Would Cheese or Bodie have ever sat down with an accountant?
September 29, 2011 9:53 AM Subscribe
I'm curious about the theoretical tax situations of characters from The Wire.
So, taking as given that The Wire strove for realism, I started wondering about the nuts and bolts about how some of its characters would interact with the IRS in the real world (or, for the flipside, I guess I wonder how the real-world people who live in the world depicted in The Wire interact with the IRS)...
I mean the criminals, of course, and specifically the mid- to lower-level ones. It's a safe bet that Stringer Bell would have some sort of tax dodge set up for himself and Avaon Barksdale (and, presumably the other Barksdales). But what about the guys a level or two down the chain? Would Bodie be filing anything in April, even a return that showed no income? Would they just not bother filing? Or isn't not filing just a way to attract attention to yourself?
And it gets weirder with the Marlo Stanfield organization; Marlo seems like less of a slam-dunk that Stringer Bell to have set up a front (except for the end of the series, of course). I frankly can't imagine Snoop sitting down and filling out a faked 1040.
So, yeah. Love to hear any exposition on how this works in the real world or highly realistic fictional ones.
So, taking as given that The Wire strove for realism, I started wondering about the nuts and bolts about how some of its characters would interact with the IRS in the real world (or, for the flipside, I guess I wonder how the real-world people who live in the world depicted in The Wire interact with the IRS)...
I mean the criminals, of course, and specifically the mid- to lower-level ones. It's a safe bet that Stringer Bell would have some sort of tax dodge set up for himself and Avaon Barksdale (and, presumably the other Barksdales). But what about the guys a level or two down the chain? Would Bodie be filing anything in April, even a return that showed no income? Would they just not bother filing? Or isn't not filing just a way to attract attention to yourself?
And it gets weirder with the Marlo Stanfield organization; Marlo seems like less of a slam-dunk that Stringer Bell to have set up a front (except for the end of the series, of course). I frankly can't imagine Snoop sitting down and filling out a faked 1040.
So, yeah. Love to hear any exposition on how this works in the real world or highly realistic fictional ones.
As far as I recall, wasn't Orlando's club a front for laundering the money that went through Avon's organisation, as well as the site for his office?
posted by Cuppatea at 10:05 AM on September 29, 2011
posted by Cuppatea at 10:05 AM on September 29, 2011
Best answer: No one would bother filing. I know a number of people from that sort of community who don't have SSNs (or at least not legitimate ones), don't have real DLs, have never had a straight job, have never filed taxes, etc..
Of course, some states tried the crack tax.
posted by Ideefixe at 10:05 AM on September 29, 2011
Of course, some states tried the crack tax.
posted by Ideefixe at 10:05 AM on September 29, 2011
Response by poster: I guess I've internalized the idea that if you don't file a return at all, instant IRS-hell is rained down on you just for not filing. Not the case, then?
posted by COBRA! at 10:17 AM on September 29, 2011 [1 favorite]
posted by COBRA! at 10:17 AM on September 29, 2011 [1 favorite]
Best answer: It's kind of a running thing in The Wire (and Homicide: A Year in the Killing Streets) that a taxpayer is a "'real' murder victim, as opposed to a drug dealer or gang member murdered in the course of criminal activity." Which is to say that low-level soldiers and slingers aren't exactly filing tax forms. Also many of these people don't have fixed address, so it's not like the IRS could easy find them. When SPOILER sets up Omar, they do so by staging a "taxpayer" murder, and Bunk is thoroughly surprised.
posted by 2bucksplus at 10:33 AM on September 29, 2011 [2 favorites]
posted by 2bucksplus at 10:33 AM on September 29, 2011 [2 favorites]
Best answer: IRS hell is eventually (though not instantly) rained down on you if you have enough reported income that you're required to file a return and don't. However, if nobody is filing any 1099s or W2s for you, and you have no bank account or property like houses and cars, then you just fit the profile of tens of million of adults in this country who are too poor to need to file taxes, and the IRS has no particular reason to care about you at all.
Most of the legitimate, non-drug dealing people in Bodie's neighborhood probably aren't required to file taxes. Indeed, many of them probably aren't filing even though, if they did, they would get money back (billions of dollars a year of eligible Earned Income Tax Credits go unclaimed) - simply because they don't know how to. The IRS has no particular way of distinguishing people like them from Bodie, and indeed no real incentive to - even if they did somehow successfully identify him and bring a judgement against him, what exactly would they do, garnish his paycheck or have his assets seized?
posted by strangely stunted trees at 10:49 AM on September 29, 2011 [1 favorite]
Most of the legitimate, non-drug dealing people in Bodie's neighborhood probably aren't required to file taxes. Indeed, many of them probably aren't filing even though, if they did, they would get money back (billions of dollars a year of eligible Earned Income Tax Credits go unclaimed) - simply because they don't know how to. The IRS has no particular way of distinguishing people like them from Bodie, and indeed no real incentive to - even if they did somehow successfully identify him and bring a judgement against him, what exactly would they do, garnish his paycheck or have his assets seized?
posted by strangely stunted trees at 10:49 AM on September 29, 2011 [1 favorite]
Best answer: I guess I've internalized the idea that if you don't file a return at all, instant IRS-hell is rained down on you just for not filing. Not the case, then?
