Failing to report your taxes can lead to severe consequences. The Internal Revenue Service has the authority to impose fines, penalties, and even criminal charges for those who fail to comply with tax regulations. In this blog, we will discuss what can happen if you don't report your taxes.
Late Filing and Payment Penalties: The IRS imposes late filing and payment penalties on taxpayers who fail to file their tax returns or pay their taxes on time. The penalty for failing to file your tax return is 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25%. The penalty for failing to pay your taxes on time is 0.5% of the unpaid taxes for each month or part of a month that the taxes are late, up to a maximum of 25%.
Interest Charges: The IRS also charges interest on unpaid taxes, which accrues from the date the taxes were due until the date the taxes are paid in full. The interest rate is typically the federal short-term rate plus 3%.
Seizure of Property: If you do not pay your taxes, the IRS can seize your property to pay the taxes owed. This can include your bank accounts, wages, and other assets.
Criminal Charges: In some cases, failure to report taxes can lead to criminal charges. If the IRS believes that you have intentionally avoided paying taxes, you could be charged with tax evasion, which is a felony offense. Tax evasion carries severe penalties, including fines of up to $250,000 for individuals and up to $500,000 for corporations, as well as imprisonment for up to five years.
Damage to Credit Score: Failing to pay your taxes can also damage your credit score, making it harder for you to obtain credit or loans in the future.
In conclusion, failing to report your taxes can lead to severe consequences, including penalties, fines, interest charges, wage garnishment, bank levies, criminal charges, and damage to your credit score. It's crucial to file your tax returns on time, report all income, and seek professional help if you're unsure about how to comply with tax laws and regulations.