Can you really go to jail for not paying taxes?
Have you ever received an IRS letter and panicked immediately? Internal Revenue Service may be frightening at times, especially if your Tax are overdue. But can a late payment of tax actually land you in prison?
The short answer is yes. After more than a decade of tax work, I can tell you that it is not often, but it is possible. If you owe the IRS money, they will allow you to deal with the problem before it escalates to this extreme. But making taxes or constantly not paying your taxes on time can lead to legal consequences, including in prison in extreme cases. Here are the tips I give to my customers and how it can also help you.
The difference between tax evasion and non -payment
Tax hiding is when you deliberately avoid paying taxes – often by insufficient income reporting or falsifying tax records.
For example, if you earn $ 100,000 a year but consciously report only $ 60,000 for your tax returnThis is a fraud. It is a criminal act that can have serious consequences, including in prison. IRS treats such cases as criminal crimes as they include deliberate fraud.
If you do not pay, on the other hand, it occurs when you owe taxes but cannot pay the full amount due until the maturity date. This may be due to financial difficulties or errors in your taxS Honest mistakes or late payments usually lead to IRS penalties and delayed fees, not in prison. Although both tax evasion and non -payment are very serious, tax evasion includes deliberate misconduct and has more stringent consequences as criminal charges.
Therefore, it is crucial to account for exactly all income – however small – and ask a qualified tax specialist if you have any questions. If you want to reduce your tax debt, there are many legal ways to do so, such as tax deduction and loans without falsifying documents and violating the law.
What can happen if you don’t pay your taxes
It is not uncommon to encounter an unexpected Tax that you cannot afford to pay immediately. If you can’t pay your taxes on time, IRS does not immediately resort to extreme measures. Instead, the agency will start sending notifications that outline your balance and explain how it is calculated.
Depending on what your letter includes, interest and sanctions may also start to accumulate. If these notifications are ignored, then IRS can go after its money in other ways, such as garnishing your salaries (deducting part of your salary), putting a Pledge on your property or even retrieval of funds from your bank account.
IRS usually starts with AuditsCollection letters and then repayment options. However, if unpaid taxes are ignored for an extended period, they could lead to a case of tax evasion and a potential prison. While the sentence in the unpaid tax prison is rare, they are possible. If IRS sends you a letter by mail, I recommend that you answer immediately and contact a tax specialist if you have any questions.
Watch out for tax fraud. IRS will never initiate contact by phone or email. If you receive a call or email that claims to be from IRS, it is probably a scam. IRS will always start with sent notifications that include instructions and contact information.
What to do if you can’t afford the tax account
Your tax account is forthcoming on April 15 this year, even if you submit an extension. If you can’t pay your full tax account, don’t panic. IRS offers payment plans that you can set up online or with your tax preparation.
If your account is significantly greater and you cannot afford to pay the full amount, you can also apply for An offer in compromisesS This agreement allows you to arrange your debt with IRS for less than your tax account.
For example, if you can’t pay a $ 60,000 tax account, you may be able to arrange your $ 10,000 debt on the OIC program. With this option, IRS will look at your revenue, expenses and assets to confirm if you are eligible for a lower repayment option.
If you have questions about your tax obligation, it is always best to schedule a meeting with a tax attorney or a certified public accountant.
Check your tax return twice before submitting it
You are not likely to go to prison to make a delayed IRS tax payment – but it is important to make sure that you do not account for your income and pay less than you owe. When you file your tax return, make sure you check the income for which you are reporting. You are responsible for mistakes or omissions, even if they were accidental.
If you have a tax account, work with a tax specialist to understand your repayment options to avoid other consequences. IRS provides a Directory of qualified tax specialists Which can be very useful when you don’t know where to start.
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