Can a business which only loses money be a &quot;money laundering&quot; method? Let's say a criminal opens a business (a restaurant) which only loses money, there are basically no customers at all or there are very few in a way which is certainly non profitable in a given time period (say, a tax year). Can that be a &quot;money laundering&quot; method, somehow?
Sure You run a restaurant employing relatives and cronies and you scrupulously pay them and their taxes. Say $500k. That is clean money. You take some money from running the restaurant but not enough to cover costs. Say $200k. However, you declare that your revenues were actually $800k with the difference being $600k of dirty money which “customers” paid in cash. You pay your taxes on your $300k profit and now have nice clean legitimate money. Now, what legitimate businesses typically do is underreport their cash income to minimise taxes but a laundering front overreports and pays too much tax to clean the money. For every $1 of dirty money going in you only get 70c out (or whatever depending on local taxes) but that money is clean.
My question: Do I need to declare this income when filing my 2018 tax return? considering that I was actually losing money. Yes. If you would otherwise have to file income taxes if you didn't have this money losing venture, you need to report this income. If you otherwise wouldn't have to file an income tax return, you don't have to file an income tax return simply to report a loss from a money losing rental, but you would still want to do so, because reporting the loss in this year could reduce your income taxes in future years. When you lose more money than you earn from sources other than capital gains, you have what is called a "net operating loss" or "NOL" for short, that can be carried forward to future years to reduce your income for income tax purposes. An exception applies if a business or rental losses money year after year after year. In that case, the IRS considers the business or rental to be a hobby rather than something done with an intent to make money and the loss is disallowed. But, obviously, that exception does not apply to your case. If the answer is yes: How do I also declare the rent I paid to the agent, to show that I actually didn't earn anything. What tax form do I need? Usually, you would report the rents received as income on Schedule E to your primary tax form (probably a 1040NR) and list the money paid to the agent and any other expenses you incurred as expenses. This will generate a net loss and can be used to reduce your income subject to taxation from other sources. Under the tax law that takes effect in 2018, you can't deduct as many expenses related to the rental as you could in prior years. But, you can still certainly deduct the rent you paid for the property that you then leased to a third party in short term rentals. Airbnb issues W-9 form for US person, W-BECI for non-US person with TIN, and W-8BEN for non-US person without TIN. A Social Security Number (SSN) is one of several forms of Taxpayer Identification Numbers (TIN). So you would provide Airbnb with a W-BECI. Airbnb will then send a Form 1099 to you early next year, and will send another copy of that Form 1099 to the IRS. The fact that the IRS will learn about your gross rental income from short term rentals from Airbnb is one of the main practical reasons that you should file a tax return declaring that income.
Businesses only keep transaction data for as long as they have to For a live loan account they will keep transactions while the account is live and then for as long as local law dictates (it varies but 7 years is typical). For transaction accounts it will generally be only for as long as required by law - typically what is required by tax law (again 7 years is typical) or as long as you can sue them under statues of limitations (2-5 years). Banks (and other businesses) do not keep records indefinitely. 10 years seems more than necessary.
No, it is not illegal There is no law that says a business must have a bank account, let alone that they must make deposits to it.
