6 Things You Can Do To Avoid Going to Jail for Failure to Remit State Sales Taxes

6 Things You Can Do To Avoid Going to Jail for Failure to Remit State Sales Taxes

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If you are a Florida business owner and have failed to remit your state sales taxes, here are 6 things you can do to greatly lower the chances Florida will refer your case for criminal prosecution:

1. Respond immediately to any DOR inquiries or notices– the earlier you respond, the better. This is because the DOR’s notices are timed. In other words, after so many friendly notices and after a certain amount of time has passed, the DOR is required by law to move the case to it’s criminal division. And once it’s in the criminal loop, it’s not easy to move it back to the civil division.

2. Voluntarily file any unfiled returns and pay as much as you can of the unpaid taxes – it is critically important that you demonstrate that, a) your past non-compliance was not intentional; and b) that you’ve self-corrected the problem so that it will never occur again. State criminal investigators and state prosecutors evaluate potential criminal prosecution cases based on the likelihood of success. If you continue your non-compliance after the DOR has notified you about it and you ignore or show disdain for the DOR collection process, it makes the State’s criminal case much easier. So at least prospectively fix your tax problem immediately, thoroughly and unequivocally and avoid the hoosegow.

3. Hire a qualified and experienced criminal tax attorney – it doesn’t have to be me and probably won’t be. But you should hire someone like me. The reasons are obvious:

a)  An experienced attorney is accustomed to dealing with the state taxing authorities and the state prosecutor’s office and knows the elements of proof the state must have in order to proceed criminally against you;

b)  The early presence of an experienced criminal tax attorney on your team sends a clear message to the DOR that you will fully exercise your rights; and

c)  If you represent yourself in a criminal matter you have a fool for a lawyer. This maxim applies to lawyers, too. That is why we have represented several tax lawyers in connection with their state and IRS problems.

4. Attempt to borrow funds to pay off the delinquent debt and document those attempts – you may or may not be able to find a lender who will give you money to pay a delinquent  sales tax debt. But it doesn’t matter. What you want to do here is clearly document your efforts to obtain the funds to repay the State. Again, your actions here are the actions of a person who is not intentionally trying to steal from the state government and it could make the difference between a state prosecutor deciding to bring criminal charges and deciding not to prosecute the case.

5. Reassign or terminate the individual or individuals who oversaw your state tax compliance functions during the time of your delinquency – this may sound harsh, but it’s absolutely necessary and here’s why. If you continue to use the person or persons to handle your tax compliance functions who were responsible (partially or otherwise) for getting you into the problem in the first place, you are sending a message to the DOR that you are not serious about correcting the problem and, even worse, that you may have instructed the employee to not comply with state tax law.

6. Voluntarily attend one of the DOR’s many free sales tax compliance classes – again, you want to show your good faith effort to comply with the state tax laws in the future. Nothing is better than attending a course given by the same government authority that will decide whether or not to prosecute you for theft of state funds. Now, you must be sincere about trying to learn something so bring with you to the seminar your new tax compliance professional, a note pad and a good attitude. Asks questions and get to know the instructor because you want him or her to remember your enthusiasm. Oh, and don’t argue with the teacher. This is not the time.

Related Post:

Revenge of the Nerds II, or 3 Reasons State Tax Authorities are Worse than the IRS

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida


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