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Thread: Theoretical Question

  1. #1
    Veteran Member rain's Avatar
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    Default Theoretical Question

    THEORETICALLY,

    say a stripper made 300 dollars per shift they worked.

    however, in their "records" they recorded that they made 200, deposited exactly 100 in their checking and 100 in a savings account, and then put the other 100 towards disposable items like toiletries, groceries, gifts for family, etc.?

    then they declared 200 a shift. (just an example)

    Seems easy to get away with. Any thoughts?
    Last edited by rain; 10-24-2005 at 05:08 PM.

  2. #2
    God/dess FBR's Avatar
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    Default Re: Theoretical Question

    The Libertarian part of me says more power to you for being able to hide your income but the more persisitent part of me that pays 60K of his 240K gross income feels you are feeloading to some extent.

    FBR
    Once again I have embraced my addiction and have put off the moral dilemma to another day.

  3. #3
    Veteran Member rain's Avatar
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    Default Re: Theoretical Question

    You didn't see the first word: THEORETICALLY!
    I haven't paid any taxes yet (been working a few months) but after reading all the horror stories of audits etc. or what COULD happen...I will, believe me. I was just wondering if any other dancers just claimed a little bit less than they earned.

    At most restaurants I've worked at the management encouraged us to declare the least amount of tips we could. Just wondering if strippers did this, too!

    I wonder if the money some of my patrons at the strip club spend on me comes from non-declared income...just a thought...

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    Senior Member DanMorris95156's Avatar
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    Default Re: Theoretical Question

    The source of the money you receive from patrons is irrelevant to your question. The issue is what are the ethical and legal challenges to skimming 1/3rd of the income and not declaring it.

    Well - as a CPA I must say you shouldn't do that - and if I knew a customer of mine did that I would have to either have the return corrected or have the customer change accountants. Ok - enough with the squeeky clean follow the rules perspective.

    I am certain that there are substantial numbers of cash based businesses that skim money and the government knows about it (why do you think all of those 1099's are required to be filed - it isn't for the payor's benefit). And although the government knows about it - they attempt to limit the skimming by the treat of prosecution or civil action.

    The risk is statistically low. However.....and this is a big however.......the penalty for being caught can be staggering - most likely not criminal unless the amount of tax evaded exceeds $10k/year (juries don't like to send people to jail for ripping the taxman off by $500 - but don't count on that). However a civil action is to be avoided when possible. Accordingly, the risk/reward ratio may not be there.

    A taxpayer is far better to prepare strategic tax planning and tax projections (these are different terms) ensuring that financial goals are achieved and that cash flow is conserved. Deducting all of the available costs and sheltering remaining income.

    Hope this helps.

    Dan
    Daniel D. Morris, CPA
    [email protected]

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    Senior Member 8TJ's Avatar
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    Default Re: Theoretical Question

    Quote Originally Posted by rain
    THEORETICALLY,

    say a stripper made 300 dollars per shift they worked.

    however, in their "records" they recorded that they made 200,
    deposited exactly
    100 in their checking
    100 in a savings account,
    So for the sake of the discussion we also assume that you do not withdraw from thse accounts? If so, and I am the goverment I would want to know what you used to pay for disposable items like groceries, rent transportation etc????

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    Veteran Member rain's Avatar
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    Default Re: Theoretical Question

    The question of where the money comes from was irrelevant, I was just throwing that out there as sort of a "I wonder how much cash these days is unaccounted for..." silly question.

    I really wasn't planning on skimming on my taxes. I was just wondering if it was a common practice in the strip club world...thanks for all the advice.

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    God/dess VenusGoddess's Avatar
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    Default Re: Theoretical Question

    Honestly, in the whole scheme of things, the IRS most likely will not go after some poor 'schmo for a couple thousand dollars. They're looking at the big money makers of the country.

    Now, aside from that. It seems "simple" that you would be able to "hide" 1/3 of your money. If you work 4 days a week, you are skimming out $400 per week...$1600 per month...$19,200 per year. Sounds a lot different now. The IRS isn't going to know for "fact" that you didn't pay taxes on that money, however, they don't just look at your "claims" and tax returns. They take inventory of every single thing that you own. Car, apt/home, clothing, make-up, furniture, average utility bills, etc, etc, etc. They'll come up with a pretty damn good close monthly figure and decide whether you could "realistically" live on the money you claimed you made. If you are not living "above" the means of what you are claiming, then you will be fine. However, I know of very few people who can do that.

    In THEORY, it may sound like it will work. However, in real life...it WILL work...it'll also work against you.

    As for "how often it is done in the club" statement. There are a lot of dancers who do not report their income, or under-report their incomes. It's very common. However, now that the IRS is going to be having a little more time on their hands...and with all of these Scores "lawsuits" and "hard proof" that dancers, indeed, make at least $1000 every night...they'll be in a lot more shit than they'll want to be.

