Foe No. 2: Small businesses cheat, and tax reform fosters them

Tax evasion isn’t for everyone. Salaried workers who get regular paychecks and a W-2 form have fewer opportunities for it. The IRS simply knows too much about their pay, having gotten regular updates from their employer — not to mention regular payments via withholding.

Instead, the biggest cheaters are the ones for whom it’s easiest. And that tends to be on the business side, with an outsize role for smaller and less bureaucratic outfits — particularly small shops with single owners, self-employed freelance consultants and other independent contractors.

In these businesses (whose owners are generally referred to as “sole proprietors” or “nonfarm proprietors”), the people earning the income are the same ones who decide what information to share with the IRS. There is no third party — an employer or investment manager — to pass those details along in a non-self-interested way. And while the owner-workers are still expected to report every dollar they get from clients, along with a fair accounting of appropriate deductions, that doesn’t always happen.