As tax time approaches once again, it is either a sight of relief, or the start of some sleepless nights. If you have filed your taxes and the government accepts the return, you have nothing to worry about. However, if you have not filed a return, it can be a mistake that will most likely come back to haunt you. What are the consequences of not paying your taxes?
TurboTax has a great overview of what happens to you if you do not file your taxes. Generally, you have to file a tax return if you owe taxes. If you are due a refund, you have up to three years to file if you intend to claim that refund. After three years, the tax refund goes back to the government forever.
Not filing your taxes can result in a jail sentence and a fine. In most situations though, the end result is some sort of settlement in which you end up paying fines and penalties. What kind of penalties can you face? The Internal Revenue Service has an explanation of what happens if you have unpaid taxes after the April 15th deadline.
Generally, the IRS will contact you if you have failed to file a tax return. The first contact will simply be to inform you that you have not filed and to request a tax return from you. If you still do not file a return, and you owe tax, the IRS can actually file a past due tax return for you that may not contain all allowable deductions. If a return is still not filed, it can result in levies on your home, wage garnishing and even seizing your property.
What is constituted as non-payment of taxes? Several guidelines are in place that can cause the IRS to come after you even if you have filed a tax return. If a return is deemed as fraudulent, frivolous, or is deemed to be an understatement of actual income, you can be charged with tax evasion. Tax attorneys such as Alvin Brown and Associates provide a detailed explanation of the definitions of these terms.
Not paying state taxes can also result in the IRS coming after you. Most states have agreements in place with the IRS that will alert the IRS about any non-payment of taxes. The IRS will have access to 1099’s, and have access to W-2 statements from previous years which can help with any case that is brought forward against you if you do not pay your taxes on time, or respond to IRS inquiries.
The best thing to do is to pay your taxes when they are due, or to come up with a plan to pay if you cannot pay by the due date. The IRS will come after you if you do not pay, so it is better to either pay, or work with the IRS to come up with some plan to pay the tax due.