5 Serious Drawbacks Associated With Ignoring Your Tax Obligations
Updated: Nov 3, 2021
Ignoring your tax obligations is a serious issue. You may think it's not worth the time and effort to get them paid off, but you could be missing out on some major drawbacks that will affect your life in more ways than one. Here are five of the most serious drawbacks associated with ignoring your tax obligations:
Your Tax Debt Grows Higher Every Day
Yes, your balance compounds daily. Penalties and interest will be imposed, and the amount of tax owed will rise. You'll have to pay the IRS .5% of the tax owing in interest for each month, or part of a month, that the tax is unpaid after the due date, until the tax is paid in full or the maximum penalty of 25% is achieved. And if the debt is big, the interest is even bigger. You'll also have to pay a late-filing penalty, which is generally 5% of the tax due for each month, or part of a month, your return is late, up to a maximum of five months. If the tax is not paid within 10 days of the IRS issuing a notice of intent to levy, the interest rate rises to 1%.
The seizure of property to pay off the taxes you owe is known as a tax levy. Garnishing wages or confiscating assets and bank accounts are examples of the tax penalties. Typically, tax levies appear after the government has issued a tax lien.
When you're over due on your income taxes, the government files a claim on your property, including real estate and other assets, and a levy is the government's execution of that claim.
The IRS has the ability to levy or take your property if you owe past taxes to the agency. Wage garnishments are an example of a specific form of levy. Your employer has no option but to comply with the IRS and submit a percentage of your salary to the agency to settle your tax obligation if the IRS pursues wage garnishment against you.
Going Behind Bars
Tax evasion is an illegal conduct in which a person or business knowingly avoids paying their total tax due. The unlawful non-payment or underpayment of real tax responsibilities owed is referred to as tax evasion. Failure to pay taxes on time may result in criminal prosecution. It must be established that the avoidance of taxes was an intentional act on the part of the taxpayer before charges may be imposed. The penalties, according to the IRS, include no more than five years in prison, a fine of no more than $250,000 for individuals or $500,000 for businesses, or both, as well as the expenses of prosecution.
No Social Security Retirement or Disability Benefits
You will not receive credits toward Social Security retirement or disability benefits if you are self-employed. If you fail to file your tax returns, this will result in the Social Security Administration not receiving any self-employment income.
Of course, you must be Uncle Sam if you're completely fine with any of the drawbacks associated with ignoring your tax obligations. Luckily, there's simple ways to relieve yourself of those tax burdens including back taxes and unfiled years. There are many programs that are offered in order to solve your tax-related issues in some sort of way. But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program. Our clients are referred to our Fresh Start Program in order to avoid bankruptcy, acquire debt relief, and settle their debts in a quick manner. Let us give you a helping hand today!
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