I really don't understand why OP has his knickers in a twist. What're the potential consequences of falsely reporting someone? They get audited? The IRS alrea

I really don't understand why OP has his knickers in a twist. What're the potential consequences of falsely reporting someone? They get audited? The IRS already does random (but infrequent audits). Given the fact that the IRS would indeed have to investigate and then prosecute whatever fraud may be present, they would have to have a fairly solid and material understanding of the circumstances leading to tax dodging. People who are filing false claims can and probably should be prosecuted for misleading the government officials. The IRS isn't some inhuman soul sucking beast. It is a bureaucracy, but when you get down to the level of dealing with individuals who have discretion to make decisions, every experience I've had with them so far has been friendly and understanding. As far as i can tell they really do try to err on the side of not screwing individuals at the very least.