I received a letter in the mail recently from the IRS stating that I owe taxes, penalties and interest of over $20,000. I don’t have that kind of money. What can I do? Will I go to jail?
I’m sorry that you find yourself in this situation, but to ease your mind, you do not have to worry about going to jail. Just owing the IRS money is not a criminal offense. However, you do need to be working on a way to pay the tax, penalties and interest and be proactive before the IRS begins to take collection action against you such as a wage garnishment or bank account levy. You mention that you do not have the money to pay your tax so you may qualify for an offer in compromise. An offer in compromise is a program with the IRS where you offer to pay a portion of your future discretionary income along with the equity you have in any assets you own as a full settlement of your tax liability. That means that you may qualify to pay much less than you actually owe. This is determined on a case-by-case basis and it does not matter how much you owe.