by B. Leslie Baird

Created on: March 01, 2010   Last Updated: March 02, 2010

Many people will try to get away with not reporting their income or paying income taxes. While they may be able to accomplish this for a period of time it will most likely catch up to them. High profile cases can be frequently seen in the news but the IRS is just as likely to go after lower income taxpayers who choose to misuse the system. Unfortunately the IRS does not put much stake into whether or not the taxpayer intentionally failed to pay their taxes or not.

Tax evasion is considered a felony and can be punishable by up to $100,000 in fines and five years in prison. Consider the case of Al Capone. While he was never convicted on racketeering charges he was imprisoned for tax evasion. This amount is significantly more for employers who fail to pay taxes collected from their employees.

The IRS has many means available to asses fines and penalties for failure to pay taxes. The IRS may garnish a taxpayer's wages and even collect from their bank accounts. In some cases the IRS will file a lien against a taxpayers home or business and possibly even force the sale to collect taxes due. Once the IRS has taken action against a taxpayer obtaining loans or home mortgages will become extremely difficult. Any property subject to a loan will also be subject to seizure by the IRS. Payment arrangements may be made with the IRS but interest will still accumulate until the entire balance has been paid in full.

Penalties for failing to file a tax return can amount to five percent of the tax due per month up to a total of twenty five percent. If no tax is due, no penalty will apply. Filing a frivolous tax return can also cost the taxpayer. The IRS may asses a penalty of $500 and apply civil penalties of 20 to 75 percent of the tax owed. Taxpayers that take frivolous cases to court can face additional penalties of up to $25,000.

Even underpaying estimated taxes through the course of the year can cause the IRS to asses fines and penalties to the taxpayer. Some circumstances will be considered by the IRS and if the taxpayer comes forward the IRS may be more lenient than they will be for taxpayers that they must take action against.

If you have not paid taxes it is best to come forward and rectify the situation before the IRS comes after you. There are many attorneys that specialize in tax law and settlements if you are deeply in debt. Their services will cost but will most likely be less than the penalties and fines from the IRS if you completely ignore the situation.

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