What Would Happen If I Don’t Pay My Taxes?

Nobody likes paying taxes, but it’s a fact of life – we all have to do it. Taxes pay for everything you could possibly think of (and some things you don’t want to think of)…but what would happen if you didn’t pay your taxes? There are many stories out there about people choosing to not pay their taxes or people saying that taxes are illegal, but rest assured – you have to pay them, and the IRS will make sure of it one way or another!

Before going into the nitty gritty of what happens if you don’t pay, I must tell you that there is a difference between not filing your taxes and not paying what you owe. A big difference. Of the two, not filing is way worse than not paying what you owe, as by not filing the penalties are much, much higher. The amount you owe to the IRS, if you don’t file, is penalized at 47.5% interest (22.5% for late filing and 25% of the total for not filing). That is a pretty massive penalty! If you file but just don’t pay what you owe, the penalty is 5% per month. It’s a big difference.

However, what exactly happens if you don’t pay, either on purpose or by accident? From what I have garnered, the IRS likes to send you letters – lots of them. They want to give you the benefit of the doubt at first, by sending little reminders just to see if maybe you forgot or you are just late in getting your return in. If they don’t hear back from you within 3-4 months, there are a few things that could happen. First off, the IRS could decide to send you a “Substitute For Return“, which is basically them deciding what you made for this tax year and telling you what you owe to them. Yep, they would make a tax return for you and ask you to pay the bill. This amount is based on several previous years of returns, and you would owe the tax plus fees and penalties. If they don’t go this route, they could send a tax revenue officer after you, who would work on getting you to file and pay your taxes owed. And if this doesn’t work, or if it’s been a long time that you have been evading taxes, they could send a special agent after you – and this could lead to criminal charges for tax evasion. This can lead to the IRS seizing your home, car, other assets, freezing your bank accounts or even sending you to prison.

The bottom line? Pay your taxes. It might not be fun, it might not be fair, it might not be right, but it’s the way it is. And if you think you can get away with not paying them, think again – they will catch you eventually. While the time limitation for auditing a return is a mere 3-6 years from the due date, depending on why the audit is being done, the time limit for finding tax evaders is 10 years. Think you can outrun the IRS for 10 years? Think again.

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Comments (15)

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  1. Jeremy says:

    But if you don’t pay your taxes, it’s a great thing to put on your resume if you’re looking for a government job — especially jobs with the new administration 😀

  2. david says:

    Yea, it’s a shame Obama doesnt have a lie-detector machine, those losers were pretty stupid.

  3. frugalcpa says:

    There’s no statute of limitations for tax evasion or fraud, either. Only for miscalculations and the like.

  4. Marissa says:

    Tom Daschle had no problem getting away with it.

  5. david says:

    Only for a while though. Eventually, obviously, he was discovered.

  6. Bill in NC says:

    Always file to start the statute of limitations clock running.

    As long as you have filed, only the last 3 years are auditable in most circumstances.

    To go back beyond 3 years the IRS has to show fraud or that you substantially underreported income (difficult for agents who are evaluated on how many cases they clear)

  7. John says:

    ya i know what you mean guys, i was wondering does a less fortunate person living on the streets pay ANY taxes? Because they sleep on public property and stuff…….

  8. David says:

    People living on the streets probably don’t have any income – talk about adding insult to injury if we asked them to pay taxes too…

  9. hamburger says:

    well its been 15 yrs since i alone ever filed or paid tax

  10. markus says:

    I haven’t filed in 5 years. It’s all fear tactics. They don’t do anything.

  11. john says:

    Go on youtube and type in Income Tax Fraud. There have been cases and there is no law to make you file a 10-40.

  12. Drew says:

    I have been researching not paying taxes, since it is a violation of the 16th ammendment. It is unconsitutional, and therefore they cannot write a law requiring us to pay. Since there is no law, how can they prosocute you? You can’t be charged for something without a law to enforce it. Yet I hear of people going to jail and getting fined. I am seriously considering not filing anymore, because they legally can’t do anything, but I want to be clear on that before I make the transition to an income tax free American.

  13. Tony says:

    I was wonder I haven pay taxes and I live in Indiana do I have to pay are not way should I have to take food out my kids mouth to pay for what!Can someone help answer me that will I go to jail for not pay taxes do I have to pay or not can you help me on this

  14. Matt says:

    I think it would be great if a large amount (a VERY large amount…say, oh 75%) of American banded together and did not pay taxes. They won’t bother catching you if they don’t get a paycheck from your hard earned money. There’s too many corrupt politicians, too many “cushy” government jobs, too many people who don’t pay and expect the rest of us to flip the bill. It’s time the people took the power back!

  15. CSmith says:

    I have not filed my taxes in about 3 years but I also dont owe any money. I made little to know money and have 2 children. Had I filed I would have rcvd a refund of close to $5k which is insane to me so I stopped doing them. If I owed money I would be concerned and take care of it. I might get in trouble but Im sure the IRS agent would waste a lot of money prosecuting me for not wanting a refund.