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What happens if you are unable to pay your taxes?

On Behalf of | Jul 13, 2022 | Income Taxes

Every adult has the responsibility of paying what he or she owes to the state and to the federal government. By earning an income, a person is agreeing to pay appropriate taxes in a timely manner. However, unexpected financial circumstances may arise, and you may be unable pay the taxes you owe. At this point, you may have concerns about what will happen if you do not meet these demands and what penalties you could face. 

Unpaid taxes can bring a host of consequences that can range from inconvenient penalties to time behind bars. It is in your interests to learn about the options available to you as quickly as possible so that you are able to confront the issue in the most effective way. There are a number of ways you can navigate your situation, and the right choice depends on the details of your individual case. 

Don’t skip paying your taxes 

Even if you are facing financial difficulty, simply skipping the payment of your taxes or putting off filing can result in serious penalties. If you do this, the government has the right to seize your property and assets in lieu of payment. Those who do not file by the deadline have the ability to request an extension with the Internal Revenue Service. Filing your taxes late may result in penalties that can accrue at a rate of 5% each month that you are late. After five months, the penalty caps at 25% of the unpaid tax liability. 

If you are late in paying your taxes, you will accrue interest and penalties. Those facing serious financial struggles who are unable to pay on time have the option of using credit cards, requesting an extension, applying for an installment agreement or borrowing from other sources. It is helpful to remember that, regardless of the option you choose, you will likely have to also pay some penalties and interest. 

The legal options available to you 

Dealing with the IRS and legal matters related to taxes can be complicated and confusing for the average Georgia taxpayer. It is helpful for each individual facing these circumstances to seek an explanation of how they can protect their interests during an audit, when facing a levy or confronting any other tax-related complications. An assessment of your individual case will help you understand the specific legal options available to you.