It is every American’s responsibility to pay your income tax by a certain deadline. But sometimes we are unable to make the deadline and soon we find ourselves in a hole, scrambling to get out. Many believe that by ignoring the problem, like a pain in your body, it will eventually go away. However this isn’t the case. The IRS wants what’s due and will use all its tools against you.
Here’s what will happen if you fail to pay taxes at a timely schedule:
- If you fail to pay taxes with your tax return, the IRS will send you a notice in the mail. This notice will explain how much you owe in taxes and can include any penalties and/or interest that may have accrued since the IRS discovered the error. This notice is a essentially a bill, demanding payment in full.
- If you ignore the notice and fail to pay the IRS, then you will be penalized. The IRS will start adding interest to the bill. This interest is compounded daily based on the federal short-term interest rated plus an extra 3 percent. In addition, you may receive a .05 percent late payment penalty which increases over time. There will also be a combined 5 percent penalty for both paying late as well as failing to file your income tax return on time.
- If you still fail to pay taxes, then you will soon receive in the mail a Notice of Federal Tax Lien or you may be served a Notice of Levy. With a tax lien, the IRS will claim your property to use as payment for your tax bill. With the tax levy, the IRS will physically take away your property until the debt is paid. This could mean the following: your wages could be garnished; your retirement fund could be used to pay your debt; your credit will be damaged; and criminal charges could arise.
- By still failing to pay taxes, the IRS could file tax evasion charges against you, which will result in jail time.
If you cannot pay your taxes, the IRS doesn’t accept this an excuse not to pay at all. With many programs available to help you pay your tax bill, there should be no reason to not pay.However there is help. Before the IRS places a lien or levy on your property, it is best to contact an experienced tax attorney who will negotiate on your behalf to help pay your taxes. The Houston tax attorneys at Pro Tax Counsel are prepared to work with you to make sure you don’t have to go through this situation.