They're supposed to. How many do you think actually are?

Probably about the same percent as individuals who rent out their apartment long-term?

I doubt it. Landlords have to count rent as aggregate gross income on their tax returns, and it's probably both fairly easy to get caught and fairly serious if you do get caught.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Em...

(If you're just subletting, only any net gain is taxable, which is probably minor.)