Could You Go To Jail For Not Paying State Of Florida Sales Taxes? Bankruptcy Might Be A Solution.
Nov. 23, 2022
You absolutely could go to jail for not paying sales taxes due to the state! The penalties for not paying sales tax money you have collected are steep in Florida. The money you collect for sales taxes does not belong to you. It belongs to the State of Florida from the moment you collect it and is to be held in trust for the state until it is remitted (paid) to the Florida Department of Revenue. It cannot be used for business operating expenses. Business owners are responsible for the collection and remittance of sales tax. Not meeting this responsibility could jeopardize your civil liberties.
Not Paying Or Paying Late Both Create Risks
There certainly have been plenty of business owners in Florida who have found out the hard way that using sales tax money for operating capital can have disastrous consequences.
For example, a business owner who is struggling financially might choose to pay employees using money collected for sales taxes, under the mistaken belief that the sales taxes can be paid later.
That’s just not true.
If you don’t pay your employees, you could lose your employees. But if you don’t pay your sales taxes, you could lose your freedom. You could go to jail.
By not remitting to the state the sales tax money you have collected or being delinquent on your sales tax remittance, you are putting yourself at risk for criminal charges that can result in heavy fines and possibly a long jail sentence. You are also putting your license to do business in Florida at risk.
You are also legally liable for sales taxes that you failed to collect that you were required by the state to collect, so “forgetting” to collect sales taxes is not a legal defense.
Filing For Bankruptcy Might Help!
Sometimes at BransonLaw, we find that people don’t understand that filing bankruptcy might be the best solution in resolving unpaid or overdue sales tax payments. It is important to note that you cannot discharge sales tax debt in bankruptcy, but you can pay the moneys back over time with the protection of the automatic stay in bankruptcy that applies to all debts, including sales tax.
While bankruptcy will not relieve you of the obligation to pay your sales tax payments, a sales tax debt repayment plan can be a part of your business’s bankruptcy reorganization plan. Dealing with sales tax debt and bankruptcy at the same time is complex and requires an experienced bankruptcy attorney. At BransonLaw, we can help you if you are in that situation. You will still need to pay back what you owe, but it may be possible to spread the payments and interest out over time. Typically, in a Chapter 11 or Chapter 13 bankruptcy, during the repayment time you are still accruing interest, but you are not accruing further penalties, which can be substantial. A payment plan can help you get back on your feet again. Restructuring the sales tax debt along with your other debts may make it easier for you to pay your sales tax debt.
Florida Considers Not Remitting Sales Taxes You Have Collected To Be Theft
To operate a business in Florida in which you sell goods or some services, you are required by the state to collect sales taxes from your customers and hold that money in trust. If you fail to remit the sales tax money you have collected to the Department of Revenue, the Department considers it theft.
In fact, the relevant Florida State Statutes specifically refer to failure to remit as “stolen revenue.” The Department of Revenue takes its responsibilities very seriously and does not deal lightly with businesses that don’t remit the sales taxes they have collected. To put it bluntly, they do not care if you are having business or cash flow issues. The department wants the money that is due to the state of Florida and will vigorously pursue businesses that do not make scheduled sales tax payments.
You Can’t Just Walk Away From Your Business To Get Out Of Sales Tax Debt
Locking your front door behind you, shutting down the business, and walking away will not relieve you of the obligation to pay the sales taxes you have collected. It doesn’t work that way. You will still owe the money, and you can and probably will be held criminally liable.
Collecting sales taxes without remitting them to the state can be a felony, depending on the amount of the unremitted sales taxes and the number of prior convictions for unremitted taxes. That can mean fines, penalties, and jail time. Even small amounts can trigger legal consequences. For example, an amount below $1,000 is a second-degree misdemeanor for a first-time offense, a first-degree misdemeanor for a second conviction, and a third conviction is a third-degree felony. Higher amounts result in greater penalties. If the total amount of stolen revenue is $100,000 or more, the offense is a felony of the first degree, punishable as provided in the Florida Statutes for first-degree felonies.
In addition to criminal penalties, the Department of Revenue has other enforcement options, which could include filing liens against property, freezing bank accounts, and revoking sales tax registration and/or other professional licenses.
BransonLaw Can Help
Our attorneys have helped several businesses successfully formulate a bankruptcy plan dealing with the Department of Revenue. If you are considering bankruptcy and are behind on paying your sales taxes, call BransonLaw immediately, particularly if you have already received a delinquency notice from the Department of Revenue. Keep in mind that you are personally liable for unpaid sales taxes, penalties, and fines, which is why having competent legal help as early in the process as possible is critical.