Between the complications of tax season and the annoyance of quarterly payments, many self-employed professionals are consistently tempted to skip out on tax payments. Few, however, actually succumb to this temptation. If you fail to take care of self-employment tax debt, you may face one or more of the following consequences:
- Larger Payments With Interest
Expect to pay interest if you go several months without paying your employment taxes. Additionally, a significant tax penalty will be assessed.
- Non-Earnings Garnishment
Wage garnishments can be complicated for self-employed professionals. However, there are other ways for the IRS to get the money you owe. Non-earnings garnishments are common among self-employed taxpayers, and often, they are accessed through bank accounts and rental income. In some cases, independent contracting earnings can be garnished. While typical wage garnishments can be restricted based on poverty guidelines or public assistance eligibility, non-earnings garnishments are accessible regardless of the self-employed individual’s income level.
- Plummeting Credit Score
Few things are more destructive to your credit score than a bad history with the IRS. Although the IRS typically takes its time before reporting your situation to credit bureaus, your credit score can take a huge hit if you neglect your taxes for too long.
- Property Lien and Levies
If the IRS sends you a Notice and Demand for Payment of your employment tax debt, and you fail to respond by paying your taxes, you may receive a Notice of Federal Tax Lien. This document lets creditors know that that government has the right to your property. A lien is a legal claim against your property, while a levy allows the government to actively seize your property in the interest of paying back tax debt.
- Criminal Penalties
Criminal repercussions are rare among those who fail to pay their taxes, so if you neglect quarterly payments or get behind on your tax return, you don’t necessarily have to worry about being thrown in jail. However, if you attempt to defraud the IRS or artificially decrease your tax burden, you could be subject to significant criminal penalties, including potential time behind bars.
Call Our Office
If you’re struggling under the heavy burden of self-employment tax debt, it is in your best interest to seek counsel from a knowledgeable attorney. Call 720-398-6088 to learn how you can resolve your current tax situation.