I committed embezzelment within the Commonwealth of Virginia for the amount of approx. $150,000.00 over a period of (6) years. I was found guilty under a signed restitution agreement that specifed the repayment amount. Then two years later I received 1099's for misc, income for each the six years. My question is "If I signed a plead agreement,paying restitution, served time, how can I be 1099 for monies that I am paying back under a restitution order ? Its either income or not.Can a tax or criminal defense attorney clarify this situation for me?
1 Answer from Attorneys
Yes, the IRS almost certainly considers your ill-gotten gain as income which
it therefore considers taxable and which is why you received the 1099s.
The restitution order is part of your punishment ordered by the court and
has nothing to do with what the IRS considers due and owing with respect
to your taxable income.