This might seem surprising, but I think this makes sense. The IRS is out there to collect money, and should be neutral regarding the legality of the source of the money. It's up to the prosecutor to decide if the tax payer did something wrong and prove that.
Take drugs for example. Marijuana is legal is some states and illegal in other states. The IRS is federal and should not care about the legality of weed on a particular state. It's up to the tax payer to figure out if what he is doing is legal.
There is a more concrete reason. The IRS actively defends people who have tax documents used against them in court, because if those documents can be used against them in court you can no longer be compelled to report income, any income, under the fifth amendment.
But how do you reconcile this with parallel construction? Your divulsion of a stream of income may cause suspicion regardless of its legality and even if it is not directly used as evidence. In many cases you have no obligation to help the government with its job, so frankly it seems like income reporting in general may violate the fifth simply because there is no adequate check on police power.
> Shortly after the 1937 Marihuana Tax Act went into effect on October 1, 1937, the Federal Bureau of Narcotics and Denver City police arrested Moses Baca for possession and Samuel Caldwell for dealing. Baca and Caldwell's arrest made them the first marijuana convictions under U.S. federal law for not paying the marijuana tax.
> In 1969 in Leary v. United States, part of the Act was ruled to be unconstitutional as a violation of the Fifth Amendment, since a person seeking the tax stamp would have to incriminate him/herself
Some states still have drug tax stamp laws enacted today.
>> In 1969 in Leary v. United States, part of the Act was ruled to be unconstitutional as a violation of the Fifth Amendment, since a person seeking the tax stamp would have to incriminate him/herself
>Some states still have drug tax stamp laws enacted today.
I was reading about this last night, not knowing about Leary vs. United States. The modern state tax stamp laws seem to get around the court's ruling/interpretation by allowing for the anonymous purchase of the stamps. Before the ruling and the 1970 Controlled Substances Act, the 1937 Marihuana Tax Act required dealers to register and implied their own self-incrimination.
The North Carolina Unauthorized Substance Tax Stamp [0] is one such. I met someone who worked for the Department of Revenue, and to his knowledge, the state has never sold a single one to an actual possessor of an unauthorized substance. Just to philatelists.
> If I purchase stamps will I then be in legal possession of the drugs?
> No, purchasing stamps only fulfills your civil unauthorized substance tax obligation. You will still be in violation of the criminal statues of North Carolina for possessing the drugs.
So what goes wrong with the obvious solution? Treat your tax documents are like a confessional, tax and financial documents found by police are inadmissible in any criminal proceedings (civil is fine), and police aren't allowed to get someone's tax documents from IRS.
> Treat your tax documents are like a confessional, tax and financial documents found by police are inadmissible in any criminal proceedings (civil is fine), and police aren't allowed to get someone's tax documents from IRS.
While the second is perfectly fine, the first makes no sense. The confession is your report to the IRS. What you keep around is your problem and would be fair game, in the same way that the sacramental seal only applies the scope of the sacrament: if you confess, then say what you confessed within the priest's ear outside of confession the sacramental seal is void, to say nothing of writing it in your diary or shouting it from the rooftop.
It’s an interesting end-run around the fifth amendment. What if we passed a law that all criminals are required to keep a logbook of their crimes? Police can’t compel production of the logbook, but it can be used as evidence if found during a lawful search. Any crimes in the logbook will be prosecuted, as will the provable omission of any crimes.
> It’s an interesting end-run around the fifth amendment.
It isn't though. The fifth does not cover the production of incriminating documents (under a subpoena), to say nothing of the document being acquired through other means, except in the case where the production of the document is in and of itself (independent of the contents of the document) incriminating (the "Act of Production" Doctrine).
> What if we passed a law that all criminals are required to keep a logbook of their crimes?
That would be a breach of the fifth as it would legally require self-incrimination. And the only use would be additional charges: if you can't prove the initial crime you can't prove that there was a need for a logbook. So even beyond the fifth I don't think it would stand.
I think the right answer is that the courts should come down hard on parallel construction. It’s perjury and obstruction of justice. No pension for you, agent.
I don't think there's an answer to this. It's easy to start with drug dealing and go to "sure, let them report income and it's prosecutor's problem to prosecute that". But jump to horrific crime X, say murdering people and harvesting their organs. Should someone able to partially launder their profit from doing this?
I'd prefer that drugs use (and all victimless crimes) be legal and that those who do actual bad things have a hard time profiting from those bad things.
In the US, separation of powers is an important concept. I think the reasoning is that if you give parts of the government extra authority beyond what's necessary for them to do their jobs, the damage due to some of them abusing that power in the name of the public good outweighs whatever extra advantage they have in actually serving the public good.
I don't know if this is true in every situation, but the IRS at least seems like an entity we should be wary about giving additional power to, since it already receives so much private personal information about literally everyone in the US.
Take drugs for example. Marijuana is legal is some states and illegal in other states. The IRS is federal and should not care about the legality of weed on a particular state. It's up to the tax payer to figure out if what he is doing is legal.