If your tax bill is not paid by April 15, you may be sent to jail.A letter from the IRSthat says Your taxes are past dueLate tax payments can result in penalties and interest, but they could also land you behind bars?
Yes, the short answer is yes. It’s not the first thing the Internal Revenue Service does to get money. If you’re unsure, you can ask your tax professional for help. You owe money to the IRS. They will give you an opportunity to resolve the issue before things get to this extreme. Tax evasion and failure to pay taxes on time can have legal consequences.
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As an accountant, I have helped many clients over the past decade. File their taxesHere’s what can happen if your taxes are not paid and what you should do if your tax bill is too high.
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Tax evasion versus failing to pay your taxes
Tax evasion is when you intentionally avoid paying taxes, often by underreporting income or falsifying tax records. This Accountant warns you might be overpaying the IRS.
The difference between tax evasion and failing to pay taxes
When you deliberately avoid paying taxes by underreporting your income or falsifying your tax records. If you earn $100,000 a year but only report $60,000 in your tax return, this is considered tax evasion. Fraud istax return. It’s a criminal offense that can have severe consequences, such as jail time. These cases are criminal offenses for the IRS because they involve deception.
On the other hand, failure to pay occurs when you owe tax but cannot pay it in full by the due date. This could be due to a financial difficulty or an error in your paperwork. Tax withholdingIRS penalties and late fees are usually the result of honest mistakes or late payments, not prison. Tax evasion is more serious than failure to pay, but both are equally serious. Tax evasion involves deliberate wrongdoing that can lead to criminal charges.
It’s important to report all income accurately, no matter how little. You can also ask a tax professional for help if you need it. There are many legal ways you can reduce your tax liability. Tax deductions and credits without falsifying documents or breaking the law.
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You may be faced with an unexpected tax bill you cannot afford to pay. The IRS does not immediately take extreme measures if you are unable to pay your taxes in time. The IRS will instead begin sending you notices that explain your balance and how it was calculated.
Interest and penalties may start accruing depending on what your letter says. If these notices go unanswered, the IRS may take other measures to get their money, such as garnishing wages (deducting part of your paycheck), or placing a lien on your property. Lien can be placed on your property, or even funds taken from your bank account.
The IRS usually starts with audits, collections letters and then repayment options. If unpaid taxes go unresolved for a long period of time, it could lead to a tax fraud case and possible jail time. Unpaid taxes can lead to prison sentences, although they are rare. If you receive a letter from the IRS, I recommend that you respond promptly and contact a tax professional with any questions.
For the tip:
Be on the lookout for tax scams. The IRS will not initiate contact by phone or email. It’s likely that a caller or email claiming the IRS is a scam. The IRS will begin by sending out mailed notices that include instructions and contact details.
How to handle a tax bill you cannot afford
Even if you have filed an extension, your tax bill is due by April 15th this year. Don’t panic if you can’t pay your entire tax bill. You can set up a payment plan with the IRS onlineand your tax preparer. If you cannot afford to pay your entire bill and it is a large amount, you may also apply for an Offer in Compromise
. This agreement allows you to settle your debts with the IRS at a lower amount than your tax bill.
If you can’t pay a $60,000 tax bill, you may still be able settle your debt with the IRS for $10,000 if you use the OIC program. The IRS will look at your income, expenses, and assets to determine if you are eligible for a lower payment option.
If there are any questions about your tax liability it is best to make an appointment with a certified public accountant or tax attorney.
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Check your tax return twice before you file it.
You won’t go to jail if you make a late payment to the IRS. But you should ensure that you don’t underreport your income or pay less than you owe. Double-check your income when you file your tax return. Even if the error or omission was accidental, you are responsible for it.
Work with a professional to understand the repayment options if you have a bill. The IRS offers a list of qualified tax professionals ( ) that can be helpful if you are unsure where to begin.
