Just wanted to clarify that this part isn't actually true. You can declare illegal earnings on your tax forms and the IRS cannot initiate sharing this with law enforcement agencies. Law enforcement agencies may request your tax returns as part of an investigation, but the IRS can't be the initial tip and the IRS can't share of its own volition. Technically, it is illegal NOT to declare embezzlement, prostitution, or proceeds from illegal drug sales on your tax returns, for example. You can even take business deductions on expenses related to your "illegal activities". Some states even allow you to pre-buy tax stamps to put on illegal drugs that you sell so you can prove the taxes were paid.






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