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by desdiv 1638 days ago
The thought of a kidnapper inquiring about the child's social security number in the ransom note is pretty good dark humor. But I think the IRS has some restrictions on who you can claim as your dependent.

To claim someone as your dependent child, they must be either:

- Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them; or

- Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.

To claim someone as your dependent relative, they must be either:

- Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)

- Your brother, sister, half brother, half sister, stepbrother, or stepsister.

- Your father, mother, grandparent, or other direct ancestor, but not foster parent.

- Your stepfather or stepmother.

- A son or daughter of your brother or sister.

- A son or daughter of your half brother or half sister.

- A brother or sister of your father or mother.

- Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

[0] https://www.irs.gov/publications/p501#en_US_2020_publink1000...

[1] https://www.irs.gov/publications/p501#en_US_2020_publink1000...

2 comments

I'm no tax lawyer but it would seem like a kidnapper wouldn't meet the criteria for having legal custody of a person and wouldn't qualify for any relief of their tax burden. But given that a large number of those type of kidnappers are family members, it's likely they already have the information needed to file them as a dependent (which in the case of a kidnapping, seems like it would be cut and dried tax fraud).

The question that lingers in my mind is if your dependent is kidnapped and gone for too long (but not dead... let's say they're kidnapped on December 31st and returned 366 days later conveniently removing custody for an entire calendar year), are you ineligible to claim them as a dependent while they're missing? Seems like strictly and amorally speaking your financial burde has been lessened and you wouldn't need the tax relief for caring for that person.

>The thought of a kidnapper inquiring about the child's social security number in the ransom note is pretty good dark humor.

lol yeah I'm imagining some skit (or real life situation!) where the kidnapper is calling in to the IRS and explaining the situation to the agent, who dutifully works through the flowchart about which statuses apply when, completely oblivious to the missing child they're dealing with.

And then they just sit there listening in while the kidnapper interrogates the child for the SSN before coming back and reporting that they "can't obtain it", followed by the agent reading off their options.

With that said, not all "kidnappings" in this context are the "masked men/unmarked van" type, I assume you have these same considerations for stuff like "other legal guardian picked up child three days before court authorized them to".

Because you are legally obliged to tell the IRS of this crime they are not allowed to tell the police about it as then telling the IRS would be self incrimination against the 5th amendment.

Though the IRS has other ways to inform the police if they can find anything you didn't tell them

NO

The article described how the SCOTUS in 1927 resolved this question.

>>Manly Sullivan was convicted in 1922 of evading federal taxes on the income he earned through “running illegal whiskey” in violation of the Volstead Act, according to The Mob Museum.

>> A U.S. circuit court of appeals, however, reversed Sullivan’s conviction. It ruled that, while income from illegally trafficking liquor was subject to taxation, the Fifth Amendment to the U.S. Constitution — which protects against self-incrimination — protected Sullivan from declaring that income on his tax returns.

>> But the U.S Supreme Court in 1927 reversed the court’s decision.

>> “We see no reason to doubt the interpretation of the Act, or any reason why the fact that a business is unlawful should exempt it from paying the taxes that, if lawful, it would have to pay,” Justice Oliver Wendell Holmes Jr. wrote in the majority opinion, according to Justia. "

This is what got Al Capone convicted, not his widespread criminal and murderous enterprises, but his tax evasion.

So, yes, you are required to report all illegal income to the IRS. However, you don't need to go into any detail - just say "Self Employment Income = $XX,000,000" for your drug smuggling empire and pay the tax.

There are also, afaik, strict rules for the IRS to firewall this info from criminal (as opposed to tax) prosecutions. The motivation for these rules is to not discourage people from paying tax on all their enterprises.

[[[ obviously not legal advice, only general info, consult your attorney for actual advise, and maybe avoid crimes ]]]

>There are also, afaik, strict rules for the IRS to firewall this info from criminal (as opposed to tax) prosecutions. The motivation for these rules is to not discourage people from paying tax on all their enterprises.

I don't know how well that works in practice, but I feel like if it is used at all in criminal prosecutions then that would still be a 5th Amendment violation. That is, imagine this hypothetical:

- They have evidence you're a head gangster.

- They raid your warehouses and find a set of accounting books showing profits of $17,530,000.

- They subpoena tax records that turn out to have you saying "Misc income: $17,530,000."

- They argue in (criminal) court that, "aha, he must be running a criminal enterprise because his books show the very same income he reported on his tax forms."

There, even though you didn't report it as criminal income, they're still using compelled testimony (legal requirement to report that criminal enterprise income) against you in prosecution of said criminal enterprise.

Again, I don't know what happens in practice, just saying that if they did it like that, that would be a clear 5th Amendment violation.

As much as I'm inclined to agree in theory, the in practice part was settled by SCOTUS in 1927.

Also, if it's any comfort, they wouldn't need to bother with your tax returns. Unexplained deposits and expenditures are often used to convict people of various crimes. So, I'd expect it to be quite an exception for them to bother with upsetting the IRS <-> criminal taxpayer equilibrium.

Hell, it seems pretty routine now for police, TSA, etc. to just find cash and seize it, forcing the owner to defend the legitimacy of the cash in court, as in funding the prosecution of "$12,345.67 vs State of Texas"; yup, you aren't even considered a party, the govt case is setup to be vs the cash pile itself, presumed to be guilty of being illegal proceeds.

Fun Stuff!

That is just not true.

https://www.irs.gov/businesses/small-businesses-self-employe...

It's not like it's a line item on your 1040 "Crime: $4000". It's just self-employed income.