The Tampa Bay Times just published an article about a restaurant owner in Florida. arrested and charged with a felony for failing to pay sales taxes that he had collected last year. He faces up to 30 years in prison.
We usually don’t talk about felonies and sales tax in the same sentence and we certainly don’t like to bring up the “J” word. Most of the time all you have to worry about when it comes to sales and use tax is whether and how much the penalty and interest will be on audit. And that’s no small worry, because penalty and interest assessed can be astronomical. But when it comes to sales tax collected and not remitted, then you have to also consider criminal penalties as well. In most states, failure to pay in sales tax that was collected potentially could be a felony.
This situation in Florida is only the latest to receive lots of publicity. State tax regulators seem to be targeting convenience store operators and restaurant owners and if they can generate a lot of publicity, then maybe they can scare a lot of others straight.
As we’ve written before, it’s not only state tax auditors looking to find money, it’s contingent fee lawyers as well. Just google the terms “sales tax felony” and you will likely see the ads for attorneys trolling for disgruntled employees to rat out their former employers. If they can find them, the attorneys can file lawsuits under the False Claims Act and try to score a 30 percent contingency fee.
So what are the criminal penalties in your state for failing to remit tax collected? Or failing to file a return and for “evading” the tax? Well, we have a chart for that. Simply fill out the short form to download your chart.