NY State Senate Bill 2013-S3314

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to finance
Jan 31, 2013	referred to finance

co-Sponsors

2013-S3314 (ACTIVE) - Details

Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §170-c, Exec L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S2611
2015-2016: S3079

2013-S3314 (ACTIVE) - Summary

Enacts the automated sales suppression act to study and report on the use of automated sales suppression devices that falsify the electronic records of point-of-sale systems for the purpose of tax evasion.

2013-S3314 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S3314

TITLE  OF  BILL:    An  act to amend the executive law, in relation to
enacting the automated sales suppression act

PURPOSE:

1. Requires the Department Of  Taxation  and  Finance  to  prepare  an
automated sales tax suppression study.

SUMMARY OF PROVISIONS:

§ 170-c. Automated Sales Suppression Study.

1. Definitions.

2.  Directs  the  Department  of  Taxation  and  Finance  to prepare a
comprehensive study on the prevalence of automated  sales  suppression
technology  (e.g.  zappers and phantom-ware) within the state's retail
industry,  focusing  on,  but  not  limited  to,  restaurants,   movie
theaters,   hairdressers,   amusement   parks,   grocery   stores  and
convenience stores.

3. Automated Sales Suppression report deadline.

4. Report information exemptions.

EXISTING LAW: None.

JUSTIFICATION:  For years, foreign countries with national sales taxes
have struggled to combat technology that  enables  retailers  to  skim
sales  taxes  and  under  report  other tax liabilities (e.g. personal
income tax, corporate income tax) by concealing  from  auditors  their
actual sales data. This technology, which includes so-called "zappers"
and  "phantom-ware.,"  automatically  suppresses digital sales figures
recorded at electronic cash registers.

It is difficult  for  auditors  to  detect  the  use  of  zappers  and
phantom-ware   through  the  traditional  process  of  cross  checking
transaction documents  because  the  technology  conceals  almost  all
traces  of  the  digital  manipulation.  Countries such as Germany and
Greece   have   required   retailers    to    install    technological
countermeasures  that make it easier for auditors to detect the use of
zappers and phantom-ware. In September 2010, the Canadian province  of
Quebec  began requiring all restaurants to install in their electronic
cash registers anti-sales suppression devices. Zappers cost Quebec  an
estimated $425 million ($410 million U.S.) in 2007-2008.

Because  the  United  States  lacks  a national sales tax, there is no
federal initiative to combat  this  tax  fraud  and  most  states  are
ill-prepared  to  deal  with this issue. Nationwide, only a handful of
people  have  been  caught  using  this  technology,   including   two
in.Michigan  and  one  in  Connecticut. Richard T. Ainsworth, a Boston
University school of  Law  tax  professor  and  a  leading  expert  on
zappers,  has  published  several  papers  documenting  the  spread of
zappers and phantom-ware in Quebec, Greece, Germany,  the  Netherlands


and  other  European  nations.  Given that that the first zappers were
made in the United States and that this technology is widely  used  in
the Canadian province just above of the New York's northern border, it
is imperative for the State to address this issue.

Prior   to   requiring   restaurants   in   the  province  to  install
anti-automated  sales  suppression  technology  in   electronic   cash
registers,  Quebec  conducted  two  empirical  studies on the problem.
This legislation, likewise, would direct and authorize the  Department
of  Taxation  and  Finance  to  prepare  a  study on the prevalence of
zappers and phantom-ware in cash-oriented businesses  statewide,  such
as restaurants, movie theaters and convenience stores.

FISCAL  IMPACTS:  Approximately  $250,000  to  cover  auditor expenses
throughout the 18-month study and to produce a report, according to an
estimate by the Senate Select Committee on Budget and Tax Reform.

EFFECTIVE DATE:    This  act  shall  take  effect  ninety  days  after
enactment.

