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This Is What Happens if You Don't Pay Your Taxes

With tax day looming, a lot of people are probably wondering how much trouble they would be in if they simply skipped it. Here's what would happen to them if they did.
The IRS HQ in DC. (AP Photo/J. David Ake, File)

For decades, Ruth Benn has tried to avoid giving the government any of her money. It hasn't been easy: She started brewing her own beer to avoid paying taxes on booze that would go to fund the Vietnam War. In the 80s, she didn't make any long-distance calls to avoid the telephone excise tax, and she decided she would never own a home. Today she's the coordinator of the National War Tax Resistance Coordinating Committee, a group that is so opposed to war that it refuses to comply with the IRS, lest some of its payroll taxes fund bombs or tanks.


Every year, Benn files a tax return, but doesn't pay what she owes, making her tax resistance clear. Still, she mostly doesn't get hassled by the IRS—she makes so little money as a full-time peacenik that she's not a juicy audit target. "I don't live too high on the hog," as she tells me.

Benn's situation is pretty rare, though. As millionaire tax evaders like Wesley Snipes and Lauryn Hill have found out, if you owe the government enough money, eventually its agents will come knocking. But what happens to run-of-the-mill people who fail to file? If tax day—April 18 this year, FYI—comes and goes, and you do nothing, will there be serious consequences?

Read: I Asked an Expert How I Could Stop Screwing Up My Taxes

According to Rus Garofolo, an accountant in Brooklyn who caters to the creative class, if you don't pay what you owe, you will receive a letter. If you ignore it, the government will put a lien on your property, which means that if you sell it, what you owe goes to them first and you second. If you aren't a homeowner, the IRS has plenty of other ways to collect, up to and including skimming your paycheck.

Garofolo remembers being shocked the first time he found out that the feds can go into your bank account and seize your money, but now says that the collection powers of the federal government are enormous. "I'm fairly confident that it's not a lot effort for them," he tells me. "They're allowed to just take it."


Benn says she's only had $800 taken out of her bank account, but since then has not kept a lot of money in there. And in 2009, she was given a summons to answer questions about where her money was so the IRS could take it. "I answered all the questions by invoking the Fifth Amendment," she says. "In that case, they don't pursue it."

If you try to keep your money away from the government—whether on behalf of principle or greed—you'll wind up being on the hook for more than you owe. There's a penalty for failure to file, and then there's 3 percent interest tacked onto your debt. That can lead to a vicious cycle: If you can't afford to pay your taxes, you'll wind up owing more, and then you really can't afford to pay.

Garofolo's advice for someone trapped in tax debt is to pay something––anything––to show that you're working in good faith to settle up. The IRS has a reputation for being easy to work with in terms of repayment plans, but is also an agency you don't want to be on the wrong side of. "If you ignore them completely and don't pay anything," Garofolo says, "they can blow your mind with the level of their authority and power."

If you have the money and the smarts, there are legal ways to dodge taxes—most popularly, you could set up an offshore shell company to hide your money from the government. Enough people take advantage of that and other loopholes that over 50,000 New York households suspiciously reported negative income in 2013. Offshoring cost the US a reported $100 billion in tax revenue a year; from 2000 to 2010, tax evasion and avoidance added up to over $3 trillion.

Benn insists that it's easy to get away with not ever paying taxes––you just have to be willing to live without a credit card or any real assets. It also helps, she thinks, that the government may not want to get into a public fight with people refusing to pay taxes for moral reasons.

"I think i have been somewhat lucky, but it's possibly because I've been so public with it," she says. "Sometimes I think the IRS doesn't want to bring attention to this."

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