You call the IRS. Don't worry though, the IRS actually flags cases and everyone does get caught.
Also, how do you know that they haven't been caught or audited? No one really broadcasts such information. In fact, most people brag about how they lowered their tax payments, or got a great deal...and they do this because they are braggarts, and in fact were actually nailed.
Life is too short. If you tangle with miserable people, you become one.