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Nobody likes paying taxes, but skipping out on them isn’t as easy as ignoring an unwanted text. While some people assume they can dodge the IRS indefinitely, the reality is far more complicated—and far more dangerous. Whether it’s federal income taxes, state business taxes, or property taxes, failing to pay what you owe can lead to serious consequences. From steep penalties to wage garnishments and even the risk of losing your home, the government has powerful tools to track down and collect unpaid taxes.
Texas, unlike most states, does not impose a state income tax, which is one reason why many people and businesses are drawn to it. However, this doesn’t mean Texans are off the hook when it comes to taxation. Property taxes, business taxes, and federal income taxes still apply, and failing to pay them can result in financial and legal trouble. If you think the IRS will simply “forget” about your unpaid taxes, think again. Here’s what really happens when you ghost the taxman.
The First Warning: IRS Notices and Late Fees
The IRS doesn’t knock on your door the moment you miss a tax deadline, but it does start keeping tabs. If you fail to file your tax return or don’t pay the full amount owed, the IRS will first send a Notice of Deficiency. This is essentially their way of saying, “We noticed you haven’t paid up—here’s your chance to fix it.”
From here, penalties and interest start accumulating. There are two main types of penalties for unpaid federal taxes:
- Failure-to-File Penalty – If you don’t file your taxes at all, the penalty is 5% of your unpaid taxes per month, up to a maximum of 25%.
- Failure-to-Pay Penalty – If you file but don’t pay, the penalty is smaller—0.5% per month—but still adds up over time.
On top of these penalties, the IRS charges interest on the unpaid amount, which fluctuates based on federal interest rates. This means the longer you ignore your taxes, the more expensive they become.
When Ignoring the IRS Gets Serious: Liens, Garnishments, and Levies
If months or years go by without payment, the IRS shifts from polite reminders to aggressive collection tactics. At this point, you’re not just dealing with penalties—you’re at risk of losing wages, assets, or even your home.
1. Tax Liens: The Government’s Legal Claim on Your Property
A tax lien is one of the first steps the IRS takes to recover unpaid taxes. This is a legal claim against your property, meaning the government has the right to take what you own if you don’t settle your tax debt.
Once a lien is in place:
- It damages your credit score, making it harder to buy a home, take out loans, or even secure certain jobs.
- The IRS can seize and sell your assets, including bank accounts, vehicles, and real estate.
- You can’t sell or refinance your home without paying the tax debt first.
Tax liens can last for years, and even after they are paid off, they can continue to affect your financial standing.
2. Wage Garnishment: Say Goodbye to Part of Your Paycheck
If you continue to ignore your tax debt, the IRS can garnish your wages, meaning they take a chunk of your paycheck before it even reaches you. Unlike creditors, who have limits on how much they can take, the IRS doesn’t have to go to court to start garnishing wages. They send an order to your employer, and suddenly a significant portion of your earnings goes straight to paying off your tax debt.
For Texas residents, this can be particularly harsh. While Texas law protects against most creditor wage garnishments, federal agencies like the IRS are not bound by state laws. This means the IRS can take as much as 70% of your wages, leaving you with little to cover rent, bills, and other expenses.
3. Bank Levies: Your Accounts Are Not Safe
If wage garnishment isn’t enough, the IRS can freeze and seize funds from your bank account. This is called a bank levy, and once it’s in place, your bank is legally required to hand over your money to the IRS.
A bank levy doesn’t just affect your personal finances—it can cause serious damage to businesses as well. If you own a company in Texas and fail to pay business taxes, the IRS can seize business bank accounts, crippling your ability to operate.
Skipping Out on Property Taxes in Texas: A Risky Move
In Texas, property taxes are one of the biggest financial obligations homeowners face. Unlike other states that rely on income tax, Texas counties fund schools, roads, and emergency services primarily through property tax revenue. That means counties are very aggressive in collecting what they’re owed.
If you fail to pay your property taxes:
- Late penalties and interest accumulate – Texas counties charge hefty penalties for late payments, starting at 6% and increasing to up to 38% after a year.
- Your home can be placed in a tax sale – If taxes remain unpaid for too long, your home can be auctioned off to the highest bidder.
- Tax lenders may offer short-term relief at a cost – Some companies offer loans to pay off overdue taxes, but they often come with high-interest rates and put homeowners at risk of further financial trouble.
While Texas has homestead protections that prevent people from losing their primary residence too easily, this doesn’t mean homeowners are immune. If you don’t pay property taxes for long enough, the government will eventually take action.
Is There Any Way Out? Options for Settling Tax Debt
If you find yourself owing the IRS or Texas tax authorities, ignoring the problem will only make it worse. However, there are legal ways to resolve tax debt before it spirals out of control.
1. Installment Agreements – The IRS allows taxpayers to set up payment plans, breaking large debts into manageable monthly payments.
2. Offer in Compromise – In some cases, the IRS may settle for less than the full amount owed. This is rare and requires proving financial hardship, but it can be an option.
3. Hardship Status (Currently Not Collectible) – If you are facing extreme financial difficulty, the IRS may temporarily halt collection efforts. However, interest still accrues.
4. Bankruptcy (A Last Resort) – While taxes are usually not dischargeable in bankruptcy, certain old tax debts may be eligible for relief under Chapter 7 or Chapter 13 bankruptcy.
The Bottom Line: Don’t Ghost the IRS (Or Texas Tax Authorities)
While it may be tempting to ignore tax bills and hope they disappear, the IRS and Texas tax authorities do not forget. Whether it’s federal income taxes, business taxes, or property taxes, failure to pay can result in penalties, wage garnishments, asset seizures, and even foreclosure. The best approach is to deal with tax issues as soon as they arise. If you’re struggling with tax debt, consider working out a payment plan or seeking professional assistance before things escalate. Because, unlike an annoying ex, the IRS won’t just take the hint and leave you alone—they’ll keep coming back until they get what they’re owed.
