Debtor’s Prisons and Double Jeopardy in State Tax Prosecutions: The Department of Revenue Has A New Trick Up Its Sleeve.
The term debtor’s prison tends to conjure up images straight out of Dickens. The United States abolished debtor’s prisons in the 1800’s. It is not a crime to owe money, issues of debt are resolved through the civil process. Unfortunately, when that money is owed to a government agency, the handling of the matter tends to be anything but civil. Collecting sales tax in Florida means collecting funds on behalf of the State of Florida. Those funds are held in trust, and failure to remit to the state is a crime. Specifically, theft of state funds. Theft of state funds is a felony of the first, second or third degree. The level of the crime is determined by the amount at issue. This is punishable by jail time and fines, as outlined here. Theft of state fund is a serious charge, with long term repercussions for the accused. Recently, the Florida Department of Revenue has taken its criminal subprocess a step further. On top of criminal charges against taxpayers for failure to remit, the State has been enforcing a civil penalty against the defendant at the end of the criminal case.
The Basis of Double Jeopardy
Article I, Section 9 of the Florida Constitution provides that no person shall be twice put in jeopardy for the same offense. This stems from the United States Constitution, and is colloquially referred to as the “double jeopardy” clause. It stands for the very basic proposition that no person in this country shall be tried twice for the same crime, or more importantly, convicted twice for the same crime. Jeopardy attaches when a jury is empaneled, or a plea is accepted by the court. Once jeopardy attaches, the defendant cannot be re-tried. The Florida Supreme Court determined in State v. Tuttle, “[L]esser offenses are those in which the elements of the lesser offense are always subsumed within the greater, without regard to the charging document or evidence at trial,” quoting the Florida Supreme Court’s 2006 decision in Pizzo v. State. Meaning, if a set of facts result in two separate crimes, the elements of which are largely the same, the state will charge with the greater offense, and all lesser charges shall be included therein. This is a prohibition against a defendant being charged for two crimes when the elements of the two are substantially the same.
Double Jeopardy is a prohibition against being tried twice, not punished twice. By way of example, everyone remembers the OJ Simpson trial. The State of California charged OJ with murder of his ex wife and her friend. A jury was empaneled, and the state had to prove their case beyond a reasonable doubt. The jury ultimately found OJ not guilty of the criminal charge. However, unrelated to the outcome of the criminal case, the family of the deceased had a remedy to sue in civil court for wrongful death. The burden of proof in civil matters is lower, and the Juice ended up being found liable to the families for the death of the victims. In short, it is possible to be tried for a crime, and subsequently have a civil case arising from the same set of facts and circumstances.
What happened in the example of the OJ cases is not double jeopardy because, despite there being two separate proceedings based on the same set of facts and circumstances, there were two separate causes of action, in two separate courts. The accuser in each case is a different party, one is a criminal charge by the State, and the other is a civil matter brought by the individuals affected by the actions of the accused. One is punishable by jail time and criminal fines, the other is limited to civil damages, which are generally monetary. Same facts and circumstances, different plaintiff, venue, and remedy.
Section 213.29, Florida Statutes
Section 213.29, Florida Statutes (“F.S.”), identifies a penalty of twice the amount of the tax shall be imposed upon any person who 1) is required to collect, truthfully account for, and pay over tax 2) willfully attempts to evade or defeat the payment 3) or directs an employee to do the same. The way this works is best illustrated by example: a taxpayer owes $10,000 in tax. Third degree felony charges are filed for theft of state funds, the Taxpayer enters a plea, and gets on a restitution agreement to pay the $10,000, plus criminal fines of up to $10,000, interest, and costs. The Department of Revenue will then take it upon themselves to file a civil lien against that same taxpayer for $20,000, double the amount of tax due. So now, on paper, the Taxpayer has a debt of $30,000 in tax to the State of Florida, plus the fines and costs included in the criminal restitution. For every dollar of tax paid, two dollars of penalty come off the civil side. Once the criminal restitution is full paid, the lien is satisfied. However, during the pendency of those payments, a civil lien is a hugely overinflated mark on one’s credit for a balance that is already in repayment.
Procedurally, in theft of state funds cases, the State Attorney brings the criminal charge on behalf of the victim, the Department of Revenue. Upon a finding of tax due, the defendant enters a payment plan through Department of Corrections. The Department of Revenue then files a civil lien separate from the criminal restitution. The accuser in both the criminal trial, and the subsequent civil matter, is the Department of Revenue. The remedy in both is payments to the state. The State’s objective is clear: they want to be made whole, and are utilizing all the tools at their disposal to be sure those funds are paid. However, the reasoning is flawed, and illogical at best. The existence of a restitution agreement through the court is sufficient to be sure the tax is paid. Unpaid restitution is a violation of probation, and the Department of Corrections can avail itself of the police power to collect that debt.
Here, the elements of the crime, theft of state funds, are any person who 1) knowingly 2) obtains or uses taxes 3) with the intent to deprive the state thereof. The elements of the civil statute under Section 213.29, (“F.S.”), are any person who 1) is required to collect, truthfully account for, and pay over tax 2) willfully attempts to evade or defeat the payment 3) or directs an employee to do the same. Meaning, the elements of both the crime, and the civil penalty, are substantively the same. They both require the collection of tax, scienter, and nonpayment of the funds to the state. Additionally, the lien has the purpose of punishment, retribution, and deterrence. This essentially triples the amount found to be due in criminal proceedings, and thus transforms into a criminal penalty. Assessing two criminal penalties for the same offense seems like exactly the sort of overstep prohibited by the Double Jeopardy Clause. The State had its remedy in the form of the original restitution order through the court.
Whether this penalty is a violation of Double Jeopardy has yet to be litigated in Florida. However, when the same party (the State of Florida) is punishing an individual twice for the same set of facts and circumstances, it certainly raises the issue. The civil lien and the crime require the same elements, and arguably, a civil penalty of this size transform into a criminal penalty. This borders on what the case law has determined to be a violation of the defendant’s constitutional right. If you are a Florida Taxpayer, and the Department of Revenue has contacted you regarding an investigation, or after a criminal case the state has done this to you, call us for a free consultation.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended clients against Florida sales and use taxes for more than 25 years with over 100 years of cumulative experience working for our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
About the author: Amanda Levine is an associate attorney with the Law Offices of Moffa,
Sutton, & Donnini, P.A. Her primary practice area is Florida tax controversy,
including criminal proceedings for state tax issues. Ms. Levine received
a B.S. in Accounting from University of Central Florida. She spent several
years working in public accounting before attending Nova Southeastern
University Law School. She received her Juris Doctorate in 2014. During
her time at Nova Law, Ms. Levine was the Executive Justice of Academics
for the Moot Court Honor Society, as well as the Finance Chair. She was
awarded by the National Order of the Barrister, a national honor society
which encourages oral advocacy and brief writing skills. You may contact
Amanda via email at AmandaLevine@FloridaSalesTax.com or 954-642-1088 or
read more about her in her
bio HERE.
AUTHORITY
Article I, Section 9, Florida Constitution – Due Process
Section 212.15 Florida Statutes – Theft of State Funds
Section 213.29, F.S. Failure to collect and pay over tax or attempt to evade or defeat tax
State v. Tuttle Florida Supreme Court
ADDITIONAL RESOURCES
GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.
FLORIDA SALES TAX - THEFT OF STATE FUNDS, published March 16, 2017, by Amanda Levine, Esq.
FL SALES TAX CRIMINAL INVESTIGATION, published December 16, 2016, by Amanda Levine, Esq.