If government statistics are correct, almost all of us engage in what the Internal Revenue System (IRS) calls ‘Voluntary Tax Compliance’. How can compliance be voluntary if the law compels compliance?
Voluntary Compliance is an assumption or principle that taxpayers will comply with tax laws and, more importantly, accurately report their income and deductions honestly.
In contrast, sales taxes and other use taxes are involuntary. Whenever you buy an item or service that carries sales tax, you not only pay the price of the merchandise or service, but the tax as well. For further assistance on tax compliance visit https://www.canadiantaxamnesty.ca/
The Voluntary Compliance Initiative is a hybrid of tax amnesty and voluntary disclosure programs. These initiatives run for only a short time period and target those taxpayers with very specific type’s circumstances or situations.
As an example of this, a Voluntary Compliance Initiative was employed by the IRS to uncover those taxpayers who had been hiding their income using a variety of tax shelters.
Although the IRS collects taxes under a voluntary compliance system, the assumption is that most of the population will fail to pay its full tax burden, either by mistake or by deliberate attempts at tax evasion. To remedy the resulting shortfall, the IRS has instituted a system of tax audits.