Penalties

• If you file a tax return but do not pay the amount of tax owed by the due date, the IRS will impose penalty charges on the outstanding tax balance. Each month, a half-percent charge will accrue on the balance until it is either paid or the maximum allowable penalty of 25 percent is reached. However, if you fail to file a return in addition to not paying the amount of tax owed, an additional penalty of 4.5 percent is imposed each month.
  
  

Interest

• Interest will accrue on outstanding tax balances owed to the IRS if not paid by the tax return filing deadline. The interest accrues on a monthly basis at an annual rate equal to the federal short term rate increased by 3 percent. Monthly interest charges will accrue until the balances owed are paid in full. The tax law allows both penalties and interest to accrue separately and concurrently.
  
  

Criminal Charges

• A failure to make income tax payments with the intent to evade or defeat tax can result in criminal sanctions in addition to interest and other monetary penalties. Taxpayers convicted of a felony charge to evade income taxes may be sentenced to a maximum of five years in prison and a maximum fine of $100,000.
  
  

Property Liens

• The IRS has the authority to place liens on a taxpayer's property if previous tax collection efforts have been unsuccessful. Liens placed on property are intended to secure the collection of tax by restricting the taxpayer's ability to sell or otherwise transfer the property. The IRS can place liens on multiple properties owned by the taxpayer if the value of one alone is insufficient to cover the amount owed. The IRS lien will remain enforceable against the property if later sold.
  
  

Levy

• The IRS is authorized to levy taxpayer property when back taxes are not paid voluntarily. The levy operates as a legal seizure of property depriving the taxpayer of possession and legal ownership. Seized tangible property is sold by the government until the full tax debt is satisfied. A taxpayer's bank account may also be seized with account balances remitted directly to the IRS. A levy can be enforced against the taxpayer's wages by requiring the employer to withhold amounts from each paycheck. The IRS is not subject to the same wage garnishment limitations imposed on private creditors and is able to garnish an increased percentage of a taxpayer's wages.