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What are the consequences of not paying taxes in the US?
Executive Summary
Not paying taxes in the United States triggers a predictable escalation of civil collection tools—interest, penalties, notices, liens, levies, wage garnishments and asset seizures—and, in the most serious cases, criminal prosecution with possible prison time and large fines. Key details differ across authorities on penalty rates, thresholds for passport consequences, and maximum criminal fines; the sources agree on the broad arc from interest and penalties to liens/levies and potential criminal charges [1] [2] [3] [4].
1. What the reporting consistently claims about immediate financial consequences
Every source describes an immediate financial penalty for unpaid taxes: interest accrues from the due date and civil penalties apply for both failing to file and failing to pay. The failure-to-file penalty commonly cited is 5% of unpaid taxes per month up to 25%, while the failure-to-pay penalty often appears as 0.5% per month up to 25%, which together can double the effective added cost if both apply [3]. Major tax guidance outlets and the IRS-focused reporting emphasize that failing to file typically costs more than merely failing to pay because the failure-to-file penalty is steeper and compounds quickly, creating large short-term increases in liability [3] [5].
2. Civil enforcement tools — lien, levy, garnishment and asset seizure explained
The sources uniformly outline a progression from notices to enforced collection: the IRS can file a tax lien against property, levy bank accounts, garnish wages, and seize assets to satisfy tax debts. These are civil remedies used after notices and opportunities to resolve the debt, and they remain the IRS’s principal practical leverage for most unpaid tax cases [1] [2] [6]. Reporting notes that collection often starts with letters and offers to set up installment agreements or offers-in-compromise, but if those fail, the agency’s statutory authorities permit forced collection actions that can affect credit, property transfers, and ongoing access to funds [1] [5].
3. Penalty math and how quickly balances grow
The sources provide arithmetic: failure-to-file up to 5% per month (capped at 25%) and failure-to-pay about 0.5% per month (capped at 25%), with interest layered on top immediately from the due date; the interest rate is variable and compounds [3] [6]. Financial guidance outlets stress that interest plus penalties can outpace the original tax, making prompt filing and negotiation critical to limit total liability [3]. Practical advice in the coverage recommends filing on time even if full payment is impossible, because filing stops the steeper failure-to-file penalty and enables installment arrangements, which reduces long-term costs [5].
4. When unpaid taxes become a criminal matter and what that means
Most unpaid-tax cases remain civil, but prosecutors pursue criminal charges when they allege intentional evasion or fraud. Criminal penalties cited include up to five years in prison and substantial fines, with some sources citing criminal fines up to $100,000 or higher and civil fraud penalties as high as 75% of the tax due [4] [7]. The reporting emphasizes a legal distinction: civil penalties require a lower burden of proof, while criminal tax prosecutions require proof beyond a reasonable doubt and are reserved for cases showing willful intent to evade tax obligations [8]. Historical coverage warns that criminal exposure is rare but real where concealment, false returns, or deliberate schemes are evident [7].
5. Passport consequences — similar claims, slightly different thresholds
Two recent pieces report that passport action is a tool tied to "seriously delinquent tax debt," but they differ slightly on the numeric threshold: one article cites $62,000 as the threshold for passport denial or revocation (p1_s1, published 2025-04-09), while another lists $64,000 (p1_s2, published 2025-10-16). Both accounts agree on the mechanism: the IRS certifies qualifying delinquent debt to the State Department, which can then deny issuance or renewal, or revoke an active passport. The discrepancy in dollar amounts likely reflects periodic inflation adjustments or differences in counting interest and penalties, so practitioners advise checking the current IRS/State guidance for the exact figure at the relevant time [1] [2].
6. Big-picture takeaways and practical next steps for taxpayers
Across sources the consistent policy message is clear: address tax obligations early—file returns to avoid steeper failure-to-file penalties, pay what you can, and contact the IRS to set up payment plans or explore offers-in-compromise. The reporting also stresses that most liabilities are handled civilly, but persistent nonpayment, concealment, or fraud can escalate to asset seizures or criminal prosecution. For those facing large or contested debts, sources recommend seeking professional representation because administrative relief, penalty abatement, or negotiated settlements can materially change outcomes and reduce exposure to liens, levies, passport restrictions, or prosecution [5] [4] [1].