Taxpayers can skip their payments from time to time. Then unpaid debts begin to pile up alarmingly, things get on top of them. However, is it possible to face jail time for that much debt?
We aim to reduce this information pollution with this post.
Taxation in the USA
The United States deals with three key tax levels:
- Federal income taxes fund the national programs such as the military and social services.
- State income taxes are used for state expenditures like highways and state parks.
- Local taxes fund services such as libraries, police departments, and city parks, including property taxes. Also, city or county local jurisdictions levy these taxes.
Consequences of Not Paying Taxes
People usually don’t pay their taxes for two reasons. The first is tax evasion, which means intentionally avoiding your taxes. The second reason is simply not paying due to forgetting, making a mistake, or lack of money.
Therefore, officials can take money directly from your paycheck under the wage garnishment. They can even seize and sell your assets, like your car or house, under the property seizure.
Whatever your excuse to not pay taxes, you could get fined. The consequences even cost you more money than your debts. In extreme cases like tax evasion, you might even end up in jail.
What Happens When You Can’t Pay Your Taxes?
First of all, the IRS sends you a bill with the total amount, including extra fees. If the bill isn’t paid, officials will keep contacting you.
Always keep in mind: The IRS charges some penalties every month until you pay your debt.
What is the Difference Between Tax Liens and Tax Levies?
A tax lien is a legal claim against your personal property and financial assets. If you fail to pay, then the government acquires the right to sell the property or use it in some other way to protect its interest.
A tax levy is the government’s direct seizure of assets, like salary or bank account, due to unpaid debt after a tax lien is placed.
Will you go to jail for not paying taxes?
If you purposely dodge paying your taxes, yes, it’s a major crime. In the end, it could lead to five years in jail and a fine up to $250,000 for individuals (or $500,000 for businesses).
- Tax fraud occurs when someone or a corporation intentionally falsifies information on a tax return to limit tax liability.
- Claiming false deductions.
- Claiming personal expenses as business expenses.
- Using a false Social Security number.
- Not reporting income.
- Tax evasion occurs when someone or a corporation illegally avoids payment of taxes owed. So, it’s an example of tax fraud.
For other situations, the IRS first tries to collect the owed money, adding extra fees and interest. However, if you still don’t pay, this time, the IRS can take serious actions like seizing your property or garnishing your wages.
Struggling to pay your taxes? Let’s get help from a tax professional. They can guide you to avoid big penalties.
Why Should You Hire a Tax Attorney?
Dealing with tax issues can be confusing. So hiring a tax expert or lawyer could be a good idea. Because they know all the tax rules and gaps. What can they do for you? Shortly, they might lower your debt or make a payment plan for you. They might even save you from jail in some cases.
You might owe more money, lose your property, or even face jail. That’s why, always filing and paying your taxes on time is recommended. If you can’t pay in full, talk to the IRS or a tax lawyer for a payment plan. Last but not least, understand the tax system and accurately monitor your income.
If you need help, act quickly. Call us to resolve any tax issues.