Over at this /r/pics thread, plenty of folk are making this claim about the house in the picture, yet providing zero sources. This honestly seems like some made-up story to say "oh, look how stupid they were back then"; I find it hard to believe that government figures in tribute-based economies wouldn't figure out that this was going on in such a large scale and devise new methods for collecting taxes. Does anyone know why it was actually done?
I can't answer your question, but I have a related one:
When I visited the Old Fort of Galle in Sri Lanka (colonial Ceylon), I remember touring some colonial-era buildings that were extremely narrow but quite deep, sometimes IIRC opening up in the rear. The tour guide claimed it was because houses were taxed in colonial times on the basis of linear feet of street frontage and hence were built deep but narrow--a house 8' by 20' would be taxed at half the rate of one 16' wide along the street but only 10' feet deep despite the identical square footage of their floor plan.
Googling has failed me in turning up sources for this -- does anyone know if it was true?