What to Expect If You Don’t Pay Your Taxes
Talk of eliminating the IRS, coupled with rising consumer prices, an unsteady stock market, and speculation about an upcoming recession, has led many people to wonder if they can skip paying taxes this year. While the temptation is understandable, it’s critical to pay your taxes.
In 2025, the tax code outlines clear consequences for not paying your taxes, and at this time, the IRS is committed to collecting taxes through automation and more efficient collection processes. If you have questions about what to expect if you don’t pay your taxes, the team at Wiggam Law can help. We can also provide guidance on what to do if you can’t afford to pay your taxes. To get assistance now, contact us today.
Key takeaways
- In 2025, you are legally obligated to pay and file taxes.
- The IRS will assess penalties and start collections if you don’t pay.
- Not paying in 2025 can lead to significant financial and even legal consequences in the future.
Is Ignoring Tax Obligations a Viable Option in 2025?
No, regardless of what you hear on social media or from politicians, you should not ignore your tax obligations in 2025. The IRS has robust systems in place to identify and pursue taxpayers who don’t file returns or pay taxes.
As of 2025, if you don’t pay taxes, the law gives the IRS the power to:
- assess significant monetary penalties,
- involuntarily collect tax debts from people who refuse to pay, and
- pursue legal action if needed.
The IRS’s automated collection system (ACS) handles a significant part of the collection process – in other words, don’t expect staffing cuts to reduce collection activity. The ACS sends collection notices, issues tax liens, and can even initiate wage garnishments or bank account freezes.
If a revenue officer is assigned to your account, they make it their personal mission to ensure that the taxes get paid – either by working with you to set up a payment plan or by taking matters into their own hands through involuntary collections.
Legal requirement to file taxes in 2025
As of 2025, U.S. citizens, residents, and anyone with U.S.-source income must file a tax return, regardless of where they live. Not filing can lead to significant penalties, including the failure to file penalty on income tax returns and much higher penalties for not disclosing foreign bank accounts or assets.
Additionally, if the IRS determines that you willfully didn’t file in an attempt to commit tax evasion, they may recommend criminal charges against you.
Long-term consequences of not paying taxes
Unpaid taxes don’t disappear – they accrue penalties that can get up to 50% of the balance or even higher in some cases. Interest also accrues and compounds daily. The IRS has 10 years to collect unpaid taxes, and even if you don’t hear anything for a while, they will eventually come after you for the unpaid taxes.
If you don’t file taxes, the IRS can come after you at any time – there’s no statute of limitations on unfiled returns, so they can estimate what you owe and assess tax against you at any time. Additionally, without a tax return, you won’t be able to prove your income to lenders.
Consequences of Not Paying Your Taxes in 2025
Not paying taxes leads to penalties and involuntary collections (wage garnishments and asset seizure). The timeline of when the IRS comes after you for unpaid taxes varies, but once the process starts, here’s what to expect:
- Initial Collection Notices
The IRS’s early collection notices urge you to pay, warn about collection actions, and outline payment options. These letters include CP14, CP501, and CP503. The IRS also typically sends LT16 once a year if you owe a balance, even if you’ve already set up payments. Beyond mounting penalties, there are no immediate consequences of ignoring these letters.
- Escalating Collection Actions
The next round of letters gets increasingly serious, and ignoring them will lead to consequences. CP504 explains the IRS’ right to seize your state or federal tax refunds and warns of increasing collections if you don’t take action.
LT11, Letter 1058, and similar notices are Final Intent to Levy notices. If you don’t request a collection due process (CDP) hearing or make payment arrangements, the IRS will move forward with enforced collection actions.
- Enforced Collection Measures
After sending the Final Intent to Levy notices and advising you of your right to a hearing, the IRS can enforce the following collection actions without any additional warning:
- Wage Garnishment – The IRS will direct your employer to send a portion of your paycheck to the IRS for your tax debt. You will only be allowed to keep a small amount based on your filing status and number of dependents, and the rest will go to the IRS.
- Bank levies – The IRS can tell your bank to freeze the funds in your account, up to the amount that you owe, without regard to any outstanding payments or autopayments that have recently been drafted from your account. At that point, you have 21 days to prove an error or establish extreme financial hardship, or the bank will send the money to the IRS.
- Asset seizure – After notifying you with the notices mentioned above, the IRS has the right to take nearly anything you own, including investments, retirement accounts, personal property, real estate, or even your home in rare cases.
- Federal tax lien – Tax liens attach to all of your assets, making it difficult to transfer, sell, or borrow against them. The IRS doesn’t need to notify you in advance before filing a tax lien.
- Passport Revocation
If you have seriously delinquent tax debt (defined as $65,000 or more as of 2025), the IRS can certify your tax debt to the State Department. Then, they can take away your passport or refuse to issue you a new one. You can protect your passport by setting up payments. The agency doesn’t need to notify you in advance about the passport seizure, but you will receive a notice that outlines how to get your travel privileges back.
- Accrual of Penalties and Interest
If you file late, the IRS will assess a failure-to-file penalty of 5% of the balance due for every month you are late, until it maxes out at 25% of your balance. The failure-to-pay penalty is 0.5% of your balance due – it increases to 1% after a certain period of delinquency and can also get up to 25% of your balance. Interest compounds daily at a rate that’s the fed rate plus 3%.
