The Failure to Remit Collected Sales Tax is a Felony

The Failure to Remit Collected Sales Tax is a Felony

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One of the worse things cash-strapped business owners can do is collect 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 sales tax from their customers. They do so, however, as an agent of the state and at no time is the collected sales tax their money to use as they see fit.

If they do use the collected sales tax for purposes other than remittance to the state, they have stolen the state’s funds and are subject to criminal prosecution.

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 what amounts to something close to a zero tolerance policy for businesses who collect sales taxes from their customers and fail to pay those taxes over to the state.

Here’s the full statute:

§ 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.

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