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Normally I wouldn't lower myself to participate in such a skeevy behavior, but.....
During my (very ugly) divorce I caught my ex paying her lawyer in cash, and him not reporting it as income. I turned them both in, and I know that he was audited, had to reorganize his partnership and pay substantial penalties.
Also, suspecting that someone might be cheating is not the same as knowing that they are cheating and to be able to prove it. You'd have to be darn close to a person to know that they were cheating on their taxes.
I suspect that most reports of tax evasion are done to take revenge for some other slight.
I'd probably have to report several hundred people if I did.
Around here, it's quite common for people from MA with a 6.25% sales tax, to drive up to NH (0% sales tax) to make their big appliance/electronics purchases, and then come back to MA with them. Supposed to be reported as "use tax" when you do your taxes.
I don't know anyone who ever does this....and the state of MA always reports some insanely low number each year from the people that actually do.
Normally I wouldn't lower myself to participate in such a skeevy behavior, but.....
During my (very ugly) divorce I caught my ex paying her lawyer in cash, and him not reporting it as income. I turned them both in, and I know that he was audited, had to reorganize his partnership and pay substantial penalties.
It was very satisfying.
How were you able to get a hold of her lawyer's tax returns in order to know that he didn't claim those "cash payments"? And how do you know he was audited, or know how he had to pay substantial penalties?
The IRS will get them eventually. No need to waste my own time.
Tax evasion seems to be the one crime people can't get away with. Kingpins like Capone and Cohen dabbled in gambling, prostitution, bootlegging, murder...you name it. Yet the only time they spent in prison was due to felony tax evasion charges.[/quote]
Rather funny isn't it? Murder, bootlegging, etc. and the government gets him for tax evasion.
Not really.....problem being with the murders, bootlegging, etc. stuff it was hard to get anyone involved in the operation of those activities (who were lowlifes/criminals/gangsters anyway) to help the govt. prosecute or testify in court against those guys. Most would be terrified (and most would be correct in assuming) they wouldn't live long if they "ratted" out the kingpins or worked with the gov't.
The previous owner of our home rented it out to a family that apparently rarely paid their bills. We got collection calls for years after we moved in even though it was our phone number (I guess it was linked to the address). One day a man called and identified himself as from the IRS. I told him we weren't the so-and-so's and that I didn't know where they moved to, but I did know Mr. So-and-so's father and gave his name and address to the IRS guy.
It has been ten years and we still get random mail, past-due notices... for them.
People tip off for a number of reasons. To be completely honest, most people don't snitch on others because they are good people and are appalled by someone's skirting of the system. The number 1 reason for snitches is easily that someone was a jerk to the snitch. Number 2, self protection from someone that was involved but didn't want to be. Between those two you've got 90% of the cases.
The other issue depends on the type of tax cheated. Some taxes are easy to prove out. The employee who gets their W-2 late, may have an employer that never paid the taxes supposed to be withheld. That hurts the employee at the benefit of the at-fault party, so snitching is more likely. The waiter that doesn't report 100% of their cash tips....nobody has a vested interest in reporting that. The forensics to prove out where the money came and went will be more expensive than the benefit to the IRS.
As the economy moves more towards electronic transactions for everything, cheating on taxes will become more and more difficult. Hence, there's a great deal of investment in creating legal loopholes. Did you sell something overseas? You're supposed to pay tax. Did the money not get back to the US....well, then maybe you don't. (Why Apple has $200B in cash yet borrows to pay dividends).
How about a self-employed person who has a small business. They pay SE Tax and Income Tax. However, if they sell the company to a profit-sharing trust and run it as an ESOP corporation....they pay neither one. Or, there's plenty that will put their self-insured plan in a tax free zone and show the profits from there.
It's whether or not you're big enough to pay for the infrastructure for effective tax planning.
The flip side of the coin is that the authorities have their games to play as well. Using the IRS to bust Capone is a masterful headline. Using the IRS to bust old grandmas that sell homemade cookies is an embarrassment.
And hopefully the IRS stays fair. The CA BOE likes to use the full extent of their teeth and frankly, IMO, conducts punitive audits, with the full extent of guilty until proven innocent. For that manner, someone would have to be fairly heinous for me to report them to the BOE. I'd be more willing to do so to the IRS.
Lots of stuff to consider when you enter the snitching game. Most people wisely avoid it.
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