#TaxEvasion #Crime #Profit #LegalSystem
Have you ever wondered why tax evasion charges are not slapped on top of pretty much every other crime that makes a profit? 🤔 It seems like a no-brainer, right? Well, let’s dive into the reasons behind this perplexing question.
##The Legal Ins and Outs
When someone commits a crime, let’s say a smash and grab, a small-scale drug dealing operation, a robbery, or embezzlement, they are typically charged based on the specific criminal act they committed. This means they are charged with theft, drug trafficking, robbery, or fraud, respectively. However, the element of tax evasion is not automatically added to these charges. So, why is this the case?
###Tax Evasion vs. Other Crimes
– **Different Areas of Law:** Tax evasion falls under tax laws and regulations, which are separate from criminal laws that govern other crimes. This means that tax evasion is treated as a separate offense and must be proven beyond a reasonable doubt in a tax court.
– **Burden of Proof:** In order to charge someone with tax evasion, the government must demonstrate that the individual willfully evaded paying taxes. This can be a complex and lengthy process that requires concrete evidence of fraudulent activity.
– **Resource Allocation:** Prosecuting tax evasion cases requires significant time and resources, as tax laws are intricate and involve detailed financial transactions. Law enforcement agencies may prioritize more straightforward criminal cases over pursuing tax evasion charges.
##Real-Life Examples
Imagine a scenario where a smash and grab person steals jewelry from a store. While they may be charged with theft, the focus is on the act of stealing. The issue of not paying taxes on the profit from selling the stolen goods is a separate legal matter that falls under the domain of tax evasion.
Similarly, a small-scale drug dealer may be caught selling illegal substances but could evade tax payments on the illicit income generated from these activities. The authorities would need to prove that the individual intentionally avoided paying taxes on the illegal proceeds to pursue tax evasion charges.
In essence, tax evasion is a specific violation of tax laws that must be proved independently of other criminal acts. While the idea of adding tax evasion charges to every profitable crime seems straightforward, the legal system operates under distinct rules and procedures for addressing financial wrongdoing.
In conclusion, tax evasion charges are not automatically added to every other crime that generates profit due to the complexities of tax laws, the burden of proof required, and the allocation of law enforcement resources. While the concept may seem logical from a moral standpoint, the legal process demands a separate investigation and prosecution for tax-related offenses.
Next time you ponder the intricacies of the legal system, remember that tax evasion is not a one-size-fits-all add-on to criminal charges. It’s a unique legal challenge that requires careful navigation in the realm of tax laws and regulations. So, the next time you hear about a profitable crime, you’ll understand why tax evasion charges are not always a given. 🧐
Remember to stay informed and keep exploring the nuances of the law to gain a deeper understanding of how our legal system operates. And who knows, you might just uncover more fascinating insights along the way! 📚💡
Probably several reasons. 1) Can’t evade taxes until after they’re due so you can’t charge someone right away. 2) Federal tax evasion would be a separate trial, theoretically a state could charge it in the same trial. 3) If the money is seized or they own restitution then there’s no profit to pay taxes on.
1. In the US, VAT/GST does not exist, so gaining ownership of something does not mean that you have to pay tax because of that.
2. In countries with VAT/GST, it is defined as the tax added on top of the value of goods or services provided by the business. This means the business needs to sell the goods and services to you, then you owe the tax. More practically, the business needs to provide an invoice to you that this item has been sold to you, along with the tax incurred. If the item is obtained not via the business selling it to you, then it does not incur VAT/GST.
In NC a drug dealer will get charged with tax evasion. There’s a special tax that’s supposed to be paid and if not then the fines and penalties all go to the cops.
tax evasion involves taxes, so its a pain in the ass. its generally thought of as not worth pursuing unless youre trying to put someone big away, like Capone. Same way RICO charges are pretty rare
because the profit from the crime is taken away. You would be paying tax on income you did not earn.
You can get charged for tax evasion, but that is usually only when they don’t have anything else to get you on (and that is only for past tax years and not the current one). Typically when the federal government is after you and not the state one.
Besides what everyone else has said, the practicality is that you go from a simple drug dealer (i.e. arrested in possession of drugs) which is pretty easy to address to now you have added a complicated tax element on top of it. This makes a.) conviction more difficult and b.) the jury potentially more sympathetic to these being “manufactured charges”.