Nope. A few things here.
First, there are certain situations where it is entirely permissible not to file a tax return. For example, if you earn little or no money ($9,350 for a single person in 2011), you don't have to file. So the mere fact that you don't file a return is not going to automatically get you in trouble, even if you've filed a return in the past.
Second, the IRS is not exactly the world's most streamlined, efficient organization. Check out the 2010 IRS Data Book. They do an amazing job at what it is that they do, but said job is basically processing 230 million tax returns every year. In 2010, the IRS employed 106,000 people, of which about 46,000 were employed in "Examinations and Collections" (p. 65). That means each examiner needs to process about 5,000 returns a year, or twenty returns a day. This quite clearly doesn't happen. The IRS uses computers to process the vast majority of its returns, and your return only really even gets noticed if there's something wrong with it. The algorithms are pretty good at picking that up, but they aren't perfect, and it can take quite some time for a problem to actually reach the attention of a human being. As in, if you're ever audited, it's probably because someone, somewhere noticed a discrepancy in your return this year, but hey, wouldn't you know it, that exact same discrepancy goes back five years! Time to pay up!
This is especially true if you've never filed a return or don't even have a proper SSN, like many of the characters in The Wire. Do everything in cash, don't have anyone report any income on your behalf, and never file your first tax return, and the IRS probably won't even properly notice that you exist.
Third, the IRS really has better things to do with its time than go after low-level drug dealers like this. If these guys never pay a cent in taxes for their entire lives, the government is likely going to be out, what, maybe a few grand a year? Call it a few hundred grand over their entire lifetimes. But if some accountant at GE miscategorizes an expense or, heaven forbid, accidentally misses a decimal point, that's like ten million dollars right there. The IRS spends a lot more time looking at the tax returns of corporations and people who actually make a decent living than it does lower income people. To the extent that any of these guys are ever prosecuted for tax evasion--and that's one thing the War on Drugs has never really gone into--it's because a prosecutor realized he had something else to throw at them rather than because it was a priority for the IRS.
posted by valkyryn at 10:56 AM on September 29, 2011 [5 favorites]
Nope. A few things here.
First, there are certain situations where it is entirely permissible not to file a tax return. For example, if you earn little or no money ($9,350 for a single person in 2011), you don't have to file. So the mere fact that you don't file a return is not going to automatically get you in trouble, even if you've filed a return in the past.
Second, the IRS is not exactly the world's most streamlined, efficient organization. Check out the 2010 IRS Data Book. They do an amazing job at what it is that they do, but said job is basically processing 230 million tax returns every year. In 2010, the IRS employed 106,000 people, of which about 46,000 were employed in "Examinations and Collections" (p. 65). That means each examiner needs to process about 5,000 returns a year, or twenty returns a day. This quite clearly doesn't happen. The IRS uses computers to process the vast majority of its returns, and your return only really even gets noticed if there's something wrong with it. The algorithms are pretty good at picking that up, but they aren't perfect, and it can take quite some time for a problem to actually reach the attention of a human being. As in, if you're ever audited, it's probably because someone, somewhere noticed a discrepancy in your return this year, but hey, wouldn't you know it, that exact same discrepancy goes back five years! Time to pay up!
This is especially true if you've never filed a return or don't even have a proper SSN, like many of the characters in The Wire. Do everything in cash, don't have anyone report any income on your behalf, and never file your first tax return, and the IRS probably won't even properly notice that you exist.
Third, the IRS really has better things to do with its time than go after low-level drug dealers like this. If these guys never pay a cent in taxes for their entire lives, the government is likely going to be out, what, maybe a few grand a year? Call it a few hundred grand over their entire lifetimes. But if some accountant at GE miscategorizes an expense or, heaven forbid, accidentally misses a decimal point, that's like ten million dollars right there. The IRS spends a lot more time looking at the tax returns of corporations and people who actually make a decent living than it does lower income people. To the extent that any of these guys are ever prosecuted for tax evasion--and that's one thing the War on Drugs has never really gone into--it's because a prosecutor realized he had something else to throw at them rather than because it was a priority for the IRS.
