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New fees law hurting small businesses

Small businesses across Florida have been dissolved under a new law that requires owners to pay thousands of dollars in fines they say they can't afford.

Mary Annis is one of those business owners. For the past 15 years, her North Palm Beach-based firm Bluegrass Lawn Care Inc. has paid a $150 annual report filing fee to the state each year. In 2010, she missed the deadline.

Annis learned last week that she must fork over $750 to the Florida Department of State's Division of Corporations if she wants to remain incorporated.

Blame it on e-mails that Annis said she never received from the state.

In May the legislature repealed a law that allowed the Division of Corporations to waive $400 late fees. Before, if the corporation claimed it did not receive notice of the filing deadline, it could be granted a waiver.

Annis, who operates the firm with her husband, Jeffrey Annis, said she was not notified that the annual report was due by May 1. Because the report was not filed, on Sept. 24 the state dissolved the corporation, which is now listed as "inactive." Annis found out Wednesday that she now owes the $150 filing fee plus a $600 reinstatement fee.

"We are getting calls," State Department spokeswoman Jennifer KrellDavis said Friday. "People are used to using the waiver. We had a large percentage of corporations who never paid a late fee because they always used the waiver. We no longer have the authority to waive it."

In 2009, 1,069,308 businesses filed on time and 8,672 paid the late fee. This year 1,114,862 filed on time and 34,349 paid the late fee, according to the division's data. Because of the end of waivers, late fees collected more than tripled, jumping to $13.7 million this year from $3.4 million in 2009.

The state administratively dissolved 284,769 businesses this year. It is unclear how many became officially inactive because of the late filing.

Some businesses are weighing their options. Some say they never saw the e-mails the state sent.

"I forgot to do it. As long as I have been incorporated, they have sent something in the mail," Annis said. "They said they sent an e-mail, but I didn't receive it."

She discovered that Bluegrass was dissolved when an insurance agent needed to verify her corporate identification number.

"He looked up the license, and it was expired," Annis said. "I have missed the deadline before and it was OK."

Annis wonders what legislators were thinking, making such a change when small businesses are struggling.

"We are the backbone, but they are breaking our backs," Annis said.

Krell-Davis said the state stopped sending postcards about the annual report deadlines in 2008, and it has never been required to notify businesses. Printing and mail costs totaled $685,501 in 2008. The May 1 filing deadline has been in effect since 1993.

"Everyone files electronically. The e-mail they use to file is the one we use to notify them. It is also the one we notify them to be dissolved," Krell-Davis said. She said three or four notices are sent by e-mail because there are no mailing costs.

The State Department had proposed ending the waivers, and cutting both the late fee and the reinstatement fees in half, according to budget documents filed last year. But the legislature chose to end the waivers and keep the fees the same.

Like Annis, Carleton Chernekoff, owner of Dubs Plus Service, a Lake Worth-based DVD duplication business, said she never received any notification that the annual report was due or somehow missed it.

Last week, her son, Ryan Chernekoff, alerted her that he received a notice his company, Muscle Car Touring Inc., had been dissolved. She discovered she had received a similar e-mail. Each needs to come up with $750, which is tough right now.

"I started to kind of go freaky," Carleton Chernekoff said. "I know I am not the only one who screwed up. If my alarm clock does not go off, that is my fault too. You get a little dependent on something."

She called the Division of Corporations, where she was told, "Sorry, we are not waiving the fees for anyone."

"I get 50 to 100 e-mails every day. I had forgotten about the May 1 deadline. I have been doing this for 20 years. I take a certain amount of responsibility for not having remembered it," Chernekoff said.

Chernekoff said she doesn't rely on e-mails when it comes to business issues such as making sure a purchase order was received, and the state should not rely on them either.

"I don't trust that an e-mail doesn't get lost in cyberspace. It could be overlooked or accidentally deleted," Chernekoff said.

Chernekoff is considering forming a new corporation, which she has been told will be less expensive than paying the $600 reinstatement fee. But she has to find out if that will work.

"I am so disappointed in the system," Chernekoff said. "For all these years, I paid them and paid my sales taxes every month and my income tax. I have never let them down. This is the first time I needed them to give me a break."