Dealing with taxes isn’t anyone’s idea of a good time, but ignoring back taxes? That’s a recipe for financial disaster. Whether it’s a missed deadline or an unpaid balance, letting back taxes pile up only leads to bigger problems. Here’s what can happen if you don’t address them—and why taking action is the smarter move.
Interest and Penalties Add Up
Unpaid taxes accrue interest starting from the day they’re due. Add late payment penalties on top, and your original balance can quickly spiral out of control.
The Result: What might have been manageable becomes overwhelming as months (or years) go by.
Risk of Wage Garnishment
If you don’t respond to IRS notices, they can garnish your wages. This means a portion of your paycheck will be taken directly to cover your unpaid taxes.
The Result: Less money in your pocket for bills and everyday expenses.
Liens on Your Property
The IRS can place a lien on your property, including your home or car. This is their way of claiming rights to your assets until you pay what you owe.
The Result: A lien negatively impacts your credit and can make it harder to secure loans or sell property.
Levies and Asset Seizure
Ignoring back taxes long enough could lead to a levy, where the IRS takes your assets outright—bank accounts, vehicles, and even real estate are all fair game.
The Result: Losing your assets creates even bigger hurdles for your financial stability.
Harm to Your Credit
While the taxes themselves don’t appear on your credit report, an IRS lien does. Lenders see this as a red flag, which could block you from accessing financing.
The Result: A damaged credit score limits your ability to take out loans or refinance.
Legal Consequences
If the IRS believes you’re ignoring their attempts to collect, they may escalate the situation to court proceedings.
The Result: Legal fees, court appearances, and added stress pile onto your financial troubles.
Impact on Mental Health
Financial stress from ignoring back taxes doesn’t just affect your wallet—it affects your peace of mind. Constant worry about IRS actions can take a toll on your mental health.
The Result: The stress and anxiety aren’t worth it.
How to Avoid These Consequences
Ignoring the problem only makes it worse. Here’s how to get back on track:
- File Your Taxes: Even if you can’t pay in full, filing prevents additional penalties.
- Talk to the IRS: Payment plans and offers in compromise are available if you communicate with them.
- Hire a Professional: Simpson Financial Company can help you sort out the mess and work out a resolution that fits your budget.
Let Simpson Financial Company Help You
Dealing with back taxes might feel overwhelming, but you don’t have to face it alone. At Simpson Financial Company, we specialize in helping clients resolve their tax issues and regain financial control.
Don’t let back taxes hold you back any longer—contact us today, and let’s create a plan to get you back on track!
Book your free consultation today at SimpsonFinancialConsulting.com Call: (248) 821-1816
