Looks like LE spent a lot of time investigating the case, primarily focusing on the IRS issues:

"Based on my training and experience, generally people whose adjusted gross income is consistently less than $13,500 a year are not able to put themselves through Stanford Law School, lease a $70,000 Mercedes-Benz for $1,486 a month, live alone in a $1,800-a-month apartment, pay off almost $300,000 in loans, compile savings over $10,000, build a cash hoard of $40,000, throw away $2,400 in cash and buy postal money orders totaling $13,500 all at one time."

How do other folks handle this?  Seems like the tax risk is real.

-- Modified on 9/27/2004 8:03:21 AM

are doomed to repeat it.

Remember the downfall of Al Capone? He did not go to jail for murder, racketeering, illegal liquor, loan sharking, etc ... but
for failing to pay his taxes!

Why don't the providers just set up as a motivational speaker/coach. It would explain alot of travel, hotels etc...
I'm always revved up after a visit and would happily testify that I'm more productive after a session.
It would also allow you to explain a large income and more importantly, pay taxes. I follow the boards here and it seems more than a few of the providers have a liberal leaning. I guess its easier to advocate tax the rich when your not participating and helping pick up the check for all the social programs the left advocates.

if you don't want to post it here you can email it to me at [email protected]

if she wanted to avoid jail and a trial etc.. could she just pay the full amount of back taxes and the charges be dropped? or how does that work?

Im not a lawyer but am in financial services. What the feds are looking for, after all the hoopla, is money.  She can maybe work out a deal to pay the back taxes with penalties and interest. It will be expensive for her but she should avoid jail. Hope this helps. The message here is pay your taxes, no matter what.

It depends on the circumstances and what the prosecutor decides.  But if she's hidden income, she's committed fraud.  If she's committed fraud, the government is probably not going to let her get away with just paying taxes and penalties.  Otherwise, it sends a message to the public that you can cheat the government and the worst that will happen is that you'll have to pay what you owed in the first place -- plus, possibly, a penalty.  That's a big invitation for people to take a chance and try to get away with much more.

often times back payment and penalties will suffice, perhaps along with a suspended sentence.  She would have to have done something really egregious or have really drawn the ire of the prosecutor for him to demand jail time as well.  A good defense attorney should be able to get her off with no time in the big house for a first offense.  If the reason you're asking is the one I think it is, you should get yourself to a reputable tax advisor at once.  Do not F*CK with the IRS and the DOJ.

Depends on the Prosecutor and what the actual charges are.  Under the federal Sentencing Guidelines, the trial judge does not have much discretion in imposing a sentence.

I pay my taxes.

I make a great living while still paying the gov't...I get to deduct a lot of the great perks that go along with the work also (toys and lingerie are costume/props, hotel and travel expenses, milage on my car...).  Do I like handing over 1/3 of my income to the government?  No, but I also have stellar credit and am able to invest without a worry of a paper trail or questions about living beyond my means.

Not paying taxes is greedy IMO, and greed is one of the things that will bite you in the ass in life.

Regards,
xoMegan

I'm confused, if the actual act of paying money for sex is illegal how CAN you report your income from it and not face some kind of problems then from the gov finding out what you do? I know that escorting itself isn't illegal because of how it's set up, but the actual transcaction of money for sex is is it not? So how can you explain making so much money?

And if you claim toys, lingerie and hotels as  business expenses isn't that like saying i provide sex for money? I always figured most girls who do it just set up some other thing on the side, like some home business or something and put the money into that instead?

In a high profile case like this the IRS will probably want to make an example of her just like they did with Heiddi Fleiss.  By prosecuting a high profile case they hope to send a message out to everybody but in this case especially providers to pay their taxes.

... is the Gov't doesn't care that you AVOID taxes, they care if you CHEAT. If you flat out don't pay taxes and they get wind of it, kiss your posessions good-bye. End of story.

My ATF is incorporated as a consultant.  She doesn't make the kind of money which is talked about here but she does pretty well and pays taxes on the money she makes.  She's pretty popular and has told me she makes something on the order of $10K/gross a month which would be $120K/gross a year. That's really good but not an improbable amount like this case with Brazil. Many consultants make that much.

One benefit she has is that she really does have a consulting practice in one of the business fields and does a little bit of work occasionally in the field- but not a lot.

This gal's key problem is that she did not pay her taxes in proportion to the amount of spendign she had evidence for.

flopster.

I do have the same questions you do about reporting oneself as a sex worker on your tax return, but I could see that it does offer some protection.  Ordinary prostitution is a misdeamenor, while tax fraud/evasion is a major felony.  The feds, generally, don't go through the trouble of gaining a search warrant unless they are rather certain that you are guilty of something major, and there's say, $60,000 to be gained.  Brazil's income discrepency made them certain.  

Also, the IRS also doesn't share your return information with local authorities, who are the ones that enforce prostitution laws.  Unless, perhaps, it's part of an investigation.      

Though reporting your profession to the IRS may not protect you from a raid, it does close off an important avenue of investigation, and, if all goes wrong, it at least tells prosecutors that you are reasonably trustworthy.    

I'm surprised that a Stanford Law Graduate could make the mistake Brazil did.  About $300k spent, and what did she get?  

