5 Bad Things Happen When You Don’t Pay Taxes
Most people have payroll taxes and income tax withholding taken out of every paycheck, but that doesn’t happen if you have your own business or do freelance work. No matter how you earn your income, though, you still have an obligation to pay taxes. When you don’t pay taxes, though, you could be looking at some pretty steep consequences.
Here are 5 things that will happen when you don’t pay taxes.
You’ll Pay Both Interest and Penalties
Since not paying your taxes is considered fraud, there are expensive penalties that go along with it, depending on how much you owe. On top of paying the taxes you owe to the Internal Revenue Service, you’ll likely have to pay interest of from 4 – 6 percent according to recent IRS pronouncements regarding tax underpayments. In addition to the interest, it’s important to remember that there are substantial penalties for both late filing of your tax return and late payment of your taxes. Other penalties may also apply.
You Will Forfeit Your Refund
If you skip paying taxes for a year, but pay the next and expect a refund, the IRS will likely just levy, or seize, your federal or state refund to pay for your previous year’s unpaid taxes. The IRS may also pursue other collection actions against you, depending on how big your refund was going to be and whether it’s sufficient to offset the taxes, interest and penalties due. In any event, you won’t get a refund until all of your IRS obligations have been paid.
Money Spent on Fixing the Problem
If you decide late to pay up, you’ll likely need a tax lawyer or other tax professional to help you straighten out your taxes. Not only will this cost you more money in the long run, but it’ll also take more of your time and effort to gather the information you need to file your outstanding tax returns and set up an appropriate IRS repayment plan.
You Could Face Property Seizure
If you continually fail to pay your taxes, the IRS could levy, or seize, your property in an effort to get the money back that you have not paid. Any property you own could be at risk of being seized by the IRS until you pay the taxes you owe.
Even Jail Time
While most people will not serve jail time for not paying taxes, but it becomes a distinct possibility if you’re hiding money from the government. Your stay in lockup can last anywhere from three to five years. In any event, not paying your taxes is probably not worth going to jail.
While there are ways to keep yourself from getting stuck in the mud with these problems, the best way to keep them at bay is to just file your returns and pay your taxes. If there’s a reason you can’t pay, be honest about it and go to the IRS with the proper paperwork before they come looking for you. Paying taxes isn’t enjoyable for anyone, but neither is paying the consequences that come with not paying.
When You Don’t Pay Taxes Get a New York Tax Attorney
If you haven’t paid your taxes or you have other tax issues, call a New York tax attorney at Mackay, Caswell & Callahan, P.C. for help. Complete our online contact form or call to speak with an attorney at 844-MCC-4TAX (622-4829). When you don’t pay taxes, you can’t just ignore your tax situation and hope it’ll somehow get better. We have offices in Albany, New York City, Rochester, Syracuse, Utica and Watertown, so whether it’s a New York City tax attorney or a Utica tax attorney you need, we stand ready to help. Our New York City tax attorney have the experience you need to help solve your tax problems.