The Al Capone tax evasion conviction happened on October 18, 1931. Capone has reportedly boasted that “They can’t collect legal taxes from illegal money.” He was sentenced to 11 years in prison for not filing his tax returns.

His parents, Gabriele Capone, and Teresa Raiola settled into their new lives in Brooklyn, New York, in 1899, after coming from Italy. Capone, however, struggled to fit in and was expelled from school for hitting a teacher at the age of 14.

As a young man, Capone tried his hand at odd jobs, but nothing worked out. Capone eventually turned to a friend, Johnny “The Fox” Torrio, who was just starting to build an empire. Elmer Irey, the first chief of the Internal Revenue Service (IRS) Enforcement Branch, which is now known as the IRS Criminal Investigation Division, would later refer to Torrio as “the father of American gangsterdom.”

Aside from introducing Al Capone to Frankie Yale, Torrio also offered Capone a job as a bouncer and bartender at Yale’s clubs, where patrons could drink, gamble and pay for sex. While at work, Capone, who was not known for his even temper, got into a fight. The fight allegedly took place over a girl, and he was slashed on the left cheek three times with a knife, leaving him with a permanent scar.

It was at the age of 18 that Capone met and married Mae Coughlin. The couple had their first child shortly after, Albert Francis “Sonny” Capone. After Sonny’s birth, Capone briefly considered making an honest living. As a result of the family’s move to Baltimore, Capone intended to become a bookkeeper – working under the law on the right side of the numbers.

An Offer He Simply Could Not Refuse

Al Capone Tax Evasion Case: How The Famous Mobster Went Down In 1931 1
Al Capone.

Capone, however, could not resist the allure of the gangster life, and when Torrio asked Capone to help run his mob empire in Chicago, Capone accepted the offer.

After spending three weeks in the hospital and more time in prison, Torrio decided to leave Chicago. After barely surviving an assassination attempt by rival mobsters Hymie “The Pole” Weiss, Vincent “The Schemer” Drucci, and George “Bugs” Moran in 1925, Torrio decided to leave Chicago and handed over control of his empire to Capone.

It was a natural part of Capone’s business to make money and he rapidly expanded it. During the mid-1920s, Capone earned approximately $60 million annually ($891 million in today’s dollars), and his wealth continued to increase, reportedly reaching $100 million ($1.5 billion in current dollars).

U.S. v Sullivan Case

The escalation of Capone’s empire also contributed to an increase in his penchant for violence. Most of the bodies piled up in Chicago with Capone’s fingerprints all over them. However, the Feds were unable to succeed in bringing charges of violence against Capone. A turning point occurred in 1927, miles away from Chicago. U.S. v. Sullivan, which was decided by the U.S. Supreme Court on May 16, 1927, held that gains derived from illicit liquor traffic would be taxable (274 U.S. 259). The ruling was exactly what the federal government needed.

A fun footnote: In Sullivan, the Justices noted that “It is argued that the defendant would be entitled to deduct illegal expenses, including bribery if a return was filed.” This by no means follows, but it will be sufficient time for consideration of the issue when a taxpayer has the temerity to raise it.”

“Get Capone,” Said The Secretary Of Treasury

Irey was summoned by the Secretary of the Treasury in 1928 and told to simply “get Capone.”

On behalf of the IRS-CI, Irey is reported to have replied, “We’ll get right on it.”

St. Valentine’s Day Massacre, 1929

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St. Valentine’s Day Massacre, 1929.

It is important to note that the violence continued while Capone was being investigated by Irey. The lawlessness culminated on February 14, 1929, when Capone was in Miami at the time of the shootings. Capone was immediately blamed for what became known as the St. Valentine’s Day Massacre. 

Two of the men were dressed as police officers when witnesses saw four men enter the garage on the day of the murders. The “officers” ordered Moran’s gang to line up against the wall where they were hit with a spray of machine gun and shotgun bullets: 70 rounds were fired. All seven men inside died – most of them immediately.

Frank Gusenberg, one of the victims, survived long enough to tell police that he had not been shot.

There was likely a territorial dispute between Moran and Capone, as Moran controlled the North Side of Chicago, while Capone controlled the South Side.

There was barely time for Moran to escape the violence: He was late to the scene and missed the shooting by minutes. A few days later, he was quoted as saying, “Only Capone kills like that.” It became a famous phrase.

