You might think a sales tax audit is just about paperwork. Maybe the auditor finds a few errors, maybe you owe some back taxes, and maybe you get hit with interest and penalties. It’s frustrating—but it’s civil. It’s business.

But what happens when the Florida Department of Revenue (DOR) believes you’ve intentionally failed to pay the sales tax you collected? That’s when your audit can cross a dangerous line—from a civil audit to a criminal investigation.

Unfortunately, this happens more often than you might think in the restaurant industry, especially in Florida. In this article, we’ll walk you through:

• The difference between a sales tax audit and a sales tax investigation

• What types of conduct trigger criminal charges

• What signs suggest your audit may be turning criminal

• And how to protect yourself and your business

1. The Big Difference: Audit vs. Investigation

Let’s start with a basic truth: Not every tax mistake is a crime. But some are.

A sales tax audit is part of Florida’s civil tax enforcement process. The Department of Revenue conducts thousands of audits each year, and most are routine. The auditor reviews your records, calculates what you owe (if anything), and issues a Notice of Proposed Assessment (NOPA). Even if they find underreported tax, it usually ends in a bill—not handcuffs.

A sales tax investigation, on the other hand, is conducted by the DOR’s criminal enforcement division, not its regular audit staff. It is a criminal proceeding that can lead to:

• Felony charges

• Arrest

• Public exposure

• Court-ordered restitution

• Probation or jail time

The most common charge? Theft of state funds—for collecting sales tax from customers and not remitting it to the state.

2. Why Restaurants Are at Risk

Restaurants are one of the top industries targeted for criminal sales tax enforcement in Florida. Why?

Because restaurants:

• Collect large amounts of cash and credit card payments

• Handle daily sales volume that can be hard to track

• Often use complex POS systems that aren’t always set up properly

• Sometimes offer discounts, comps, or off-the-books transactions

• May be tempted to use collected tax to cover short-term business expenses

The temptation to “borrow” from sales tax funds—especially during slow seasons or financial stress—is a common thread in criminal investigations. But the state sees this differently. Once you collect sales tax from a customer, that money belongs to the state. It’s considered trust money, and failure to turn it over can be prosecuted just like embezzlement or theft.

3. The Legal Standard: What Makes It Criminal

Here’s the line that gets crossed: Intentional misconduct.

Under Florida Statutes § 212.15, it’s a felony to willfully fail to remit sales tax that was collected. The more tax you owe, the more serious the charge.

• If you owe $1,000 or more, it’s a third-degree felony

• If you owe $20,000 or more, it’s a second-degree felony

• If you owe $100,000 or more, it’s a first-degree felony, punishable by up to 30 years in prison

This isn’t about making a mistake on a return or forgetting to file once. This is about a pattern of nonpayment—and the DOR doesn’t take it lightly.

What the DOR looks for:

• Collected tax shown on receipts but never remitted

• Filed returns showing tax due, but no payments made

• Collected tax included in POS reports, but not reported to the state

• Repeated ignored warnings, letters, or payment demands

• Bank records showing the money was collected and spent elsewhere

4. From Audit to Criminal Referral: How It Happens

A criminal investigation can begin in a few ways:

• A civil auditor uncovers evidence of willful nonpayment and refers your case to the criminal division

• You’re already under audit and stop cooperating or disappear

• A former employee or competitor reports you to the state – This is in fact the most likely senario!

• You ignore prior assessments or collection efforts

• The DOR cross-checks your bank records or POS reports and finds serious discrepancies

At first, you may not even realize your audit has taken a turn. But there are warning signs.

5. Red Flags: How to Know an Audit Is Turning Criminal

While the DOR doesn’t announce that you’re under criminal investigation, here are some clues your civil audit may be escalating:

🚩 The auditor suddenly stops communicating or asks vague questions.
🚩 You’re contacted by someone with “Criminal Investigations” or “Inspector General” in their title.
🚩 You’re asked to sit for a recorded statement or in-person interview.
🚩 You receive a subpoena instead of a records request.
🚩 The tone shifts—from numbers to accusations.
🚩 You receive a visit from a DOR agent who’s also a sworn law enforcement officer.

If you see any of these signs, it’s time to stop talking and get legal help immediately. Do not try to “explain things away” or provide more documents on your own—this could backfire and give investigators evidence they’ll use against you.

6. How to Avoid Getting into Criminal Territory

The best way to avoid a criminal sales tax investigation is to treat collected sales tax with extreme caution. This is not money that belongs to your business—it is money you’re holding on behalf of the state.

✅ Always remit the full amount of tax you collect.
✅ File your sales tax returns on time, even if you’re behind on payment.
✅ Don’t “borrow” from your sales tax to pay bills.
✅ Respond to DOR letters promptly.
✅ Keep accurate records, including POS reports, Z-tapes, delivery app data, and bank statements.
✅ Hire a tax professional at the first sign of audit trouble.

7. What Happens If You’re Charged

If a criminal investigation leads to charges, your case will be handled in state court, often in the same county where your business operates. The charges are public, and many criminal sales tax cases are picked up by local media—especially if your restaurant is well-known.

In some cases, the state may offer a plea deal if you agree to pay restitution. But depending on the amount owed and the circumstances, you could face:

• Probation or jail time

• A permanent felony record

• Personal liability, even if your business is a corporation or LLC

• Revocation of your sales tax certificate

• Permanent damage to your business’s reputation

Final Thoughts: Don’t Let a Tax Problem Turn Into a Criminal Case

Many restaurant owners don’t set out to break the law. They’re trying to make payroll. They’re covering rent. They’re buying inventory. But when sales tax starts getting used like a personal line of credit, the consequences can be devastating.

If you’re behind on sales tax—or if you’ve received letters or calls from the DOR—it’s not too late to fix things. But you need to act fast, and you need someone who understands both the civil and criminal tax process in Florida.

Don’t ignore it. Don’t explain it away. Don’t go it alone. Sales tax might seem like just another line item—but in Florida, it’s taken very seriously, and the line between audit and arrest is thinner than you think.