A recent great example of why they don’t notice. Rich individual 1 was paying for an employee’s children/grandchildren to go to school while deducting that money from his salary via a second set of books. Rich individual avoids payroll tax, employee avoids income tax, and on the surface it looks legal except the second set of books made it a clearly illegal action. It’s exactly that mix of personal and business activities that makes such criminal evasion so hard to track.

Another interesting example of not prosecuting, personal Roth IRA’s may not invest in companies under specific conditions and transactions must be at the fair market rate. Rich individual 2 broke both rules, but the IRS investigation decided to leave it alone. This is adding up to hundreds of millions of dollars in tax fraud, but if the IRS chooses not to prosecute then he’s free and clear.

PS: Names redacted to avoid political discussion.