> encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest. Ha, yes that i

> encouraging more taxpayers under the U.S. system of "voluntary compliance" (self-reporting attested to under penalty of perjury) to be honest. Ha, yes that is a funny fallacy they use. On the IRS side, they use a social graph and node based system to determine who to look into. If one filer takes a tax deduction for a payment, the IRS then looks to the recipient to see if they paid taxes. When a mismatch occurs, typically of the recipient, they send out the "we determined that you owe us this much" letters. From my experience just talking to people, a very large number of people really believe that only their employer or a their bank is "snitching" on them, and whenever they get a payment outside of those systems they think "they don't have to pay taxes" because "the IRS doesn't know". I really am at a loss of words of how deep tax ignorance goes. The 1099 system and compliance behind the 1099s is also a helpful notice for the IRS' graph system, although not necessary as they can just look at the same filer's deductions, but they can coax more payments as they do have statutory penalties for not filing a 1099.