There is an Italian restaurant that I go to that was investigated by the state for failure to report sales tax for cash receipts. There was a law passed several years ago that banks had to track cash deposits. The person depositing the cash has their ID scanned. The state determined the restaurant owner deposited $434 thousand over a 12 month period. The state audited the restaurant and found the $434 was never reported on their taxes. The owner had to pay restitution for the state sales tax they owed on the cash, they received a fine and the restaurant was closed for close to 6 months. The state reported it to the IRS. The IRS has not taken any action yet and this happened about 28 months ago.
I also know a guy who gets paid over $100 thousand per year in cash where he is a shop manager. He brags that he only reports about $40 thousand a year to the IRS. He hasn’t been caught because he doesn’t deposit the cash. He pays for just about everything in cash, even his mortgage in person at the bank.
I don’t think it’s fair for these 2 examples of tax cheating to escape the IRS. I also don’t think the IRS is going to go after a person that fails to report a small amount of income from a side gig.
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