Tax Payment: Why Ignoring It Can Cost You More
At some point everybody wonders what what will happen if they don’t pay their taxes. There are always consequences in society when rules and laws are broken. These consequences exercise justice and help society stay in order. So, what happens if you don’t pay your taxes?
The Consequences
First, the IRS will penalize you for failing to completely pay off your taxes. The IRS will charge you this penalty in addition to a fee of 0.5% of the amount of money owed and will continue to do so every month until the debt is paid in full, up to 25% maximum. In addition, you will also be charged interest. The IRS announced that interest rates will increase for the first quarter of the year 2019. The 2019 first quarter interest rates 6% for underpayments, and 8% for large corporate underpayments. Penalties and interest charges stop increasing as soon as the balance is paid in full.
What to do if You Can’t Fully Pay Your Taxes
If it is impossible to fully pay off your taxes, you should still respond to the IRS and pay as much as you can. They will help you to arrange a tax payment plan with them at a lower total cost. Failure to make arrangements with the IRS will result in more severe consequences on top of the penalties and interest rates mentioned earlier. The IRS may place a Federal tax lien on your house, car, boat, RV, or take money out of your checking account. A Federal tax lien is a legal claim that states if you sell your property, the money that is made will be used to pay off your debt before you receive any of it. This will make it nearly impossible to take out a mortgage on your home and the tax lien will stay on your credit report for seven years.
Paying Larger Penalties
If continue to not pay your taxes you could pay larger penalties, lose your passport, the government may seize your property, or you could end up in court. In the end filing for your taxes and making efforts to pay them off is always the best option. It may be difficult, but it will help avoid future problems that will be more serious and harder to resolve.
Rachel Morris
