IRS Requirement to Report Stolen Property as Income Goes Viral

Several posts displaying the Internal Revenue Service’s (IRS) guideline requiring taxpayers to report stolen goods as income went viral this week, leading to an array of online speculation as to the practical consequences of the requirement as well as references to the recent wave of mass lootings.

The IRS requires U.S. citizens to list goods they stole during the year on their federal income tax returns, something which proved news for many after a series of viral posts set off a Twitter storm on Tuesday.

One post, which received nearly 25,000 likes as of Tuesday night, served as a tongue-in-cheek reminder for taxpayers to report illicit income ahead of the coming tax season, which begins next week.

“Remember to report your income from illegal activities and stolen property to the IRS,” the post reads.

The guideline, however, is no laughing matter. 

Though many appeared to initially regard the screenshot as fake, it is real — as the IRS legally requires stolen property and bribes to be reported as income.

The IRS Publication 17 (2021) guideline states, “If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.”

The publication also says, “[i]f you receive a bribe, include it in your income,” while demanding any unlawful earnings be listed as income.

“Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity,” it reads.

An IRS spokesman confirmed the provisions are on its website but declined to comment further, according to USA Today.

Some were quick to point out the utility of such a clause.

“This is so the IRS can go after people for tax evasion even for stolen goods,” wrote one Twitter user.

“The reason the IRS requires you to declare stolen goods on your tax returns is so that, when you don’t do that, federal prosecutors can nail you on tax evasion even if they can’t nail you on the theft itself,” wrote another.

The matter of reporting unlawfully-gained income to the government has stirred controversy in the past, leading to debate over whether one could be expected to incriminate oneself.  

The U.S. Supreme Court ruled in 1927 that criminals must pay income tax on stolen property, with many having been convicted for tax evasion since, including crime boss Al Capone in 1931.

But that didn’t stop many from musing about the hypothetical implications of such policy.

“Attn: Guy who stole my bike: ‘If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year,’ reads the IRS’ provision for stolen property,” wrote a Twitter user.

“So two days left to return it to me,” he added.

And what about the looting that took place in many cities this year?

During nationwide unrest after the murder of George Floyd in May and June 2020, cities across the country saw widespread looting among what were reported to be the most costly riots in U.S. history.

A recent wave of incidents featured groups of looters converging on shops and making off with loads of stolen goods in organized “smash and grab” raids in cities across the United States.

A recent comic strip called attention to the rampant looting by portraying what appeared to be a looter attempting to return a stolen television but unable to provide a receipt.

Pro-BLM activists have defended looting as a “legitimate” response to “state violence” against minorities and even as a form of reparations.

While some Democrats blamed the pandemic for looting incidents, Republicans have increasingly attributed looting to permissive policies, calls to “defund” the police, and light punishments for criminals.

Follow Joshua Klein on Twitter @JoshuaKlein


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