According to Capone, Bugs Moran is the only man who has the ability to kill like that.

As a result of this, no witnesses have survived, no evidence has been gathered, and no one has ever been prosecuted. The feds, however, believed Capone was responsible, and in 1930, he was referred to as “Public Enemy Number One,” a label he reportedly despised (his older brother, Ralph “Bottles” Capone, would receive the title “Public Enemy Number Three”).

Despite his conviction that he was untouchable, Capone failed to appear before a federal grand jury in response to a subpoena, asserting that he was suffering from bronchial pneumonia.

When prosecutors presented evidence that he had been gambling at the track and cruising in the Bahamas, he was arrested on contempt charges. Following his release on bond, he was re-arrested on concealed weapons charges and sentenced to prison in Philadelphia’s Eastern State Penitentiary, where he was reportedly housed in luxury with French furniture, plush rugs, and a Victrola radio.

Al Capone Tax Evasion Case Is What Eventually Took Him Down

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Al Capone Tax Evasion Conviction on the cover of the Chicago Sunday Tribune, 1931.

The feds were quietly building a case against Al Capone during this time. Although he lived an extravagant and public lifestyle, Al Capone did not file a federal income tax return, claiming that his income was not taxable. After following the money, IRS Special Agent Frank Wilson and the “T-Men” collected evidence that Al Capone made millions of dollars on income that was never taxed. It was successful: Al Capone was indicted on 22 federal income tax evasion charges.

In addition to Al Capone, his brother Ralph, Jake “Greasy Thumb” Guzik, Frank Nitti, and others were also charged. The judge refused to accept Al Capone’s plea agreement, and the case proceeded to trial.

On October 17, 1931, Al Capone was found guilty and sentenced to a then-unprecedented 11 years in prison. In addition to his fine of $50,000 ($798,055 in today’s dollars), he was also ordered to pay back taxes of $215,000 (now $3,431,640).

In response to his appeal, he was denied a rehearing.

Al Capone’s Prison Sentence In Alcatraz

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Al Capone In Alcatraz, Madame Tussauds Museum in San Francisco.

In Atlanta, Al Capone’s first prison stop after his conviction, he bribed prison officials to get what he wanted, just as he had done in Philadelphia. When he was discovered, Al Capone was transferred to Alcatraz. Alcatraz proved to be Al Capone’s undoing.

Unlike those Al Capone had previously encountered, the warden, James Aloysius Johnston, was not easily swayed. Johnston allegedly asked Al Capone what his name was, and he allegedly replied, “You know who I am.” Johnston retorted, “Here you are now known as AZ-85.” Al Capone eventually admitted, “It appears Alcatraz has me beat.”

During his four years at Alcatraz, Al Capone performed laundry jobs (as Genenifer Choldenko has made most grade school kids aware of). During his sentence, his health eventually got the best of him: He had contracted syphilis years ago, and it worsened, resulting in intermittent mental disturbances.

This was followed by an appeal in 1937 to the District Court, arguing that the verdict was inconsistent. The appeal was denied.

As a result of his final sentence in 1939, Al Capone moved again to a mental hospital, where he served out the remainder of his sentence. Prior to his death, his physician determined that he had deteriorated to the point that he was mentally capable of a 12-year-old. At the age of 48, Al Capone, the once most feared man in America, passed away on January 25, 1947.

Learn More About Back Taxes

Most people find it incredible how Al Capone was involved in gambling, prostitution, bootlegging, bribery, narcotics trafficking, robbery, “protection” rackets, and murder, but what eventually brought him to justice was tax evasion. This is a clear indication that you shouldn’t mess with federal money.

Tax Defense Network provides input and assistance on how to deal with your taxes and stop the IRS from taking it all. They can negotiate your tax debt on your behalf.


Marcel Le Carre is a wine connoisseur and writer for Xtrapoint. Growing up in a vineyard in Italy, Marcel learned the art of winemaking at an early age. He is passionate about making wine, and his wines have won awards in numerous competitions. In addition to his love of wine, Marcel is an avid reader. He reads books on a variety of topics, but he has a special interest in books about history and LGBTQ rights. Marcel is also an activist for LGBTQ rights and has spoken out against discrimination against the LGBTQ community.

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