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What could happen if I'm delinquent on taxes?

We don't know too many individuals who would say that business taxes in Minnesota are too low. The state has a well-documented reputation as being one of the 10 worst in the country when it comes to the business tax climate. Wisconsin doesn't rank as poorly as Minnesota, but according to, it's in the bottom half.

What that means is that the list of possible taxes that any business could be obligated to pay in either state is long and complicated. Unless great care is taken, it can be easy to overlook some liability. What can happen next is that you receive notification from the IRS or state revenue departments that you are delinquent and facing serious tax penalties. Do you know your rights and understand what could happen if you ignore those notices? Some thoughts follow.

To begin with, a distinction needs to be made between taxes going unpaid by mistake and on purpose. If you knowingly fail to pay tax obligations, criminal charges could follow. Significant consequences could result upon conviction.

As we have noted in many previous posts, it is never a good idea to ignore notices about delinquent taxes. However, taking an aggressive position in response could be counterproductive. The IRS has the right to prosecute individuals for unpaid taxes, but generally prefers to encourage voluntary resolution of issues. Showing willingness to cooperate is likely to deliver a better outcome.

Prosecution is more likely to be recommended if the evidence suggests you have consistently sought to avoid tax obligations. Failing to file returns for a number of years, even after repeated IRS contact, would be considered evidence of fraud.

Given the complexities that are inherent in the various tax codes it's clear that keeping good records and conscientiousness in filing are important. If issues still surface, consult an experienced tax attorney for help.

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