When you have serious tax issues, you need someone who knows tax law

Can I go to jail if I can’t pay my taxes?

If you know you don’t have money to pay your taxes, you may think it’s better not to file them at all. It can feel tempting to avoid a stressful situation altogether. However, not filing your taxes is one of the worst things you can do in your scenario. You can go to jail for tax-related reasons, and not paying can—in some circumstances—be one of them. However, there are nuances involved.

When do you risk jail time?

If you make a mistake on your taxes, the court will not charge you criminally.  Instead, the court will settle a civil judgment to collect the debt you owe.

You can only go to jail in the event of criminal charges. In tax-related matters, the charges are commonly tax fraud and tax evasion.

  • If you intentionally file a fraudulent return, you can go to prison for up to five years.
  • If you fail to file a return (tax evasion), you can go to jail for one year for every year you failed to file.
  • If you help someone else evade taxes, you can go to jail for three to five years.

What is the statute of limitations for tax crimes?

Depending on the nature of the wrongdoing, criminal charges must be filed within three to six years of the violation.

What are my options if I can’t pay?         

The IRS will work with you, and not paying is probably not your best option. You can set up a payment plan or installment agreement. In the event that the debt is truly beyond your means and a payment plan is not a feasible option, the IRS may consider an offer in compromise to settle the debt for a lesser amount.

Keep in mind that the longer you fail to pay your taxes, the more serious your situation will become.