But this is just for things like W2s and 1099s. When the party providing you income (employer, bank, etc.) sends one to the IRS they also send a copy to you. On

But this is just for things like W2s and 1099s. When the party providing you income (employer, bank, etc.) sends one to the IRS they also send a copy to you. Only idiots try to cheat the IRS by lying about what these forms say. This isn't to say it doesn't work some of them time (I forgot to report the redemption of a bond once and never heard about it, but I'm poor.) But I have a hard time believing this makes up a significant fraction of the total revenue lost to tax fraud. If people get away with it that's probably because the IRS have bigger fish to fry among all the money changing hands that isn't reported on such forms. Anyway, this is not how law and order is supposed to work in a civilized society. You don't bait morons into breaking the law by fooling them into thinking they won't get caught. For every potential cheat who looks at this info and says "Aha! They don't know about the dividends from my Acme shares! Cha-ching!" there are probably more who will be dissuaded from cheating because they'll realize that, oh yeah, my bank sent a copy to the IRS as well. Or better yet, people will be prevented from _accidentally_ omitting income and having to go through an audit, which is a net win. (I sure as hell would have reported that bond.)