Here's what can happen if you don't pay your taxes

The number of Americans who fail to file taxes each year is estimated to be 10 million.

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We're not talking about folks who aren't required to file taxes or people who file but don't owe taxes. We're talking about those who deliberately choose to ignore their tax obligations.

Of course, there are a lot of reasons a person might try to forget the IRS exists. Let's say someone got so busy during the year that they failed to keep proper records. That person may be tempted to ignore the annual tax deadline. Maybe someone is fighting a serious illness and doesn't feel up to dealing with taxes.

Whatever the reason, it's important to understand what can happen if you decide not to file this year.

You'll receive a stern warning

A letter from the IRS rarely contains good news. If you've filed taxes but have not paid the amount owed, you're likely to receive a letter telling you that you're legally obligated to do so.

Really, sending a letter is a relatively polite way for the IRS to remind you of an issue you may be trying hard to ignore. Your best bet is to pay attention to the letter. Failure to pay can also result in the following consequences.

You'll get hit with penalties

Failure to pay taxes can be costly. The IRS charges a penalty of 0.5% of the unpaid amount for each month or part of a month the tax remains unpaid, not to exceed 25% of your unpaid balance.

If you haven't even filed your taxes, the IRS will apply both a Failure to Pay and Failure to File penalty. In total, this penalty amounts to 5% of the unpaid balance.

There may be a levy placed on your bank account

If the IRS does not receive an indication that you'll be paying your taxes, it can impose a bank levy. A bank levy is a legal maneuver that allows the IRS to take funds from your bank account.

Your wages could be garnished

If you're already cutting the monthly budget close, you're not going to like the fact that the IRS can take a portion of your paychecks through wage garnishment to repay a tax obligation.

A lien may be placed against your property

Typically, once you owe the IRS $10,000 or more, the federal government adds "property lien" to its list of potential actions. A property lien is a legal maneuver that gives the IRS a stake in your home. Let's say you decide to sell the property. Your proceeds won't be paid out to you.

Your property could be seized

If you totally ignore IRS warnings and your tax bill begins to pile up, it has the right to seize your property. If the IRS does so, the property will be sold and the proceeds used to cover your tax debt.

You may be required to forfeit a refund

If, for some reason, you're owed a refund but are still choosing to avoid the IRS, that refund may be forfeited.

You might face tax evasion charges

If you're a regular working person and have gotten behind on taxes, you're probably not going to be thrown into the clink. If you're a millionaire who isn't paying taxes because you don't want to, jail is possible -- theoretically.

Your passport can be revoked

The State Department has the right to revoke the passport of anyone who deliberately avoids their tax obligation. Thanks to the Fixing America's Surface Transportation Act (FAST Act) of 2015, the State Department can yank passports from delinquent taxpayers. If you're a frequent traveler, this penalty could be particularly difficult to deal with.

The IRS may be the bill collectors for the federal government, but that doesn't mean it’s the bad guy. No matter how far behind you are, there's no time like the present to reach out to an IRS representative to learn how you can get caught up.

This article was written by Dana George from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to


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