A little anecdote. Back in the early 80s I worked in downtown Birmingham and there was an awesome meat and potatoes type restaurant called John's (I believe that was the name). The place was packed every single day. They were so busy the lady sat at the cash register and didn't bother to ring up your ticket. She would just take your cash and make change. I always thought something fishy was going on.
A few years later the proprietor dies and they decide to sell the restaurant. When they were going through the due diligence with a prospective buyer they revealed to the buyer that cash sales were actually much higher. Dude reported them to the IRS and they ended up taking the restaurant for payment of back taxes. If the owner had not leaked scheme who knows if they would have ever been caught.
Yeah, these types of situations are very common for small businesses. The problem is that the IRS doesn't do enough audits of these types of businesses. They want to go after what they call "the big fish" to get more bang for their buck in audits. Which, I get that, but small businesses outnumber "large" businesses in this country, and they are some of the chief sinners of not paying taxes. It's almost like they feel that auditing a small business wastes their time and resources.


