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Cash and other transactions without established reporting requirements is why. They only know what gets reported to them as a pre-requisite of being an employer or hiring entity in the United States. The burden is actually on the taxpayer to accurately report the entire detail of their taxable footprint as defined in the tax code, as the IRS would otherwise require a perfect surveillance infrastructure, wherein every movement of money is traceable to assure your tax liability is accurately assessed. The real question, in my mind, is that, knowing John Q. Taxpayer is burdened with understanding the tax code in it's entirety (in the spherical cow, in a vacuum sense), why in heaven's name are things written in such a manner whereby doing everything by the book is so hard? From my experience, most people get the income part, those who have good portfolios get capital gains, but most people don't even know where to start looking if they aren't guided to it by an adversarial audit, which are guaranteed to be counterproductive in fostering the any degree of goodwill between taxpayer and tax service. Obviously, an accountant is capable of learning the corpus of material to be able to work with it, but given both the licensure requirement, and the fact most accounting questions I've heard resulted in a lot of open to interpretation answers, I'm not at all confident saying it is reasonable to expect the taxpayer to accurately report things, and furthermore, to expect some group of experts to handle it for everyone else, we've not done a good job at treating tax expertise as a public good in the accessibility department. In short, at it's core an information propagation problem, suffering from perverse incentives present in private enterprise guarding and perpetuating information asymmetry to create opportunities for profit extraction at the expense of public process being rendered largely ineffectual. |