Can You Go to Jail for Not Paying Your Taxes?

Can You Go to Jail for Not Paying Your Taxes?

• Dec 15, 2022

You’ve likely heard tales of people going to jail for tax evasion, but if you owe taxes yourself, those stories start to feel a lot more personal. Is it possible for you to go to jail for your taxes debts as well? What can you do about that debt and the consequences that come with it? Keep reading to learn more about the likelihood of facing jail time for unpaid taxes.

What You Can’t Go to Jail For

It may give you some peace of mind that you can’t go to jail for simply not having enough money to pay your taxes. If your tax debt is due to financial hardship or a simple lack of funds to cover your debt, you don’t have to worry about being arrested for it.

This is a common scare tactic used by scammers, so if you receive calls stating that you will be arrested for your tax debt, you can feel confident that it’s not truly the IRS, no matter what else they may say. While there can be other consequences for unpaid taxes (which we’ll discuss in a moment), jail time is not one of them.

What You Can Go to Jail For

So, if you can’t go to jail for tax debt, what about those stories you hear of people going to jail for unpaid taxes? Those cases are not associated with a lack of funds. Rather, these individuals are usually arrested for not filling their tax returns for extended periods of time, or lying on their tax returns about their income and/or expenses.

If you have willingly violated tax laws, the IRS may bring criminal charges against you. You would then face a trial, and if sentenced in a criminal proceeding, you may face prison. This usually only occurs if you willfully attempt to evade taxes or intentionally try to deceive the IRS. You may also face jail time if you help someone else evade their taxes.

As you might have gathered, this means that it is always better to file your tax returns rather than to avoid filing in the hopes that your tax debt will go unnoticed. The IRS is much more lenient with individuals who file their tax returns and seek earnestly to pay their debts than those who attempt to deceive by not filing at all. In fact, failure to file a return can land you in jail for one year for each year that you don’t file.

Possible Consequences for Unpaid Taxes

So, if you can’t go to jail for simply having tax debt, what consequences can you actually face? Those consequences are all related to the IRS’s attempts to collect on your debt, and can include the following:

• Fees and interest – This is a natural consequence of almost any unpaid debt; the longer your taxes remain unpaid, the more fees and interest you will accrue, and the more you’ll owe.
• Wage garnishment – The IRS will take what you owe directly from your paychecks.
• Withholding tax refunds – Any refunds you may qualify for in the future will be held and applied towards your tax debt.
• Tax lien – The IRS may place a lien on your assets, including your home. A tax lien provides public notice that the IRS has a financial interest in your property, making it difficult to qualify for additional loans and interfering with your ability to sell your assets.
• Tax levy – A tax levy usually follows a lien; it is an active attempt by the IRS to repossess your assets in order to pay what you owe. Levies can be placed on anything from real estate to the money in your bank accounts.

While none of these is as severe as jail time, they can still have serious long-term implications on your finances and on your life as a whole.

Settling Your Tax Debt

If you have tax debt and want to avoid the consequences outlined above, contact the IRS Advocates today. We will go over your finances and the amount that you owe with you to help determine the best course of action for settling that debt. The IRS offers several different types of repayment and settlement plans, and our tax experts can help you find the one that best fits your needs. Then, we’ll guide you through applying for and receiving a payment plan that works for you. Call now to schedule your consultation, and finally get your tax debt under control.