Tax evasion

After 236 days of resistance from the opposition parties, the ruling coalition voted in Czech parliament’s lower chamber, new fiscal law named EET / Electronic Evidence of Taxes /, which regulates the cash sale of goods and services. Now it must be approved by the Senate and signed by the president of the Czech Republic. In the Senate, the ruling coalition has a majority and president Milos Zeman was in favor of this law from the beginning.

Opposition parties are not satisfied with the way it came to this decision, they will make its protest at the Constitutional court. “The law was violated as debate was stopped, many members could not come out and express themselves, ” opposition said at a press conference.

Random assessments conducted by the Comptroller and Auditor General in 443 units in the state during 2014-15 has revealed an under-collection of Rs 5,141 crore (=748,101,451,333.52 USD).

The principal accountant-general (economic and revenue sector audit), Mr Amar Patnaik, said that the incidence of evasion seen during the audit period was “the highest ever”. The short collection of VAT alone (after assessing only 169 offices of the Commercial Sales Tax Department) has been pegged at Rs 1,771.71 crore.

2013

The Vancouver Sun reported back in 2013 that the British Columbia Court of Appeal has tarnished a successful, high-profile Canada Revenue Agency investigation into restaurant tax cheats. Four years after a Richmond computer company was charged and a year after it was convicted of tax fraud, the province’s highest bench has ordered the company acquitted.
When a zapper is installed in conjunction with the firm’s Profitek point-of-sale record keeping system, a user can delete cash transactions from sales records and produce statements that under-report income.

The RCMP conducted an undercover operation in 2008 in which agents set up shop in a Vancouver restaurant and purchased the zapper software from InfoSpec.

The owners of four B.C. restaurants were charged with tax evasion and the CRA said more than $3 million in sales had been hidden and nearly $1 million in tax lost.

The owner of a North Vancouver sushi restaurant was handed 20 months house arrest and fined almost $143,000 after pleading guilty to tax evasion using the software.

A former InfoSpec salesman was sentenced to two years and six months in jail for fraud over $5,000 in relation to the sale of the software.

 2016…

Innsbruck / Salzburg / Linz – As Tiroler Tageszeitung reports, due to allegedly manipulated cash registers tax inspectors and financial police have carried out raids at six catering businesses in Tirol, Salzburg and Upper Austria. The sales suppression software found at the premises reduces revenues of up to 25%, means that quarter of annual revenues remain unreported. Each year this tax evasion is costing Austrian citizens 1 billion euros.

The Ministry of Finance informed press, with reference to the ongoing investigation, that damage to the Treasury made by manipulation of the cash registers is quite significant. The cases will soon be handed over to the prosecutor’s office.

Ministry of Finance has gathered evidence proving that some businesses use sophisticated technology (zappers and phantom-ware) to electronically suppress sales. That creates an unfair advantage by allowing them to underreport business income and retain the taxes paid by consumers.

According to the report released by the Statistics Canada in 2015, the underground economy in Canada is at 2.3 per cent ($42.4 billion) of GDP for 2012, which, based on Ontario’s GDP share, is estimated to be approximately $15.3 billion.

The Bureau of Internal Revenue (BIR) has directed business establishments to submit an inventory list of all cash register machines, point of sales machines, special purpose cash machines and any other similar machines generating sales invoices as of June 30.

Internal Revenue commissioner Kim Henares said the move is in line with the agency’s efforts “to effectively supervise and monitor the issuance of sales invoices/receipts by business establishments and strengthen data management and capabilities that is vital in ensuring a reliable database of sales transactions.”

Manhattan District Attorney Cyrus R. Vance, Jr., announced that a New York State Supreme Court Grand Jury has issued a report outlining a series of recommendations to prevent fraud related to sales suppression software programs. These programs – which include “Phantom-ware” and “Zappers” – can be used by businesses to automatically falsify financial records by giving the appearance of fewer and smaller transactions and, as a result, less taxable revenue.

New York State was the first to release anti-zapper bill (sponsored by Senator Liz Krueger). Same draft was used in 30+ States, out of which 20 have made it a law, but New York State is stalling.

Sen. Krueger believes it’s the kind of policy that should generate bipartisan support since it merely helps the state enforce existing tax laws. “I sort of think this bill is a no-brainer,” Krueger said in 2011 interview.

What has happened in the past 5 years leading to this Grand Jury verdict?

The owner of Fannin Mart Restaurant pleaded guilty to two of eight counts of tax evasion in Rankin County Circuit Court.

A judge on Monday sentenced Steve Page, the owner of the popular restaurant on Mississippi 25 in Flowood, to five years in prison with two years suspended, and three years house arrest.

Page was indicted in October of last year on eight counts of felony tax evasion and eight counts of fraudulent statements and representations.

Page reported to have sold only $10,800 in the average month during that period, when in reality the restaurant actually sold an average of $35,720 per month.

Information from: The Clarion-Ledger