Consequences of Not Paying Taxes for Your Business
We need to know that owning a business comes with a lot of expenses.
Many significant people in the world have made the mistake of not being truthful while filing their taxes, and this has caused them jail time. Not paying taxes is a dangerous thing, as it is what keeps our country functioning properly.
A lot of good things come from our tax payments – like the doctor’s and teacher’s salaries, maintenance of the street, asphalt for our roads, new buildings for the population, and more. Taxes are essential for a country, and that’s why we need to pay for them.
Of course, sometimes they are extremely high, and it hurts to spend that much money– but it is a necessary expense. We should all be prepared for it and destine a good amount of money towards the tax payments.
Now that we know that paying our taxes is important, what happens if we don’t pay them?
By not paying the taxes or failing to file for taxes, you can face several penalties according to your situation.
This happens when you don’t file for taxes, and consequently, you don’t pay them. This penalty charges you 5% for each month that you didn’t file for it. And this amount can reach up to 25%.
This penalty can be applied if the report is filed after the due date too. So make sure that you mark the day on the calendar!
A failure-to-pay penalty is charged when the taxpayer files the for the taxes but doesn’t pay them before the due date.
Also, if you asked for an extension to file, it doesn’t mean that the payment date is extended too. The penalty is a little lower, at 0.5% of each unpaid month until 25%. Besides, you will have to pay with interest for each month.
Federal Tax Lien
If you continue to leave your taxes unpaid, the government has the right to file a claim to keep or take a person’s property until the previous fees are paid.
This serves the purpose of a warning, but if the taxpayer continues to ignore the tax due, the government can seize your personal assets.
Having a lien on your home is prejudicial to your future. If you ever want to sell the house, you won’t profit from it until the government takes what you owe. And also, you will have issues refinancing a new home if you had a lien on the previous one.
Then, a CRA Collections Officer will visit your home in order to intimidate you and make you pay the taxes. If this doesn’t work, they will keep your property until you have paid your debts.
If you find that you can’t afford taxes, you can file for it, but don’t pay it. The failure-to-pay penalty is a lot lower than failure-to-file. After that, you could talk to a tax office so that you can get a payment agreement.
You must apply for a payment agreement, and if you’re approved, you can pay the owed amount over a period of time.
If you don’t pay that way, you will be accumulating an ongoing debt that will keep you broke for a long time. It’s best to make the sacrifice and spend all your money on taxes than to continue growing debts due to the fees and penalties.
Spend Even More Money
After all this mess of not paying taxes, you may have to hire a tax lawyer or someone that keeps up with your finances. If you don’t feel capable of getting organized, it’s best for everyone involved that you hire a person specialized in that field.
They will help you manage your accounts in a way that you can afford to pay your debts, and they will also remind you when the tax payment is due. This is an extra expense, but it’s better to do this than to pay fees for penalties.
Take Your Passport
Due to a new law, the tax office and the State Department can now communicate between each other. This wasn’t done before, but it is now.
The tax office can inform the State Department about serious tax delinquents. This will mean that they can’t renew their passport, and their current passport might get taken away. This stops them from leaving the country so that they have to pay their debt.
Taxes are a serious issue that brings severe consequences if they aren’t paid at the right time. From penalties, revoking your passport, and even jail time – these are all harsh punishments for those who choose not to pay them.