With the tax filing deadline of April 15 almost hitting the calendar, numerous Americans are engaged in last-second attempts to meet the deadline. If you are one of them and worried mainly because you cannot fully settle your tax bill, don’t lose heart. The Internal Revenue Service (IRS) defines penalties but police time is not the first action they take.
Even if missing tax payments are still a common fear, prison rarely occurs due to this reason, except if the case involves fraud or willful evasion. So, to save the situation, our next implementer is to give any penny you have left in your pocket and come to pay the debt together with me. What is the opportunity to discuss it with me?
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What Is the Offence of Tax Evasion?
To avoid doing that crime, it is advisable to be sure of your actions, and you, therefore, need a helper. The act of tax evasion comprises activities that were intentional in nature, for instance, underreporting of income, keeping the assets secret, and a lie being told by the person on his return.
If your annual income is $100,000 and you report just $60,000, think about what you’re doing. You’ve just been committing fraud, and that is against the law. Under certain circumstances where the IRS is forewarned that the information you provided on the sheet of paper was not truthful, they may decide to press criminal charges, and this is where the prospect of being jailed becomes a reality.
What Do You Do If You Are Unable to Reach a Portion of a Tax Demand?
If, for example, you honestly fill in your return but unluckily do not possess enough money to settle the full amount of the tax, the matter is not criminal. It is referred to as failure to pay. This can be due to some reasons like when someone is unemployed, or an accident occurs and there are medical bills, or tax withholding is done incorrectly.
Now, in such a case, the IRS will notify you in writing and provide a statement with the balance you owe, as well as the information related to interest and penalties. If you reply to it and manage to set up a time, they mostly will agree to that. Yes, there will be a fine but no jail for you.
What Will the IRS Do Before They Get Your Situation Rolling to the Next Level?
If you disregard letters from the IRS and allow your balance to accrue over time, the situation may become very severe. The IRS has the authority to do things like:
- Garnish your wages (taking some money from your paycheck)
- Levy your bank account (getting the funds directly from your account)
- Put liens on your property or house
In the unlikely event that — particularly in the event of a long-standing history of not paying taxes or hiding the income — the IRS might initiate the legal procedure. Such a scenario occurs very rarely, and it’s usually preceded by several ignored warnings.
If You Can’t Pay the Taxes Right Now What Should You Do?
First, don’t hesitate, as you can resolve the situation right now. There are options presented by the IRS that will help you manage a bill that is beyond your ability to pay. They are:
- Installment Agreement – You can go to the IRS Payments page and request a monthly payment plan there.
- Offer in Compromise (OIC) – This might be a better option for you if you can be approved to pay less than you owe. E.g., from a debt of $60,000, your amount could be reduced to $10,000 by assessing your financial condition.
- Temporarily Delay Collection – If the collection of taxes is a source of your trouble, and it is really hard for you, then maybe the IRS will grant you time to recover, and they even may pause the process of recovery.
So, go to the IRS payment plan page or get advice from a tax professional who has experience in this area and find out the solution that will work best for you.
Filing for an Extension Won’t Postpone Your Payment
Keep in mind that you are still required to make a payment by the original deadline in the case of filing your taxes after the due date. An extension simply grants you time to file without asking for a payment extension. Typically, if you fail to pay on time, you will be subject to late fees.
Avoid the Following Scams That the IRS May Send You
Be careful. The IRS is not always using the telephone, texts, or emails to demand payments. Mostly, a threatening call you receive would be from a fraud. Only after sending the letter the official communication starts.
Avoid Common Errors That Can Make You Pay Money
It doesn’t matter if you don’t have to pay taxes, be sure to check everything twice just in case. You should tell the IRS about all your income – including income from the side or some freelance work. Mistakes cause audits or refunds delays. You are still liable for them even if it was a mistake.
When it comes to your taxes, if you are not sure, it is always a good idea to hire a CPA or a tax attorney. Additionally, the IRS provides a listing of professional tax providers that are approved, which you can use to locate skilled assistance.
Taxes evasion is definitely not the first punishment for a person who has not submitted the necessary funds to the IRS. Collection of the tax you owe has become the IRS’s priority one, whereas your freedom has never been the first concern for them. The standard checking of letters, the direct and truth filing and the search for a solution, should be problems appear, are the best prevention measures for you.
However, do not consider not paying your tax as a matter to ignore. It is known that The more you are thinking ahead about the problems that might occur, the more alternative things that will be at your disposal – to solve the problems, thus being peaceful.
