Voluntary Compliance

DEFINITION of 'Voluntary Compliance'

An assumption or principle that taxpayers will comply with tax laws and, more importantly, accurately report their income and deductions honestly.

BREAKING DOWN 'Voluntary Compliance'

This is one of those "ideal world" principles; for example, in an ideal world we wouldn't need police officers.

RELATED TERMS
  1. Schedule A

    Schedule A is a U.S. income tax form that is used by taxpayers ...
  2. Cash Basis Taxpayer

    A taxpayer who reports income and deductions in the year that ...
  3. Schedule L

    A form attached to Form 1040 that is used to calculate the standard ...
  4. Tax Benefit

    A tax benefit is an allowable deduction on a tax return intended ...
  5. IRS Publication 514

    A document published by the Internal Revenue Service that provides ...
  6. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
Related Articles
  1. Personal Finance

    New Tax Rules Target The Top Tax Bracket

    The American Taxpayer Relief Act brings about new tax rules for the wealthy that people such as Warren Buffett have been calling for over the last few years.
  2. Financial Advisor

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  3. Personal Finance

    Calculating the Mortgage Interest Tax Deduction

    The amount of money you save by paying your mortgage off quickly will far exceed any benefit from the mortgage interest tax deduction.
  4. Personal Finance

    7 Expenses You Won't Believe Are Deductible

    Many taxpayers would be surprised to discover some of the things that qualify as legitimate deductions.
  5. Personal Finance

    Why You Should Itemize Your Tax Deductions

    This strategy of moving your tax deductable payments and donations to the following year could mean hundreds more on your return.
  6. Investing

    Want A Bigger Tax Refund? Don't Itemize

    Six reasons why many taxpayers can save money and time by claiming the standard deduction.
  7. Personal Finance

    11 Tax Deductions You Can't Actually Write Off

    These are some of the most common tax write-offs that you can't really claim.
  8. Financial Advisor

    How The Wealthy Slash Their Income Tax Bills

    Many of these tax-minimization strategies can be used by anyone. Find out how you can pay taxes like a millionaire.
  9. Investing

    Personal Income Tax Guide: Basic Concepts

    By Ken ClarkOne of the most important but misunderstood concepts in tax planning is the mechanics of the United States' progressive tax system. When asked how this system functions, most people ...
  10. Financial Advisor

    Don't Miss These Tax Deductions

    Knowing the tax deductions you're entitled to can make or break your bank account. Do you know about all these insurance-related deductions?
RELATED FAQS
  1. How do I know whether to itemize deductions or take the standard deduction?

    Taking the standard deduction is the easiest and most common method chosen by filers, but many taxpayers may wind up paying ... Read Answer >>
  2. How should a change in accounting principle be recorded and reported?

    Learn about changes in accounting principle and why businesses make them, as well as the reporting and recording requirements ... Read Answer >>
  3. Are IRS penalties tax deductible?

    Learn about penalties assessed by the U.S. Internal Revenue Service and how the IRS does not taxpayers to deduct them on ... Read Answer >>
  4. How can I lower my effective tax rate without lowering my income?

    Discover how to reduce your effective tax rate without losing income by maximizing adjustments and deductions, earning tax-free ... Read Answer >>
  5. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  6. What’s the difference between IRS Forms 1040 and 1040EZ?

    Though very similar, the differences between the 1040 and 1040EZ Forms are significant when it comes to filing your tax return. ... Read Answer >>
Trading Center