelated to other crimes that cannot be proven. There are also many laws with a primary purpose of stacking to give the government more leverage in plea bargaining.

[kuikui]

But who would be stupid enough to list stolen goods for tax purposes and be taxed for them :)

Al Capone was charged for tax evasion but because he did never declared his illegal source incomes, if he had, it would be no tax evasion.

That clause seems like the IRS only cares about taxing everything, even if its illegal, it doesn't matter, just report it so we can tax it. That is what I understand at least, since its not their job to investigate stolen property they don't care and still want the tax for it.

[BizAdvisor]

Perhaps another way the IRS looks at it is like this: If honest, hardworking men/women have to pay taxes on their earnings... Why should criminals be exempt?

[Harold Mansfield]

But who would be stupid enough to list stolen goods for tax purposes and be taxed for them :)

Al Capone was charged for tax evasion but because he did never declared his illegal source incomes, if he had, it would be no tax evasion.

That clause seems like the IRS only cares about taxing everything, even if its illegal, it doesn't matter, just report it so we can tax it. That is what I understand at least, since its not their job to investigate stolen property they don't care and still want the tax for it.


You're right and wrong. The IRS definitely has a clause to tax every sort of income you can get. You also have to understand that in America trying to cheat, get over on, or "game the system" when it comes to taxes is an American past time. People have been trying to come up with ways and reasoning not to report income for decades. It's like it's a game.

But on the other hand, the clauses about reporting income from nefarious sources is absolutely about catching criminals. It's a catch 22. If they report and it's caught, they get investigated. If they don't report and they can't get them on anything else, they can always get them on tax evasion.

The Federal agencies work together for the most part. The IRS simply alerts the FBI, or the FBI may contact the IRS.

[kuikui]

I see, so if they report it, they get them for those crimes, and if not, for tax evasion. That makes more sense.