Buy Sell Flipping Cars For A Living Without Reporting Tax ?
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
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."
