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Technically people do owe taxes on revenue from illegal activity. You certainly could put a tax on something that's illegal, I just don't think it would bring in much revenue I'd you're still prosecuting people for that same thing you are taxing.
They tried that and it was previously struck down.
Don't you have to state how much money you made illegally on your taxes?
Yeah, the legality of the source of the gain or income is irrelevant in regard to taxation.
There's actually no line in the 1040 specifically for income arising from illegal activity, no box to check or anything, so it's hard for the IRS to even filter returns with that criteria.
Most criminals with significant income from illegal activity still have to worry about the random audit or being the focus of interdepartmental attention so many do pay taxes and have a decent backstory to explain how they pay their mortgage, but money laundering is a more common way to go about as opposed to listing a whole bunch of vague shit as other income (which would raise quite a few questions if their file was pulled).
Fun movie trivia: in The Irishman, De Niro's character, a hitman, claimed to 'paint houses' for a living due to his ability to furnish receipts for things like rollers, rags, cleaning supplies, and drop cloths. Probably bought a lot of paint too and handed it off to be tossed it in some dumpster
There is literally a box for it in America
https://www.nbcnews.com/business/taxes/dont-forget-declare-income-stolen-goods-illegal-activities-irs-says-rcna10345
Here's line 8z on the schedule 1, as you can see and like I said, it's not specifically for income generated for illegal activity. It's for all other income, and since there's no box specifically for that kind of income, you'd list it under other income.
If there was a line specifically for illegal activity you'd put it there, but there isn't, so you put it in the catch-all 'other income'.
Furthermore, 8z is like form 8949 (sale/disposition of other assets) in that the description is blank for the filer to fill out, so one doesn't need to explicitly state that it's from illegal activity. If you're a fence and bought a bunch of stolen power tools and sold them at a profit you'd probably just want to put 'sale of refurbished power tools' rather than 'sale of unlawfully-acquired power tools'
You're supposed to in the US, yes.