No, the federal government and the majority of states have the legal authority to take a portion of your income through a process called taxation. Almost everyone working or otherwise receiving an income in the United States are required to pay taxes to the federal government and most of the states in which they reside.
A few states such as Florida and Texas do not have income tax at the state level but even residents in those states and all others must pay federal taxes when their income is above a certain amount. Since the nation’s creation, the United States Constitution provides the authority for the federal government to tax its population in a variety of ways including income tax.
What Happens When a Person Fails to Pay All or Some of Their Tax?
The IRS will send a notice of deficiency to your last known address. This notice is not a bill, rather it provides what the IRS discovered about your income and can differ from what you may have filed.
If you agree with the new amount of tax owed, you should pay it as soon as possible to avoid interest and fees by following the directions in the notice. The IRS does provide payment plans for those who are unable to pay the full amount immediately.
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What If the Amount Due is Incorrect?
If you do not agree with the adjusted tax provided in the deficiency notice, you have the opportunity to contest it. There are different ways to resolve the tax difference:
- Taxpayer Advocate Service: is a free program funded by the IRS. If you have been unsuccessful in contacting the IRS regarding your problem or are having financial difficulties, they may be able to help.
- The Office of Appeals: is a service within the IRS, however, it operates as a third-party mediator to assist taxpayers and the IRS in resolving a tax dispute.
- U.S. Tax Court: is a formal tribunal in which taxpayers may file petitions or civil cases disputing the tax owed.
What are the Consequences of Not Paying One’s Income Tax?
Failing to pay taxes is tax evasion and if found guilty, a taxpayer can face a fine of up to $250,000 and the possibility of imprisonment for up to 5 years. Ignoring the IRS notices can make the situation worse.
There are deadlines for filing petitions and making an appeal. Failure to follow those deadlines may prevent a person from disputing the tax later. If you do not comply or fail to contest the tax owed, the IRS collections unit may be able to take your wages and assets including your home.
Should I Hire an Attorney?
Tax law is one of the most complicated areas for people to navigate. A local tax lawyer can advise whether your claim is valid and file the appropriate paperwork in a timely. Even if you have not paid taxes in a long-time, talk to an experienced professional to avoid any future problems.