Overhaulin' - Buy Sell Flipping Cars For A Living Without Reporting Tax ?

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

Public Comments

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."
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.
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.
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