Outcomes of Not Paying Taxes

As most of us know, the job of collecting taxes in the US falls to a tax collecting agency called the IRS, or the Internal Revenue Service. Paying taxes facilitates the essential services the government provides that keep our lives running smoothly (infrastructure, defense, government programs, etc.).

There are times when taxpayers may, because of choices or circumstances, not be able to pay their taxes at the time of filing. In these situations, TaxMasters encourages taxpayers to contact the IRS and set up a simple payment plan if the tax debt is relatively small. If you do not want to deal with the IRS yourself, TaxMasters will be happy to set up and negotiate a payment plan for you. Whatever you do, do not ignore your tax debt or act as if it does not exist. Not paying taxes is bad enough, but not paying taxes and going silent may get you into a world of trouble.

If you choose not to pay your taxes, the IRS will eventually send you a notice informing you that you have a tax debt which has to be paid immediately. If you fail to comply with the notice, it could result in the IRS adding even more penalties and interest than they already have. And trust me when I tell you that you do not want an IRS tax collector hot on your trail.

If you do not respond to the IRS notices you receive, the IRS will eventually send you a final notice of intent to levy, and a notice of your right to a hearing. Keep in mind that interest and penalties have been constantly accruing as you have sat back and chosen not to act. The IRS has the legal right to levy your bank accounts, garnish your wages or social security check, and place liens on your property to “encourage” you to pay your tax debt. This intent to levy notice has a 30 day compliance period. After the 30 days are over, it will be incredibly difficult to salvage your financial status. The IRS typically does not provide you any leniency if you have reached this point in the collections process, and will begin aggressive collections activity.

If you have received a final notice of intent to levy, you need to get in touch with a tax representative immediately. Time is of the essence and it is most definitely not on your side. If you are in this position, the IRS is about to shake what little is left of your financial wellbeing.

There is a great deal of anecdotal evidence claiming the IRS is known for withholding facts, misleading people and setting them up for payments they cannot afford. Of course, this is a he-said, she-said argument. And what the IRS believes you can afford and what you believe you can afford often do not align. The result of not paying taxes can bring a heavy burden to your life. Rather than facing the IRS alone with so much at stake, it is generally best to take a good tax representative along with you to hammer out the negotiations. Paying taxes is not something any of us like to do, but an experienced tax representative with a strong tax preparation team can do a good job of preparing your past tax returns, hopefully finding ways to reduce your liabilities. IRS tax relief is not always about settling tax debt. For many TaxMasters clients, it’s about moving back into the world of legality and compliance. Any savings are icing on the cake. But the real goal of anyone with IRS tax problems needs to first be compliance. 

One last point. It is not illegal to owe the IRS money. So while they may come after your money and assets in an attempt to collect revenue, you are not breaking the law by not being able to pay.

It is illegal to not file an IRS tax return every year. So file those returns no matter whether you can pay or not. Intentionally not filing tax returns is an illegal act that can be prosecuted. Not paying taxes is serious, but tax evasion is in a totally different league.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation teams in the IRS tax relief industry. Patrick Cox and Tax Masters are located in Houston, Texas and the company is publicly traded under the ticker symbol TAXS.