What Happens If You Don't Pay Your Income Taxes?

by Jennifer Allen

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.

About the Author

Jennifer Allen obtained her Bachelor of Arts in economics and a Bachelor of Arts in political science, and has worked in finance since May 2006. She completed her Master of Arts in human resource management in December 2009. Allen has written a variety of articles that are published on various websites.

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