What Are the Consequences of Not Paying Back Taxes?

Paying taxes can be a stressful situation especially if you’re having difficulty financially or if your tax situation is much more complicated than a simple W-2. Due to these two issues, it’s actually quite common for Americans to get behind on their taxes and have back taxes they own to the IRS. Although it’s very rare for the IRS to send you to prison/jail for not paying your taxes, there are definitely other consequences that can occur. 

Whether you’re predicting you’ll have trouble paying taxes for the upcoming season, find yourself a little behind, or are even years behind, you should consult a back taxes lawyer in New Haven, CT is a safe bet and you can do so by contacting Barlow Tax Solutions

The Consequences of Not Paying Back Taxes 

Back taxes are simply taxes that were not completely paid during the year they were due. Reasons for not paying taxes may include failure to pay by the due date, failure to adequately report one’s own income, or simply negligence in filing altogether. Luckily, back taxes are a common issue that the IRS faces and generally they’re willing to work with people without too many issues. However, failure to pay back taxes (especially without any sort of communication) may result in several consequences including receiving notices in the mail:

  • The RS Automated Collection System (ACS) Becomes Activated: This automatic system will be activated and its main purpose is to collect back taxes. The system can do this by issuing liens, levying bank accounts, and even garnishing wages as a result of your back taxes. 
  • Having Interest on Your Tax Balance: Failure to pay your back taxes and/or communicate your situation may result in your tax account being charged interest. This rate is determined quarterly as well as a federal addition of three percent and you’ll be charged interest every month. 
  • Can be Charged Penalties: In addition to accruing interest, you’ll also have to pay penalties. These often start out at 0.5 percent per month on your unpaid tax balance but can go all the way up to 1 percent if you fail to communicate with the IRS. Once you’ve talked with the IRS and are on a payment plan, the percent usually drops to 0.25 percent. 
  • The IRS May Take Any Refunds: In the future when you file your taxes you may be eligible for a refund. However, if you have back taxes due the IRS may swoop in and take your refund. 
  • Other Methods: The IRS is adamant about receiving its money somehow and while it’ll start with softer methods and will attempt to communicate with you (which it’s highly recommended to communicate with the IRS even if you don’t have the money and by using a back taxes lawyer in New Haven, CT), but may employ harsher methods. These can include levying your bank account, seizing assets, and even in some cases employing the services of a private debt collector. 
  • Losing Passport Privileges: Finally, failure to pay your back taxes may result in you losing passport privileges thus rendering you unable to visit other countries. This method is generally used against individuals with $50,000+ back taxes due and/or who haven’t been in communication with the IRS/established a payment plan. 

Contact a Lawyer Today

If you owe back taxes you may be scared of the possible consequences, but luckily a back taxes lawyer in New Haven, CT can help you. From discussing options to helping you communicate with the IRS, establishing a reasonable payment plan, and more, let the legal team at Barlow Tax Solutions help