My understanding is that having true ghost employees can be considered tax fraud as the tax forms filled out fraudulent. In addition, the tax returns which would include these tax payments would also be considered fraudulent.
Now I do agree with you that the IRS is likely not the best organization to report this to for a variety of reasons. However, I also would not discount it as MCA providing more details to a professional might open up possibilities we’re not aware of because we’re not tax lawyers.
I seem to remember an issue with closely held companies when it comes to salaries of owners and family members. Basically the IRS might consider a 100k salary for an owner’s wife as a disguided dividend. This is because dividends get taxed twice: Once as a dividend and again as part of that person’s income. So the fraud includes finding a way to disguise this dividend as something else. Aka a family member’s salary. The term is referred to as constructive dividends.
Payments to family members of shareholders: Amounts paid to a family member that were in excess of the value of services the family member provided constituted a constructive dividend (Snyder, T.C. Memo. 1983-692). Also, payments to a family member made on a lease that did not have a business purpose were constructive dividends (58th Street Plaza Theatre, 16 T.C. 469 (1951)).
I’m not saying this is necessarily fraud, as I’m not a lawyer and my work only deals with taxes very peripherally. But I wouldn’t necessarily discount the fact that there are tax implications with what MCA describes that the IRS would be interested in. This is a random example I remembered from a tax class years ago.