This bill has been amended

Bill S3612A-2013

Prohibits the use of automated sales suppression devices, zappers or phantom-ware

Prohibits the use of automated sales suppression devices, zappers or phantom-ware.

Details

Actions

  • Jan 14, 2014: REPORTED AND COMMITTED TO FINANCE
  • Jan 8, 2014: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jan 8, 2014: returned to senate
  • Jan 8, 2014: died in assembly
  • Jun 17, 2013: referred to ways and means
  • Jun 17, 2013: DELIVERED TO ASSEMBLY
  • Jun 17, 2013: PASSED SENATE
  • Jun 3, 2013: ADVANCED TO THIRD READING
  • May 30, 2013: 2ND REPORT CAL.
  • May 29, 2013: 1ST REPORT CAL.795
  • May 14, 2013: PRINT NUMBER 3612A
  • May 14, 2013: AMEND AND RECOMMIT TO FINANCE
  • Apr 30, 2013: REPORTED AND COMMITTED TO FINANCE
  • Feb 7, 2013: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Votes

VOTE: COMMITTEE VOTE: - Investigations and Government Operations - Jan 14, 2014
Ayes (9): Marcellino, Carlucci, Golden, Nozzolio, O'Mara, Zeldin, Hoylman, Diaz, Squadron

Memo

BILL NUMBER:S3612A

TITLE OF BILL: An act to amend the tax law, in relation to prohibiting the use of automated sales suppression devices, zappers or phantom-ware

PURPOSE:

To make it illegal for a person to knowingly purchase, possess, install, update, maintain, upgrade, transfer or use any automated sales suppression device, zapper or phantom-ware.

SUMMARY OF PROVISIONS:

Section 1: Adds a new section 1816 to the Tax law to define automated sales suppression device or zapper, electronic cash register, phantom-ware, transaction data and transaction data.

Prohibits and makes it an offense for a person to knowingly purchase, possess, install, update, maintain, upgrade transfer or use any automated sales suppression device, zapper or phantom-ware. It is also an offense to transmit transaction data with the intent of data manipulation for the purpose of evading any taxes under this article.

A violation is a class E felony punishable by a fine between five thousand dollars and twenty-five thousand dollars. For a second offense within five years, it is punishable by a fine between twenty-five thousand and one hundred thousand dollars, and for a third or subsequent offense within ten years, by a fine of between one hundred thousand dollars and five hundred thousand dollars.

It is an offense for a person to knowingly sell any automated sales suppression device, zapper or phantom-ware. This violation is a class E felony punishable by a fine of twenty-five thousand dollars per incident.

Section 2: This act takes effect on January 1, 2015.

JUSTIFICATION:

Automated sales suppression devices can be used to evade sales tax collection, including the so called tax-zapper software that lets businesses, especially those that deal mostly in cash, to underreport taxable sales and pocket money that should be given to the government.

During business hours, cashiers record the true sales and give customers accurate receipts. The software also stores real sales electronically. After hours, a memory stick that contains the zapper is inserted to remove a given amount in the sales from the day's receipts. For each altered transaction, the zapper software will also re-total and recalculate the individuals receipts. This action alters the tax due and creates a second set of books.

The Internal Revenue Service finds more than half of all cash businesses under-report income from their sales. The IRS does not track the use of zapper software. As a result, New York State has increased their focus on cash businesses. It is estimated that New

York State loses over $1 billion in tax revenue annually as a result of these devices.

It has been reported that New York State operated a series of stings operations in which cash register vendors were invited to pitch their equipment to phony restaurants. The results were shocking. In many cases, the vendors offered the phony restaurant opportunities to underpay their taxes using zapper software.

The majority of the businesses in our State are complying with New York State sales tax laws and properly remitting the money collected. This legislation is focused on the small number of businesses which are illegally underreporting their tax collections.

LEGISLATIVE HISTORY:

2012: S. 7733 Passed Senate/No Same As

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect on January 1, 2015.


