If you can’t work out some kind of payment arrangement with the IRS, you may still have a few more options available. Some people take out a credit card cash advance, a home equity loan or personal bank loan, or even borrow from their retirement funds, to settle their income tax bill. While none of these are ideal options and each one comes with its own cost, when you do the math, you might just find one of these methods makes more sense than accruing penalties and finance charges on floating the balance you owe the IRS.

You should also be aware that in certain cases of nonpayment, the IRS can garnish your wages, leverage your bank account(s) or require you to sell your mortgage or other assets to cover the bill that is due.

You might also have seen instances on movies and on television shows where the IRS puts delinquent taxpayers in jail. In real life, though, this is a less likely occurrence. The IRS usually pursues other options first and saves that for a last resort for more extreme cases.

The Cost Of Being Late

If April 15 has come and gone and you haven’t filed yet, you probably wonder what the consequences will be. A lot depends on your personal financial circumstances. If you don’t owe any money to the IRS, you have three years to file your income tax return without accruing any penalties. One important thing to note, though, is that if the IRS does decide to audit you for that year, they may also look at your records for the following years up through the day you actually filed. So while this won’t cost you anything as long as your records are correct, you could be opening yourself up to a lot of extra inconvenience.

If you do owe money, though, then being late does come with a cost: interest and penalties on the unpaid amount. In fact, experts estimate that on average, the interest and fines can add another 25 percent to what you owe, and in some cases, even more.