The state may also require you to pay your back taxes and will impose a lien on your property as collateral until you pay taxes. You can go to jail for not filing taxes. The tax law provides for one year in prison for each unfiled tax return. However, this severe penalty only applies to taxpayers who deliberately do not file returns and who also refuse any opportunity to resolve their tax problems.
Obviously, the IRS takes fraud very seriously, whether it's in the hundreds, thousands, or millions of dollars. When it comes to criminal penalties, the average jail sentence for tax fraud is in the range of 17 months. It can increase significantly depending on the extent of the fraud. If you don't pay the IRS what you owe, including interest and penalties, the IRS will use the Federal Payment Tax Program to deduct 15 percent of your Social Security benefits each month until your debt is paid in full.
The IRS may also decide to file a federal tax lien notice in public records to alert your creditors that the IRS is reclaiming all your assets, including any assets you may purchase after notification of the federal tax lien.
