The answer: Absolutely.

The IRS does not care where you made money, or whether or not it is legal. (online poker is legal in the United States) Uncle Sam wants his share whether you are getting paid to dig ditches, sell quilts on Ebay, or sell crack behind the local bowling alley. This is how many of the largest mob organizations came crashing down. Not for stealing, fraud, or murder, but for not paying taxes on their earnings. This is, in fact, what sent Al Capone to Alcatraz.


How does the IRS keep track of this? Not only that, who holds jurisdiction over these rooms when they are out of the country. I don't understand how you can make someone pay tax on something that is not even regulated by our government.