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Mississippi Tax Zapper Software

October 22, 2019

Revenue suppression software is becoming an increasingly pressing topic in the world of state taxation. This is because states are becoming aware of exactly what type of impact this suppression software can have. We’ve touched on this topic several times in the past, and we will continue to feature articles on it in the future. Sales suppression software – often referred to as “tax zapper” software – is a sophisticated tool which can create two separate sets of books. These books enables businesses to purposely under report sales and illegally minimize their tax burden. We’ve looked at a few specific examples of this before. State legislatures are catching on and are beginning to take account of sales suppression devices in their tax and criminal codes. This is what has happened recently in the State of Mississippi. Today, we’re going to look at the proposed Mississippi tax zapper software laws.

We don’t always think of Mississippi as a state likely to be on the cutting-edge of technological or societal progress. But if Mississippi does end up integrating suppression software into its legal code, it will become part of the small minority of states in the U.S. to do so. In this post, we’ll first review the basics of sales suppression software for those who aren’t familiar with the mechanics. Then, we’ll discuss what’s happening in the Mississippi state legislature on this issue.

Basics of Zapper Software

Tax zapper software enables cash intensive businesses to eliminate certain transactions from their point of sale system in order to deliberately under-report sales. The software creates two sets of books: a correct book and a false book. The transactions which are eliminated are usually made in cash; this makes the under-reporting easier to conceal. Businesses will use the false books to underpay their sales tax, then pocket the difference between it and that shown on correct books. Typically, tax zapper programs are found in businesses which conduct a good portion of their business in cash, such as restaurants. We’ve already documented multiple cases involving restaurants in certain states (including Washington State). Businesses then use the correct set of books whenever they sell their business. This correct, higher set of books allows them to generate better offers.

The Mississippi Position

Back in January, 2018, the Mississippi Department of Revenue Commissioner, Herb Frierson, made a statement condemning zapper software that enabled restaurants to under report sales. He warned about the scale of the tax evasion danger involved with tax zapper software programs. He stated that tax suppression software could result in Mississippi being defrauded of millions in sales tax. Mississippi is contemplating adding the possession or sale of automated sales suppression devices a felony crime. Frierson actually put advanced a bill including this proposition, and a version of the bill has passed the Senate Judiciary Committee.

If Mississippi passes the bill, it will join a handful of states with tax zapper software legislation. Currently, only Washington, Michigan, Florida, Georgia, Utah, and West Virginia have laws against tax zapper software. Mississippi would therefore add itself to this small cadre of states if it does end up passing the bill. The purpose of the law would be to deter Mississippi tax zapper software dissemination and ownership. Businesses punished under the law will likely be used as examples of what can happen to others using similar software.

Cash Heavy Businesses Should Be Careful

As mentioned, tax zapper software is prevalent in industries which see a lot of cash transactions. This means restaurants, small businesses, and so forth. If you run a cash business, you may be at risk of audit to uncover sales suppression software. This is especially true if you’re operating in a state with legislation against this software.

States are becoming better at cracking down on sales suppression software. Part of becoming better involves targeting the businesses which are most likely to have the software. And this means cash heavy businesses. If you own a restaurant, be sure to keep your books as clean as possible. The last thing you want to deal with is an accusation that you’re using suppression software.

Contact MC&C for Additional Information

We’ll circle back and see what happens with the proposed Mississippi tax zapper software legislation. We’ll also continue to talk about other tax zapper cases in the future. At Mackay, Caswell & Callahan, P.C., we try to stay on the cutting-edge of tax debt resolution and tax enforcement. This means keeping up-to-date with new developments in the tax world. We routinely handle federal tax debt resolution, state income tax debt resolution, sales tax compliance disputes, and so forth. If you need counsel in one of these areas, don’t hesitate to reach out. Give one of our top New York City tax attorneys a call. We’re happy to take a look at your case.

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Comments

Cash Business Tax Advice – Mackay, Caswell & Callahan, P.C. 3 days ago

[…] previously looked at tax zapper software. One observation we can make is that cash-based businesses certainly have […]

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Comments

Cash Business Tax Advice – Mackay, Caswell & Callahan, P.C. 3 days ago

[…] previously looked at tax zapper software. One observation we can make is that cash-based businesses certainly have […]

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