The IRS can issue you a warning if you owe back taxes, but what’s next? Fees, fines, and penalties? The short answer: Maybe. But the longer one may surprise you.
After the IRS has mailed you letters, issued tax liens, and tried other remedies to settle your bill, the tax agency may have more options to get you to pay.
Read on for what the IRS can and cannot do to get you to pay your outstanding taxes.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1) The IRS can take away your passport
Can the IRS really revoke your passport and get you stuck overseas? Well, no. The tax agency tells the U.S. Department of State (DOS) to revoke your passport. If you’re traveling, the DOS may issue a special passport to allow you to come home so you can pay your tax bill.
However, certain circumstances are required. For instance, the taxes owed must be:
- Unpaid federal tax debts (including penalties and interest), AND
- Worth more than $64,000 (adjusted annually for inflation).
Also, the IRS must have tried all other remedies to collect your debt, including issuing a levy (more on levies below).
Suppose you’ve fallen under hardship, like a federally declared disaster, or been a victim of tax-related identity theft — would your passport still be revoked due to unpaid taxes? Generally, no, but you may have to prove those situations happened to keep your travel plans intact.
2) The IRS can take part of your paycheck
The IRS can also ask your employer to withhold your wages if you owe an outstanding tax debt. The portion withheld depends on the standard deduction for the year and how many dependents you are allowed.
Remitted funds are sent to the IRS to pay off your tax debt, and the wage levy does not stop until:
- The levy is released.
- You paid all your overdue taxes.
- You make another plan with the IRS to pay back your tax owed.
3) IRS: Bank account levy
The IRS can remove funds from your bank account for owed balances. The tax agency will send out Letter 1058, Final Notice of Intent to Levy, before levying your bank account.
During an IRS bank levy:
- Funds in the account are frozen, meaning they are inaccessible to you.
- Your bank may charge you a $100 processing fee.
Any funds you deposit after the levy date are normally not frozen. However, you should contact the IRS for more information about your levy.
4) The IRS can take your house, car, boat, and other property
Though rare, the IRS can also take property to satisfy your tax obligations, including:
- Your home.
- Cars, trucks, boats, and other vehicles.
- Some types of land.
After the property is seized, the IRS auctions off the goods to pay your tax debt. If your obligation isn’t satisfied after the auction, you’ll still owe the difference between the sale price and your unpaid bill.
You could redeem your property before the sale by working with the IRS. But if you want your real estate back after the purchase, you may need to:
- Pay the winning bidder the purchase price plus interest at 20% per year, compounded daily.
- File an appeal (which you can do before the seizure as well).
5) IRS interest rates and penalties for underpayment
The IRS can also charge you fees, fines, and penalties if you are behind on tax (on top of some combination of the above).
The penalty for late filing your return is 5% of your tax due for each full or partial month you are late, plus any interest compounded daily.
For this tax filing season, the late payment interest rate is:
- 8% for tax year 2024.
- 7% for the first quarter of 2025.
The penalty balance will continue to rise until you reach 25% of your taxes owed.
How to pay taxes owed and IRS scams
Don’t wait to get started filing this tax season. You can reach the IRS for help via the IRS Interactive Tax Assistant or by calling the agency directly at 1-800-829-1040 with any tax questions.
You can also use your IRS Online Account to securely view your personal tax information and follow up on notices or balances due. If you think you’ll need to request a payment plan option, you may be able to do so online or by contacting the IRS. Also, don’t be afraid to ask a tax professional for additional assistance.
Finally, be on the alert for tax scams. The IRS will never:
- Threaten you with the police, immigration officers, or other law enforcement.
- Revoke your driver’s license, business license, or immigration status.
- Call and demand immediate payment via gift card, prepaid debit card, or wire transfer.
Related Content
- Ways to Pay the IRS if You Owe Taxes
- When Are Taxes Due in 2025? Tax Deadlines by Month
- States With 2025 IRS Tax Deadline Extensions
-
Stock Market Winners and Losers of the 'Big, Beautiful' BillDefense, manufacturing and tech should prosper, while health care and green energy stocks face hurdles.
-
I'm 68 and health issues forced me to retire. Should I claim Social Security or use my savings until I'm 70?We asked financial planning experts for advice.
-
What Health Insurance Tax Credits Have to Do With the Government ShutdownTax Credits Previous shutdowns have occurred for various reasons, including border wall funding. But this time, the standoff centers in part on health care and taxes.
-
Florida Residents Could Soon Get Property Tax ReliefProperty Tax The push for a solution to end high property taxes could lead to significant tax cuts in the Sunshine State next year.
-
New Tax Rules: Income the IRS Won’t Touch in 2025Income Taxes From financial gifts to Roth withdrawal rules, here’s what income stays tax-free under the new Trump 2025 tax bill, and some information on what’s changed.
-
Three Popular Tax Breaks Are Gone for Good in 2026Tax Breaks Here's a list of federal tax deductions and credits that you can't claim in the 2026 tax year. Plus, high-income earners could get hit by a 'surprise' tax bill.
-
Tax Brackets 2025 Quiz: How Much Do You Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
Retirees Face a Growing Capital Gains Tax Trap: What's Next?Home Sales A changing housing market and unchanged IRS exclusion amounts can add up to a headache for many homeowners. Will Congress offer a fix?
-
New York Inflation Refund Checks Are Coming Soon: What to Know NowTax Relief Inflation relief checks are on the way for over 8 million New York taxpayers. Here's a full breakdown of who gets a payment and when you may expect yours.
-
Mortgage Refinance in 2025? These Tax Breaks Can Boost Your SavingsTax Breaks Refinancing your mortgage comes with tax implications, but also opportunities to deduct certain expenses on your return.
