If you are a criminal, such as a drug dealer, is it actually in your best interest to report your income and pay taxes on it?
He does this for a living.
That means, he can afford a newer car, a decent apartment in a good area and is able to pay his bills and neccesities.
If he doesn't pay taxes, the IRS will sooner or later catch on and want to know how he can afford these things without having a job. Is someone supporting him? Does he have a tax free source of income? What is going on here?
Can you say audit and tax evasion charges?
Is it actually a wise choice for a criminal to file tax returns? Afterall, they don't have to list their criminal enterprise on their tax forms. They can claim they are gambling wins, or there's the fact that tax forms have a specific place to disclose income from an undisclosed source, and Bob can just do that.
1. Is it true that if he pays the maximum amount of taxes that he could be obligated to, and claims no deductions, then he is unlikely to be audited and the IRS is unlikely to care where the money came from?
2. If he does not pay taxes, is it likely that the IRS will catch him before the police do?