What Happens When You Do Not Pay Your Taxes?

What Happens When You Do Not Pay Your Taxes?

March 10, 2022

We at Green Valley Tax Services can help you when you need to pay your taxes we understand how important this is to you. Don't forget your state that may have other consequences. 

In 2020, the IRS processed more than 240.2 million federal tax returns. That does not include the hundreds of thousands of small businesses and other entities that have to file taxes every year. While it is true that a large portion of these tax documents will mean families do not have to pay anything, the fact they are filing is a pretty big deal. 

The situation of paying money to the government for just existing is not always a welcome thought by many in the country. Between the varying political ideologies and willingness to accept the public services tax revenue creates, some are left with the question: what happens if I do not pay any taxes at all? 

Under the Weight of Penalties

 A significant portion of the IRS is automated by computers and AI machine learning systems. This has become even more critical over the past few years as the revenue for IRS systems and employees has been routinely slashed by political oversight committees. 

What this means for you and your business is that the IRS has become more of an “If/Then” situation. If person A does not file their taxes by the deadline, then the system issues notice B. In other words, you can expect a few financial situations to immediately occur if you miss filing your taxes by the deadline.  

You will be charged an annual interest rate of roughly 5-6% in penalties on the amount of money they calculate you owe. That means if you actually owe less, you will have to go through a prolonged process of providing the actual dollar amount and then deal with the penalties that are being accrued. 

  • 1-3 months = You will start to receive notices that a balance is due to the IRS, with each progressive letter becoming more severe in tone.
  • 2-6 months = The IRS may issue a tax lien and your property or financial assets. These are public records issues that do get reported on your credit. It will affect your ability to get loans or apply for jobs with security clearances, and bankruptcy is not likely to remove them from your record. Your account may also be sent to a “government approved” collection agency that will go after you hard to recoup the money.
  • 3+ months = You will be issued a levy. This is the actual seizing of your property, financial assets, or anything else the IRS can sell for cash. They are given a pretty wide window of what is acceptable to seize. You do not want to be in this situation. 

If you do not owe any money but are owed a refund, that money becomes significantly harder to get once the final tax date (usually April 15) has come and gone.  

What About Jail?

Going to jail for not paying your taxes is pretty rare but not unheard of. In fact, it is an often overlooked tactic that has resulted in the successful prosecution of many high-profile celebrities and criminals. The IRS has a 10-year statute of limitations on collecting your taxes. That means you can hide someone for 10 years, and you are free and clear, but then next year’s taxes come due, and it’s back to the cave. 

Playing legal chicken with the IRS is not a good idea. They tend to have the full backing of the federal government, and in cases like Al Capone, Wesley Snipes, Pete Rose, Willie Nelson, and even our former president Donald Trump, tax evasion can lead to severe repercussions. 

You are far better off contacting a professional service to help you avoid these simple issues like our experienced team at Green Valley Tax Services. We have spent years preparing taxes and keeping our clients in good standing with the IRS so they can pursue whatever business or independent ideas they may wish without the government interfering. Give us a call today, and let us help you stay current with your tax obligations.