senate Bill S3612B

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

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 07 / Feb / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 30 / Apr / 2013
    • REPORTED AND COMMITTED TO FINANCE
  • 14 / May / 2013
    • AMEND AND RECOMMIT TO FINANCE
  • 14 / May / 2013
    • PRINT NUMBER 3612A
  • 29 / May / 2013
    • 1ST REPORT CAL.795
  • 30 / May / 2013
    • 2ND REPORT CAL.
  • 03 / Jun / 2013
    • ADVANCED TO THIRD READING
  • 17 / Jun / 2013
    • PASSED SENATE
  • 17 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 17 / Jun / 2013
    • REFERRED TO WAYS AND MEANS
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 14 / Jan / 2014
    • REPORTED AND COMMITTED TO FINANCE
  • 29 / Jan / 2014
    • AMEND AND RECOMMIT TO FINANCE
  • 29 / Jan / 2014
    • PRINT NUMBER 3612B
  • 20 / May / 2014
    • 1ST REPORT CAL.840
  • 21 / May / 2014
    • 2ND REPORT CAL.
  • 28 / May / 2014
    • ADVANCED TO THIRD READING
  • 18 / Jun / 2014
    • PASSED SENATE
  • 18 / Jun / 2014
    • DELIVERED TO ASSEMBLY
  • 18 / Jun / 2014
    • REFERRED TO WAYS AND MEANS

Summary

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

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Bill Details

See Assembly Version of this Bill:
A7420B
Versions:
S3612
S3612A
S3612B
Legislative Cycle:
2013-2014
Current Committee:
Law Section:
Tax Law
Laws Affected:
Add ยง1816, Tax L
Versions Introduced in 2011-2012 Legislative Cycle:
S7733

Sponsor Memo

BILL NUMBER:S3612B

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, transfer or use any automated sales
suppression device, zapper or phantom-ware. It is also an offense to
transmit data with the intent of data manipulation.

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, 2016.

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.
2013: S.3612-A passed Senate/A.7420 - referred to Ways & Means

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect on January 1, 2016.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3612--B

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 7, 2013
                               ___________

Introduced  by  Sens. MARCELLINO, BONACIC, GOLDEN, KRUEGER -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Investigations 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  -- recommitted to the Committee on Investigations
  and Government Operations in accordance with Senate Rule 6, sec. 8  --
  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08470-06-4

S. 3612--B                          2

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, 2016.

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