... The government knows your income....
Income from self-employment is profit, not revenue. The government does not know your income, even if all your revenue shows up on a 1099, since they don't know your expenses until you tell them. And there is revenue they don't know about, as well: cash payments, small checks, small electronic payment.
My wife is a psychologist, and yes, the payments from health insurance companies are reported to the Feds on 1099's, but copays, coinsurance and deductibles paid by clients, payments from self-pay clients, payments from debt collectors who tracked down deadbeats who didn't pay what they owed under the terms of their insurance, and expenses which have to be deducted from revenue to give actual income are not reported to the government except by us.