TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, June 28, 2006

Senate Finance Committee Approves "Pimp Tax"

Senate_20The Senate Finance Committee approved Chairman Charles Grassley's proposed "Pimp Tax."  From the press release:

A Senate committee today approved legislation that would use the federal tax code to put behind bars criminals who make money in the underground economy by selling sexual access to girls and women....

The Grassley proposal gives the IRS harsh new criminal penalties to arrest those in the underground criminal economy. The majority of the victims of human trafficking – those who are often smuggled in from other counties and virtually imprisoned in a house set up for prostitution – are girls ages 13 to 17. In the past the IRS has been saddled by focusing on proving how much income a sexual trafficker or pimp earns in order to show that the trafficker has not been paying enough income tax. The Grassley provision packs its punch with the failure to file information returns, even the W-2 form. The new legislation makes the failure-to-file provision apply per failure. The enhanced jail time for failure to file would apply to those forms for which the associated income was earned in an underlying criminal activity. For example, if a trafficker has failed to file W-2s for five girls (employees), the maximum penalty would be 10 years in prison per failure to file, or 50 years.

The provision was added by voice vote included in  S. 832, The Taxpayer Protection and Assistance Act Of 2005, passed by the Senate Finance Committee today.

Press coverage:

http://taxprof.typepad.com/taxprof_blog/2006/06/senate_consider.html

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