Taxes are a major expense in our balance sheet every year. You might think that we are not receiving anything apparently for the hefty amount we pay. The answer is not something you would like to hear if you want to avoid taxes. The Government uses tax money to provide us with security and infrastructure so that we can earn for ourselves and our loved ones. But the idea of not paying anything in terms of taxes is surely intriguing.
However, before you act on your intentions, here are some consequences that you may face if you stop paying taxes.
Consequences of Not Paying Tax:
There are many consequences if you don’t pay taxes on time. Some of them are listed below:
Failure to Pay Penalty:
Failure to pay tax is not something that the IRS takes easy. The Internal Revenue Service imposes a fine of 0.5 percent of the amount of tax that is unpaid after the due date. The penalty is charged monthly, and it will keep incurring with every passing month, so you are just burdening yourself by not paying the taxes on time. The penalty to pay taxes caps at 25 percent of unpaid taxes. After that, the IRS moves to stricter options.
Failure to File Penalty:
Even if you have paid all the taxes you owe, you must file the tax returns before the due date. The penalty for failure to file is the same as failure to pay, which is five percent of unpaid taxes and capped at twenty-five percent of unpaid taxes. However, you will not be penalized if you provide a reasonable cause to the IRS for not filing returns on time.
If you owe some old taxes to the IRS, the tax collecting body will also charge interest on the unpaid amount for the period of delay. Since this is their money, they are legally allowed to do that, and you just need to comply with them.
Rejection to Tax Refund:
If you are entitled to a tax refund but don’t pay or file your returns on time, the IRS may reject your claim for a refund. They will probably use the amount of refund to offset your outstanding taxes.
The more you avoid paying taxes, the more your chances of being prosecuted under the charge of tax offender or tax fraud. The IRS takes tax offending seriously, and not filing and avoiding complying with IRS will make them think that you are deliberately spoiling their time not to pay tax. Bear in mind that tax offending is a serious crime, and it can land you in prison. The IRS prosecutes long-time tax offenders, and they have a proper mechanism to do so. That is why we recommend that instead of not complying with the IRS, keep your communication good with them. If you cannot pay taxes, consult a good tax attorney and discuss this with the IRS. You may get a much better solution from the IRS.
The Bottom Line:
In a nutshell, the consequences of not paying or filing taxes are not good at all. On the contrary, you can put yourself in jeopardy by doing so. So keep paying taxes on time and consult a tax attorney when you are not in the position to do so.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.