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What happens if I owe back taxes?

Updated October 8, 20263 sourcesTaxTruce teamFact checked
The short answer

Back taxes keep growing with interest and penalties until you pay. The IRS follows a set path of notices, then can file a lien and levy your property. Interest is 7% a year for individuals in late 2026, compounded daily. The late payment penalty is 0.5% a month, up to 25%.

Each unpaid year has its own 10 year collection clock that starts when the tax is assessed.

Sources

  1. IRS: Interest rates for the fourth quarter of 2026 (IR-2026-98)
  2. IRS: Failure to pay penalty
  3. IRS Internal Revenue Manual 5.1.19: Collection statute expiration

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