While 47 percent of Americans did not have to pay income taxes in 2009, the remaining 53 percent of Americans had to pay additional taxes, according to Yahoo Finance. Pay tax debt immediately to avoid financial consequences.
Penalties & Interest Assessed
The Internal Revenue Service (IRS) adds its assessment of penalties and interest to your unpaid income tax debt. These penalties can be as much as 25 percent of the amount of your unpaid taxes, according to the IRS website. The interest assessed can range from 4 percent to 10 percent, depending on how long you owe the tax debt.
Filing of Tax Lien
The federal government may file a lien against you for the tax debt you owe. To file a tax lien, the federal government must send you a Notice for Demand for Payment. You will have 10 days to pay the debt, or the government can file a tax lien for your tax debt. The lien will attach to all property you have, including your house and car.
Reduced or No Income Tax Refund
The IRS will take future income tax refunds and government money owed to you, such as stimulus payments or tax credits, until your tax debt is paid in full. If you expect a refund during tax season but owe some past due taxes, you may receive a reduced refund or no refund at all.
- tax forms image by Chad McDermott from Fotolia.com