I'd like to see a system like that that also integrates taxes. That is, it tracks total income for each payee each year and deducts taxes based on the appropriate tax bracket. It should also support sales tax and state income tax. That way, all that you need to do is appropriately mark the transactions and tax compliance is done. You could even mark business expenses in it and have deductions automatically processed.

Someone could lie about the nature of their transactions, but that's called tax fraud and it's already possible and we already have mechanisms to deal with that.