posted by valkyryn at 10:56 AM on September 29, 2011 [5 favorites]
COBRA!: "It's a safe bet that Stringer Bell would have some sort of tax dodge set up for himself"
Wasn't the photocopy shop a tax dodge that Stringer wanted to be run as legitimately as possible? And the condo project was his attempt to go fully legit, but he was hustled by not knowing the political players or how the game worked.
posted by sharkfu at 11:47 AM on September 29, 2011
Wasn't the photocopy shop a tax dodge that Stringer wanted to be run as legitimately as possible? And the condo project was his attempt to go fully legit, but he was hustled by not knowing the political players or how the game worked.
posted by sharkfu at 11:47 AM on September 29, 2011
Sharkfu,
Yea, he was trying to make the condo and photocopy shop legit. I remember him bitching to the people working there about not screwing around/no drug stuff.
I think he was naive to think palming money to politicians would help him. Remember how Avon would always talk about how he didn't know what he was doing, and the whole once a street thug always a street thug?
I think Stringer saw larger pictures, and wanted to get more removed from the street activity after making so much money.
posted by handbanana at 12:20 PM on September 29, 2011
Yea, he was trying to make the condo and photocopy shop legit. I remember him bitching to the people working there about not screwing around/no drug stuff.
I think he was naive to think palming money to politicians would help him. Remember how Avon would always talk about how he didn't know what he was doing, and the whole once a street thug always a street thug?
I think Stringer saw larger pictures, and wanted to get more removed from the street activity after making so much money.
posted by handbanana at 12:20 PM on September 29, 2011
Best answer: I wouldn't entirely discount the idea that the street-level soldiers are unknown to the IRS. In poor neighborhoods there is a great awareness of things like the EIC, and people are known to horse-trade their SSNs to be used as dependents, even if they don't file themselves. In other words, you might be paid $100 as a kickback so your aunt can claim you and get $500 to $1000 of her legitimate taxes back. There are also things like one-time education credits that are targeted.
It may also be necessary to file a tax return to receive certain benefits.
Finally, the tax filings may be straight-out illegal, but it is quite possible to scam a bank out of a refund anticipation loan on a false 1040.
The service industry to provide this demographic with its bottom-feed take is itself prodigious. Alas, I once worked for a sleazy tax guy and saw all this happening. They got a cut even if the refund or RAL were denied, but as long as the "taxpayer" showed us legit-looking paper, we'd be legally in the clear.
But in any case, none of the drug money is going to show on anyone's taxes. It's either under the table, or properly laundered.
As far as Stringer, yes, once he starts managing legit businesses, he's much more of an IRS target. They don't do the over-the-top rifle-through-your-pockets "lifestyle audits" like they did in the past, before Congress got on their case about a decade ago. But they do have algorithms to tell them when a business may be hiding income or assets. The trouble is that some things -- like real estate -- are perfect tax shelters: even when they're working properly they generate a tax loss.
posted by dhartung at 1:55 PM on September 29, 2011 [2 favorites]
It may also be necessary to file a tax return to receive certain benefits.
Finally, the tax filings may be straight-out illegal, but it is quite possible to scam a bank out of a refund anticipation loan on a false 1040.
The service industry to provide this demographic with its bottom-feed take is itself prodigious. Alas, I once worked for a sleazy tax guy and saw all this happening. They got a cut even if the refund or RAL were denied, but as long as the "taxpayer" showed us legit-looking paper, we'd be legally in the clear.
But in any case, none of the drug money is going to show on anyone's taxes. It's either under the table, or properly laundered.
As far as Stringer, yes, once he starts managing legit businesses, he's much more of an IRS target. They don't do the over-the-top rifle-through-your-pockets "lifestyle audits" like they did in the past, before Congress got on their case about a decade ago. But they do have algorithms to tell them when a business may be hiding income or assets. The trouble is that some things -- like real estate -- are perfect tax shelters: even when they're working properly they generate a tax loss.
posted by dhartung at 1:55 PM on September 29, 2011 [2 favorites]
BTW, if you find yourself wanting to know even more about how the underground economy works (including, but not limited to, the business of drugs and crime), the chapter of Freakonomics referenced above was based on the work of Sudhir Venkatesh, who wrote a book called Off the Books: The Underground Economy of the Urban Poor. I can't remember if it ever really delves into tax issues, but it provides a fascinating look at how poor communities function economically. (It's not particularly well written, but if you find the subject matter fascinating, it's enough to carry you through the spotty structure.)
posted by Banky_Edwards at 4:20 PM on September 29, 2011 [2 favorites]
posted by Banky_Edwards at 4:20 PM on September 29, 2011 [2 favorites]
This thread is closed to new comments.
Really, look into money laundering and shell companies to get an idea how these types of organizations work. I find it rather fascinating.
posted by handbanana at 10:01 AM on September 29, 2011