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    Veteran Member rain's Avatar
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    Default Re: Theoretical Question

    Sounds like it's smart to live by this expression: "Best to play it straight."

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    God/dess montythegeek's Avatar
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    Default Re: Theoretical Question

    Rain,
    8TJ is right. What will set off alarm bells if the IRS ever rune you through the computer based on the 1099 from the interest on the saving account is the inconsistencies. If you report 200/night and it adds up to 800/wk that is $40K per year. You will stand out like a sore thumb if you save $20K per year on an income of $40K.

    Everyone eats, the bills you pay from checking willindicate a lifestyle. If you pay 800/mo rent, $120 heat, 40 cell, 40 cable, 250 car payment, $300 taxes but never buy food, the computer is going to suspect hidden income. You do not have money for gas, incidentals, food, clothes, car repair, starbucks, Christmas presents, etc.. In short people with an income of $40K do not live like that.

    VG, I hate to disagree with you but the IRS likes to make examples of the "little people" because one good news story about an average Joe getting caught scares 1000 average Joes into reporting all their income.

    Now if you had said 300 split 200 to checking/shift, 70 to saving and 30 skimmed you would have a better chance of slipping through the cracks. As a parallel, consider bank robbers. Few get caught for one robbery--they get cocky and say "that was easy". They rob another bank and get away from the bank and decide to go for #3. They now have a pattern and the FBI is knocking on/down their door.

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    Banned Melonie's Avatar
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    Default Re: Theoretical Question

    yes, the big change at the IRS over the last 10 years is the harnessing of computing power and data communications to monitor the 'expenditure' side of the financial equation along with the income side. The IRS already receives automatic reports from state title agencies whenever the title to a house is registered or the title to a car is registered. The IRS already receives automatic reports whenever a large cash transaction takes place (max $10k down to $3k in some states). The IRS already maintains a database for the typical cost of living (food, utilities, sales tax etc.) for every single zip code. And if given half a reason to wonder, the IRS can have a copy of every bank statement, investment account statement, credit card statement with a simple phone call/fax/e-mail request.

    The bottom line here is that someone attempting to 'skim' 1/3 of their income will probably be fine as long as that money stays under the mattress or gets spent on 'toys' or other frivolous things which don't cost a whole lot. However, the minute that the mattress money comes out to serve as a deposit on a house or a down payment on a new car, or is shifted to an investment account or retirement account, the IRS computers are virtually guaranteed to find a shortage of reported income on previous tax returns to explain where that money suddenly came from, and AH-OOH-GAH. This will be even more the case if the 'job code' listed on tax returns corresponds to a 'high risk of underreported income' cash business like cabdriver or waitress or dancer.

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    Banned Melonie's Avatar
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    Default Re: Theoretical Question

    I'll also throw another nasty tidbit out there for consideration. While not highly publicized, recent law changes have legalized the IRS's use of 'bounty hunters' to track down tax cheats ... with the 'bounty hunter' receiving a portion of the previously unpaid tax money in exchange for their services. Thus there are new private companies being/recently formed whose only 'mission in life' is to identify the most likely categories of people cheating on their taxes, to research the likely actual earnings of people cheating on their taxes, and to directly 'tip off' the IRS. Thus if there happens to be a guy talking with you in your club who asks/comments about the amount of money you are making, it's entirely possible that such questions are not pure curiosity. Because of the super-high publicity that the SCORES credit card case continues to receive, and because of the stupid public statements made by some dancers in regard to their earnings, it's pretty much a given that top shelf 'show' clubs like SCORES, Penthouse etc. are going to be pretty high on the bounty hunters' list.

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    God/dess scarlett_vancouver's Avatar
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    Default Re: Theoretical Question

    You will stand out like a sore thumb if you save $20K per year on an income of $40K.
    Which is probably why I'm being audited .

    I live like a pauper and save almost 1/2 my $$...

    Your basic premise seems easy to pull off with a smaller amount. (like $250/50). But I don't see it being beneficial, as you'd have to spend the extra $50 a day on luxuries, and would be costing yourself that much in potential investments and savings. Like, if you instead paid tax on the $50 (so it's now $38, say), that $38 invested will likely be $100+ in 20 years.

    Feature costumes for sale!

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    Veteran Member rain's Avatar
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    Default Re: Theoretical Question

    Melonie, I really enjoy your intelligent responses. Thank you.

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    Banned Melonie's Avatar
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    Default Re: Theoretical Question

    I appreciate the kind words, but where laws and taxes are concerned I'm "just a dumb blonde with big tits" !

  15. #15
    God/dess montythegeek's Avatar
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    Default Re: Theoretical Question

    While she is blonde and has big xyzqwerty, she is far from dumb. Opionated, maybe, but very, very far from dumb.

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