Will you go to jail if you don’t pay your taxes?
In most cases, no. Not paying your taxes is usually not a crime. Rather, it’s a civil matter that’s subject to civil penalties and civil collection actions (wage garnishment, asset seizures, etc). However, if you are convicted of tax evasion or other types of criminal tax fraud, you may face fines and imprisonment.
Common Misconceptions About Not Paying Taxes
There are several misconceptions about not paying taxes:
- The IRS Won’t Notice: The IRS’s computers will notice if they receive payment information (W2s, 1099s, etc) from other parties or if you suddenly stop filing after years of filing returns.
- Small Amounts Don’t Matter: Small debts will snowball due to penalties over time. Although the IRS spends more resources on tax debts that range from $50,000 to $100,000 or higher, the agency can file liens or pursue involuntary collections on smaller amounts.
- You Can Write Off Taxes in Bankruptcy: You can only write off some taxes in bankruptcy. Generally, the taxes must be income taxes that are at least three years old. If you’ve recently used a credit card to pay off taxes, you generally won’t be able to discharge that credit card debt in bankruptcy either.
- The IRS Cannot Shut Down Your Business: Although business licenses are generally issued by the state, the IRS can effectively shut down your business through asset seizure if you don’t pay business taxes. Your business may also be at risk if you don’t pay personal income taxes.
Why Addressing Unpaid Taxes Proactively is Crucial in 2025
Ignoring your taxes is not a sustainable solution. Once you have delinquent taxes, you are subject to penalties and extreme collection actions. To protect yourself, you need to be proactive.
At Wiggam Law, we provide services to help you avoid enforced collections, deal with tax debt, and get back into compliance with the IRS. Being proactive about your tax situation helps to:
- Prevent escalation – Setting up payment arrangements lets you avoid wage garnishments, asset seizures, or loss of your passport, regardless of how much you owe.
- Secure payment options – The IRS has numerous installment agreements and relief options, but generally, it’s much easier to secure these arrangements if you’re proactive and compliant with current filing and payment requirements.
- Minimizing penalties and interest – Filing on time or as soon as possible limits the failure to file penalty. Additionally, once you set up monthly payments, the IRS drops the failure to pay penalty to just 0.25% per month. Paying down the debt reduces the total amount of interest accruing on your account.
Paying your taxes protects your assets and your long-term financial future. Failing to file or pay taxes in 2025 could lead to significant penalties, interest, and collection actions that you may not face for years, but the longer you wait, the higher the balance will get and the worse the consequences will be.
Need options? Check out our guide on what to do if you can’t pay your 2024 taxes in 2025.
Wiggam Law: Your Partner in Resolving Unpaid Taxes in 2025
At Wiggam Law, we focus on helping people solve IRS and state tax problems. We can help you deal with unpaid taxes or any other tax problems you’re facing, including audits, penalties, incorrect assessments, criminal charges, and more. We can help you:
If you are struggling with the IRS or even if you just have a question, contact us at Wiggam Law for a confidential consultation today. Call us at (404) 233-9800 or use our online scheduler to schedule a free call.
Frequently Asked Questions About Unpaid Taxes
What is the first notice I receive if I don’t pay my taxes?
Generally, the IRS sends a CP14 as the first notice. The timing of the first notice varies, but once you receive it, you can expect to see a new notice every six to eight weeks, with increasing severity.
How long does the IRS take to start collection actions?
In some cases, the IRS starts collections when your payment is a few months late. In other cases, you may not hear from them for a couple of years. However, during that time, your balance will have increased significantly. For example, if you filed and owed $100,000, your bill may be $130,000 or more within two years.
Can the IRS really garnish my wages?
Yes, even if you only owe a few thousand dollars, the IRS has the right to garnish your wages. The agency must first send you a notice with a 30-day warning, though.
What is a Notice of Intent to Levy?
This is a letter explaining the IRS’ intent to levy (seize) your property. If it’s a final levy notice that notes your right to a hearing, the IRS couldlevy your assets in 30 days if you don’t respond.
What options do I have if I can’t afford to pay my taxes?
The main option is to set up monthly payments through an installment agreement. However, if you have limited income or assets, you may qualify for an offer in compromise, currently not collectible status, or a partial payment installment agreement.
How can Wiggam Law help me with unpaid taxes?
Wiggam Law can help you come up with a personalized solution based on your individual financial situation. That may include requesting penalty abatement and/or setting up monthly payments or applying for a settlement. If relevant, Wiggam Law can also help you dispute incorrect tax assessments, apply for innocent spouse relief, or look into other programs based on your unique circumstances.
Is it too late to take action if I’ve already received a levy notice?
No, if you receive a Final Notice of Intent to Levy, you have until the deadline on the letter. If you don’t act by then, the IRS could move forward with asset seizure. You can reverse those actions once the IRS garnishes wages or seizes assets. But it is difficult, and you should work with a professional.
What are the long-term consequences of not paying my taxes?
Your tax debt will grow. You risk losing wages and/or assets. You will struggle to get loans or transfer assets. You may not be able to get certain types of business licenses if you don’t pay your taxes. Additionally, unpaid taxes can hurt you professionally, depending on your industry.
