The biggest misconception about taxes is that they can’t be collected from illegal money. This is a myth, and it is the most prevalent myth about taxes, but it is one that could be easily disproved.
If you’re not caught in a lawless, illegal, and illegal-trusting system, you’re probably not a tax collector. If you are, you’re likely to be a tax collector.
So, if you’re in a legal system and you take in a lot of illegal money, you need to pay taxes to the authorities, or you’re going to get caught and be caught with a lot of illegal money. A smart tax collector will ask for a receipt that shows the amount of money you take in. If you can prove to the tax collectors that you are not doing this legally, they have the power to prosecute you.
The reason we have the “they can’t collect legal taxes from illegal money” tax collection feature is because of the recent Supreme Court case of United States v. Morrison. This ruling made it illegal, in all areas of the US, for anyone to take in illegal money.
When a person is caught with a lot of illegal money, the IRS has a few options. The first and most traditional is to fine them. The second is to take their property. The third is to seize their assets, including their bank account, stocks, and real estate. This last option is the only one that can be taken against a person with no income. The IRS can’t take away assets from a person with no income unless they have legal authority to do so.
This is the thing that keeps me up at night – as we speak, someone in Congress is trying to make it very easy for people to collect federal taxes from illegal money. It is a nightmare! I read a couple of times that the only way someone could be forced to report illegal income to the IRS is with civil suit and a court order from a judge, but the government has not yet given anyone this civil right.
The IRS is legally prohibited from collecting on civil tax debts from people who owe money to the IRS. But don’t worry, that’s not why you are collecting on your income – that is because you are not legally obligated to pay the IRS.
The feds say that the IRS has no authority to collect on civil tax debts, because if the IRS were to collect a civil tax debt, it would violate the Supremacy Clause of the U.S. Constitution’s Declaration of Independence. Even if it did violate the Supremacy Clause, the IRS cannot collect on a civil tax debt unless it has a legal obligation to collect on that debt.
The IRS are a self-important bunch, but they are not immune to the fact that they are a special branch of government. They have a special authority that they are allowed to use in certain circumstances.
In the case of the IRS, they don’t have that special authority. They are not allowed to collect civil taxes from illegal sources, but in the case of the IRS, they are. Even though the U.S. Constitution does not say how the IRS is to enforce its own laws, the IRS are allowed to enforce their own laws by using their authority as a special branch of government.