TL;DR: DAs are not equipped to go after tax evasion and this will prolong trials and reduce the probability of conviction.
There are a couple of reasons.
1) At the federal level, most cases are settled through plea bargains. So the federal government will draw up a long list of charges against a defendant and negotiate with them to plead guilty to a charge or a subset of charges to end the case. So in those cases, tax evasion charges might be brought but dropped as part of the plea bargain.
2) Difficulty to prove tax evasion. In your example of a small scale drug dealer, the big crime is obviously selling the drugs. If there’s a firearm involved, that’s another charge that can be tacked on to the defendant. You can have an informant or an undercover make a purchase from the drug dealer, establishing that they are, in fact, selling illegal drugs. But it’s much more difficult to prove how much that drug dealer was retaining from each sale and not reporting as income. Since it’s a primarily cash business, it’s hard to document how much is getting kicked up to the drug distributor who supplies the dealer and how much the dealer keeps. Or in a smash-and-grab case, again, the theft is the big charge. Proving they generated income from the sales and didn’t report it is much more challenging.
3) Lack of sexiness – Some prosecutors are going to be worried that a jury might grab onto a less “sexy” charge of tax evasion rather than a drug dealing charge to convict the defendant of something, even if it’s not the top count. And a lot of accounting talk (necessary to show that the defendant had income, declared some of it, paid taxes on some of it, and evaded taxes on another portion) is putting the jurors into “my eyes glaze over” territory.
Sometimes it is done. Watch the movie “Molly’s Game”.
They charged her with money laundering and tax evasion on the money. And at the same time seized her money so that she couldn’t pay the tax on the seized money.
But they only do it for big crimes that they charge years later. Mostly because it takes about a year before tax on stolen money is due.
Jurisdiction and the difference between a civil case and a criminal case.
A county cannot prosecute for state level tax evasion, and a state cannot prosecute for federal tax evasion.
In most places, taxes are a civil offense. Civil trials to do not happen the same way or in the same courtroom as criminal trials.
It is a ton more work and effort to figure out and have evidence that the person sold $5,000 and reported nothing in taxes, then it is to say the person was caught selling something illegally and providing evidence.
To prove the amount someone has failed to pay in taxes would require evidence of every transaction. (most criminals do not keep a ledger of their illicit deals)
Because they are not worth pursuing.
The DA has to be as sure as possible when they go to court they will win.
So they pick the crime that will bring the most jail time and ignore or bargin away lesser charges to make their best case.
Most tax code violations result in a fine. Which your average criminal can’t and won’t every pay. Not long jail time.
There’s typically a delay between when income is received and when taxes are owed. For a one time thing, this is usually at least 4 months in the US (taxes for the year are due the following April). For recurring/predictable income, you typically make a payment every quarter, but again with some delay between when the quarter ends and when taxes are due.
So if someone is arrested seconds or hours after a smash-and-grab, how do you prove that they did not *intend* to pay taxes on that income? By the time the taxes are due, they’ve already had the income taken away, and the case may be over anyway.
It’s possible to get large or complex criminal organizations on tax evasion charges, but it requires either that they keep records of income collected years ago (cue Stringer Bell’s admonishment about “taking notes on a criminal conspiracy”) or that you have an investigation that lasts long enough to document that income yourself.
It adds complexity to the case. You don’t actually have to report the source of all your income, So it’s not always clear whether a specific piece of income was reported or not – depending on the facts the state might have to go through the person’s whole tax record and review all of the income they claimed. This still might be easy under a lot of circumstances in a lot of states (as someone else mentioned, federal tax law would be a separate case from most crimes which are typically state level), but it’s still way more work than just getting a witness to say “yeah he pointed a gun at me and emptied the cash register.” For not necessarily any real benefit.
There’s lots of states and local municipalities that have “taxes” on drugs so they can have extra charges to bring on dealers if needed.
I’m told it’s frequently there so they can use it if other charges are weaker or it’s one of those “everyone knows you’re guilty of worse crimes but there’s no evidence, so we’ll use this where there is evidence”.
Every time I’ve heard of these types of laws, I’ve also heard the urban legends of the “one guy who got arrested and charged for this, but he had actually been paying the tax so they had to let him off”
Because it’s not worth the time to investigate and prosecute most of the time. You’d need to prove how much income they made from the drug dealing to figure out how much tax loss there was. That’s unnecessarily complicated when they can just charge you with drug trafficking and know they’ll send your ass to prison for however many years. Prosecutors goal is to get you off the street and they’ll take the path of least resistance to get there.
