[broiler]

I would just add to your story that the IRS auditors will reducr itemized deductions that can't be explained based on your income and bank statements. These audits are worse than sales tax audits and always result in a substantial tax due at the end of the process. The dumb IRS agents don't work on these cases.

The IRS usually saves these for people that are cheating to a ridiculous degree on their taxes. Tipped employees are an easy target because many of the claim less than 50% of their true earnings and get themselves in trouble by claiming earned income credits.

The 3 examples that I have dealt with in the last 7 years ended up with 2 counts of tax evasion and another person paying in excess of $20k to avoid jail, not counting attorney and accountant fees.

I almost wish that the IRS would actually go after the tax preparers that file the ridiculous returns. That is hard to say as a CPA, but there are people out there that give us a bad name.