2013-S3314 (ACTIVE) - Bill Text download pdf

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

                                  3314

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sens. KRUEGER, DILAN, PARKER, STAVISKY -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Finance

AN ACT to amend the executive law, in relation to enacting the automated
  sales suppression act

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "automated sales suppression act".
  S  2.  The  executive  law is amended by adding a new section 170-c to
read as follows:
  S 170-C. AUTOMATED SALES SUPPRESSION STUDY AND REPORT. 1. DEFINITIONS.
(A) "AUTOMATED SALES SUPPRESSION DEVICE" OR "ZAPPER" SHALL MEAN A  SOFT-
WARE  PROGRAM,  CARRIED  ON  A  MEMORY  STICK,  REMOVABLE  COMPACT DISC,
ACCESSED THROUGH AN INTERNET LINK OR ACCESSED THROUGH ANY  OTHER  MEANS,
THAT  FALSIFIES  THE ELECTRONIC RECORDS OF POINT-OF-SALE SYSTEMS FOR THE
PURPOSE OF TAX EVASION.
  (B) "DEPARTMENT" SHALL MEAN  THE  STATE  DEPARTMENT  OF  TAXATION  AND
FINANCE.
  (C) "ELECTRONIC CASH REGISTER" SHALL MEAN A DEVICE THAT KEEPS A REGIS-
TER 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  RETAIL  SALES  TRANSACTION  DATA  IN
WHATEVER MANNER.
  (D)  "PHANTOM-WARE" SHALL MEAN A HIDDEN, PRE-INSTALLED 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 CAN BE USED TO CREATE A VIRTUAL SECOND TILL  OR  MAY  ELIMINATE  OR
MANIPULATE  RECORDS  THAT MAY OR MAY NOT BE PRESERVED IN DIGITAL FORMATS
TO REPRESENT THE TRUE OR MANIPULATED RECORD OF TRANSACTIONS IN THE ELEC-
TRONIC CASH REGISTER.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07089-01-3

