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Zapper

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The Technology Requirements Of The First Electronic Monitoring Agreement In Us For Zappers, Phantomware, And Other Sales Suppression Devices, Richard Thompson Ainsworth, Robert Chicoine Oct 2017

The Technology Requirements Of The First Electronic Monitoring Agreement In Us For Zappers, Phantomware, And Other Sales Suppression Devices, Richard Thompson Ainsworth, Robert Chicoine

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On August 30, 2017, a plea was entered in the case of case of State of Washington v. Wong, Wash. Super. Ct., No. 16-1-00179-0, and as a result the first electronic monitoring agreement of sales transactions in the US (the “Monitoring Agreement”) was legislatively imposed on a retail business.

The Monitoring Agreement was negotiated between the State of Washington Department of Revenue (the “WA DOR”) and the taxpayer over a period of several months and is comprised of two parts: the basic agreement, which covered the obligations and rights of the parties, and an appendix, which defines the scope of …


Zappers - Technological Tax Fraud In New Hampshire, Richard Thompson Ainsworth Oct 2016

Zappers - Technological Tax Fraud In New Hampshire, Richard Thompson Ainsworth

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No other State is as vulnerable to Zappers as is the State of New Hampshire. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in New Hampshire. Seen from a global perspective however, it seems unlikely that they are not here.

New Hampshire’s fiscal vulnerability to Zappers comes from its heavy reliance on precisely the industry segment that has been found to be …


Sales Suppression As A Service (Ssaas) & The Apple Store Solution, Richard Thompson Ainsworth Jun 2014

Sales Suppression As A Service (Ssaas) & The Apple Store Solution, Richard Thompson Ainsworth

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The problem of sales suppression fraud is estimated to cost state and local governments $20 billion annually ($2 billion in New York restaurants alone). Modern sales suppression (skimming) is carried out with technology (Zappers and Phantom-ware). Nine undercover sting operations in and around Manhattan and the Bronx by investigators working for New York’s Department of Taxation and Finance (NY-DT&F) have identified the SSaaS variant of modern skimming.

A striking example of SSaaS may be unfolding in the $1 million sales suppression case against Congressman Michael Grimm (R-NY). It is alleged that Grimm skimmed sales from his Healthalicious restaurant in Manhattan, …


Refund Fraud? - Real-Time Solution! Digital Security Borrowed From The Vat (Brazil, Quebec, & Belgium), Richard Thompson Ainsworth May 2012

Refund Fraud? - Real-Time Solution! Digital Security Borrowed From The Vat (Brazil, Quebec, & Belgium), Richard Thompson Ainsworth

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This article provides support for a proposal to eliminate refund fraud in the U.S. by turning Forms W-2, and 1099 into self-certified/ self-authenticated tax documents. The proposal suggests that a “digital signature” of these documents should be taken after they are completed. The signature should then be made part of the final document.

This proposal was initially advanced in Refund Fraud? Real-Time Solution! The underlying premise of that article was that the US could dramatically reduce, if not eliminate, refund fraud if it borrowing digital security techniques from the VAT. The article did not however, explain or expand upon these …


Massachusetts Zappers - Collecting The Sales Tax That Has Already Been Paid, Richard Thompson Ainsworth May 2009

Massachusetts Zappers - Collecting The Sales Tax That Has Already Been Paid, Richard Thompson Ainsworth

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No other New England state is as vulnerable to Zappers as is the State of Massachusetts. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs).

Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in Massachusetts. A global perspective says: it is highly unlikely that Zappers are not in the Commonwealth – we just need to find them. In fact, using a Quebec template, tax losses from Zappers and related frauds in …


California Zappers: A Proposal For The Commission For The 21st Century Economy, Richard Thompson Ainsworth Jan 2009

California Zappers: A Proposal For The Commission For The 21st Century Economy, Richard Thompson Ainsworth

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California has not uncovered a single instance of technology-assisted cash skimming - there are no zappers, and no phantomware in California. Is this because Californians are not skimming cash sales with technology, or is this because the California technology works so well that the fraud cannot be detected?

The record in foreign jurisdictions is reasonable clear. Automated sales suppression technology is widely used to skim cash sales, denying the state revenues from consumption taxes that have been paid by the consumer, reducing taxable business profits, and funding a cash hoard out of which unreported employee wages are paid. Government studies …