One of my clients a few days ago asked me jokingly–she’s been a client for years, so I know when she’s joking, “If I had a stream of illegal cash income, do I have to declare it on my tax return?” Of course you do–illegal income is just as taxable as legal income. From as far back as Al Capone to others more recently, such as Johnny Ray Taylor, the government has found that crooks who make illegal income tend to also not report that income; sometimes its easier to get the crook for tax evasion than the underlying offense.
Everyone’s heard of Al Capone, but who is Johnny Ray Taylor? Well, Mr. Taylor is a resident of nearby Henderson whose main source of income appears to have been pimping. Indeed, he’s apparently going to soon plead guilty state felony charges of pandering and living off of prostitution. Back in May, Mr. Taylor pled guilty to one count of tax evasion. On Wednesday he was sentenced to 25 months at ClubFed, must make restitution of $117,559 to the IRS (what he earned as a pimp), and will then have three years of supervised release. It is likely that Mr. Taylor will be able to serve his state charges concurrently with his time at ClubFed.