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Third-party information reporting dramatically increases the accuracy of tax returns. Third parties-employers, banks, and others-report wages, interest, and other information to both taxpayers and IRS.6 An IRS study of individual tax compliance found that in tax year 2006, taxpayers accurately reported over 90 percent of income with substantial information reporting requirements, such as interest and dividend income. In contrast, the same study found taxpayers accurately reported only 44 percent of income subject to little or no information reporting, such as nonfarm sole proprietor income