Paddy, although people may get away with not reporting tips, they are technically obliged to, are they not?
Mind you, I'm sure the IRS is more concerned about workers reporting tips in some industries (e.g., food services) than in others.
"All tips you receive are considered income and are subject to federal income tax. You must include in gross income all tips you receive directly from customers, tips from charge customers that are paid to you by your employer, and your share of any tips you receive under a tip–splitting arrangement with fellow employees.
If you did not report tips to your employer, you must report them as income on your return, and you may owe social security and Medicare taxes on them. Complete Form 4137 (PDF), Social Security and Medicare Tax On Unreported Tip Income, and attach the form to your return. Include the amounts from Form 4137 on the appropriate lines of Form 1040."
http://www.bankrate.com/brm/itax/edit/n ... 111299.asp
"Tip reporting isn't limited to restaurant employees. Anyone who gets a salary or wages and collects tips -- cab drivers, hairdressers, club attendants, performers -- must report tips as income."