• dave rosa

What Will Happen If You Owe The IRS Money And Don't Pay? | Flat Fee Tax Service

Updated: Nov 22, 2019

Taxes are due every April 15th, and if you don’t file and pay your taxes, you could face some very severe consequences.

Every taxpayer's situation is different, but here are some of the things that might happen if you don’t submit a tax return by the filing deadline.

First, there are different penalties for unfiled tax returns and not paying them.

If you have unfiled tax returns, you’ll face a failure-to-file penalty. The RS will assess a penalty that is five percent of your unpaid taxes for each month your tax return is late, up to 25 percent. On top of that fee, if you file more than 60 days late, you’ll pay a minimum of $135 or 100 percent of the taxes you owe (whichever is less). If you file your taxes but don’t pay them, the IRS will charge you a failure-to-pay penalty. The IRS penalty is 0.5 percent of your unpaid taxes for each month you don’t pay, up to 25 percent. Plus, you’ll owe interest on the unpaid amount.

Should you fail to file, the IRS may file "a return" on your behalf. This so-called returns is not a real tax return. It is a SUBSTITUTE FOR RETURN (SFR). The IRS needs a tax debt to collect. Without a tax return there is no tax debt. So, the IRS creates one. After creating a Substitute for Return, the can file tax liens and enforce tax levies and wage garnishments. The IRS can get copies of your income forms (your W-2 or 1099-MISC) by accessing information in their data bank. It’s best to file a tax return yourself because you might be eligible for tax deductions and credits that the IRS doesn’t know about. Also, the Substitute for Return will probably be an over inflated tax debt.

In short, even if you’re only a couple of months behind on your taxes, the consequences can pile up in the form of fees and interest. And the longer your taxes go unpaid, the more costly it’ll be. REMEMBER THIS: IT IS NOT AGAINST THE LAW TO OWE THE IRS MONEY. IT IS AGAINST THE LAW TO HAVE UNFILED TAX RETURNS. If you continually ignore your taxes, you may have more than fees to deal with. The IRS could:

File a notice of a federal tax lien (a claim to your property) Seize your property (Tax Levy, IRS Garnishment) Make you forfeit your refund File charges for tax evasion Revoke your passport

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