Don't do it. So clearly tax fraud is bad and the state can prosecute this when tipped off. Alice is also clearly allowed to report the possible tax fraud to authorities and to serve as a witness if necessary. The problem is that Alice can expose herself to various liabilities, and could be sued by Bob or by the state. On what grounds did Alice snoop around in Bob's room? Even if they are roommates, Alice might not have a right to enter the room. Even if she has grounds to enter the room, she might not have permission to trawl through Bob's private stuff. A glance at a computer screen is also quite unlikely to show evidence of tax fraud, as even selling lots of stuff does not imply running a business.1 On what grounds can Alice collect and share personal data with authorities? There is no constitutional right for snooping and snitching.2 Alice must instead identify a legal basis for sharing such screenshots or pictures with third parties. Data protection law such as the GDPR does recognize that there might be a legitimate interest, but Alice is unlikely to have such a legitimate interest unless she is personally affected by Bob breaking the law. For example, some people have been sued for overly enthusiastic reports of parking violations. Footnotes: People can sell goods e.g. on eBay without running a business that would have to be registered with the tax office. A business in this context is any regular business-like for-profit activity. Thus, a registration might not be necessary for occasional activity, or if the activity isn't for profit. For example, a person selling their old stuff for less than they bought it for is not acting with a profit motive. Even if there is occasional profit, this can be a privates Veräußerungsgeschäft (private sale). Whether such a sale is taxable depends on the duration between acquisition and sale. If it is taxable, it has to be reported as part of income tax filings. Generally, the profit is free from income tax after one year. VAT is a different matter. Private sales don't involve VAT. When a sole proprietor registers a business, they can elect to ignore VAT until they reach certain turnover or profit limits (Kleinunternehmerregelung). This kind of tax fraud is typically not a crime, and more of an administrative offence. Thus, intrusive investigations are not proportional – and even then, they would be up to the state, not to individuals. It is worth noting that Germany has extremely poor whistleblower protections and has failed to implement relevant EU laws.
The part of the statute (which is part of an article of the Uniform Commercial Code model language applicable to the sale of goods) that you are discussing reads as follows: 1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though (a) the transferor was deceived as to the identity of the purchaser, or (b) the delivery was in exchange for a check which is later dishonored, or (c) it was agreed that the transaction was to be a "cash sale", or (d) the delivery was procured through fraud punishable as larcenous under the criminal law. I have put the critical language of (1)(c) for the purpose of understanding what they are talking about when they are talking about "cash sales" in bold. You are asking: Please explain it to me and tell me what a "cash sale" has to do with voidable title. Doesn't cash sale just mean you are paying cash for something? That sounds perfectly innocent to me. Items (1)(a), (1)(b), (1)(c) and (1)(d) involve circumstances which are examples of transactions in which a buyer of goods obtains voidable title from the seller. This means that the sale can be undone if the seller acts promptly enough, but the sale can't be undone if the buyer in turn sells the goods to a good faith purchaser for value (i.e. someone who pays a meaningful price for the goods without knowledge that the seller only has voidable title). If the goods have been sold to a good faith purchaser for value, however, then the seller who could otherwise undo the sale entirely can now only sue the buyer for damages (usually the agreed purchase price, or fair market value if no purchase price had been agreed upon yet). When it says in (1)(c) that "it was agreed that the transaction was to be a "cash sale"," what the statute is describing is a transaction where the original deal was that you will deliver goods to me with the understanding that I will pay you for the goods in full with currency or other "good funds" (like a wire transfer), roughly contemporaneously. But, what actually happens is that you deliver the goods to me and instead of promptly paying you the cash you are owed for the goods, I don't actually pay you anything. This could happen because I was trying to cheat you and get something for nothing, in which case I would have also committed fraud which also falls under (1)(d). More innocently, suppose that I run a small grocery store and you run a dairy that delivers milk for resale to my grocery store every morning at 5 a.m. before banks open, in time for the morning rush of innocent customers milk to put in their coffee on their way to work, before the banks open, and then I go to the bank when it opens every day at 9 a.m. and take out some cash and hand it over to your money collector, when your money collector stops buy my grocery store around lunch time. But, today, I