If you’re someone like Al Capone where we’re talking billions of dollars in untaxed income, sure. But for Steve the neighborhood weed man, nah.
Bruh: **You’re going in the wrong direction.** Billionaires are the truest form of human cancer in society. The vast majority of humans can’t even comprehend conceptually in their own minds, what a billion dollars is. There is absolutely nothing a working person can perform that earns him/her a billion. A few million? Perhaps and maybe. I’d say 3 million max….And I’m being VERY generous
Put another way… Your question goes after the VAST majority of people earning less than 200K a year. Sadly, most don’t even earn 90K. And wages aren’t matching productivity at all. Productivity is at an all time high… We as a society are simply better at creating, marketing, advertising ,manufacturing, and providing services than ever before. Yet, the current Federal Minimum wage is still at $7.25 per hour and it should be (adjusting for productivity scalability) closer to $50-$58 per hour. Strange world we live in. LOTS of greedy people and society is simply a reflection of that. Think of it as “trickle down greed”. Prices should actually go down in a healthy & grounded society but laws are put in place that foster the human component of the emotion of greed being a virtue, through binding laws like fiduciary’s in which people are solely responsible for doing whatever it takes to make quarterly profits for shareholders by most (and any) means necessary. This is one of the reasons why our food supply isn’t really “food” per say but product based. We add cheaper inferior chemicals to all sorts of things, make it look nice and fancy, get an athlete or entertainer to say that it’s good for us, and call that “food”
Often times a bunch of charges gets slapped on and the defendant pleas guilty to a “main charge” (sometimes its a less severe charge like misdemeanor instead of felony) and everything else gets dropped. It increases the conviction rate for the prosecution and the defendant gets a lighter sentence instead of the book thrown at them.
For example a robbery:
Armed robbery, possession of weapon during felony, assault with a deadly weapon, terroristic threatening, vandalism, speeding in the getaway car, reckless driving, resisting arrest, possession of drugs found in the car, etc. Guy pleas guilty and only gets the robbery and gun charge, everything else dropped.
There’s actually you can fill out on your tax forms to include “illegal income”. The IRS has explicitly stated that you should.
Because it’s too hard to come up with a valid verifiable income they are avoiding paying taxes on.
At best, it’s just a guess as to how much they owe and aren’t paying. This just won’t stand up in a court of law. It’s not like small time crooks are keeping books of their income and expenses.
And spending the resources to try to find verifiable evidence isn’t going to be worth it in the end.
Because of the difference in legal systems, plus the need to prove taxes were not paid.
Crimes like burglary and robbery are state crimes.
Income tax evasion is a federal crime (unless your state has an income tax, in which case the state can charge you for failing to pay state tax).
So separate trials.
Also the government would have to prove (you are innocent until proven guilty) that you did not pay quarterly taxes on your criminal earnings, and if you were caught before such payments were due they couldn’t charge you….
It’s more hassle than it’s worth, unless we are talking about an Al Capone type case where it’s years of untaxed earnings AND you have copies of his accounting records showing that he didn’t pay…..
Governments generally steal money made illegally from the convict if they can these days, so that’s effectively a 100% tax rate.
Most “white collar” crimes, especially federal ones, have very strict and difficult to meet criminal intent requirements included into the criminal statute. So it’s essentially the same reason that most tax evasion is not charged criminally. It’s complex and difficult to obtain the evidence of criminal intent sufficient to meet the proof standards.
I have laundered money before. Forgot to check pockets and found a very clean bank note later
Well there wouldn’t be any sales tax since nothing was technically sold and no gift tax because it wasn’t given to you and then theyvwpuld have to find out how much you actually sold it for to know exactly how much tax you should have paid. Then you would have to give them time in case they DUD pay at the end of the year. After all of that, that amount would have to reach a certain threshold before the law would start. Basically it’s not worth it. The leg work needed to get the evidence would cost way more than the fine would be and that’s if it would stick.
Tax evasion was famously used to jail Al Capone, who had (also famously) committed many, many other high-profile crimes in Chicago in the ‘30sz
Because if you report your profits from crimes on your taxes then you aren’t evading taxes. Conversely if the crime is unsuccessful or the money is taken away from you as evidence then you wont have to report it on your taxes cause you didn’t get to keep it.