Uncle Sam has a way of finding us, and finding out what he’s owed. Many freelancers are especially guilty of thinking they can get away with not filing income tax. However, as much as we all would love to hold on to 100% of our income, the IRS doesn’t have the same sentiment. If you are hoping to evade taxes now, prepare yourself for owing the IRS back taxes shortly thereafter.
Don’t Get Caught!
Don’t get caught, but more importantly, don’t commit the crime. Debt negotiation isn’t quite as cheery after you’ve already been busted for tax evasion. Filing and being unable to pay is one thing. Failing to file is another case entirely. Because independent contractors receive their paycheck in full (i.e. without the employer tax deductions most of the world has to deal with), many think they can get away with tax evasion.
However, the IRS is privy to these practices, and knows where to look, and who to look for. When you get caught, it won’t be a simple matter of paying the IRS back taxes. Instead, you could face up to five years in jail, and fines of up to $500,000. If that isn’t enough of a deterrent, consider the cost of prosecution on all of your tax fraud charges… those get passed on to you, too.
So, the lesson here is: debt negotiation isn’t something you want to go through after tax evasion. In fact, it likely won’t even be an option. If you can’t pay your taxes, file first and talk with a financial professional about your tax debt repayment options.