The Internal Revenue Service plans to ask more of these questions. Taxes on unreported income have zoomed to an estimated $60 billion a year. Because of this, the agency has been criticized for shirking its primary responsibility -- catching tax evaders. So it's shifting some resources from fighting drug trafficking to finding tax cheats.

To flush out this money, the IRS will consider it open season on people generally paid in cash and on small businesses with cash skimming potential. Agents won't worry too much about income paid employees and owners of stock, bonds and certificates of deposit. The payer reports this to the agency, and the IRS computers find the people not reporting it.

The IRS' secret weapon is the "lifestyle audit" or "economic reality check." In the past agents didn't look beyond the paper records. They found overstated deductions, but missed unreported income. In future examinations, they plan on also comparing a taxpayer's lifestyle with income reported. Are you a maid driving a new Mercedes? Do you operate a small grocery store, but live in a 24-room mansion? If your income doesn't match expenditures, agents will insist you prove how you got the money.

This economic reality audit would include a personal interview with questions about home improvements, the location of any safe deposit box, the amount of loans and other personal matters. It might also include a tour of the business premises to confirm depreciation or inventory items or questions asked suppliers, customers or neighbors.

Most audits will start with many intrusive questions. CPAs and lawyers complain the IRS is fishing in dangerous waters because some questions invade a taxpayer's privacy. In the past the IRS cast this lifestyle audit net only if the taxpayer looked criminally rich. In that case, because different rules apply, the taxpayer's accountant would call in an attorney skilled in advising a client in criminal tax investigations. The lawyer would advise which questions to answer. In the usual audit, a taxpayer should cooperate, but with a criminal audit many questions shouldn't be answered.

The IRS says it doesn't want to call this extra probing a lifestyle audit or an economic reality check. That sounds too much like interfering in a taxpayer's life. Instead, it prefers to call it a financial-status audit.(more at IRS Audits)

THE MORAL: By any name, it's snooping.