The IRS doesn't keep track of everything that every one spends on various potentially tax deductible causes or programs. So, they rely on us to accurately and honestly report such expenses. This would be especially true of someone that is in business for themselves. I spent a year as an independent contractor for a delivery company. So, I had a number of business expenses (gas, wear on my car, supplies, etc.) that the IRS would not have known about if I hadn't reported them. Then there are contributions that I make to my church. Again, there is no way for the IRS to know just how much I give if I give cash. Additionally, as an independent business man, my employer did not report my pay to the IRS. So, it was up to me to report this. This also applies to anyone who earns money that is not reported in their W-2 forms. This income can include money from the sale of property, gambling, prizes, tips, etc. Again the IRS can't keep track of all of those sources of income, especially if the transactions are handled with cash. So, once again it is necessary to report these transactions on your tax forms. Now, for the most part, unless you make an obvious mistake or the IRS is specifically looking at you, then they are not likely to notice if you are not being entirely honest with them. That I why they also randomly select a number people for audits. This is basically an intimidation tactic to keep people honest just in case they get called in for an audit. So, the reason that the IRS doesn't just send you a bill is because until you file your return, they can't be sure if you underpaid nor can they be sure of by how much. So, you have to file a return. Besides, would you really want the government figuring out how much you owe them? That sounds like an invitation for them to take even more of our paychecks to me.