S. 3314                             2

  (E) "SUPPORTING DOCUMENTS" SHALL MEAN ANY RECEIPT, INVOICE  OR  REPORT
THAT PROVIDES A RECORD OF TRANSACTION DATA OR TRANSACTION REPORTS.
  (F)  "TRANSACTION  DATA"  SHALL INCLUDE 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  IDENTIFICATION
NUMBER  OF  THE  VENDOR, AND THE RECEIPT OR INVOICE NUMBER OF THE TRANS-
ACTION.
  (G) "TRANSACTION REPORTS" SHALL MEAN A  REPORT  DOCUMENTING,  BUT  NOT
LIMITED  TO, THE SALES, TAXES COLLECTED, MEDIA TOTALS AND DISCOUNT VOIDS
AT AN ELECTRONIC CASH REGISTER THAT IS PRINTED ON CASH REGISTER TAPE  AT
THE  END  OF  A DAY OR SHIFT, OR A REPORT DOCUMENTING EVERY ACTION AT AN
ELECTRONIC CASH REGISTER THAT IS STORED ELECTRONICALLY.
  (H) "TECHNOLOGICAL COUNTERMEASURES" SHALL MEAN ANY ELECTRONIC  DEVICE,
COMPUTER  SYSTEM  OR  SOFTWARE  PROGRAM  DESIGNED  TO ASSIST AUDITORS IN
DETECTING THE PRESENCE AND/OR USE OF ZAPPERS OR  PHANTOM-WARE  IN  ELEC-
TRONIC CASH REGISTERS, BY VERIFYING THE AUTHENTICITY OF TRANSACTION DATA
RECORDED IN SUPPORTING DOCUMENTS AND/OR TRANSACTION REPORTS.
  2.  THE  DEPARTMENT  IS  HEREBY  AUTHORIZED  AND DIRECTED TO PREPARE A
COMPREHENSIVE  STUDY  DOCUMENTING  THE   PREVALENCE   OF   ZAPPERS   AND
PHANTOM-WARE WITHIN THE STATE'S RETAIL INDUSTRY, FOCUSING ON CASH TRANS-
ACTIONS,  BUT  NOT  LIMITED  TO,  THE USE OF ZAPPERS AND PHANTOM-WARE AT
RESTAURANTS, MOVIE  THEATERS,  HAIRDRESSERS,  AMUSEMENT  PARKS,  GROCERY
STORES, CONVENIENCE STORES OR ANY OTHER RETAIL ESTABLISHMENT WHERE THERE
IS A HIGH VOLUME OF CASH TRANSACTIONS.
  (A)  SUCH  STUDY  SHALL  ALSO  PROVIDE AN ESTIMATE ON THE TOTAL FISCAL
IMPACT THAT ZAPPERS AND PHANTOM-WARE HAVE ON THE STATE, FOCUSING ON, BUT
NOT LIMITED TO, THE ESTIMATED TOTAL REDUCTION IN GROSS RETAIL SALES,  AS
WELL  AS  THE  ESTIMATED TOTAL AMOUNT OF TAX REVENUES THE STATE DOES NOT
COLLECT BECAUSE OF THE FALSIFIED TRANSACTION DATA  PRODUCED  BY  ZAPPERS
AND PHANTOM-WARE.
  (B)  SUCH STUDY SHALL CONSIDER TECHNOLOGICAL COUNTERMEASURES THE STATE
COULD EMPLOY OR REQUIRE BUSINESSES TO USE TO ENHANCE  THE  DETECTION  OF
ZAPPERS  OR  PHANTOM-WARE USED IN OR INSTALLED IN ELECTRONIC CASH REGIS-
TERS. THE DEPARTMENT IS AUTHORIZED AND DIRECTED TO INCLUDE IN THIS STUDY
ITS RECOMMENDATION OF WHICH TECHNOLOGICAL COUNTERMEASURE  WOULD  BE  THE
MOST EFFECTIVE AND COST-EFFICIENT.
  3.  THE DEPARTMENT SHALL SUBMIT THE FINDINGS OF SUCH STUDY IN A REPORT
TO THE DIRECTOR OF THE DIVISION OF THE BUDGET, THE  TEMPORARY  PRESIDENT
OF  THE  SENATE, THE SENATE MINORITY LEADER, THE SPEAKER OF THE ASSEMBLY
AND THE ASSEMBLY MINORITY LEADER NO MORE THAN FIVE  HUNDRED  FORTY  DAYS
AFTER THE ENACTMENT OF THIS SECTION.
  4.  NOTHING  IN THIS SECTION SHALL PERMIT OR REQUIRE THE DEPARTMENT TO
INCLUDE IN THE REPORT DESCRIBED IN SUBDIVISION TWO OF THIS  SECTION  ANY
LISTING  OF  ANY INDIVIDUAL BUSINESSES' TAX LIABILITY, PROFITS, SALES OR
LOSSES OR ANY INFORMATION PERTAINING TO ANY ON-GOING  ADMINISTRATIVE  OR
CRIMINAL  INVESTIGATION BY THE DEPARTMENT, U.S. INTERNAL REVENUE SERVICE
OR ANY LAW ENFORCEMENT ENTITY INTO THE USE, INSTALLATION, MANUFACTURING,
OR LEASING OF ZAPPERS OR PHANTOM-WARE.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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Senate Bill S3314

Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

co-Sponsors

2013-S3314 (ACTIVE) - Details

2013-S3314 (ACTIVE) - Summary

2013-S3314 (ACTIVE) - Sponsor Memo

2013-S3314 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S3314

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Sponsored By

Liz Krueger

Archive: Last Bill Status - In Senate Committee Finance Committee

co-Sponsors

Martin Malavé Dilan

Kevin S. Parker

Toby Ann Stavisky

2013-S3314 (ACTIVE) - Details

2013-S3314 (ACTIVE) - Summary

2013-S3314 (ACTIVE) - Sponsor Memo

2013-S3314 (ACTIVE) - Bill Text download pdf

Comments