/Zin

Geesh - do you think it says "escort" on my tax forms? No, my occupation is "entertainer". The entertainment industry is huge, and many people in it travel and attend and host parties and all sorts of things that look just like what I claim.

You can get away with murder, but you can't cheat the IRS - look at Al Capone.

The IRS doesn't care how you got the money, as long as you pay them their due.  Having said that, I'd recommend against anything that hints at prostitution, such as sex toys, unless you can show that you sell explicit videos, etc.  It's all about the trail, and how well you can cover it.

Moonlighting as a very successful Avon representative is probably a better idea.  Pay the IRS; and have a good accountant (we're not ALL boring - I'm here after all) and a better attorney.

Escorting *is* legal, when defined by the terms of being paid for companionship (not sex).  This is why you can open most telephone books and find an escort section in the yellow pages, as well as advertisment in most cities newspapers.  

The expenses I incur are related to the items I use to entertain others.  Sometimes this is in public settings, sometimes it is in private, but either way being an escort or entertainer is a legal job description.

The thing to also note is that if someone were to pay taxes, but at some point be convicted of a crime that provided as their main source of income, the Feds can seize property as "ill gotten gains" due to it being the fruit of illegal activity. This means your car, house, and any other assets...

I recommend that all women in any level of this business talk frankly with their lawyer and accountant to make sure they understand what is and isn't legal, and what they need to do to stay on the good side of the law.  Blindly thinking that flying below the radar is a safe place can leave you more vulnerable then you could ever imagine...

Regards,
Megan  

I've paid taxes on time every single year since I was 18 years old
I've been a provider for less than a year, but I did pay taxes this year and I will next year as well even though I haven't kept a great record of how much I've made, so i will probably over pay, but whatever

very true and I also think about social reasons for paying taxes, it's bad karma not to, in my opinion

every person is different, since this will be the first year where the majority of my income came as a provider, next year I will file as an ENTERTAINER. It's simple and you can deduct all kinds of things like she said, if you keep cab reciepts, makeup reciepts even wardrobe, you can get deductions.
It's illegal to PROVIDE sex for money, but it's not illegal to entertain in certain ways, if i met you in your hotel room and performed a masturbation show on myself with toys for a fee, i don't think that is an illegal act?

There's a moral character and fitness test that lawyers have to pass to get their license.  I wonder if she'll lose her law license now with these tax evasion charges.  I still don't understand how she would go through the torture of 3 years of law school and then not want to practice and then throw it all away like that.
I also wonder if she's still escorting.

"greed is one of the things that will bite you in the ass in life"

Well spoken, Megan.

Of course, given your ass, I think you will have quite a few other things biting it...like me, for example.

Peace, Red.

And I guess watching somebody else do it would be "Conspiracy to Commit Sodomy" or "Ascessory to Sodomy?"

What can you expect from a state where there's no charge of Embezzlement?  What do they charge you instead?  "Stealing without Consent!"

/Zin

I don't believe in paying $700/hr for escort services, but if I did, she'd probably be the first one I'd call.

Something I don't get about her-she was smart enough to get into Stanford Law (and we've spoken on the phone, she is a very intelligent lady)-but how could she not know about not paying her taxes?

My profession is heavily cash and carry. It's so important to dot your I's and cross your T's, besides, the Tax Code is pretty liberal to guys like us with the deductions. I have a lot mor eexposure than she did, but I've never been audited. Then again, to risk all that downside over $10K tax liability a year at what we make is simply nuts, INHO.

The article states she had $13,500 in postal money orders.  Sounds like "money laundering" will be added to the list of charges she faces.  She's in deep trouble.

Many local jurisdictions (cities, counties) have strict licensing requirements for legal "escorts."  In most cases the penalties for escorting without a license are stricter than those for soliciting prostitution.

I think you don't have to file an income tax return if you make less than a certain amount. In other words, if you don't have a W-2(s) reported to the IRS that's above the limit (I think it's 9,500? a year), you don't have to file. No tax return, no audit. If you did file a return and are audited and had all those expenditures, you're definitly going up the river..

Filling out the required forms also informs local authorities who you are and where you will be working...it's a catch-22.

They got Heidi Fleiss for the same thing as well along with other charges.
Maybe we've got the wrong people looking for the terrorist, huh? {winks}

Like Meagan says, Greed is not something you can do very well in this biz. Don't live beyond your means....I know, I know, it's all sparkly and pretty but, be careful or you will lose it all and have a roommate that goes by big bertha or something.....Not that there's anything wrong with that! {whew!}

{winks} CaMille

It's not about "not knowing" the laws... its about choosing to ignore them.  Brazil knew the tax laws, but she violated because she didn't think she'd get caught.  That's how 99% of all laws are broken.

There's intelligence, education, and common sense... by reading the article, Brazil was completely missing that latter.  I mean who the hell throws $2400 in the trash????!!!!

Brazil just proves to me why I shouldn't spend my hard earned money on providers who ask for so much... they just don't appreciate it anyway.

You dont file w2's on employees who make less the $600.00 in a year. As far as not filing income tax returns you better talk to an accountant fast. The only people exempt that I'm aware of are students who make less that 3K and retiree's (not sure of the $ limit)