Modification of sale records with intention to defraud the government is a serious offense which is causing chain reaction to affect not only the sales tax (or VAT) but also many other obligations linked to income. Guided with this fact, researchers, such as Professor Richard T. Ainsworth from Boston University, had investigated how tampering with collected tax can be easily undetected to auditors. Zappers and Phantom-ware are used for this illegal acitivity.
According to New York Senate bill number: S2611 which enacts the automated sales suppression act, definition used for Zapper and Phantom-ware are following:
“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.
“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 ELECTRONIC CASH REGISTER.
Zappers vs Phantom‐ware
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One easy and simple approach to discover zappers has been used by Slovenian Tax Authority (DURS). They had inspectors in the field, secretly photographing receipts in the restaurants while drinking their coffee or having their lunch. Furthermore, they discretely and intentionally left their bills on the table after paying. Some time after, auditors were sent to investigate establishments and search for records of these photographed receipts. Guess what they found? …see here!!
Let’s not get too carried away with zappers, because there is another, more less sofisticated and cheaper (an even free method) for dishonest taxpayers to skim tax money. Since newspapers are full of court cases against false tax filers who use methods such as double tills, misues of training functions on cash registers, performing reset to clear sales records, turning off journal function, etc. It’s obvious that honest taxpayers need to fight unscrupulous competition who manage to profit more on this fraud. The worst case scenario for honest taxpayers is when the government orders to increase in the tax rate for balancing deficits in the budget; yet all these billions simply disappear.