What could happen if I fail to pay my taxes?
Some people mistakenly do not pay their taxes or believe they do not have to pay. Failing to pay taxes can result in costly consequences.
A simple Internet search can turn up dozens of sites claiming that taxes are unconstitutional, or that it is easy to avoid paying taxes and being penalized. The opposite, however, is true. Just as many – if not more – resources can explain why tax evasion is a very bad idea. It is not only illegal to refuse to pay taxes, but residents of Massachusetts and elsewhere can find themselves in serious legal hot water for tax evasion or fraud.
The potential legal ramifications have not deterred many people from failing to pay taxes, whether intentional or accidental. According to USA Today, there are numerous examples of high-profile people who did not pay their taxes, ranging from improperly managing their finances to believing they were above the law. For example, several years ago, country singer Willie Nelson got in trouble with the Internal Revenue Service for not paying more than $16 million in back taxes. Home décor entrepreneur Martha Stewart failed to pay $220,000 in back taxes and penalties for property she owned out of state. She claimed that because she was not often at that property, she did not owe taxes for it. In every case cited, people who missed paying their taxes suffered penalties ranging from fees and interest to jail time.
What are the penalties I might face?
According to U.S. News and World Report, failing to meet one’s tax obligations can result in costly penalties that may last for years. These may include the following:
· Owing more money to the IRS with fees, penalties and interest
· Having a lien put on personal property, particularly one’s home
· Getting wages garnished
· Destroying one’s credit and not being able to have tax fees discharged through bankruptcy
· Possible jail time, particularly for those who are wealthy or deliberately engage in tax fraud or evasion
There is also a stigma that is associated with those who do not pay their taxes. Every individual who works, owns property or buys consumer items in America is required to pay taxes; therefore, when someone gets away with not paying, it is widely looked down upon. Not paying taxes can damage a person’s reputation for years, if not permanently. This can be particularly devastating to those who own businesses.
One additional factor to consider is that the IRS encourages people to report suspected tax fraud or evasion. It is possible that business owners, employers and others who say they are not paying taxes – whether joking or being serious – could be audited if someone else takes them seriously.
Those who are experiencing tax troubles fortunately have recourse. It is possible to work with the IRS to repay back taxes and penalties. It may be necessary, however, to seek assistance from an experienced Massachusetts tax attorney.