I agree with you that this would not be the ethical way to conduct a business. However the USA is filled with cash payments to home repair guys, cleaning service, private day care, bookies, etc, etc, etc. The IRS doesn’t have enough people or interest in chasing all these guys and gals down. Some will get busted - probably more high profile vendors.How are they not paying taxes on that money? Are you suggesting they are risking their large salaries and their careers to make another $13K (estimated under a fictional scenario) "under the table" and then illegally not report it on their tax returns to save about $4K in taxes??
I'd like to think they are not that stupid - but you never know about how easily greed can dictate stupid decisions.
There is a big difference between tax avoidance and tax evasion. Not reporting income (tax evasion) is criminal (a federal felony) and the penalties can be severe - including prison time. Reporting expense offsets to that income that are determined to not be deductible - is tax avoidance. That is punishable by fines, penalties & interest, and restitution for all taxes not previously paid. But no criminal charges if determined to be done in error.
Definitely not worth it. All it takes is for an IRS agent to catch wind of suggestions that the "coach is training athletes with under the table cash payments" - and it is in the thousands of dollars over a long period of time. That, and a vendetta for the coach or school, can easily trigger an audit.
As a final point, whistleblowers can receive up to 30% of the taxes and penalties recovered by providing such information to the IRS. Pi$$ off the wrong parent that has seen what is going on and heard the coach mention he will only take cash because he "doesn't have to claim it on his taxes" - and there you go.
It’s always a clue when they offer a discount for cash payments.