I'm still wondering what kind of 'expenses' a DPE racks up?
Probably not a lot, of course. But DPEs do need to maintain currency as pilots, to the tune of 60 hours PIC a year in airplanes (for airplane DPEs). Checkrides don't count as PIC, so if they are a full-time DPE they'd have to find some other way to maintain that.
One DPE here who travels to meet you almost anywhere in the state had to buy another car because he wore his old one out driving to checkrides.
As for taxes...well it's a pure cash business so draw your own conclusions.
I hear this thrown around often as an implied indictment of DPEs - obviously since they take cash, they must all be tax-dodging criminals. That's clearly assuming facts not in evidence.
Whenever this comes up, nobody ever offers actual real examples of tax fraud, they just "assume" it's happening.
I'm a CFI and I often take cash. Does that mean I cheat on my taxes?
While I'm sure there are some tax cheats who are DPEs just like there are in any business, this isn't like paying somebody cash to mow your lawn. Any IRS auditor would be easily able to find evidence of tax fraud. Remember, the DPE must first get approval from the FAA for every checkride. They then log into a government system (IACRA) to document the results of the checkride, whether pass, fail, or discontinue. A document is generated with the results of that (temporary cert or letter of disapproval/discontinuance). These results then go to the FAA and temporary certs are then processed by the Airman Registry. Further, the DPE often signs the logbook of a successful applicant. And then the applicant goes on social media to let everyone know they passed. The "paper trail" for a checkride is quite long.
All these records would be super easy to find. "Oh, so you did 200 checkrides this year but only claim $10,000 for income?"