If you could cut one responsibility out of your life, what would it be? No more taking out the garbage or washing the dishes? What if you decided you would never have to pay taxes again?
Well, as it turns out, choosing that route would end up having disastrous consequences. And it’s certainly a tempting choice when you’re running low on cash. But what are these ever-dangerous consequences we’re talking about?
Well, it’s funny you should ask. We’re here to break down exactly what happens if you don’t pay your taxes! So without further ado, let’s jump right into things!
So What Happens When You Don’t Pay Your Taxes?
The first thing to clear up is that filing your taxes and paying your taxes does not mean the same thing. For starters, you can request an extension on filing the taxes that will give you several months to catch up on the paperwork, but the payment cannot get delayed without consequence.
If you don’t file your taxes on time without requesting a tax extension, you will get charged 5% of what you owe every month (maxed at 25%) unless 60 days pass, then you have to pay double your tax amount. Late payments, on the other hand, will only make the IRS charge you 0.5% every month. On top of that, the IRS will start adding chunks of interest to your taxes, causing the base value to grow over time.
It’s important to note that in a pinch, you should file your taxes even if you can’t pay them. This prevents the filing penalties from kicking in and following up with the IRS soon after will make them more sympathetic to your case.
In addition to this, the IRS will flood you with mail and notifications until you establish a plan to pay them back and communicate it to them. They will also withhold your tax refund. If things get too dangerous, it never hurts to get help with property taxes and such
The More Dire Consequences
Should the situation grow dire, the IRS is equipped to start cutting you off at the knees. They can disable your Social Security and sabotage your credit report to make it near impossible for you to secure any loans.
One of the worst weapons in the IRS’s arsenal involves a federal tax lien. This maneuver allows the IRS to lay legal claim to your property unless you work out an agreement with them to begin paying them back. Continue to ignore them, and the IRS will take your house, vehicle, and everything you own right out from under you until they’ve taken enough to repay the amount you owe.
Declaring bankruptcy is another course of action that will come about if you continue to stick your head in the sand regarding taxes, and finally will cap off with official court summons and jail time if you continue to ignore the IRS.
You Won’t Escape the IRS
And there you have it! Now that you know the answer to the question of “What happens if you don’t pay your taxes?”, you’re prepared to pay your taxes on time so the IRS doesn’t hunt you down with laser-like precision! And if you’re curious to learn more about taxes and the law, come check out the other posts on our blog!