What Happens if You Don’t Pay Your Taxes

People who commit tax fraud can face big fines and even imprisonment. Just ask the recently released Wesley Snipes, who had served most of a three-year sentence for not filing his taxes. The timing of his release, just ahead of the tax filing deadline, may not have been an accident; the Internal Revenue Service appears to ramp up publicity of its tax fraud cases right before April 15, a 2010 study found.

An author of that study, Joshua D. Blank, has a new paper out about another aspect of the tax enforcement machine: all the other, nonmonetary penalties that can hit you if you don’t pay your taxes in full.

You’ve probably heard of similar measures hitting other kinds of scofflaws. If you’re convicted of a drug felony, for example, you can be denied the right to vote, serve on a jury or work in a hospice.

Depending on where you live, if you shirk on your taxes, you might:

• have your medical or law license suspended;
• be denied a hunting or fishing license;
• have your passport revoked;
• have your driver’s license suspended, and your renewal of your vehicle registration denied;
• be deported;
• be denied housing assistance;
• be barred from a government contract and government employment;
• have your liquor license revoked (if you’re a restaurant).

And perhaps most crushingly, you can:

• be denied the right to operate a concession, ride or booth at Minnesota’s annual state fair.

Professor Blank, who teaches at the New York University School of Law, says these types of collateral penalties can promote compliance, perhaps more effectively than heaping on additional monetary fines.  He also argues that governments should publicize them more aggressively, just as the I.R.S. does for big celebrity tax fraud trials.