If you are a CFI and riding along in the right seat not even giving instruction they will hold you liable.
This is a popular myth. I believe it feeds the ego of the up and rising flight instructor, but it has no basis in reality.
No, the FAA does not seek out the person with the highest certification, or the most experience with the intent to blame him or her, or violate him or her. Myth; all myth.
New flight instructors like to believe that they have achieved the pinnacle of pilot certification. They like to believe that they are always pilot in command when in the aircraft, that their position is somehow loftier...after all, they're the people who not only fly, but teach others to fly. Echoes of old movie lines, the best of the best of...what's left?
A flight instructor certificate isn't a pilot certificate. It's a teaching certificate. Do you suppose that in the event of a mishap that occurs when you are riding along, the FAA will attack you on the basis that you failed to teach hard enough?
Perhaps because you failed to perform a mutiny and sieze control of the aircraft, and exert your superior knowledge and ability, when you weren't a pilot or crewmember on that flight? Save the day by denouncing the terrible flight planning or judgement on the part of the 172 Captain with whom you're riding, and take over in time to avert certain disaster? Do you think that the Administrator, or representatives thereof actually think or act that way? Are you aware that interceding or arresting control from the Pilot in Command may be construed as air piracy?
Ego likes to think that one is above all the others, and therefore recognized as such by authority. But ego is wrong.
Who is pilot in command?
Can a SIC be held liable? Absolutely, when the SIC is really acting as SIC, and shares liability for the safe outcome of the flight. Don't confuse that with riding along. It's not at all the same thing.