What are the possible penalties for not paying state taxes?


Quick Answer

The penalties for not paying state taxes vary by state law, but they may include monetary fines, interest on unpaid taxes, and possibly even criminal or civil charges, according to TurboTax. As of 2015, several states, including New Hampshire, Florida and Alaska, do not charge state income taxes.

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What are the possible penalties for not paying state taxes?
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Full Answer

In New York, as of 2015, the state charges individuals who file their taxes but don't pay them at an interest rate of 0.5 percent per month up to a maximum of 25 percent, as the New York Department of Taxation and Finance explains. The state charges individuals who fail to file their taxes 5 percent interest on unpaid taxes per month up to 25 percent. The penalties for underpaying taxes due to negligence or fraud are much steeper. If an individual files a fraudulent return, the penalty is double the difference between the correct tax owed and the amount claimed on the income tax return.

Deliberately failing to pay state taxes, which is commonly known as tax evasion, may result in jail time depending on state law. For example, in Alabama, tax evasion is a felony, and individuals convicted of the crime face up to five years in prison, a fine of $100,000 or both, as the Alabama Department of Revenue indicates. The statute of limitations in the state is six years. If prosecution does not begin within that period of time, the state can not bring charges against the individual.

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