Failure to pay taxes can result in serious consequences from "summary" of Income Tax Fundamentals 2021 by Gerald E. Whittenburg,Martha Altus-Buller,Steven Gill
Failure to pay taxes has serious consequences. The Internal Revenue Service (IRS) has the authority to take various actions against those who fail to pay their taxes. These consequences can range from financial penalties to criminal charges depending on the severity of the offense. The IRS may impose penalties for failure to pay taxes on time, failure to file a tax return, or underreporting income. One of the most common consequences of failing to pay taxes is the imposition of penalties and interest on the amount owed. The IRS can charge a failure-to-pay penalty of 0.5% of the unpaid taxes for each month or part of a month that the taxes remain unpaid, up to a maximum of 25% of the total tax due. In addition to penalties, the IRS can also charge interest on the unpaid taxes, which accrues daily and compounds over time. If a taxpayer repeatedly fails to pay their taxes, the IRS may take more serious actions to collect the debt. This can include placing a tax lien on the taxpayer's property, garnishing their wages, or seizing their assets. In extreme cases, the IRS may file criminal charges against the taxpayer for tax evasion or fraud. Tax evasion is a felony offense that can result in fines of up to $250,000 for individuals and $500,000 for corporations, as well as imprisonment for up to five years. It is important for taxpayers to understand the consequences of failing to pay their taxes and to take steps to address any outstanding tax liabilities promptly. This may include setting up a payment plan with the IRS, requesting an extension to file their tax return, or seeking professional help to resolve any tax issues. By taking proactive steps to address their tax obligations, taxpayers can avoid the serious consequences that can result from failing to pay taxes.
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