Iāve heard of something similar with an employee who worked at a company before I did. My understanding is that he completely believed the IRS didnāt have the authority to collect taxes and even got the company to not withhold income taxes (how he managed that, I have no idea).
Now this guy also owed the government millions of dollars due to the lucrative acquisition of a previous company but he still hadnāt paid any taxes.
Eventually the g-men came & arrested him. He tried the same defense or similar your buddy is using and even said the court didnāt have the authority to try him. He was found guilty and when he was non-conciliatory with the federal judge, he was sentenced to 5 years in federal prison & his property was confiscated to pay the back taxes.
My guess is that your buddy hasnāt warranted the full attention of the government because the amount he owes isnāt worth their time. Yet.
Once he gains their attention, and eventually he will, they will come after him. Itās important to note that there is no statue of limitations on tax evasion - so even if he gets away with it for 30 years, they can eventually bust him for the entire period he wasnāt paying.
Messing with the governmentās cash flow is a foolās errand and one day it will catch up to him.