[QUOTE=lowbrass]
So you’re describing a situation where a person has no assets, but apparently had income (or else they wouldn’t owe any taxes), but has somehow spent all the income and doesn’t have any money to pay the taxes?
BUT, the money would have ALREADY been taken out of their paycheck. And if they falsified their W-4 info to eliminate payroll deductions, then I’m sure you would say - Oh, well that’s a crime, so it’s not “simple non-payment”.
And these so-called “tax protesters” ARE jailed. For example:
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Even if you flat-out refuse to pay, they’re still going to charge you with “evasion” if they want to.
[/QUOTE]
JesuzKrist, haven’t you ever heard of AMT? Dudes can easily have a bunch of Stock option, exercise or cash them in masterful peices of bad timing and end up owing tens of 100’s of dallars- and they don’t have the money to pay it, and they don’t have witholding.
http://waysandmeans.house.gov/hearings.asp?formmode=view&id=6039
"*They believed this until about 2001, when, in the parallel universe known as the alternative minimum tax, the government began seeking more than $100,000 in tax on income that the couple never received…They knew they were over their heads. So they hired a financial adviser and a lawyer, and the advice was unequivocal: Exercise the options as soon as possible, but hang onto the shares, because they would get tax advantages that way, and who knows how high they’d go, anyway?
It was a doubly terrible idea.
The Millers scheduled option exercises on their calendar, like haircuts. Each time an option became exercisable, they called the broker, had him sell just enough shares at the market price to cover the exercise cost, and saw their paper worth go higher and higher - mostly in VeriSign stock.Options’ value depends on the difference between their exercise price and a stock’s market price. Rita Miller was getting thousands of options with exercise prices of $4 and $6 a share, and VeriSign’s stock was heading toward $250.Under the regular tax code, for the kind of “incentive” stock options that she held, that value would not have been taxed until the VeriSign shares were sold. But under the wacky AMT rules, holding shares after the end of the calendar year triggered a large tax based on the difference between the exercise and market prices at the time of exercise.(Incentive options are different from the “nonqualified” options most employees get.) Arthur Miller says their tax lawyer had no clue about this. But VeriSign tried to educate employees, and sometime in early 2001, the couple realized they were going to have a very large tax bill. Problem was, they no longer had the wherewithal to pay.Like every other Internet stock, VeriSign was crashing and taking the Millers’ paper wealth with it. By March 2001 VeriSign had plunged back to $40, en route to $6, but the tax bills stayed stratospheric. The AMT system allowed people like the Millers to recoup excess stock-option liability by taking credits against tax owed in future years - but only up to $3,000 a year. The Millers couldn’t pay the whole AMT without selling their house or cashing their retirement annuities and incurring big penalties. And even if they had, she says, "we were going to be 97 and 99 when we got all our credits back, and I doubt I would have lived that long."Thus the ordeal began.“I know, personally, dozens of people who have lost their homes” over AMT stock-option taxes, says Tim Carlson, president of the Coalition for Tax Fairness, a lobbying group organized to seek relief for people like the Millers. There have been at least two suicides, a coalition spokesman says.
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Note that these people owed the IRS more than a Hundred thousand dollars, that they could not and did not pay- and “criminal charges” were never mentioned. Leins, seizures, levies, yes. But not jail time.
Nor is there witholding on Self Employment, which is where many dudes go wrong.
Or capital gains, or “other income”. In fact of the two dozen plus types of income, there is witholding usually only on a couple. So, it can happen, and happen legally that you have filed honestly but can’t pay.
And, that tax protestor? First of all, that is not the IRS. It’s the South Carolina Department of Revenue. Next: "An Anderson County man who refused to file income tax returns and was labeled as a tax protester, was found guilty Monday evening of tax evasion and sentenced to one year in jail and a $10,000 fine, the maximum penalty under the law. " He didn’t file an honest return but refuse to pay, he refused to file.
So, there are many many people (see I didn’t say “dudes” 
) who honestly file, and honestly owe, and honestly can’t pay- and none of them go to jail.