For many Americans, the threat of legal action is a big reason we always ensure we pay our taxes on time. And for good reason—failing to pay your taxes can lead to hefty fines and increased financial problems. But, failing to pay your taxes won’t actually put you in jail. In fact, the IRS cannot send you to jail, or file criminal charges against you, for failing to pay your taxes. There are stipulations to this rule though. If you fail to pay the amount you owe because you don’t have enough money, you are in the clear. But if your reason for not paying is because you didn’t file or you committed a form of tax fraud (you intentionally lied on your return or tried to deceive the IRS), you could find yourself behind bars.
First things first, mostly all tax-related crimes are actually civil cases, not criminal. Taxes can be confusing, and the IRS understands this. If you get confused on your return and fill it out incorrectly, or forget to include an important document, you will likely be sent a letter to amend your mistakes. If the mistake was a bit more serious, you will probably be audited and have a civil judgment placed against you. This is not a criminal act and will never put you in jail. Instead, it is a notice that you must pay back your unpaid taxes and amend your return.
But those that intentionally change their taxes, fail to file and file fraudulent taxes won’t be so lucky. If the IRS thinks you are evading your taxes, by either intentionally filling out your return incorrectly (ex: you claim more dependents than you have) or you fail to file your return altogether, you may face jail time. Tax evasion results in up to five years, while failure to file your return will give you one year in prison for every year you do not file.
For other, less serious tax-related problems, such as not paying, always know that the IRS must go through a variety of steps before they take legal action. They must send out a letter first informing you of your issue and give you the time to either fix the problem or challenge the notice, which will always come in written form through standard mail, never as a phone call or e-mail.
If you are unable to pay your taxes, or feel you are in deeper trouble with the IRS, contact a tax professional to help get you out of it. Levy Tax & Associates are well-versed in all varieties of tax concerns and are here to help you. Contact us at 1-800-TAX-LEVY or visit our website to learn more.