Illegal Gambling Operation Tax Fraud

An Ohio resident was sentenced to two years in prison for her role in defrauding the government. Over the course of  five years, she filed false tax returns and omitted cash income derived as an owner and operator of an illegal gambling business. In addition to her sentence, she is required to pay over $1.1 million to the U.S. government for her previous understated tax liability.

It is important to note that she was not sentenced for her role in operating an illegal gambling business. She was sentenced for falsifying tax returns and failing to report income.

The IRS is not interested in the source of your income, only that it is reported and taxed correctly. Whether it is income from stolen goods or an illegal gambling ring, it must be reported. In certain circumstances, like illegal gambling operations, the IRS allows for certain deductions against this income, even if derived from an illegal source.