<prompt> Human: basically he makes crafts and things and sells them at trade shows. he doesnt feel that you should be collecting taxes on these and as far as I know does not have a business license. Im probably not going to make a lot of sense here because i dont know what Im talking about. But here goes. He has been contacted by a tax agency and has been told owes a certain amount in taxes which he believes he does not. This job is the main source of income for him and his wife. Would someone explain whats likely going on and just how bad this is. ThanksEDIT: first off thanks for the replies. Second all this info is not first hand so anyone who has played the telephone game or listened to someone freak based on partial information, just know this could apply here. This is in Tennessee. Also I dont know what entity told him he owes taxes, and I agree with what was said below it sounds iffy. I was talking to his sister, who had gotten concerned when he was ranting about someone calling him and saying he owed. The sister pushed a bit and when he didnt want to talk. She had mentioned it to me and asked my thoughts and expressed concern. None of the three of us are accountants or tax pros so I wanted to get some info. This guy had been doing this for over 10 years. And this is the main source of income for the family. He has bought cars and a house with the money. Is it just a matter of time before he gets audited? Thanks for the time  <response>: Did he report it as pass-throughhobby income?edit: Ah, I see. Your friends an idiot. If hes you, just pay your taxes. 