I am doing a paper on tax evasion and fraud. Does anyone know how much unclaimed cash can be deposited?

Question

Say Paul deposits $600 per week in cash. If he does not claim any of that on taxes, will he get audited? Michaels other income is somewhere in the range of 10-12,000 per year, plus the other 600 per week (31k). What would be Paul's best way to claim as little as possible? Will he get audited for these actions at any point? Any help would be great as the deadline on this paper is approaching quickly.

Answer 1

Cash deposits are not monitored unless they exceed the $10,000 money laundering limit.

I believe the IRS has a reward program to help catch people like Paul.

Answer 2

Different techniques catch different things.

Eventually Paul will get audited.  The IRS will ask for a copy of his bank statement and will ask him to show the paper trail for every deposit.  When he can't show that the $600/week is not income, they will add all of it back to his schedule C.  This will substantially increase his income, his tax, penalties, interest and he'll be hit with a fraud penalty.  Paul can't even breathe a sign of relief at 3 or 6 years after he files as there is no statute on fraud.

Even if Paul never deposits the money, at some point he'll start spending it.  The IRS has what is called a lifestyle audit.  Even here the $10,000 fincen reports will do him in.  If Paul wants to pay cash for his house, car, rent, etc, the people he pays will turn him in.