In the banking world a SAR is a Suspicious Activity Report. These are filled out to help the government identify illegal activity. Generally its for things like terrorism or drug trafficking, but any illegal activity can be included.
There are guidelines which spell out when a SAR must be filed. They are not clear concerning this situation.
A long time borrower, with perfect in-house credit, has a loan that is up for renewal. According to your institutions guidelines he has to show a repayment source, normally that means a tax return. In the course of the conversation you are told that he didn't file his taxes.
You can not give him the loan. That's not a question. Do you file an SAR?
Does it matter to you that the IRS, not the DEA or FBI or your local cops are the largest user of the SAR data base?