What Happens If I Don’t Pay My Taxes?

Nobody likes paying taxes, but failing to pay them can lead to serious consequences. Whether you forgot to file, couldn’t afford your bill, or just avoided it altogether, ignoring your tax obligations won’t make them disappear. In fact, the longer you wait, the more complicated—and expensive—it can become.


Penalties and Interest Start to Add Up

If you miss the tax filing deadline or don’t pay the amount you owe, the IRS (or your state’s tax agency) will begin charging penalties and interest on the unpaid amount. These penalties can quickly turn a manageable bill into a serious financial burden.

Here’s what to expect:

  • Failure to File Penalty: Typically 5% of the unpaid taxes for each month your return is late, up to 25%.
  • Failure to Pay Penalty: Usually 0.5% of the unpaid taxes per month, also up to 25%.
  • Interest: Compounded daily, starting from the due date of your return.

Even if you can’t pay the full amount, it’s better to file your return on time to avoid the higher "failure to file" penalty.


The IRS Will Send Notices

The IRS doesn't forget. If you don’t pay your taxes, they will begin sending you official notices and letters about your balance due. These notices get increasingly serious over time, and they serve as a warning before harsher actions are taken.

You might receive:

  • CP14: A simple reminder that you owe taxes.
  • CP501 or CP503: More urgent notices if the bill remains unpaid.
  • CP504: A final notice before they move forward with collection action.

Ignoring these notices can lead to more aggressive tactics from the IRS.


You Could Face a Tax Lien

If your tax debt remains unpaid, the IRS may file a federal tax lien against your property. A lien is a legal claim that gives the IRS rights to your property (home, car, etc.) as collateral for the tax debt.

What this means for you:

  • It can damage your credit score.
  • It becomes public record.
  • It can make it hard to sell or refinance your home.
  • It can affect your ability to get loans or credit cards.

A tax lien doesn’t mean they’ve taken your property—but it’s a big red flag, and it gives them legal leverage.


The IRS Can Garnish Your Wages or Bank Account

If the debt still isn’t resolved, the IRS can escalate to a tax levy—which means they can legally seize your assets to collect the money you owe.

This can include:

  • Wage garnishment: The IRS contacts your employer and deducts money from your paycheck.
  • Bank levy: They can freeze and take funds directly from your bank account.
  • Property seizure: In rare cases, they can take cars, houses, or other valuable assets.

Unlike private creditors, the IRS doesn’t need a court order to do this. Once they’ve sent the required notices, they have the power to act.


You Might Lose Your Passport

If your unpaid federal tax debt exceeds a certain amount (over $62,000 in 2025, including penalties and interest), the IRS can notify the State Department, which can revoke or deny your passport.

This can affect your ability to travel internationally and may delay renewals or applications.


In Serious Cases, Criminal Charges

While the IRS rarely seeks criminal prosecution for failure to pay taxes, it’s not impossible—especially in cases where there’s intentional fraud or evasion.

For example:

  • Tax evasion (intentionally avoiding taxes): This is a felony that can lead to prison time and large fines.
  • Willfully failing to file a return: This can result in a misdemeanor charge and up to one year in jail per year you failed to file.

Most people don’t go to jail for unpaid taxes, but it’s a possibility in extreme or fraudulent cases.