10 Myths About IRS Audits

The IRS Will Take Everything and Put Me in Jail
No need to worry about handcuffs: The IRS won’t haul you off to jail -- unless you are found guilty of tax fraud. Wavebreak Media/Thinkstock

In the U.S. no one goes to jail for owing taxes. You can go to jail for cheating on your taxes, but not because you owe some money and can't pay.

In fact, it would take a lot for the IRS to put you in jail for fraud. There is a very high burden of proof on the IRS when it comes to tax crimes serious enough to require prison time.

Furthermore, the IRS cannot simply take your bank account, your car or your house. Nor can the agency garnish your wages just because you owe money. The IRS must give you written notice and a chance to challenge what it claims you owe. As soon as you challenge, all collections must come to a halt, and if you take the revenue service to court you can have its hands tied for years.

If it's not that serious but you don't have the money to settle your debts with the IRS, you have several different options including paying in installments or changing your tax withholdings with your current employer [source: IRS].