Text

STATE OF NEW YORK ________________________________________________________________________ 3612--A 2013-2014 Regular Sessions IN SENATE February 7, 2013 ___________
Introduced by Sens. MARCELLINO, GOLDEN -- read twice and ordered print- ed, and when printed to be committed to the Committee on Investi- gations and Government Operations -- reported favorably from said committee and committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, in relation to prohibiting the use of auto- mated sales suppression devices, zappers or phantom-ware THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The tax law is amended by adding a new section 1816 to read as follows: S 1816. AUTOMATED SALES SUPPRESSION. (A) DEFINITIONS. AS USED IN THIS SECTION: (1) "AUTOMATED SALES SUPPRESSION DEVICE" OR "ZAPPER" MEANS A SOFTWARE PROGRAM, CARRIED ON A MEMORY STICK OR REMOVABLE COMPACT DISC, ACCESSED THROUGH AN INTERNET LINK, OR ACCESSED THROUGH ANY OTHER MEANS, THAT FALSIFIES THE ELECTRONIC RECORDS OF ELECTRONIC CASH REGISTERS AND OTHER POINT-OF-SALE SYSTEMS, INCLUDING, BUT NOT LIMITED TO, TRANSACTION DATA AND TRANSACTION REPORTS. (2) "ELECTRONIC CASH REGISTER" MEANS A DEVICE THAT KEEPS A REGISTER OR SUPPORTING DOCUMENTS THROUGH THE MEANS OF AN ELECTRONIC DEVICE OR COMPUTER SYSTEM DESIGNED TO RECORD TRANSACTION DATA FOR THE PURPOSE OF COMPUTING, COMPILING, OR PROCESSING TRANSACTION DATA. (3) "PHANTOM-WARE" MEANS A HIDDEN, PREINSTALLED, OR INSTALLED AT A LATER TIME PROGRAMMING OPTION EMBEDDED IN THE OPERATING SYSTEM OF AN ELECTRONIC CASH REGISTER OR HARDWIRED INTO THE ELECTRONIC CASH REGISTER THAT WITH INTENT OR BY SPECIFIC DESIGN IS USED TO CREATE A VIRTUAL SECOND TILL OR MAY ELIMINATE OR MANIPULATE TRANSACTION RECORDS THAT MAY OR MAY NOT BE PRESERVED IN DIGITAL FORMATS TO REPRESENT THE TRUE OR MANIPULATED RECORD OF TRANSACTIONS IN THE ELECTRONIC CASH REGISTER.
(4) "TRANSACTION DATA" MEANS DATA ASSOCIATED WITH ITEMS PURCHASED BY A CUSTOMER, THE PRICE FOR EACH ITEM, A TAXABILITY DETERMINATION FOR EACH ITEM, A SEGREGATED TAX AMOUNT FOR EACH OF THE TAXED ITEMS, THE AMOUNT OF CASH OR CREDIT TENDERED, THE NET AMOUNT RETURNED TO THE CUSTOMER IN CHANGE, THE DATE AND TIME OF THE PURCHASE, THE NAME, ADDRESS, AND IDEN- TIFICATION NUMBER OF THE VENDOR, AND THE RECEIPT, SEQUENCE OR INVOICE NUMBER OF THE TRANSACTION. (5) "TRANSACTION REPORT" MEANS A REPORT DOCUMENTING DATA, INCLUDING, BUT NOT LIMITED TO, DATA ASSOCIATED WITH SALES, TAXES COLLECTED, MEDIA TOTALS, AND DISCOUNT VOIDS AT AN ELECTRONIC CASH REGISTER THAT IS PRINT- ED ON CASH REGISTER TAPE AT THE END OF A DAY OR SHIFT, OR A REPORT DOCU- MENTING EVERY ACTION AT AN ELECTRONIC CASH REGISTER THAT IS STORED ELEC- TRONICALLY. (6) "PERSON" SHALL HAVE THE SAME DEFINITION AS IN SUBDIVISION (A) OF SECTION ELEVEN HUNDRED ONE OF THIS CHAPTER. (B) PROHIBITIONS. (1) IT IS AN OFFENSE FOR A PERSON TO KNOWINGLY PURCHASE, POSSESS, INSTALL, UPDATE, MAINTAIN, UPGRADE, TRANSFER OR USE ANY AUTOMATED SALES SUPPRESSION DEVICE, ZAPPER OR PHANTOM-WARE. IT IS ALSO AN OFFENSE TO TRANSMIT TRANSACTION DATA WITH THE INTENT OF DATA MANIPULATION FOR THE PURPOSE OF EVADING ANY TAXES UNDER THIS ARTICLE. (2) A VIOLATION OF PARAGRAPH ONE OF THIS SUBDIVISION IS A CLASS E FELONY PUNISHABLE BY A FINE OF NOT LESS THAN FIVE THOUSAND DOLLARS BUT NOT MORE THAN TWENTY-FIVE THOUSAND DOLLARS AND, FOR A SECOND OFFENSE WITHIN FIVE YEARS, BY A FINE OF NOT LESS THAN TWENTY-FIVE THOUSAND DOLLARS BUT NOT MORE THAN ONE HUNDRED THOUSAND DOLLARS AND, FOR A THIRD OR SUBSEQUENT OFFENSE WITHIN TEN YEARS, BY A FINE OF NOT LESS THAN ONE HUNDRED THOUSAND DOLLARS BUT NOT MORE THAN FIVE HUNDRED THOUSAND DOLLARS. (3) IT IS AN OFFENSE FOR A PERSON TO KNOWINGLY SELL ANY AUTOMATED SALES SUPPRESSION DEVICE, ZAPPER OR PHANTOM-WARE. (4) A VIOLATION OF PARAGRAPH THREE OF THIS SUBDIVISION IS A CLASS E FELONY PUNISHABLE BY A FINE OF TWENTY-FIVE THOUSAND DOLLARS PER INCI- DENT. (5) THE OFFENSES CREATED BY THIS SECTION SHALL BE IN ADDITION TO AND CONSIDERED A SEPARATE OFFENSE FROM ANY OFFENSE OF SECTION EIGHTEEN HUNDRED SEVENTEEN OF THIS PART. S 2. This act shall take effect January 1, 2015.

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