IRS Has the Right to Prosecute and Imprison a Taxpayer Who Doesn’t Pay Taxes

Question: After my father died eight years ago, my mother has tried to manage their three Gilbert rental homes. We live in Portland, but we come to Gilbert to see my mother 3-4 times a year, and try to help out with management of their three Gilbert rental homes. Until recently we didn’t realize, however, that my mother has not been paying any of her taxes, e.g., nasty letters from the IRS. On TV we see ads that the IRS, if taxes aren’t paid, can “seize” the taxpayer’s assets, or even put a taxpayer in jail. Could my mother go to jail after eight years of not paying her taxes?

Answer: No. Your mother’s situation is common with senior citizens, when the deceased spouse had paid the bills, taxes, etc. The IRS will try to reconstruct the taxable income for the eight years of unpaid taxes. The taxpayer then has the option to pay the taxes, and sue in Federal District Court for a refund of the taxes, or wait for the IRS to file to collect the taxes in Tax Court before an administrative Tax Judge.

Note: The IRS can be more aggressive with non-payment of taxes by actors or other famous people in order to “scare” all taxpayers to pay their taxes. For example, the actor Wesley Snipes (“Blade” movies) was fined $5 million and served 2 ½ years in federal prison after the IRS reconstructed his income to show more than $15 million of unreported income during the years of 1998-2003.