What Happens If Your Taxes Aren’t Paid On Time? Be well-informed
Season of taxation has arrived, a time that everyone dreads. At the end of the year, you may find yourself needing to come up with more funds to pay Uncle Sam’s bill.
So, what happens if you don’t pay your taxes and you keep that unpaid bill lying in your mailbox until it’s scheduled to be collected?
Discover what may happen to you and how you can avoid dealing with the feared Internal Revenue Service (IRS) by continuing to read this article.
There Will Be a Sum of Penalties and Fees.
Keep in mind that if you fail to submit your taxes at all, you will be subject to a severe failure-to-file penalty, which accumulates at the rate of five percent of your unpaid taxes for each month your return remains unfiled. There is a possibility of a 25 percent penalty, as well as a minimum of $135 or the whole amount of what you owe in addition to the interest rate increase.
It is possible that you may be required to pay additional interest on the amount that has not been paid. In terms of keeping track of what is due, the IRS is quite thorough, and the more time you take to complete your taxes, the more fees and interest accrue.
It goes without saying that you should go ahead and submit your taxes, even if you anticipate to owe money at the end of the month. Make a filing as soon as possible since failing to do so might result in further fines.
What ever your case, if you owe taxes, you may expect to get letters in the mail between a month and three months after the IRS determines that you owe. It’s best not to ignore such letters since the number of notices will rise if you do, therefore it’s best to contact the IRS as soon as possible.
Whenever you speak with a representative, express your understanding of the notice and your intent to repay it promptly. There are many times when it is possible to set up a payment plan so that you are not required to pay everything in one lump sum.
In the event that you fail to pay your taxes, you will be subjected to liens and collections calls.
Let’s assume you’ve made the decision to disregard the IRS, or you simply didn’t get notification until a few months after it should have been. What is going to happen next is unclear. The Internal Revenue Service (IRS) may decide to submit a legal claim against your property as well as any financial assets you may have in possession.
Although this method may be quite frightening, it is possible that the government will be entitled to a portion of your money via investments or the sale of any assets that you own. This might occur anywhere from a few days after the notification is received to many months later, so you never know when you should expect it to happen.
A lien is recorded in the public record, which means that it may have an impact on your ability to get a personal loan or a mortgage in certain circumstances. In certain cases, it may even prevent you from obtaining employment or maintaining your security clearance.
Furthermore, liens do not vanish even after a bankruptcy, so it’s preferable to avoid them altogether in the first place if at all possible. A large number of collection calls may also be received by you. Calls from a private collection firm, rather than from the Internal Revenue Service, will be made in this situation.
It’s possible to lose your whole salary every week or month if you’re subjected to a bank charge. This service may assist you in fighting the IRS and resolving the issue so that you have money in your bank account at the end of each day.
Things may quickly escalate to a dangerous state of affairs.
In order to fully appreciate what happens if you fail to pay your taxes for a lengthy period of time, you must first realize that things may get downright frightening. The Internal Revenue Service may place a lien on your property, garnish your earnings, or empty your bank account.
Your Social Security benefits might be jeopardized, and this can happen much more quickly than you anticipate. Your car may even be taken away by the IRS and sold at an auction in order to convert the earnings into a payment owed to the government.
Your 401(k) and other retirement plans may be harmed if you fail to pay your taxes on time. Prepare to go on a journey to a faraway land. If you owe taxes, you may want to reconsider your decision.
Your passport renewal or issuance might be refused by the IRS in collaboration with the State Department. It’s possible that they’ll even cancel your passport, making it impossible for you to leave the country under any condition.
In the event that you’ve gotten this far into the process of owing the IRS, it’s generally a good idea to consult with an experienced tax attorney for guidance. However, effective communication is essential if you want to prevent these issues from the start.
Immediately upon receiving your first notification that money is due, contact the Internal Revenue Service (IRS). More importantly, the sooner you speak with them and devise a strategy, the better off you will be.
If you’re planning for the future, always double-check that your paperwork is in order and that you’re setting away enough money to cover any tax bills you may incur come April 15. If you are self-employed, speak with your employer about any existing withholdings and consider hiring a CPA to assist you.
Avoid IRS problems by planning ahead of time.
You’ll be more likely to pay your taxes on time now that you’ve seen what happens if you don’t pay them on time. Keep track of your filing deadlines, and pay what you owe or make arrangements to pay it off as soon as you can after filing.
If you solve these issues as quickly as possible, the better off you’ll be.
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