shipwreck: Tax evasion might get them arrested but they have even more problems than that. They don't get covered under Social Security or unemployment for one thing so if they do this more than a short time they are messing up maybe lifetime for SS since they get nothing if disabled or elderly since they didn't pay in also if they die the minor children don't get survivors. They will have trouble getting a mortgage or any other loans and might have trouble finding health insurance. If they are in an accident the car insurance might pay for lost wages but that is zero since they didn't have a job.
Yes, if they are dodging taxes, etc. If they are reporting proper income and paying the taxes as independent contractors, then no. The employer might.
not initially you will be tagged with tax fraud, given a tax penalty and then go to jail
generally not arrested