Automated sales suppression device

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An automated sales suppression device or zapper is a software program that falsifies the electronic records of point of sale (POS) systems for the purpose of tax evasion.

Contents

Function

Most jurisdictions levy a sales tax or a value added tax on commercial transactions such as sales in stores or food served in a restaurant. These transactions are now most often recorded by a POS system rather than a mechanical cash register. The POS system records are generally not alterable by the operator and are used as the basis of tax assessments and audits by tax authorities.

Because POS systems are increasingly designed as general purpose computers (as of 2008, 85% worldwide were reported to run Microsoft Windows), [1] arbitrary software can be run on them. A "zapper" is a software program, often run untraceable from a USB flash drive, that accesses the POS system records and allows the owner of a business to alter the records so as to make it credibly appear that fewer transactions have occurred than has actually been the case. This reduces the tax burden on the business, which is generally proportional to the volume of the transactions.

Government responses

The use of zappers is illegal and may be subject to criminal penalties. However, according to a 2008 The New York Times report, governments worldwide have yet to find effective means of preventing their use. [1] A European Union committee on cash register fraud has been established, and legislation mandating tamper-proof POS systems has been proposed in Germany in 2008 (INSIKA) and introduced in Quebec, Canada, on September 1, 2010. [1]

In Canada, legislation aimed at suppressing zappers is in effect since 1 January 2014. A first offence will lead to a $5,000 fine, and subsequent infractions to a $50,000 fine. Persons in possession of zappers could be fined up to $50,000, and developers or sellers up to $100,000. [2]

In Australia, activities involving electronic sales suppression tools that relate to people or businesses that have Australian tax obligations are banned since 4 October 2018, and subject to criminal and administrative penalties. [3]

In Russia, the electronic secure memory device (EKLZ) was made mandatory to be part of any cash register. Then, new online cash registers use a combination of the special secure fiscal storage and the immediate transmission of the data to the tax service. These measures make it impossible to remove the data from the memory of the cash register.

In 2021, the state of Massachusetts drafted provisions into their budget [4] establishing penalties for the use of selling, purchasing, installing, or possessing zappers. Selling (or offering for sale) zappers will incur a fine of up to $25,000 for the first offense and up to $50,000 for subsequent offenses; purchasing, installing, or possessing a zapper will incur a first-time fine of up to $10,000, and up to $25,000 for subsequent offenses.


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Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organisations. It involves preparing source documents for all transactions, operations, and other events of a business. Transactions include purchases, sales, receipts and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, including the single-entry and double-entry bookkeeping systems. While these may be viewed as "real" bookkeeping, any process for recording financial transactions is a bookkeeping process.

Cash register Mechanical or electronic device for registering and calculating transactions at a point of sale

A cash register or till or automated money handling system is a mechanical or electronic device for registering and calculating transactions at a point of sale. It is usually attached to a drawer for storing cash and other valuables. A modern cash register is usually attached to a printer that can print out receipts for record-keeping purposes.

A debit card is a plastic payment card that can be used instead of cash when making purchases. It is similar to a credit card, but unlike a credit card, the money is immediately transferred directly from the cardholder's bank account to pay for the transaction.

EFTPOS Type of electronic payment system

Electronic funds transfer at point of sale is an electronic payment system involving electronic funds transfers based on the use of payment cards, such as debit or credit cards, at payment terminals located at points of sale. EFTPOS technology originated in the United States in 1981 and was adopted by other countries. In Australia and New Zealand, it is also the brand name of a specific system used for such payments; these systems are mainly country-specific and do not interconnect.

Money laundering Process of transforming profits of crime and corruption into ostensibly legitimate assets

Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. The overall scheme of this process returns the "clean" money to the launderer in an obscure and indirect way.

Automated teller machine Electronic telecommunications device to perform financial transactions

An automated teller machine (ATM) or cash machine is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, funds transfers, or account information inquiries, at any time and without the need for direct interaction with bank staff.

Secure cryptoprocessor Device used for encryption

A secure cryptoprocessor is a dedicated computer-on-a-chip or microprocessor for carrying out cryptographic operations, embedded in a packaging with multiple physical security measures, which give it a degree of tamper resistance. Unlike cryptographic processors that output decrypted data onto a bus in a secure environment, a secure cryptoprocessor does not output decrypted data or decrypted program instructions in an environment where security cannot always be maintained.

