A chain of actions are set into motion when IRS's computer realizes that you filed taxes, but didn't send in the money! The first thing it does, is create a file and put you in the COLLECTIONS database. This means that it will be sending you written communications (like love letters) until a "human" tells it to Stop!
Each communications is extremely meaningful to IRS (and should be to you as well) The more communications IRS sends out the closer you get to being "humanized". This means a human will actually pull your file and make contact - AND in due time the love relationship will get really serious - they will demand that you sign for the "love letters" communications. (They don't like to be ignored)
To often, this is when people start looking for a Tax person. Most of the major Tax Franchises are closed and the only Tax offices that are open are designed to charge you "big bucks" to get you out of trouble. By this time, Uncle Sam has racked up and added an enormous penalties and interest to your tax liability. The penalties and the interest (usually) will not stop - UNTIL you pay the bill.
If you own real estate here in the US - it is best that you work with IRS ASAP to resolve your tax bill. Because they will and can put a tax lien on your property. Yes, you can refinance and pay them off - however the cost of the tax bill will be much higher then if you had refinanced in the first place and never allowed the penalties and interest to add up.
IRS is not a toy; they have ruined more millionaires then you think. For some strange reason, many Americans ignore them until its almost too late. I am not exactly sure why. (Some say it is fear, others believe IRS will go away after a period of time and still others, new to this country, don't yet fully understand how IRS works and how aggressive they can become if ignored)
What To Do IF You Cannot Afford to Pay Your Taxes (Tax Law)
If you cannot pay all your taxes, pay as much as you can. That way you reduce the amount of interest and penalty you will owe. The immediately call, write or vist the nearest IRS office to explain your situation. (I strongly recommend that you locate and hire a trustworthy tax professional) After you explain your situation, IRS will ask you to fill out a Collection Information Statement so that they can compare your monthly income with your expenses to determine the amount you can pay. (I strongly recommend that you hire a tax professional) You may be able to make monthly payments through an installment agreement. IRS can set up a direct debit from your bank or a payroll deduction. (I strongly recommend that you hire a tax professional) You may qualify for a temporary delay if your case is considered a significant hardship. And in some cases you may qualify for an Offer in Compromise.
My recommendation holds true for Wage Garnishments as well. Having someone on your side who understands Tax Codes is extremely important. IRS will NOT give you advise when you call or visit them. They will ask you questions and based upon your answers, they will determine how much you can pay!
By law IRS has the authority to collect outstanding taxes for ten years from the date your liability is due.