According to the Brookings Institute, one out of every six dollars owed to the IRS goes unpaid. Experts say that both businessmen and individual taxpayers are guilty of this crime, worryingly.
Analysis suggests that all unpaid taxes amount to three-quarters of the federal budget per year. The reports are credible because many people ask themselves, what would happen if I didn’t pay the tax?
It’s obvious. Most would like to evade tax liability, but our ultimate recommendation is not to do so. Knowing the consequences of the offense will be key to start doing your duty.
Not paying the tax will lead you to pay fines
The IRS will not wait to start charging you penalties for ignoring your tax liability. When you find out the amount, you will wish you had no debt. Currently, fines are set at 0.5% per month of the balance due.
When you decide not to pay the penalties, the amount will increase to 1%. Similarly, it can lower in percentage to 0.25% if there is an agreement with the IRS.
Forget about any refunds
The IRS will cancel any future refunds when you have a debt. They will take it as an offset to the tax debt. Overall, it will benefit you because it will reduce your bill and interest.
They will seize your assets
Resisting payment will result in the seizure of all your money, i.e., creating an embargo. The most common is taking part in your salary for the tax bill.
They could also take money from your bank or company as part of the payment, although you may work something out.
You may be forced to deal with a debt collection agency.
Trust us; it’s much better to deal with the IRS than to deal with a debt collection agency. These agencies are responsible for calling and making inquiries day after day until you pay the money you owe.
You will have a mailbox full of messages from the debt collectors
The debt collectors will put enough pressure on you to pay. Among the actions taken will be collection notices in your mailbox. You will see messages about your debt balance, fines, extra fees, and severe consequences. Do you want to go through this?
Interest upon interest
Depending on how long it takes, the IRS will charge interest on top of your debt. The annual rate is 5%; the longer the days go by, the more money you’ll end up paying.
You will face a federal tax embargo
As part of the consequences of the debt, the IRS will file a federal tax embargo that will prevent you from selling any property or borrow any money. While this may not seem like a big deal, it is.
A public embargo will cause many entities to turn their backs on you because no one wants to damage their reputation.
Your access to credit will be affected. It is essential to mention that they will not eliminate the embargo even if you declare yourself in bankruptcy. Generally, the measure is applied to debts over $10,000.
You will not be able to travel abroad!
Your taxes will keep you imprisoned, especially when you refuse to pay the debt and interest. Although you will not be in jail, you will not be allowed to travel abroad.
More than $51,000 in debt will classify you as a serious defaulter, forcing the state department to restrict your passport. You will be denied permission to obtain or renew the document as long as you don’t pay the debt.
The only way out of the problem is to settle with the IRS and pay and eliminate all interest. Be a responsible citizen because the measures taken by this agency are much worse. About that, you should have no doubt.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.