First, NO illegalities are planned. The motivation for this question was a novelist wants to pay me (a small amount) for the answer. What he wants is an answer that not only would the average reader think it sounded plausible, but even a financial wiz would think “it could work without the IRS quickly getting a bead on the character.”
The plot involves a character (Let’s call her Kim), who is so poor she is nearly homeless. Fate has it she manages to have bestowed on her a briefcase containing $250,000 US currency. There’s just no way the Feds could ever know she got this money unless she does something stupid as to attract attention to herself.
My first idea is get a safe deposit box and stash cash there. For all the bank knows she’s just storing a fragile family hierloom with little cash value, but great sentimental value. Even if the Feds can find out she rented that safe deposit box, they could have no clue what is in it. If the FBI considers having a safe deposit box enough to start an investigation, they’ve gotta have their hands busy doing stakeouts of everyone who has one.
If she rented a modest one bedroom apartment, and bought a modest value used car, that isn’t conspicuous consumption. Nobody would turn her in with that sort of lifestyle. And even if she isn’t filing taxes, she could have a sugar daddy paying her bills for being his mistress. The IRS has better things to do with their time going after what amounts to a low rent whore.
But stashing cash earns no interest. Any way she could invest such an amount that would be near impossible for the Feds to trace? The first thing that comes to mind is offshore nations with strong bank secrecy laws. Easy to get the money there, and they specifically have strong bank secrecy laws precisely to facilitate hiding funds there. Deposit money there, keep always an adequate amount in a checking account tied to a Visa/Mastercard there, and use that card in the US. The Feds have no way of finding who is the account owner. And with the amounts of the transactions so small, they really don’t hit the radar. Nothing about the amounts of frequency of them that would scream out “likely major international drug smuggler” or such. They amounts would be consistent with a tourist, or legal resident alien. (Say an alien living off an inheritance of $250,000 now living in the US.)
Currently in the US, inheritance tax doesn’t apply to estates under $1,500,000. Thus if Kim has a rich father who left everything he owned in his will, and all he owned was a $1,500,000 bank account when he died, Kim would legally inherit all that cash tax free. Thus here is a scenario that is plausible where she could get this sum of money 100% legal. Thus no mod need feel squeamish about the question.
So alter the question such that Kim, for any reason or no reason at all, wants to make it so the government at any time in the future so they can’t know if she still has any remaining inheritance. Maybe within a week Kim flies off to Vegas and loses it all on the roulette wheel? Quite plausible. In fact I read recently a very large percent of million dollar lotto winners quickly squander the money away. And there are many good reasons for hiding assets. What if Kim in the future gets slammed in a tort lawsuit for $10,000,000? She could just ditch the US forever, move to foreign tax haven, and good luck to the plaintiff to even find where on Earth she is now hiding.
Does she have to stay in the US for any reason? The first thing that crossed my mind was heading off to Brazil or the like. You get a lot more for your money that way, and the IRS can go hang. If it is necessary for her to be in the US, then head for the Turks & Caicos for a year, then return to the US. Use the credit card from a T&C bank, and live it up. As far as the US is concerned, you have no income, and the cash was yours before you entered the country. The “leave the country for a year” dodge is a standard one for rock stars and the like.
Hmm…she’s dirt poor, but of normal intelligence. She’s also only English language literate. However, she could presumably relocate to anywhere the locals would understand US English. She’d definitely want to return to the US. Thus if she could re-enter the US after a year and legally the Feds be damned, she’d likely consider that an OK option. Thus the author to make the story credible would somehow make it impossible to leave the US. (Maybe she has a felony record from years past no foreign country would let her in?)
Discussion of how to accomplish things that are illegal in the United States is not permitted on this board. I ain’t being “squeamish.” I’m just telling you what the rules are.