As Benjamin Franklin said, “Nothing is certain except death and taxes.” Taxes are something most people have to pay, and you cannot escape them. They are your responsibility. But what happens when you don’t have the money to pay them? Some people will think of not paying them at all or paying a minimum amount as it’s better than nothing. However, others will consider lying about their taxes and committing tax evasion.
What is the worst that could happen after a tax audit, when the IRS realizes you evaded your taxes illegally? Below we’re going to talk about the consequences.
People can make mistakes. It just happens. They may think that they don’t have to pay taxes for certain things, or they may simply make a small mistake when they report their income. If you only did a small mistake, then all that could happen is that you will have to do the reports once again and spend time dealing with your taxes.
If you make a bigger mistake, the IRS might end up thinking you tried making tax fraud instead, and you’ll have to look for a tax lawyer.
The most common thing that happens when someone fails to pay their taxes through tax evasion is that they’ll get some penalties. The IRS will always make sure they take what you owe them. So, even if you evade taxes, they will make sure they get their money back and a bit extra as a form of punishment.
Most of the time, people have to pay a penalty or interest. This means that if you tried to make false claims to purposely avoid paying taxes, you can be fined up to $250,000. On top of that, you will also be penalized if you fail to file your taxes.
Other times, you will have to pay interest. The interest always accrues from the due return date until you’re able to pay the full amount you owe. This also includes the penalty charges and your interest.
As mentioned, the IRS will take back what belongs to them. If you cannot pay and committed tax evasion, then they will take other assets from you to make up for the amount you owe. So, they might take away your house or car. If you have money in your bank account, it might be taken as well.
Jail time is another consequence of being found guilty of tax evasion. It’s rare compared to the other consequences, but it might still happen if the IRS decides you need a sentence. They can make this decision if you don’t have honest tax behavior.
Tax evasion is a severe thing that comes with serious consequences. So, you should refrain from it unless you want to get in trouble with the IRS. If you’re not honest, you risk being penalized, having your assets taken from you, or even worse, going to jail.