When Kylie Leia Perez walked out of a Florida courthouse in August 2025 after posting a $50,000 bond, her case instantly became a test of how far U.S. tax authorities are prepared to go to police the booming online creator economy. Federal prosecutors say Perez, known on OnlyFans as “Natalie Monroe,” earned $5.4 million between 2019 and 2023 and failed to pay any federal income tax, allegedly evading about $1.6 million. Her prosecution, led by IRS Criminal Investigation in coordination with the Department of Justice, is unfolding just as a new “no tax on tips” law forces the IRS to distinguish between mainstream digital work and pornographic entertainment for tax purposes.
The Perez indictment charges her with one count of filing a false tax return for 2019 and four counts of failing to pay income tax from 2020 through 2023, despite annual earnings ranging from roughly $203,000 to more than $2.1 million. If convicted on all counts, she faces a maximum of seven years in prison. For tax professionals and online creators alike, the case signals a broader enforcement push that reaches well beyond a single Florida defendant.
A Tip Tax Break With an Adult-Content Carve-Out
The legal backdrop is the One Big Beautiful Bill Act, signed into law on July 4, 2025. A central feature is former President Donald Trump’s “no tax on tips” initiative, which allows qualifying workers to exclude up to $25,000 in annual tip income from federal tax through 2028. Service jobs make up the core of the benefit, but the Treasury Department’s preliminary list of eligible occupations also includes digital creators who receive gratuities from fans and followers.
Congress, however, built in a specific exclusion: tips tied to “pornographic or adult entertainment” activities do not qualify. That carve-out pushes the IRS into an unusual role. To determine whether creators can claim the tip exemption, the agency must decide which activities count as adult entertainment, even when they occur on multiuse platforms like OnlyFans that also host nonsexual content such as fitness, cooking, or yoga channels.
Treasury and the IRS attempted to address this in proposed regulations released in September 2025. The guidance acknowledged that the boundary is unclear and largely fell back on the longstanding Supreme Court obscenity framework, often summarized by Justice Potter Stewart’s line, “I know it when I see it.” As a result, much may turn on the judgment of individual auditors or Tax Court judges when they review specific creators’ work.
IRS Scrutiny Extends Into Online Platforms
Because the law excludes adult entertainment tips without clearly defining them, enforcement is expected to require direct review of creator output. IRS officials have indicated that personnel will not face discipline for viewing explicit material when doing so for investigative purposes. That means agents and, in some cases, judges may have to watch or examine OnlyFans content to decide whether tip income is eligible for preferential treatment or fully taxable.
The Perez case also illustrates how criminal tax enforcement is unfolding. Since late 2022, IRS Criminal Investigation has mounted a coordinated nationwide campaign focused on OnlyFans earners. Defense attorneys report that pairs of special agents have appeared at the homes and workplaces of creators and their tax preparers, serving grand jury subpoenas that demand bank records, platform payout data, accounting files, and sworn testimony. Unlike civil audits, these inquiries involve the Justice Department from the outset and carry the prospect of criminal charges for false statements or tax evasion.
Inside the OnlyFans Economy and Audit Risk
OnlyFans has grown into one of the largest creator platforms in the world, with about 4.6 million creator accounts overall and roughly 1.1 million in the United States. That is up from just 348,000 total creators in 2019, reflecting explosive growth in a few years. Despite the platform’s reputation for high earnings, income is sharply concentrated among a small elite.
Roughly 83 percent of creators make less than $100 per month, or about $1,200 a year—well below the level that typically attracts IRS scrutiny for self-employed workers. At the same time, the top 1 percent of creators average about $34,000 a month, or more than $400,000 a year, and the top 0.1 percent take in nearly $147,000 per month. Analysts estimate that this top tier accounts for around three-quarters of all revenue generated on the platform.
Women make up approximately 80 to 84 percent of creators and earn on average about $700 per month, with the top 10 percent of women surpassing $10,000 monthly. Male creators average about $180 a month, and only a minority reach $5,000 per month or more. OnlyFans itself keeps a 20 percent commission and pays out 80 percent of receipts to creators.
Because of this extreme skew, tax professionals believe real audit exposure is concentrated among a relatively small group—perhaps about 46,000 high-earning creators worldwide and around 11,000 in the United States. These are the people most likely to surpass income thresholds that draw attention, and who stand to lose the most if adult-content classifications deny them access to the new tip exclusion.
Legal Risks, Documentation Burdens, and Policy Debates
For creators, the practical risks begin the moment IRS special agents appear at the door. Grand jury subpoenas can compel testimony and records, and anything said under oath may later be used in a criminal case. Attorneys who defend creator clients advise them to obtain their own legal representation immediately, separate from their accountants, because the two may have conflicting interests once investigators scrutinize earlier tax filings.
Even outside criminal investigations, compliance with the tip rule is complex. OnlyFans does not routinely separate tips from subscription charges in its payment flows, yet the proposed regulations would require creators claiming the exemption to maintain detailed, contemporaneous records of every tip. That includes dates, amounts, available information about senders, and payment methods—standards many small operators have never applied to their online activity.
Policy arguments over the adult-content carve-out are intensifying as well. Conservative and Christian organizations lobbied Treasury to exclude pornographic work from the new benefit, asserting that the government should not confer tax advantages on industries they view as exploitative for young adults. Some of these groups, including those linked to the Heritage Foundation’s Project 2025, support far more sweeping restrictions on pornography in general, though such proposals remain theoretical at the federal level.
As enforcement ramps up, tax specialists who serve creator clients are urging them to keep thorough documentation, take cautious positions on deductions, and prepare for the possibility that IRS personnel may evaluate their material directly. They also warn that uncertainty over what counts as adult entertainment could persist until audits and court decisions build a body of precedent.
For now, about 1.1 million American OnlyFans creators find themselves in a new environment of heightened scrutiny. Most earn too little to draw detailed attention, and recent changes to Form 1099-K thresholds have reduced automatic reporting for small amounts of income. But for those making six figures and above, the convergence of a high-profile criminal case, a platform with concentrated earnings at the top, and a tax break that excludes undefined “pornographic” activity has created significant legal and financial stakes. How the first wave of audits and prosecutions is resolved will likely shape both IRS enforcement strategies and congressional debates over whether to refine, expand, or roll back the current tip rules.
Sources:
U.S. Department of Justice Press Release; Middle District of Florida Indictment (August 2025)
The Independent; IRS OnlyFans Content Review Investigation (December 2025)
MissTechy; OnlyFans Creator Statistics and Platform Data (2025)
Business Observer Florida; Tampa OnlyFans Tax Fraud Case Coverage (August 2025)
U.S. Treasury Department; Proposed Regulations on “No Tax on Tips” Implementation (September 2025)