BAKERSFIELD, Calif. (KERO) — The tax returns of former President Donald Trump are about to be released following a vote by the House Ways and Means Committee. A supplemental report about the matter found that Trump paid no federal income taxes during his last year as president, a time for which it is public knowledge that his income was at least the regular presidential annual salary of $400,000.
23ABC looked into what happens if you don't pay your tax bill.
If that amount isn't paid off by April 15th, which is the last day to file your taxes, you'll get charged on whatever balance remains. The failure to pay penalty is a percentage of that outstanding amount and also gathers interest.
The IRS will send you a letter informing you of the penalty.
Sherod Waite with Moneywise Wealth Management says always communicate with the IRS. Simply delaying contact or not filing at all in hopes the agency won’t notice will only cost you more money.
“But don't ignore that, because the penalties can accrue to be quite extensive. For example, they can charge you up to 5% of what you owed per month. And that can go up to 25% of what you owe,” Waite said. “So that can be quite substantial. You don't want to ignore it.”
You can dispute the charge if you disagree with the amount you owe. Alternately, the IRS can work with you on reducing, or in some cases removing, some penalties if you can show reasonable cause for why you weren't able to pay those taxes.
The penalty process is the same regarding a failure to pay by a person or a business, and Waite says even if you don't have the funds necessary to cover your taxes, you still need to file.
“The IRS doesn't want to be the bad person here, and there are provisions allowed for people to be forgiven of some of these fees and some of these charges,” Waite added. “But the only way to do that is by going through the process that the IRS has laid out.”
Any communication from the IRS will always be through mail. Any attempts to reach you by phone or email are scams. The agency follows a pattern for attempting to contact people who forget, refuse, or otherwise fail to file a return and pay their taxes.
NerdWallet reports that one to three months after your balance is due, notices from the IRS begin to arrive. The tone of each notice will begin to get more severe as the notices continue.
Two to six months following a failure to pay, tax liens and collections companies may start to call. Liens could affect your ability to obtain loans, get a job or keep a security clearance.
After three months of failure to pay, the IRS can seize assets like property, bank accounts, social security payments and your wages. At this point, your ability to obtain or renew your passport may also be affected; it could even be revoked.
To learn more about how the Internal Revenue Service collects delinquent taxes, you can visit the information page at the IRS website.