IIRC this is not IRS policy and requires warrants from federal judges going through IRS legal channels. The rank and file IRS flunkie can go to jail for releasing taxpayer information and would pass the request up the chain to someone who can verify that the warrant is valid. Local cops serving a local IRS office a warrant and demanding a release of taxpayer data would fizzle in short order. The IRS officially could care less how you make your money, as long as you pay the taxes on it, that is their only enforcement mandate. There are parts of the country where selling drugs is legal, there are parts of the country where prostitution is legal, so claiming to own a whorehouse or a marijuana dispensary might rate a giggle from the guy processing your return but does not raise any red flags if you pay your taxes.
If I really get in trouble and they don’t believe me it’s a genii, I have them and my lawyer stake out my dresser on the 15th while I am verifiably away someplace. How are they going to explain the money got there?
You know, i wouldn’t be too freaking quick to tell a bunch a people about your magic moneyf drawer unless you think it’s beyond belief an IRS guy would murder you for it.
I would firstly fly to Vegas and throw some money around, such that people take notice. When questioned By auditors I’d tell them I went to Vegas and fell in love with gambling. Turns out I’m pretty damn good at it too! Then I’d proudly announce I’ve moved up to online gambling and betting the ponies. And I kick ass at that too, I can’t believe my luck.
I’d be wide eyed and enthusiastic! Tell them I intend to milk this lucky streak for all it’s worth, as long as it lasts!
Resist all kind hearted attempts to wise you up, to invest wisely etc. That first audit, the accountants are going to leave laughing and smirking to themselves and wondering how long till you lose your shirt.
Then I’d ride that reputation for the next however many years. I’d make sure every year I was in Vegas a few times, actually gambling, large amounts so as to get noticed. Monaco, Hong Kong, etc, etc. On my travels I’d be sure to stop by lots of places that have casinos.
How are they going to prove I’m NOT gambling? As long as I’m declaring it, I’m not sure they’ll give a shit.
If they are watching you, they will see that you are collecting that money from your dresser drawer. When they come to seize your assets, they are going to take that dresser. Then what are you going to do?
See remark above.
Good fucking luck, these days, trying to find a bank that will accept large amounts of cash any more.
This is how to do it. $50,000 a month is plenty to hire a lawyer and make all the problems go away. Civil Forfeiture? Who cares, I’ll have another $50,000 next month.
Yeah. And even if you have the gift tax, you have almost 9 years of this before you hit the lifetime limit.
You could marry the genie. :dubious: But then he’s probably not a US citizen, so he is subject to an exclusion, albeit different than a non-related individual.
As said, the IRS cares about their cut, and don’t do their own law enforcement, so probably won’t listen to stories much. But I’d probably not mention online gambling.
I didn’t work in a bank “these days,” but recently enough. I took in that much cash all the time. It either gets put in the cash dispenser, or bagged and sent off at the end of the day. If I “possessed” over $50,000 though (as in my inventory) that would require me to immediately “sell” it to the bank. A minor hassle but not a rare occurrence.
A bigger problem is if a customer were to ask for a huge cash withdrawal as we normally didn’t have hundreds of thousands on hand unless someone requested it (a local check cashing place did this frequently). But $50,000 in one day to one customer? You’d just have to wait for us to gather it.
I think you guys are making this too complex. The genie money would just be taxed as gross income under Internal Revenue Code section 61.
Also known as a Currency Transaction Report (CTR). The same thing the banks magically file for cash transactions exceeding $10,000.
As there is no legal precedent for “magical genie money” the biggest issue (as others have pointed out) seems to be verifying the legitimacy of the money, rather than determining the taxes on it.
I’d hide he cash well, and tell the IRS that the informant from the genie is bullshitting them. Tthe burden is on the IRS to prove that you received the cash, and they have no tangible evidence that stand any scrutiny absent their delivery of a testifying agent or certifying documents from a credible sourse – ergo, they know the source of the funds, and concomitantly, the particulars. Which means it is public record, revealed though court documents, and you can find out , too.
If the IRS says “We have sources in Geniedom”, just say Tell it to the judge.
The genie is going to put the money in ‘your’ drawer. Take yourself and your (carefully guarded) dresser to some place with generous tax laws. Pay your fees to the consulate and reject your citizenship.
If you stay in the US and the IRS declares ‘civil forfeiture’ on your dresser–the dresser committing the crime of creating money, then the dresser is no longer’ your dresser, it’s the IRS’s. I assume when you get a new dresser the genie will fill the drawer with money.
In fact since the word dresser is just a designator, you could take a paper bag write ‘dresser’ on it, take the money out and destroy the bag. Next month–new bag.
If the IRS keeps claiming your money, and acknowledges it’s a mystical source of money, then I assume they will hand it over to the Secret Service as counterfeit since it’s not produced by the US Gov.
I’m actually less interested in the legal implications of this than the mystical ones.
Turn the money over to the police; tell them you found it in your dresser drawer and do not know how it got there. Thirty days later, when you collect the unclaimed property back from the police, head over to your local IRS office and hand them their cut of your found windfall.
Just double checked with mom (28 years at IRS)
Worst case scenario they can and will do a “lifestyle audit” they will assign someone to get an idea of the value of homes/rental rates for the place you live and values of cars, etc. As long as they do not see someone with that 600K a year income living a multi million dollar a year lifestyle, and you are paying taxes on that $600K a year, they will back off. Its fairly easy for them to pull bank accounts and such but as long as your “off the radar” expenditures do not create trackable visible excess spending they will have nothing to go on.
