What If I Owe More Taxes Than I Can Pay?
Even if you do not have the money to fully pay the taxes owed, you should still file a tax return to minimize the penalties you will pay if you have unfiled tax returns.
There are a many ways to pay the unpaid income taxes or payroll taxes::
- Enter into an installment payment agreement to pay the tax debt in monthly installments, or
- Work to get an offer in compromise accepted by the IRS.
What If I Do Not File My Tax returns Voluntarily?
The IRS will take aggressive enforcement action against such people who have unfiled tax returns. Often, the IRS will prepare substitute tax returns and then assess the tax they computed against the person. In almost all cases, the tax assessed by the IRS will be much greater than the amount you actually owe since they do not take into account deductions when they compute the tax. Therefore, it is very important to have all unfiled tax returns filed. It is always better to file your taxes and deal with any issues that arise when you are unable to pay them than to fail to file a tax return.
Will I Go to Prison for Not Paying My Taxes?
It is a long-standing policy of the IRS not to pursue the prosecution of individuals who fail to file their tax returns and pay the tax owed if they voluntarily file the missing tax returns, and make an honest attempt at paying the taxes owed. Though it may seem better to just put off filing your return hoping that maybe you’ll have the money to pay it later or that the IRS ‘won’t notice’, it’s just too risky and not worth the potential problems that you could potentially have to deal with when the IRS does come calling.