What is a tax liability or debt?
A tax debt, also known as a tax liability, is a debt which a person owes to their government for not paying taxes for more than one year. People develop tax debts when they stop paying taxes for a considerable amount of time. In addition, tax debts do not only consist of the actual amount of taxes which a person woes their government but also consist of various fines which have been imposed on the person who bears the debt by the government.
There are a number of different fines which the government imposes on people who do not clear their tax debts and as the years pass, these fines keep piling up and become a whole mountain of fines before a person even catches up. Tax debts are some of the debts which people normally owe, which is the reason why both the government and numerous banks have come up with programs, such as tax debt loans which can aid people by providing them with the money they need in order to clear their tax debts. In return, the people who subscribe to these programs pay interest to banks or the government, depending on whose program they subscribe to.
The consequences of not clearing a tax liability
Almost every person knows that not clearing tax debts can be extremely disadvantageous. Why is that so? Well, that is obviously because of the consequences of failing tom clear the tax debts which a person owes to the government. Many people wonder what exactly the consequences of not clearing tax debts are. Well, the following are the most common consequences of not clearing tax debts:
- Heavy fines-The fines which the government imposes on people who do not clear their tax debts every year are quite nominal. However, if a person does not clear their tax debts for a long amount of time, the government implements extremely heavy fines on them. In addition, these fines are way, way larger than the other ones which they government normally imposes on people who do not clear their tax debts.
- Time in jail- If a person takes an extremely large amount of time but fails to clear their tax debts, the government may sentence them to a considerable amount of time in jail. This is an extremely dire consequence of not clearing the tax debts which a person has developed.