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If you don't pay your taxes by the filing deadline, even if you get a tax filing extension, it may mean paying even more money to the IRS in the form of penalties and interest.
Here are some consequences of not paying taxes — on time or at all — and how quickly the IRS will act.
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What happens if you don't pay taxes, or pay your taxes late?
Interest and penalties start immediately
If you don’t pay your tax bill in full by Tax Day, the IRS will charge interest on the outstanding amount. The IRS may also levy a late-payment penalty (sometimes also called a failure-to-pay penalty) of 0.5% per month, with a maximum penalty of 25% of your unpaid taxes.
Notices start to arrive within 1-3 months
If you're issued a failure-to-pay penalty, you will receive a letter noting that a balance is due in the months to come. You may receive more than one letter. The IRS says if you can prove a reasonable cause for paying late or if this is your first offense, you may be able to get the penalty reduced or removed.
» MORE: Hit with a tax penalty? The IRS might give you a do-over
Tax liens and collections calls may follow
If you take no action to respond to the notice(s) or make a payment, the IRS may ramp up its collection tactics.
A tax lien is a legal claim against property and financial assets you own or may have coming to you. It’s not a seizure of your assets, but it is a claim on them. If you sell the asset, the government could be entitled to some or all of the proceeds.
Liens are often public records. That means that even if they're not on your credit report, liens could affect your ability to get loans, get a job or keep a security clearance. Filing for bankruptcy may not necessarily get rid of the lien or your tax bill.
The IRS may send your account to a private collection agency. The IRS will send you a notice should that happen, and it will give you the collection agency’s contact information.
» MORE: Learn more about how a tax lien works and how to stop one
IRS levies and passport restrictions
Continuing to ignore notices and not taking steps to repay your tax debt could lead to more serious consequences, such as a tax levy or passport seizure, within a few months' time.
A tax levy is the actual seizure of your assets — property, bank accounts, Social Security payments or even your paycheck — to pay your debt.
The IRS can levy, seize and sell any type of personal property that you own or have an interest in, such as your car or real estate, and apply that money to your unpaid tax bill.
Ten days after a notice of intent to seize or levy is issued, the late-payment penalty rises to 1% per month, according to the IRS. On top of all that, the State Department may not issue or renew your passport, and it might even revoke it if your accrued federal tax debt is over $62,000.
» MORE: Learn more about how a tax levy works and how to stop one
Simple tax filing with a $50 flat fee for every scenario
With NerdWallet Taxes powered by Column Tax, registered NerdWallet members pay one fee, regardless of your tax situation. Plus, you'll get free support from tax experts. Sign up for access today.
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What to do if you can't pay your taxes
If you can’t afford to pay your tax bill on time, the IRS offers payment plans that could help you pay off your debt. Enrolling in one shows you’re making an effort, it can lower your late-payment penalty to 0.25% per month and could help ward off levies.
Another relief option is an . This IRS program allows taxpayers to settle their debt for less than the original amount owed. You can apply for it on your own, but your chances of being approved are fairly low: the IRS typically accepts fewer than half of the applications.
To keep the problem from happening again next year, review your W-4 form to make sure you’re having enough tax withheld from your paychecks during the year to cover your expected tax bill.
And above all, take steps to address the debt. The longer a tax problem goes unresolved, the harder it can be to deal with it.
» MORE: Tax relief and resolution: 5 ways to deal with tax debt
