The Worst Thing You Can Do Is to Do Nothing
If you cannot pay your taxes, ignoring the problem will only make the problem worse. If you don’t pay your taxes you might end up owing:
- The taxes due.
- Interest on the taxes you owe.
- A penalty, or fine, for not paying on time.
The penalty for not paying on time is usually .5% of what you owe each month. For example: if you owe $5,000 in taxes, you will owe a $25 late-payment penalty each month, and you will owe interest.
If you keep ignoring your tax bill, the IRS might try to get the money that you owe. The IRS might:
- Take money from your bank accounts.
- Garnish your wages, meaning they can ask your employer to send them part of your pay.
- Place a federal tax lien against your property. A tax lien means that if you own a home the government can claim some ownership of that home in place of the tax money you own.
The IRS can also charge you more penalties if you don’t file your tax return on time. The penalty for not filing your income taxes on time is 5% of what you owe for each month that you are late. So on a $5,000 tax bill, you will owe a $250 monthly penalty until you file your tax return.