Buy Sell Flipping Cars For A Living Without Reporting Tax ?

Question

My brother buys and sells cars on a weekly basis. He has a California dealer license that allows him to sell up to 22 cars as an individual without a "real dealership". He buys them 1 or 2 at a time from auctions and profit around $2,000 each car. I dont think he pays tax since its all cash, can he get in trouble ? Can the IRS find out ? He doesn't have any other jobs just buys and sells cars with cash. He doesn't have any type of liability insurance for the type of business that he is doing so may be at risk for potential exposure to law suits. I'm concen about his way of doing things. Any answers, feedbacks, and advice would greatly be appreciated

Answer 1

With an all cash economy, sounds like many Americans are doing the same thing to stay one step ahead of debt collectors and mortgage foreclosure specialists.

As long as he does not sell lemons and expose himself to lawsuit, he should be OK....

{EDIT} Bills of sale can always be "edited" to show that the car was bought and sold for a nominal amount - say $100. This helps the buyer avoid paying sales taxes when titling the car. Also, some states do not charge sales tax on older models - in MD, sales tax can be charged if the car is more than $640. One can buy and sell the same car for $640 - generating $0 in "paper trail" profit even though the seller is making money on both ends of the deal "under the table."

Answer 2

2

Answer 3

As a UK-registered car is only legal for use in other EU countries (e.g. Republic of Ireland) if it is legal for use the the UK, you cannot legally drive your UK-registered car in the Republic of Ireland if your UK road tax has expired. Your insurance is probably invalidated also. if you are only temporarily in the ROI, you must have the car registered to a UK address somewhere. Your solution is to get the car taxed, and the tax sent to that address, then forwarded to you. As the tax doesn't expire in the middle of the month, this hasn't just happened to you this week. You should have sorted this all out before the tax expired, and before you got yourself into this fix. Also, as your car has now been untaxed, there is probably a fine waiting for you for not renewing it on time or declaring SORN.

Answer 4

What he is doing is just signing titles over, this is common but he is avoiding sales tax and could not be claiming income tax. But I have been in the car biz for 10 years and have people come in all the time that get social security but do jobs on the side(ticks me off) but until the gov't decides to enforce it what are we gonna do.

10 years in auto biz

Answer 5

Yes, he can get in a lot of trouble for not reporting income, it's called "tax evasion" and can lead to hefty fines and jail time. Most people who work for cash can stay under the radar, but your brother has an obvious paper trail -- the bill of sale and title transfer for each transaction. He's just asking for trouble.

Answer 6

I'm not sure why you are concerned. You *think* he might be not paying taxes, etc. Why is this your problem?

No, if he is cheating the government out of taxes, it's not the right thing to do, but again, I don't see how it affects you.

Answer 7

I do the same thing, plus i sell music on the side. I never paid taxes.... wtf are taxes? I earn my money on my own im not paying the government ****..... my hard earned money, its all my money i earned. Not sure what world you people live in. I got my own place and i am my own man, i control my own life and do what i want in my life.

Answer 8

How did he get that license if he doesn't have a dealership?