What happens if you owe the IRS money and don’t pay?

What happens if you owe the IRS money and don’t pay?

Most people start out with plans to pay their tax bills as required. Many people fall behind because those tax bills can be very expensive. While it’s easier to have an employer pay them out of your paycheck for you, this doesn’t always solve the problem, especially if you are self-employed or your details with your withholdings, for example, aren’t correct.

When you don’t pay your taxes, what’s the worst that could happen to you? The federal government has a number of ways it can pursue you to collect the debt you owe. In every situation, it’s best for you to pay what you owe when you can. When that isn’t a possibility, don’t ignore the situation but get help, like from our team at Wiztax. Essentially, if you simply don’t pay, here’s what you can expect.

You’ll Pay Increasing Fees

Failure-to-pay penalties are not uncommon if you don’t file your taxes. If you miss a tax filing date, you could be facing a penalty of up to 25 percent. If you are over 60 days late on your payment, that could require a much higher fee, making non-payment expensive especially if it goes on. If you file your taxes, but you don’t make a payment, you’ll pay a penalty of 0.5 percent of the amount you owe for every month you are late, up to 25 percent. More information can be found on the IRS website here.

You Can Be Sent to Collections

If you continue to not pay your debt, even after you’ve promised to do so, you can expect costs to continue to rise. However, the IRS also has the ability to file a lien against your assets or, in some cases, seize them.

  • A federal tax lien can be placed on your property and any future property you own, including your car or home. It can also be placed on wages and bank accounts. This can automatically be placed if you don’t pay your tax bill.
  • Seizure of property is likely in some cases. A seizure, or levy, is the government’s legal right to take the property you own or the rights to that property to settle the debt owed. That property can be sold to pay for the tax debt. It can seize the wages you have in your bank account, too, to pay down what you owe.
  • Passport-related consequences can also occur. The U.S. Department of State will not issue or renew a passport to you if you have a debt to the IRS that is delinquent. More so, if the IRS certifies that the debt is seriously delinquent, the government can revoke your existing passport.

When you cannot pay back taxes, this can seem very frightening. Yet, paying a hefty tax bill can also seem impossible. The good news is that the IRS also offers a variety of tools that can help you to avoid all of these consequences.

Getting Tax Help Can Alleviate the Problem

Keep in mind that if you can easily pay back taxes right away, you should do so since that will be the least expensive option. If you cannot, you can get help. You don’t need to use a traditional “tax resolution service” that charges thousands and promises some hidden way to reduce your tax debt. Instead, with Wiztax’s help, you can use the tools that are available to every American citizen to get caught up on repayment of your debts.

There are tools such as an offer in compromise that can help you to repay your back taxes without the financial difficulties you could be facing. Or, you can set up a payment plan that fits your financial situation and meets the IRS’s goals. Get started for free today.

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