Theft of State Funds
One of the worst things cash-strapped business owners can do is collect Florida sales tax from their customers and then use that money to pay other business expenses. The state of Florida calls this Theft of State Funds and it’s a felony.
The reason for this is obvious: Business owners who apply for a Florida sales tax registration number are, by the authority vested in them through that registration, permitted to collect Florida sales tax from their customers. They do so, however, as an agent of the state.
Collected Florida sales taxes are not the taxpayer’s money to use as he sees fit.
If you do use the collected Florida sales tax for purposes other than remittance to the state, you have stolen state funds and are subject to a Florida criminal sales tax prosecution as well as significant civil fines and penalties, including the shutting down of your business.
The situation is similar to the failure by employers to remit to the federal government moneys withheld from their employees’ wages. The difference is that Florida is much more likely to bring criminal charges against the sales tax scofflaw than the United States is to bring criminal charges against the payroll tax scofflaw.
Florida has a zero tolerance policy for business owners who collect Florida sales taxes from their customers and fail to pay those taxes over to the state.
If your business collects Florida sales taxes from your customers and does not remit it to the Florida Department of Revenue, Florida will bring criminal tax charges against you personally under Florida Statute 206.56 for Theft of State Funds.
§ 206.56. Unlawful use of tax collected; theft of state funds
(1) Any person who knowingly obtains or uses, or endeavors to obtain or use, taxes collected pursuant to this chapter, with the intent, either temporarily or permanently, to deprive the state of a right to the funds or a benefit therefrom, or appropriate the funds to his or her own use or to the use of any person not entitled thereto, commits theft of state funds.
(2)(a) If the total amount of revenue involved is $100,000 or more, the offense is a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
(b) If the total amount of revenue involved is $20,000 or more, but less than $100,000, the offense is a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
(c) If the total amount of revenue involved is $300 or more, but less than $20,000, the offense is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
(d) If the total amount of revenue involved is less than $300, the offense is a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. However, any person who commits theft of state funds involving less than $300 and who has previously been convicted of any theft of state funds is guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.
Any person who commits theft of state funds involving less than $300 and who has previously been convicted two or more times of any theft of state funds is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
Theft of State Funds is a third degree felony carrying a maximum prison sentence of up to 5 years.
If you are a business owner and have collected but not remitted Florida sales tax, here is what you and your Florida sales tax attorney must do to minimize your chances of Florida criminal prosecution:
- Immediately hire a Florida sales tax attorney experienced in both white collar criminal cases and Florida sales tax law
- Immediately prepare and arrange for the filing of your unfiled Sales Tax Returns
- Obtain as much of the funds as possible to pay towards the unremitted sales tax shown due on the returns
- Contact the Florida Department of Revenue and arrange for a meeting with a local agent
- At the meeting explain the reasons for your failure to remit and offer the prepared sales tax returns for filing together with a Certified check for the down payment
- Make sure you are current with all Florida sales tax filings and payments (continued violations will cause the DOR to refer the case to its criminal tax investigation division)
- Take responsibility and be contrite. You want the DOR representative to believe that the problem won’t occur again in the future.
Many taxpayers avoid dealing with their Florida sales tax problem in the hopes that the Florida DOR will not discover it. This is a serious mistake. Call or email us today for a free consultation.
The Florida sales tax attorney and CPAs of The Pappas Group in Orlando have more than 50 years of experience helping taxpayers resolve their civil and criminal Florida sales tax problems.
We have represented car dealers, restaurants, night clubs, grocery stores and hundreds of other small businesses before the Florida sales tax criminal investigation division and before the State criminal courts.
If you wait until the Florida DOR discovers the problem and comes after you for it, it is often too late to prevent a Florida criminal sales tax investigation and, perhaps, even a Florida sales tax prosecution.
Coming forward and correcting your Florida sales tax problem before a criminal referral is made almost always will preclude a criminal prosecution, assuming you do it sincerely and in good faith.
The important thing to know is that even if you can’t repay the unremitted Florida sales taxes in full – most people can’t, otherwise they wouldn’t be in the predicament in the first place – you should still come forward, get your Florida sales tax returns filed and have your Florida tax attorney or Florida tax CPA or an IRS enrolled agent prepare and propose a reasonable repayment schedule.
The sooner you come forward to fix your Florida sales tax problem, the better off you will be. A Pappas Group Florida sales tax attorney can help.
Call or email us today for a free consultation with our Florida sales tax attorney about your Florida sales tax problem.