A lot of bad things can happen if you don’t pay the taxes you owe. But can you go to jail for not paying taxes?
It’s something many people who owe back taxes worry about. You know the government will charge penalties and interest on the taxes you owe. In more serious cases, they are able to take property from you (home, boat, etc.). And they can also take money from your paycheck.
None of that is fun, but many people are more worried about ending up in jail due if they don’t pay their taxes. Below you’ll learn if that can happen, along with other penalties you may have.
Can You Go To Jail For Not Paying Taxes?
The short answer to that is yes. You can absolutely go to jail for not paying taxes. Buy, don’t worry. Just missing a payment or two isn’t going to land you in the Big House. And, even if you miss more than that, going to jail for not paying taxes isn’t very common.
What Happens If You Don’t Pay Your Taxes?.
The first probable thing that will happen to you if you missed one tax payment is that you will receive a notice from the Internal Revenue Services (IRS). And if you still have not paid your taxes after receiving a notice from the IRS, then more notices will come your way.
And if you keep ignoring your tax debts, the amount you owe will start to build up. As your taxes accumulate, penalties and interest charges will just make what you owe grow even faster.
The interests will build up starting on the due date that can be found on the notice given to you. Accumulation of interest on your unpaid taxes compounds daily to the unpaid balance. As of now, the interest rate is 5 percent.
Aside from interest, there will also be penalty fees if you do not pay your taxes on time. For instance, you will pay additional fees along with the interest. These fees are 0.5 percent per month up to 25 percent of your unpaid balance.
Another thing is that your unpaid taxes could come out of future tax refunds that are owed to you.
As a penalty for not paying your taxes, the IRS can also seize your assets.
Jail Time and Taxes
And now to the topic of getting sent to jail time for not paying taxes.
You may be subject to jail time if you owe taxes in the amount of hundreds of thousands of dollars. Or you may go to jail if you have not paid your taxes for years. Or both.
However, if you can’t afford to pay your taxes, you won’t be sent to jail. So don’t worry, not having the money for taxes will not land you in prison.
You are only subjected to jail time for criminal charges such as tax fraud and tax evasion. Tax evasion is the act of doing illegal methods to avoid paying taxes.
If you are proven guilty for tax evasion, you may spend up to 5 years in jail. Helping someone to evade their taxes can also land you in jail for 3-5 years.
Lastly, you can go to jail for a year for failing to file a tax return.