was stunned to discover that all of the money in my bank account had been frozen due to a garnishment on a money judgment against me that I hadn't been aware of because the process server who was supposed to give me notice of the lawsuit against me instead threw the court papers in the sewer and lied on the return of service saying that he'd delivered the court papers to me, so that unbeknownst to me, a default judgment was entered against me. The sale would be voidable in both cases, the one where I was trying to cheat you while telling you that it would be a "cash sale" and the one where I innocently found out that I didn't have the money to pay you that I had no reasons to think that I wouldn't have available to me. And, in each situation, if my grocery store sold half the milk that was delivered to me in the morning rush, those sales would be valid and irreversible, even though I completely stiffed the dairy owner and there was a total failure of consideration in what was supposed to have been a cash sale transaction. But, the dairy owner would have a right, when he found out that he wasn't getting paid at noon and the sale turned out to have been a voidable one, to take back all the milk that hadn't been sold to my customers yet in the hope that he could sell it to someone else who was actually willing and able to pay for it instead. In general, under circumstances when a sale is voidable, if I haven't resold the goods to a good faith purchaser for value, then you can legally force me to return the goods and have the sale invalidated. But, if I have sold the goods to somebody else for a more than nominal price, and the person who bought the goods from me doesn't know that I cheated you by not paying for the goods, then you can't undo my sale of the goods that I didn't pay for to the good faith purchaser for value. Situation (1)(c) is very similar to situation (1)(b), in which you give me the goods and I give you are personal check for the purchase price, but the check is then dishonored by the bank (something that could been my intentional plan to cheat you, but which could also have been my failure to keep track of the balance in my bank account as I wrote checks). Both of these situations involve broken promises which may or may not have been made with no intent to honor those promises in the first place. Situations (1)(a) and (1)(d), in contrast, involve out and out fraud and deceit, but not "fraud in the factum". In other words, what (1)(a), (1)(b), (1)(c) and (1)(d) all have in common is that the goods were voluntarily delivered by you to me, even though your voluntary delivery was obtained by improper means such a deceit regarding who is buying the goods. ("Fraud in the factum", which is also void, involves situations when, for example, I ask you for you to sign what I tell you is a birthday card, when what I have actually done is have you sign a letter authorizing your delivery man to deliver lots of goods to me, and then I use that letter to have goods delivered to me.) In case (1)(a) this would often be a sale on credit or open account to someone you believe to have good credit but who is in fact someone else with bad credit. For example, you make a sale to George Shrub, thinking you will be delivering goods to George Shrub, Sr. who has good credit, but instead you are tricked into delivering the goods to George Shrub, Jr. who has multiple bankruptcies and never pays his bills on time. In case (1)(d) there are myriad possible examples. For example, I may have given you counterfeit money to get you to deliver the goods to me. Or, I may have purchased your cow in a barter exchange for beans that I told you were magic beans, but that were really just ordinary beans. But, in both (1)(a) and (1)d), as well as in (1)(b) and (1)(c), you are voluntarily delivering the good to me and then not getting what you thought you had bargained for in the deal, sometimes with evil motives and sometimes for innocent reasons, so voidable title arises. In contrast, suppose that I snuck into my stockyard one night and stole the goods from you. In that situation, you would have a right to get your goods back not only from me, but even from a good faith purchaser for value to whom I sold the stolen goods, because out and out theft that does not even involve consent procured through fraud or a broken promise, doesn't give me any title to the property, not even voidable title. Similarly, suppose that I pointed a gun at you in your shop and insisted that you deliver the goods to me or else I will kill you. Again, in that situation, you aren't giving me even voidable title to the goods, and you can sue a good faith purchaser for value from me to get the goods that I never had any colorable claim to have ever owned back. The language in the first sentence of (1) goes along with the language about voidable sales of goods in the rest of (1), because the first sentence of (1) covers situations when I may not have 100% ownership of goods that I sell to some else. For example, suppose that I have a pedigreed male dog that I have purchased the pet rights in from a breeder, while the breeder has retained the stud rights in the dog. (Yes, these transactions really happen. I've litigated them.) Under the first sentence of (1), I can sell the pet rights I have in the