Without a doubt billions of dollars in taxable income goes unreported each year. But if the evaders are caught by the IRS, the penalties can be very harsh, up to and including prison time. Last year the IRS carried out over 2,500 criminal investigations and had a 90% conviction rate.
https://www.irs.gov/newsroom/irs-criminal-investigation-releases-annual-report-highlighting-2500-plu...
By the same token it's true that, to a large degree, our tax system rests on voluntary compliance by honest citizens.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