NCR Corporation Company

NCR Corporation, previously known as National Cash Register, is an American software, managed and professional services, consulting and technology company that also makes self-service kiosks, point-of-sale terminals, automated teller machines, check processing systems, and barcode scanners. NCR had been based in Dayton, Ohio, starting in 1884, but in June 2009 the company sold most of the Dayton properties and moved its headquarters to the Atlanta metropolitan area in unincorporated Gwinnett County, Georgia, near Duluth. In early January 2018, the new NCR Global Headquarters opened in Midtown Atlanta near Technology Square.

Point of sale

The point of sale (POS) or point of purchase (POP) is the time and place where a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice for the customer, and indicates the options for the customer to make payment. It is also the point at which a customer makes a payment to the merchant in exchange for goods or after provision of a service. After receiving payment, the merchant may issue a receipt for the transaction, which is usually printed but can also be dispensed with or sent electronically.

Bank Secrecy Act

The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities.

Zapper may refer to:

Receipt Written acknowledgment that a person has received money or property in payment

A receipt is a document acknowledging that a person has received money or property in payment following a sale or other transfer of goods or provision of a service. All receipts must have the date of purchase on them. If the recipient of the payment is legally required to collect sales tax or VAT from the customer, the amount would be added to the receipt and the collection would be deemed to have been on behalf of the relevant tax authority. In many countries, a retailer is required to include the sales tax or VAT in the displayed price of goods sold, from which the tax amount would be calculated at point of sale and remitted to the tax authorities in due course. Similarly, amounts may be deducted from amounts payable, as in the case of taxes withheld from wages. On the other hand, tips or other gratuities given by a customer, for example in a restaurant, would not form part of the payment amount or appear on the receipt.

QuickBooks is an accounting software package developed and marketed by Intuit. QuickBooks products are geared mainly toward small and medium-sized businesses and offer on-premises accounting applications as well as cloud-based versions that accept business payments, manage and pay bills, and payroll functions.

Verifone is an American multinational corporation headquartered in Coral Springs, Florida, that provides technology for electronic payment transactions and value-added services at the point-of-sale. Verifone sells merchant-operated, consumer-facing and self-service payment systems to the financial, retail, hospitality, petroleum, government and healthcare industries. The company's products consist of POS electronic payment devices that run its own operating systems, security and encryption software, and certified payment software, and that are designed for both consumer-facing and unattended environments.

Hardware security module

A hardware security module (HSM) is a physical computing device that safeguards and manages digital keys, performs encryption and decryption functions for digital signatures, strong authentication and other cryptographic functions. These modules traditionally come in the form of a plug-in card or an external device that attaches directly to a computer or network server. A hardware security module contains one or more secure cryptoprocessor chips.

NETS (company)

Network for Electronic Transfers or more commonly known as NETS; is a Singaporean electronic payment service provider founded in 1985 by a consortium of local banks to establish the debit network and drive the adoption of electronic payments in Singapore. It is owned by DBS Bank, OCBC Bank and United Overseas Bank (UOB).

A financial bureau is an accounting business whose main focus is the preparation of finance for other businesses. In the USA such firms are often run by Certified Public Accountants, though a typical financial processing company will refer to itself as a bureau rather than a CPA firm, to distinguish its finance from the general tax and accounting that are generally not offered by a financial bureau. The typical client of a bureau is a small business - one just large enough for finance to be complicated to the point of a hassle, but one still small enough to not merit its own full-time finance department.

Fiscal memory devices are electronic devices used to record sales tax owed to a country. They are widely used in many countries around the world, as of 2004 including Russia, Bulgaria, Serbia, Romania, Republic of Macedonia, Albania, Argentina, Poland, Moldova, Bosnia and Herzegovina, Kazakhstan, Armenia, Georgia, Kenya, Tanzania, Malawi and Ethiopia. Fiscal memory devices have the following categories:

Kounta (software company)

Kounta is an Australian software company founded in 2012. The company's flagship product, Kounta, comprises a cloud based point of sale mobile app.

Fiscalization is fiscal law designed to avoid retailer fraud. Fiscal law about cash registers has been introduced in countries to control the grey economy by enforcing all mandatory transaction reporting to the authorities. According to fiscal law, an appropriate fiscal receipt has to be printed and given to the customer.

References

  1. 1 2 3 Furchgott, Roy (August 29, 2008). "With Software, Till Tampering Is Hard to Find". The New York Times . Retrieved 2008-09-02.
  2. ↑ "Canada's new rules: Here's what changed for 2014". CTV News. 2014-01-02. Retrieved 2014-01-02.
  3. ↑ "Ban on electronic sales suppression tools". Australian Taxation Office. 2018-10-16. Retrieved 2018-10-16.
  4. ↑ "Technical Information Release Tax Provisions in the Fiscal Year 2021 Budget". mass.gov. Retrieved 11 March 2021.
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