What Happens If You Can’t Pay Your Taxes?

Hopefully, it shouldn’t be news to anyone reading this that any time the IRS gets in contact with you, it’s worth taking seriously. If you haven’t paid your taxes, you can expect to hear from them and it can get expensive if you’re not careful. If you can’t pay your taxes, what should you do to ensure the best outcome possible?

Don’t try to ignore it

Without fail, amongst those who are unable to pay the taxes that they owe, there are those who will try to ignore it, or even worse, might try to adjust their tax return by omitting information in the hopes of reducing their tax burden. This is tax fraud, and the consequences of fraud can be a lot more serious than what will happen if you’re simply not able to pay your taxes in full. Complete your tax return thoroughly and as accurately as possible to avoid any further trouble.

Penalties and collections

As soon as the deadline passes, if you have not paid your tax in full, the IRS is going to start charging interest on however much you have left to pay. On top of this, the IRS might add on a late-payment penalty, which can be as much as 25% of the taxes that you have to pay. You are also likely to start getting notices to pay your taxes within months and may start to make claims on your assets, getting ready for the levy, which we will cover a little more later. Liens can make it difficult to get loans and may even affect job applications.

Coming to a compromise

If you owe taxes and you find that you are not able to pay all of them, it is best to take a proactive stance against them. With the help of tax solvers, you might be able to come to a compromise with the IRS. This is an official process in which you work out how much you are able to pay them if you are not able to pay the full amount that you owe. Depending on your financial situation, they may be able to come up with a payment plan or a smaller bill so that you don’t have to go through the process of accruing interest and penalties.

If you leave it for too long

As mentioned, you should never simply try to ignore it when the IRS contacts you about taxes that you owe. If you leave it too long, then you may targeted by what is called a tax levy, which is when the IRS or agencies working on their behalf will start to actually seize your property, including bank accounts and your paycheck. Furthermore, you can have your passport restricted or even revoked entirely if your owed taxes are over a certain amount. At this point, you might want to contact tax attorney Glen Frost for advice.

Every year, there are plenty of people and businesses who are not able to pay the full amount that they owe on their taxes. However, there are actions to take that can mitigate the penalties that they might face. Get in touch with a professional to work out the strategy best for you.