What type of penalties may arise from tax non-compliance?

Severe financial penalties and legal consequences can arise from tax non-compliance due to the stringent regulations set by tax authorities to ensure compliance with tax laws. These penalties are intended to deter tax evasion and underreporting of income.

When individuals or businesses fail to comply with tax obligations, such as filing returns on time, accurately reporting income, or paying taxes owed, they can face significant financial repercussions. This may include hefty fines that could amount to a substantial percentage of the unpaid tax, especially in cases of deliberate evasion or fraud. Additionally, non-compliance can lead to legal consequences, including criminal charges for severe offenses, potential imprisonment, or damage to one’s reputation.

This option reflects the serious nature of tax compliance and the consequences that individuals and businesses may face if they do not adhere to the established tax laws. In contrast, the other options suggest either trivial penalties or the absence of penalties, which does not accurately reflect the realities of tax non-compliance.