dog to you, but I can't sell the stud rights that I don't own to you because I don't own them. And, unless I am a pet store owner to whom the dog has been "entrusted" (and I'm not a pet shop owner), I probably can't destroy the stud rights through a sale of the dog to you when I am purporting to be selling you both the pet rights and the stud rights, even if you are a good faith purchaser for value, because I am not a merchant to whom the "entrusting" doctrine applies. So, if I sold the dog, the owner of the stud rights could still enforce those rights against the person to whom I sold the dog. Parts (2) and (3) deal with an exception to the general rule in the first sentence of (1) called "entrusting" which is quite similar to voidable title. Entrusting involves you leaving your goods with a merchant who is in the business of selling those kinds of goods. So, if I leave my nice clothes with a consignment shop or a pawn shop and the consignment shop or pawn shop sells my clothes to someone and give the buyer good title, and I can't undo that sale even if you didn't actually have my permission to sell the nice clothes that I had entrusted to the consignment store or pawn shop (e.g. perhaps they were only allowed to sell my wedding dress for a minimum price of $100, but instead sold it to someone for $30 which they didn't have permission to do, then the buyer of my wedding dress for $30 would still have good title to the wedding dress and the sale couldn't be undone). But, on the other hand, if I leave my nice clothes with an automobile parts shop or a grocery store or a stationary store, and they don't actually have my permission to sell the nice clothes that I left in their care, and then they sold my nice clothes to one of their customers, that sale made without my permission would be void and could be undone, even if their customer paid more than a nominal price for my nice clothes and had no knowledge that the merchant didn't have my permission to sell my nice clothes. This is because we don't believe that someone who buys, for example, my wedding dress from an automobile parts shop or grocery store or stationary store, can legitimately say that they really believed in good faith that the seller really had your permission to sell my wedding dress, because that is not an ordinary merchant-customer transaction for them.
An incomplete list: Getting the money. How did you plan to get paid? Credit card? Paypal? Integrating those into a website in compliance with their terms of service is not easy. (I wouldn't touch credit card numbers, in particular, even with a ten-foot pole. Too much liability risk for weak implementations. Too many highly skilled attackers to pounce on any mistake.) Distributing the App. Places like the Apple App Store have their own terms of service, especially regarding payment and in-app purchases. At a guess, Apple would reject your app, but if they allowed it, how does your withdrawal policy fit with the 30% cut they want from the initial transaction? Holding the money. So there are user accounts with a credit balance that can be withdrawn again. Would you be able to repay them if all users withdraw at the same time? Where do you keep the money? Currency risks. Say international customers pay in currency A, which the payment provider transforms into currency B. Then they want their money back, but exchange rates have changed. What do they get? Knowing your customer. There would be money laundering concerns. Do you have the infrastructure to identify your customers? Can customers change the (re)payment method from one account to another? Can you handle withdrawals if a user no longer has the same credit card, for instance? Scammers leaving you to hold the bag. Say a scammer tricks a victim into making a deposit, and then finds a way to redirect the withdrawal (see above). Would you be able to deal with the legal and administrative fallout?
There's a critical error in your argument but no transfer of goods or services will be present. Actually: No, there is a transfer of service made by booking: resources are put aside by the service provider to be available for the booking person once they arrive. That is a service. These resources are not available to be sold otherwise: a room is booked and thus blocked from being rented to someone else, or a seat on the plane is booked and not offered to others, and so on. As long as the booking person arrives, no damage happens. However, if they no-show, there is damage: the resources go to waste unused: the room stays empty, or the plane flies with one less person. And the cancellation/no-show fees that are contractually obligated to make the damaged party whole (to compensate for the wasted resources) are also not paid. Knowingly using a fake credit card number or empty debit card that can't pay the fees and planning not to show up would be clearly fraud. One such paragraph that might be used to hunt down could be 18 USC §1341 - aka &quot;mail fraud&quot; - or much more likely, 18 USC $1343 - wire fraud. The latter is because any fraud on the internet is wire fraud. Whoever, having devised or intending to devise any scheme or artifice to defraud [including a scheme or artifice to deprive another of the intangible right of honest services], or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.