Florida Sales Tax Criminal Law

When entrepreneurs start a business, they anticipate challenges like competition, market fluctuations, or economic downturns. What many fail to consider, however, is the possibility of facing criminal charges tied to their business operations. In Florida, failure to remit sales tax is a crime that can lead to arrests, criminal records, and severe financial consequences.

Every month, business owners across the state find themselves under criminal investigation—or even arrested—because they didn’t remit sales tax collected from customers. In 2016, the Florida Department of Revenue (DOR) reported 38 arrests for such cases. This number excludes ongoing investigations and unserved warrants.

While some individuals deliberately misuse collected sales tax, most business owners caught in this situation tell a similar story: declining revenues forced them to choose between paying their employees and rent or remitting sales tax on time. They often gamble that delaying sales tax payments will buy them enough time to recover financially. Unfortunately, this decision can lead to devastating legal and financial repercussions.

The Legal Framework: Sales Tax as State Funds

Under Florida law, sales tax is not considered the property of the business once it is collected from customers. Instead, it is classified as state funds held in trust by the business on behalf of the state. According to Section 212.15, Florida Statutes, any person who fails to remit collected sales tax commits theft of state funds.

The penalties are harsh, with the severity based on the amount of unpaid sales tax:

• $301–$20,000:
  • 3rd-degree felony
  • Up to 5 years in prison
  • $5,000 in fines
• $20,001–$100,000:
  • 2nd-degree felony
  • Up to 15 years in prison
  • $10,000 in fines
• More than $100,000:
  • 1st-degree felony
  • Up to 30 years in prison
  • $10,000 in fines

In addition to these penalties, businesses and their owners remain liable for the unpaid taxes, plus interest and penalties assessed by the DOR. Each unfiled sales tax return may also result in misdemeanor charges, compounding the overall consequences.

Understanding the Criminal Process

The criminal process for unpaid sales tax unfolds in two primary stages:

1. Investigation

The investigation phase is led by DOR investigators, who gather evidence to determine if sales tax was collected and not remitted. Unlike a standard audit, a criminal investigation requires the state to prove intent—specifically, that the business owner knowingly failed to remit taxes with the intent to deprive the state of its funds.

Investigators may subpoena bank records, financial statements, and other documentation to establish the responsible parties and calculate the unpaid balance. While investigators are generally professional, it’s crucial to remember that their role is to gather evidence for prosecution—not to protect the business owner’s interests.

Hiring an attorney at this stage is essential. An experienced attorney can help:

• Negotiate with the DOR to settle the unpaid balance.
• Mitigate the likelihood of criminal charges being filed.
• Protect the business owner’s rights throughout the investigation.
  
  

The goal during this phase is to calculate the unpaid amount and make full payment, if possible. Doing so can often prevent the case from escalating to criminal charges.

2. Pre-Trial

If the investigation results in criminal charges, the case is referred to the State Attorney’s Office. The next steps depend on the accused’s criminal history and the amount of unpaid taxes:

• First-Time Offenders: Prosecutors may offer diversion programs, such as pretrial intervention or pretrial diversion. These programs allow defendants to avoid a criminal record by repaying the unpaid taxes and completing other requirements, such as community service.
• Repeat Offenders or High-Dollar Cases: For individuals with prior offenses or substantial unpaid amounts, prosecutors are less likely to offer diversion programs. The case proceeds to court, where defendants may face harsher penalties.
  
  

Many defendants choose to plead guilty or no contest in exchange for reduced sentencing recommendations. However, even plea bargains often involve probation, repayment of taxes, and fines.

Long-Term Consequences

The ramifications of a criminal conviction for theft of state funds extend far beyond fines and prison sentences:

1. Loss of Business Licenses
   Florida requires many businesses to hold licenses issued by the Department of Business and Professional Regulation (DBPR). License applications often ask whether the applicant has been convicted of a crime. A felony conviction can jeopardize the renewal or issuance of these licenses, effectively shutting down the business.
2. Reputational Damage
   A criminal record can harm a business owner’s reputation, making it difficult to rebuild trust with customers, partners, and lenders.
3. Collateral Charges
   In addition to the primary theft charge, business owners may face additional charges, such as:
   • Failure to Maintain Records: A misdemeanor under Section 212.13, Florida Statutes.
   • Intentional Destruction of Records: A felony under the same statute.
   • Failure to File Returns: Each unfiled return is an additional felony charge.
     
     

These additional charges can significantly increase sentencing recommendations based on the prosecutor’s score sheet.

Common Misconceptions

Many business owners mistakenly believe that:

• Delaying Payments Is Harmless: While a short delay may not immediately trigger legal consequences, consistent failure to remit sales tax raises red flags and increases the likelihood of an investigation.
• Intent Doesn’t Matter: Florida law requires the state to prove intent, but intent can be inferred through evidence, such as the business owner’s ability to pay.

These misconceptions can lead to costly mistakes that are difficult to recover from.

How to Protect Yourself and Your Business

Preventing or mitigating the consequences of unpaid sales tax requires proactive steps:

1. Maintain Accurate Records
   Ensure that your financial records are organized and up to date. Poor bookkeeping can result in additional charges and make it harder to defend yourself if investigated.
2. Prioritize Tax Payments
   Sales tax payments should always take precedence over other expenses. These funds belong to the state, not the business.
3. Act Quickly
   If you’ve fallen behind, address the issue immediately by consulting a tax attorney or accountant. Delaying action only worsens the situation.
4. Hire an Experienced Attorney
   If contacted by the DOR, do not communicate with investigators without legal representation. An attorney experienced in both tax law and criminal defense can help protect your rights and negotiate a favorable resolution.
   
   

Conclusion

Failing to remit sales tax is a serious offense in Florida, carrying the potential for life-altering consequences. However, with the right approach and professional guidance, it is possible to address these issues before they spiral out of control.

If you’ve been contacted by the Florida Department of Revenue or suspect you may be under investigation, act immediately. The sooner you engage an experienced attorney, the better your chances of resolving the matter without long-term damage to your business or personal freedom.