What Happens If You Don’t Pay Your Taxes?

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What happens if you don't pay taxes on time?
The failure-to-pay penalty
Notices start to arrive within 1-3 months
- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
Tax liens and collections calls may follow
- A tax lien is a legal claim against property and financial assets you own or may have coming to you. It’s not a seizure of your assets, but it is a claim on them. If you sell the asset, the government could be entitled to some or all of the proceeds
.
- Liens are often public records. That means that even if they're not on your credit report, liens could affect your ability to get loans, get a job or keep a security clearance. Filing for bankruptcy may not necessarily get rid of the lien or your tax bill.
- The IRS may send your account to a private collection agency. The IRS will send you a notice should that happen, and it will give you the collection agency’s contact information
.
IRS levies and passport restrictions
- A tax levy is the actual seizure of your assets — property, bank accounts, Social Security payments or even your paycheck — to pay your debt.
- The IRS can levy, seize and sell any type of personal property that you own or have an interest in, such as your car or real estate, and apply that money to your unpaid tax bill
.
- Ten days after a notice of intent to seize or levy is issued, the late-payment penalty rises to 1% per month
. On top of all that, the State Department may not issue or renew your passport, and it might even revoke it if your accrued federal tax debt is over $64,000 .
- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
What to do if you can't pay your taxes
Article sources
- 1. Internal Revenue Service. Failure to Pay Penalty. Accessed Sep 16, 2024.
- 2. Internal Revenue Service. Penalty Relief. Accessed Sep 16, 2024.
- 3. Internal Revenue Service. Understanding a Federal Tax Lien. Accessed Sep 16, 2024.
- 4. Internal Revenue Service. Private Debt Collection. Accessed Sep 16, 2024.
- 5. Internal Revenue Service. What Is a Levy?. Accessed Sep 16, 2024.
- 6. Internal Revenue Service. Will I Be Charged Interest And Penalties For Filing And Paying My Taxes Late?. Accessed Sep 16, 2024.
- 7. Internal Revenue Service. Revocation or Denial of Passport in Cases of Certain Unpaid Taxes. Accessed Sep 16, 2024.
- 8. Internal Revenue Service. 2022 Internal Revenue Service Data Book. Accessed Sep 16, 2024.
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