Filing your personal or business taxes isn’t always a simple or straightforward process. Filing taxes can become an overwhelming process that leads people through a rabbit hole of issues and delayed payments. If you owe the IRS money because you’ve accumulated tax debt, it is important to know what to expect. Our Rancho Cucamonga tax attorneys explain what occurs when you don’t pay your taxes.
Tax Evasion
When a person knowingly declines to file a tax return or refuses to pay the taxes owed after filing a return, it is considered tax evasion. This means that anyone who refuses to file a tax return or pay taxes can be charged with a serious crime. However, the IRS doesn’t often prosecute individuals who don’t file or pay taxes. They encourage people to seek out a payment plan instead of filing charges.
The IRS prosecutes corporations more than individual cases. The IRS will not typically file charges until they have completed a full tax audit on the company or the individual.
Owing Tax Debt
However, just because the IRS might not charge you for tax evasion doesn’t mean you won’t face serious penalties for failing to pay your taxes. Below we have put together the penalties the IRS implements if you fail to pay or file your tax return:
Failure to pay taxes (after filing a tax return) can result in:
- 0.5% interest of tax not paid by the due date, April 15; 0.25% during approved installment agreement (if the return was filed on time, and the taxpayer is an individual); 1% interest if tax is not paid within ten days of a notice of intent to levy.
- Recurring charge on the remaining unpaid tax each month or part of a month following the due date, until the tax, is fully paid or until 25% is reached.
- A full monthly charge applies, even if the tax is paid before the month ends.
Failure to pay taxes (not reported on the original return) and not paid in full within 21 days of the date of notice and demand will result in:
- 0.5% interest of tax not paid by the due date in the notice - generally 21 calendar days from notice date, ten business days if the balance equals or exceeds $100,000; 0.25% interests during approved installment agreement (if the return was filed on time, and the taxpayer is an individual); 1% interest if tax is not paid within ten days of a notice of intent to levy
- Recurring charge on the remaining unpaid tax each month or part of a month following the due date, until the tax is fully paid
- A full monthly charge applies, even if the tax is paid before the month ends
If you have tax debt, there are options available to help you become tax debt-free. Contact our Los Angeles tax lawyers today at (909) 766-9996 to get legal guidance.
