Re: So if I don\'t pay my taxes...then what??
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All these tax posts made me want to learn more about just what the consequences of non-payment are (since anyone considering not paying them would probably at the least want to weigh the risks versus the benefits).
So hypothetical:
JACK has a full-time job, but enjoys high limit online poker in his spare time. He makes a poker profit of $80,000 in 2005, but doesn't declare any of it on his tax return.
He gets audited by the IRS who discovers this and tells him that he filed an erroneous tax return by leaving out his poker winnings. It turns out that Jack should have paid approx $30,000 in income tax on his poker profits.
- What happens then? <font color="blue"> When I used to work for HRB, some clients would come in who were having their wages garnished for non-payment of taxes. If they find your actions to be fraudulent as well, there could be additional penalties and/or prison time. </font>
- What is the penalty? <font color="blue"> Penalties and interest can range from 20+% depending on the timeframes and amounts. </font>
- Does JACK then have any kind of black mark on either his credit record or IRS internal records? <font color="blue"> Yes and yes.</font>
- Is his act criminal, and will he have a criminal record?<font color="blue"> Possibly.</font>
- Does it matter whether Jack knew that he was withholding his poker winnings (presumably fraudulent), versus whether he has a reasonable (even if ultimately rejected by the IRS) argument as to why he left them off (let's say for the sake of argument that he was able to make such a showing, even if extremely unlikely -- I only add this twist because from some of the IRS language I read, the penalties are somewhat less harsh if the filer had a reasonable basis for his actions).
[/ QUOTE ] <font color="blue"> I don't know what you are talking about, but you have to pay, and you have to pay in a timely way, that means quarterly, not all at the end of the year. It is just not worth looking over your shoulder all the time for not paying. If it is fraudulent there is no statute of limitations, that means not the normal 3-4 years, but FOREVER. That means 20 years down the road if the government wants to get you, they can dig this up, and imagine the penalties and interest at that time.</font>
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