Typically they will just lie about sales right, so couldnt tax authorities just monitor the number of people going in and out of businesses where they can track easily sales from the outside?(for example barber shop) Then they could just shut down the operation easily by proving fraud? I might be stupid here but it doesn’t make sense to me
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Well the idea is to not get caught – to not be such a flagrantly obvious front business that the IRS immediately flags you and sends an investigator.
Front businesses aren’t necessarily a fake company, they can be profitable ventures on their own merits as well. Mob-owned bars, clubs, casinos, restaurants, they’re making money fine legally too and just reporting double that for laundering purposes.
They’re not reporting 1000 times the expected profit from an ice cream parlor in Alaska, that’s too obvious.
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