What does tax compliance refer to?

Tax compliance refers to the timely and accurate filing of tax returns. This definition encompasses the obligations that taxpayers have to report their income, claim deductions, and submit all required documentation to the Internal Revenue Service (IRS) according to established deadlines. Staying compliant means that taxpayers not only need to file their returns within the specified time frames but also ensure that the information provided is correct and reflects their financial activities for the tax year.

This concept is crucial because accurate and timely tax filing is necessary for the proper functioning of the tax system. It helps ensure that the government collects the revenue needed to fund public services while also enabling taxpayers to avoid penalties or interest due to late submissions or incorrect filings. Tax compliance is considered a primary responsibility of taxpayers, and it is monitored by tax authorities to ensure fairness and legality in tax collection.