Only report 1099 income?
I am looking for the following info:
We run a service based business
We have always filed our taxes appropriately and through a CPA.
We provide all clients with an invoice to pay from (recorded in Quickbooks)
Only a handful of our clients send us a 1099 at the end of the year
What are the potential cons of only reporting income that we receive a 1099 for and omitting other sales? It seems as though this would reduce the gross income shown, and the other omitted invoices are likely being reported to the IRS in a lump sum deduction (with other similar expenses for our clients) so how would they be able to detect this?
I assume that the IRS could audit one of our clients that did not provide a 1099 and review all receipts/invoices, but then do they actually follow the trail of every single reciept/expense claimed?
thanks - I'm sure some of you have some strong feelings about this kind of thing... but please give me a realistic idea of how the IRS would track this and the potential consequences?