Illegal Activities Must Be Reported on Federal Taxes Thanks to Al Capone | OPINION

OPINION | The opinions expressed in this article are that of the writer and may not necessarily reflect those of Tatum Report LLC

As if Americans didn’t have enough to be skeptical about, the internet has gone crazy over a screenshot snippet from the IRS website.

I’m going to assume you know who the IRS is, but I’ll explain in case you don’t. The Internal Revenue Service is responsible for collecting our federal income taxes, which are then spent on things our Congress votes on and our President Brandon approves, in a nutshell.

So when this image began to circulate, it quickly went viral.

And it’s completely real.

It had me wondering what else I might find, so I took to the IRS website to find out. 

There are some helpful tidbits, like how to get an automatic six-month extension on filing your taxes. 

There is also an independent organization within the IRS, an entire department dedicated to us, the taxpayer. A free service whose “job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.”

Further digging revealed that usurious interest must also be reported, which is interest charged at an illegal rate. “This is taxable as interest unless state law automatically changes it to a payment on the principal,” the website reads.

But don’t worry, you don’t have to report your illegal bribes or kickbacks.

Why? Because they are explicitly illegal. They even have their own dedicated section in chapter 11 of Pub. 535.

Political contributions and lobbying expenses are also on the Nondeductible Expenses list, as are wristwatches.

Sorry boys, that Rolex is not tax-deductible according to this list!

Embezzlement made the no-no list in a passive way: it only appears in the Index towards the end of the page. 

And it points right back to where we started: illegal activities must be reported.

Come on, snitch on yourself! Then there are no stitches. That’s the loophole! 

Is someone really going to tell on themselves and wonder why the FBI shows up at their door 4 hours after submitting their taxes online? 

In reality, your taxes are private and cannot be used to incriminate you — unless you don’t pay them. The IRS is legally bound to tax return secrecy unless terrorism is involved or a court order requires a release of your information.

Otherwise, it must look the other way and pretend that illegal activities are just like every other taxable income.

Just like other government agencies, that doesn’t mean it will.

Joseph Henchman, vice president of legal and state projects at the Tax Foundation, said, “The IRS would most certainly immediately report it to law enforcement.”

The bigger question, though, is: Why are they specifically addressing these topics?

I’ll tell you why — Al Capone, aka Scarface, the notorious gangster from the 1920s.

According to the FBI, “In the ‘roaring twenties,’ he ruled an empire of crime in the Windy City: gambling, prostitution, bootlegging, bribery, narcotics trafficking, robbery, ‘protection’ rackets, and murder. And it seemed that law enforcement couldn’t touch him.”

Prohibition was a real thing, and Capone was instrumental in the black market for booze. He’d even boast about his ability to evade authorities, which didn’t sit well with them.

By the mid-1920s, Capone was reportedly taking home nearly $60 million annually ($878 million in today’s dollars), and his wealth continued to grow, reportedly topping $100 million ($1.5 billion in today’s dollars), explained Forbes.

Perhaps it’s because Capone once said, “They can’t collect taxes from illegal money.” That gave authorities a hint on how to finally catch the notorious gangster and put him away for good.

They could not catch him on anything significant otherwise, so they devised a plan: Report your illegal activities, or we’ll arrest you for tax evasion.

The authorities played the paperwork game as the Supreme Court changed the law on May 16, 1927: gains from illicit traffic of liquor became subject to income tax.

Meanwhile, tax sleuth George Johnson was busy shuffling through tax paperwork to take down Capone and his minions. 

It worked. 

Capone was indicted on 22 counts of federal income tax evasion, along with his brother, Ralph, Jake “Greasy Thumb” Guzik, Frank Nitti, and others.

Capone was sentenced to 11 years in prison, serving a good portion of it in the now-defunct, infamous San Francisco prison, Alcatraz.

In today’s world, criminals take advantage of this loophole to avoid paying additional fines and retribution after being caught.

With the government revealing corruption on more levels than we care to admit, becoming an informed citizen is an act of rebellion.

In that vein, it’s time to rebel.

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