Taxing Illegal Income: Long After Al Capone, Charges Still Occur
It’s been 85 years since the IRS took down Al Capone. Other law enforcement agencies had sought to prosecute the famed gangster for murder, extortion and host of other crimes. But it was the IRS that put him in prison, on a charge of tax evasion.
After so long, the Capone case might seem as if it has passed into legend. But prosecutions for willful intent to evade taxes on illegally obtained income still occur.
In this post, we will inform you about one of them.
Last July, a federal judge in Pennsylvania sentenced the former manager of a credit union to two years in prison for embezzlement and willful tax evasion. The man had embezzled more than $250,000 from the credit union, between the years 2010 and 2013.
Embezzlement only offense to which the man pleaded guilty. He also pleaded guilty to failing to include the embezzled income when filing his federal taxes.
The amount of taxes for the embezzled income for the affected years was $62,074. In the sentencing order, the judge therefore included a restitution requirement for that amount.
A case like this obviously poses the question: Despite the requirement to do so, why would someone actually report illegal income? Isn’t that like asking to be charged with a crime because the IRS would share the disclosure about illegal income with its criminal investigation (CI) division or law enforcement agencies?
The answer is that information on tax returns is generally supposed to be confidential. At least that is the theory. Whether it is true in practice is another matter.