A warrant or court order from local law enforcement would be ignored, police would literally be denied access short of them shooting their way in (and IRS service centers have their own armed security contingent as well as FBI details at many service centers.) Thats not even counting armed revenue officers.
If Police showed up with an arrest warrant for an IRS employee, IRS security will bring them out to the police.
Getting information out of the IRS would only happen via extremely annoying legal channels and even the FBI and DEA sometimes have problems getting federal judges to write warrants to get info out of them so much so that its sometimes easier to do their own legwork/research. Getting caught for releasing taxpayer info without permission (say an IRS employee has a friend that is a cop and sneaks info to them) would land an IRS employee and quite likely the cop in federal prison.
You’re going to do this every single month? :dubious: Once is fine, but if you keep it up, they’re going to get suspicious that you’re laundering drug money. At some point they will just start confiscating it under asset forfeiture laws.
Moreover, what is the point of going to the police with it in the first place? That’s an upstanding thing to do when you actually find large piles of cash of unknown provenance, and you want to give its rightful owner a chance to reclaim it. But when you know the cash is yours, well…it’s yours. There’s nothing to be gained by letting the cops hang onto it for a while.
I dunno. I think I’d handle this differently.
First, retain a good lawyer who’s going to help you set everything up the right way.
Second, tell a reporter and a police officer that you’ve got a strange situation in your house on the fifteenth of the month. If necessary, pull strings to convince them to come watch your dresser drawer. Set up webcams on the drawer. Invite a skeptic or two to watch.
Third, BING! money appears.
Fourth, allow skeptics to investigate for any mechanism by which the money could appear.
Hopefully, by keeping several parties publicly involved, you can avoid IRS shenanigans or police shenanigans. This will become public proof of genies and CHANGE THE WORLD!!!11!
The problem with keeping all the cash hidden, is how do you spend it? Yes, it is up to the IRS to prove that you got all this income. But when you start spending hundreds of thousands of dollars in cash, that’s obvious.
This is the problem that organized crime deals with all the time. Yes, you’ve got giant stacks of cash. But that dirty cash is worth a lot less than laundered money in a bank account. I can assure you that you’re not going to be able to take a suitcase full of $100 bills and buy a house with it.
And you absolutely can deposit thousands and thousands of dollars worth of cash. You just can’t do it without the bank reporting the giant cash deposit to law enforcement. Plenty of legitimate businesses handle that much cash money every day without problems. Again, the reason drug dealers don’t just take stacks of hundred dollar bills to the bank is that the money was obtained illegally, and when the deposit report is sent to law enforcement alarm bells start going off.
Al Capone was convicted of tax evasion because he lived a lavish lifestyle that could only be supported by a giant income, yet he never reported that income to the IRS. Your $600,000 a year cash income is worthless if you can’t spend it, and you cannot spend that much cash in a year. Yes, you can easily spend a few thousand dollars a month on cash purchases of goods. And this might be a decent upgrade to your lifestyle, but you can’t live as if you had a high six-figure income and not pay taxes on that income.
The usual solution for criminals is to open some sort of business that can expect cash transactions, and claim that you made substantial profits in that business. So you open a vending machine company, and every month claim that your machines took in two or three or four times as much cash as they actually made. It doesn’t matter that the vending machine company loses money because the purpose is to launder the dirty money into legitimate money, the kind you can put in the bank and spend without the IRS getting suspicious.
If you’re spending hundreds of thousands of dollars in cash during a year, and challenge the IRS to prove that you actually spent that money, you’ll find out that it would be very easy for them to do that. Yes when you spend a hundred dollars at the corner grocery store or restaurant there is no record tying your identity to that purchase. But when you’re buying big ticket items like cars and houses and plane tickets and hotel rooms there assuredly is.
Anyway, the point of the hypothetical is not how you could launder that cash. That’s easy, organized criminals do that every day, it’s not an interesting question, and it’s also illegal. The point of the OP is what do you do with this cash and also avoid breaking any laws.
I’m in the camp that says gambling is the way to go.
If it was me, I’d get my $50k into the casino and then expect to lose down to $30k, which I’d cash out, take my W-2G and then head off to the bank.
When the IRS audits me, my records will not show that I started with $50k. My scrupulously kept gambling records will show me starting with $5k and winning my way up to $30k. I’ll make sure I do my gambling in establishments and game types where the casino won’t have sufficient records to disprove anything I’m telling the IRS. (For example, if I’m playing electronic slots, the casino has an electronic record of each transaction. My records won’t match theirs for slots. However, card games probably don’t show as much detail.)
But I already have what I want. Maybe do some reno to my house, buy a newer car, nothing outstanding.
Spend a lot travelling, take your friends!
Think of all the charities you could help!
Well, just don’t spend it all. The great thing about wealth is that you CAN do what you like, not that you MUST. Live a comfortable lifestyle, enjoy tghe financial security, and use the rest to do some good work. Donate it anonymously to a worthwhile charity. Or do what the Koch Brothers do – spend millions buying your favorite scoundrel into public office, with untraceable political donations, which will become even easier now that the government is made up of people who got there that way themselves.
Or, you know, you can just declare it all as income and pay tax on it, and probably still squeak by on what is left after taxes.
Man, I always wanted 1 million dollars! I could call James Randi, set up a Paranormal Challenge! Of course, what with our conflicting schedules, it might take over a year to set up, but still, within 20 months I’d be exactly $1,000,000 richer thanks to the Challenge!