For the IRS to maximize the rate at which taxpayers pay their taxes voluntarily, it needs to understand why they comply. The Taxpayer Advocate Service surveyed sole proprietors (i.e., those filing Form 1040, U.S. Individual Income Tax Return, Schedule C) to better understand the factors that may affect their income tax reporting compliance. This is particularly important because sole proprietor income is generally not subject to information reporting, is difficult for the IRS to detect, and represents the largest portion of the tax gap – tax that is not timely and voluntarily paid. The results of our surveys suggest that norms and distrust of the national government, the law, and the IRS may promote noncompliance. Consistently, the results also suggest that tax morale and trust in government, the law, the IRS, and preparers may promote compliance.
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