'Zapper' bills headed for governor's desk
‘Zapper’ bills headed for governor’s desk
Lansing—Legislation banning automated sales suppression devices, also known as zappers or phantom-ware, is ready for Gov. Snyder’s signature, said sponsor Sen. John Pappageorge.
“Last year, it is estimated that Michigan lost $740 million in tax revenues due to zapper use. This is money that could be going to schools, roads and municipalities,” said Pappageorge, R-Troy.
Senate Bills 768 and 769 make it a felony to knowingly sell, purchase, install, transfer, or possess such devices.
Automated sales suppression devices are used to skim cash sales and evade taxes. The devices are installed in electronic cash-registers or point-of-sales systems and allow a user to manipulate the total and pocket the difference. Devices such as these are used at any place with high volume cash transactions.
Violators will be subject to the following penalties:
• Imprisonment for not less than one year or more than five years;
• A possible fine of not more than $100,000; and
• Legal responsibility for all taxes and penalties due the state resulting from automated sales suppression devices.
The leading Michigan zapper case involved the owners of the 13-store La Shish restaurant chain in the Detroit area, who were investigated for federal income tax fraud. A press release by U.S. Department of Justice in 2007 explained that the La Shish cases involved two sets of books, skimmed millions of dollars, some of which reportedly went overseas, and failed to report this income on tax returns as required by law.
Together the owners purportedly “zapped” more than $20 million in sales over a 4-year period and allegedly sent the money to Hezbollah in Lebanon. One owner reportedly fled overseas and remains a fugitive from the U.S. authorities.
“This legislation should serve as a warning to anyone using zappers that their fraudulent behavior will not be tolerated,” Pappageorge said. “I wish this legislation were not necessary. However, we cannot stand idly by as the hard-working citizens of Michigan are potentially bilked out of hundreds of millions of dollars they believe are going to schools, roads and the like.”
Posted: Wednesday, May 16, 2012
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