For most Americans, April 15 is a day of fear and loathing.  It is time to account for all of the taxes owed to various levels of government.  If someone has overpaid, money will be coming back.  If a taxpayer has underpaid, a (sometimes large) check must be written.  But if someone earns money that the government never knows about and therefore doesn’t pay any taxes, April 15 is just another day on the calendar.

These people do their best to make sure that Uncle Sam and state tax collectors don’t even know that they exist.  The scofflaws include pirates and counterfeiters, who can rake in anywhere from $120,000 to $10 million (possibly even up to $100 million).

The goods that these crooks are peddling can be as innocuous as “branded” handbags sold cheaply on the street corner, or as deadly as a counterfeit power strip or holiday light, missing that all-important copper grounding wire in its construction.  However, even if the goods seem harmless, the theft, importation and sale of counterfeit or pirated intellectual property (IP) have a major impact on the economy.  The Organization for Economic Development (OECD) concluded in November 2009 that international trade in counterfeit and pirated goods may have accounted for more than $250 billion in 2007.  This is a sizable dent in the global economy.

On April 12, 2010, the Government Accountability Office (GAO) reported on the negative effects of IP counterfeiting and piracy in the U.S.  According to the report, from 2004 to 2009, the Department of Homeland Security seized more than $1.1 billion in IP-infringing goods, ranging from apparel to cigarette to pharmaceuticals.

According to GAO, the U.S. IP theft causes slower economic growth, lower tax revenue, and reduced innovation, as well as declining trade with other countries who have weaker IP rights enforcement.  In addition, because of increased counterfeiting and piracy, the government has incurred higher enforcement costs and greater risks to supply chains for both national security and safety reasons.

On March 21, 2014, a member of a massive counterfeit goods conspiracy was sentenced in federal court to 38 months in prison.  The 35 containers of counterfeit goods that were confiscated in that case by law enforcement officials included cigarettes, handbags, and sneakers with a potential retail value of more than $300 million if the merchandise had been legitimate.  The sellers certainly were not going to post their earnings on an IRS Form 1040.  That means that everyone else has even more to fear and loathe about April 15, because all taxpayers are paying more than they would otherwise have to in order to make up for the lost revenue from pirates and counterfeiters.