Collecting sales tax...and keeping it. How serious?

Coffee_Dude

My wife and I make our living with a coffee truck and do the festival circuit. We have an artist friend who hits many of the same venues with her arts and crafts booth. Recently, she admitted to us that she has been collecting sales tax on her wares for over 20 years and...has simply kept the money. :eek: She's very low-income, and probably rationalizes this by the fact that she just needs the money. She has always been kind to us, we like her and of course we have no intention of "turning her in". But, she is wracked with worry about what will happen if the IRS catches up to her.

How much trouble could she be in? How serious is this?

PlutoinCapricorn

Sales tax? IRS? This is a site for people in the UK!

In any case, what we advise on here is that it is best to own up and pay whatever is due: you may be able to negotiate a settlement and perhaps if the income is low not much may be due anyway. Best Google for US tax information.

Coffee_Dude

PlutoinCapricorn wrote: »

Sales tax? IRS? This is a site for people in the UK!

I had no idea. The site has a .com address, not .uk . I did not see anything during registration that this was a "site for UK people only". No need to be so rude.

In any case, what we advise on here is that it is best to own up and pay whatever is due: you may be able to negotiate a settlement and perhaps if the income is low not much may be due anyway. Best Google for US tax information.

Obviously, I googled it. Did not find the answer. That''s why I sought out and posted on a financial forum.

olly300

Coffee_Dude wrote: »

I had no idea. The site has a .com address, not .uk . I did not see anything during registration that this was a "site for UK people only".

Unfortunately you have learnt the hard way that .com can mean a site aimed at any nationality.

Coffee_Dude wrote: »

No need to be so rude.

The poster isn't being rude.

As you can split your quotes I'm surprised you didn't click around and check it was a US site before posting.

There are a few financial sites (mainly business/accountancy ones) that I've found that are .com and aimed at a UK audience.

Coffee_Dude wrote: »

Obviously, I googled it. Did not find the answer. That''s why I sought out and posted on a financial forum.

Well you know where to come to save money if you move to the UK.

PlutoinCapricorn

There was no intention of being rude: it was an immediate reaction to some 'alien' terms at the end of a very long, tiring day!

I agree that it might be useful if the registration section made it clear that this site contains primarily UK financial information. Some of the MSE advertisements at the side do have £ signs in them, and there are some references to credit cards, which I think are "charge cards" in the US.

Many new joiners spend some time reading posts before registering and making their first post, and looking at the tax section would have highlighted many references to HMRC, with amounts given in pounds sterling.

Some suggestions given here apply everywhere: many people have come on and said that they had not paid tax for many years, and they are always advised to confess and pay what is due.

Sambucus_Nigra

Coffee_Dude wrote: »

She has always been kind to us, we like her and of course we have no intention of "turning her in". But, she is wracked with worry about what will happen if the IRS catches up to her.

How much trouble could she be in? How serious is this?

Hi Coffee Dude.

Nice job...I'm a little bit jealous of you.

I suspect that the IRS would not be as kind to her as she has been to you if indeed they catch up with her. In answer, it is very serious as I am sure you are aware.

Much like the others, my advice would be to come clean and work out terms to pay back the sales tax to the IRS. Hopefully she has books/records to look back on.

Not sure whether there is a time allowed [last 3 years], or whether there is a 'come clean today and we will forget about the past' clause with the IRS but it would be worth doing some digging over there to check for her.

Coffee_Dude

Sambucus_Nigra wrote: »

Hi Coffee Dude.

Nice job...I'm a little bit jealous of you.

I suspect that the IRS would not be as kind to her as she has been to you if indeed they catch up with her. In answer, it is very serious as I am sure you are aware.

Much like the others, my advice would be to come clean and work out terms to pay back the sales tax to the IRS. Hopefully she has books/records to look back on.

Not sure whether there is a time allowed [last 3 years], or whether there is a 'come clean today and we will forget about the past' clause with the IRS but it would be worth doing some digging over there to check for her.

Thanks. We feel there is zero chance of her "owning up" or "coming clean". She's so low-income she practically lives in her car. Prob makes about 10,000 USD per year, so that's 200,000 of unreported income over 20 years, PLUS the prob 20,000 of sales tax she kept.

I have googled extensively, the IRS is very vague about penalties. I'm just personally curious if this is actually a jail-able offense, or if she'll just have to pony up and pay it with penalties and interest. In either case, she isn't going to act...I feel sorry for her losing sleep worry about this, but it's her own fault.

Cook_County

Coffee_Dude wrote: »

Thanks. We feel there is zero chance of her "owning up" or "coming clean". She's so low-income she practically lives in her car. Prob makes about 10,000 USD per year, so that's 200,000 of unreported income over 20 years, PLUS the prob 20,000 of sales tax she kept.

I have googled extensively, the IRS is very vague about penalties. I'm just personally curious if this is actually a jail-able offense, or if she'll just have to pony up and pay it with penalties and interest. In either case, she isn't going to act...I feel sorry for her losing sleep worry about this, but it's her own fault.

The IRS has a spendid whistleblower initiative so they will pay you a handsome reward for turning in this tax cheat.

Coffee_Dude

Cook_County wrote: »

The IRS has a spendid whistleblower initiative so they will pay you a handsome reward for turning in this tax cheat.

No. She's our friend.

cheerfulcat

Hi there, Coffee Dude,

You could try asking your question on the Motley Fool's US site.

PlutoinCapricorn

It seems very serious indeed if you are caught:

http://www.tampabay.com/news/publicsafety/crime/zephyrhills-restaurateur-accused-of-keeping-sales-tax/1179917