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Welcome to DOR's Tax Talk Blog

Tax Talk is a weekly blog published each Wednesday by the Indiana Department of Revenue (DOR) that discusses tax tips, DOR programs, and helpful information for tax preparers. During tax season blogs are posted on both Mondays and Wednesdays. 

 

Most Recent Blog Posts

Scammer? Thief? Involved in Illegal Activity? Crazy as it sounds, claiming this on your income tax form is required!

July 18, 2018

Here’s a scenario for you: you’ve been selling stolen items to individuals and receiving income. You’re pretty good at it; in fact you made over $100,000 last year alone. Now it’s tax time, and guess what? That income is taxable!

You probably think this illegal activity isn’t taxed and you definitely don’t want to report this income to the IRS or DOR. Well, you might not want to report it, but legally it is taxable. On top of that, you might also need to pay sales tax.

Tax Myth #2: Illegal Activity is Not Taxable

Myth Busted: In 1927 the Supreme Court decided income earned by illegal activity is still taxable income. The IRS’s Publication 17 section on "Other Income" has some of the most interesting sources of income you are obligated to report.

So, what types of income does this include?

  • Bribes - If you receive a bribe, include it in your income.
  • Illegal activities - Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on the appropriate form as well as if it is from your self-employment activity.
  • Stolen property - If property is stolen, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.

So what does this mean? When filling out your taxes with DOR, you have to simply report the income that you earned, not specifically how it is or was earned. Any way you earn income, whether legal or not, it is taxable and should be reported. Remember this tip: if you slip up on reporting taxes on your illegal activity, Al Capone was caught for tax evasion, not murder.

 

Online Retailers Offered Program to Waive Penalties While Paying Past-Due Taxes

 

July 11, 2018

Are you an out-of-state retailer that sells to Indiana customers but has inventory in a third-party Indiana warehouse? If so, DOR has a one-time voluntary disclosure program that may interest you. The program offers certain retailers, that are not currently in compliance with Indiana tax laws, the opportunity to enter into an agreement to fulfill their tax obligations.

So, what does this mean? Well, many of these retailers are required to pay sales, use, and/or income taxes, but may not have been aware of their tax obligation(s). DOR is working to get all of these retailers in compliance by waiving penalties normally associated with non-filers.

In order to qualify for this program, retailers must meet the following qualifications:

Have inventory located in a third-party Indiana warehouse and sell to Indiana customers

Never filed tax returns in Indiana for the tax type in question

Never registered for the tax type in question

Never been audited or contacted by DOR about the tax type in question

Is not an Indiana resident that has clearly defined sales tax and income tax filing obligations in Indiana

Any retailer approved for this program benefits through a written agreement to decrease the look-back period for taxes owed and an agreement to waive penalties. The retailer also avoids an unplanned audit from occurring.

This special program is in effect until December 31, 2018.

More details on the program and how to apply can be found on the DOR website at www.in.gov/dor/6327.htm.