State Looking To Crack Down On Tax Suppressing ‘Zappers’

ST. PAUL, Minn. (WCCO) — A high-tech device available online is said to be cheating the state out of tens of millions of dollars every year.

It’s called a “Zapper,” and it can zap away many of the taxes a business owes.

The Minnesota Revenue Department says thousands of businesses may be using the automated sales suppression devices to falsify receipts.

It can lower sales figures on cash registers, allowing businesses to pocket millions of dollars in taxes they’d otherwise have to pay.

“When we find instances of it, we’re going to go after it,” said Cynthia Bauerly, Minnesota’s Revenue Commissioner.

The Revenue Department doesn’t know exactly how many Minnesota businesses may be using Zappers, but says it could be costing the state as much $59 million a year.

“What it is doing is taking the tax the customer has paid, and pocketing it in the business’s pocket as opposed to sending it on to the state,” Bauerly said.

The Revenue Department cites a 2011 national study which estimates convenience stores in Minnesota using Zappers cheated the state out of $17.8 million in sales taxes.

From bars and restaurants, even more: $41.2 million.

On the other hand industry experts say those numbers are grossly distorted.

“We don’t believe it’s credible,” said Dan McElroy, CEO of the restaurant industry trade group Hospitality Minnesota.

McElroy says his group supports the bill making Zappers illegal. However, he says he’s unaware of any business in Minnesota using one.

“Regardless of how much it is, whether it is 4 million or 6 million or 200,000, it’s still a crime,” McElroy said. “It is still wrong, and we are very supportive of a law to prevent that.”

Meanwhile, the National Restaurant Association in a statement called the Revenue Department dollar estimates of sales tax cheaters “outrageous.”

“The assertion by the Minnesota Department of Revenue that restaurants are utilizing automatic sales suppression devices is not based in reality,” the statement said. “The reality is, for every dollar spent at Minnesota’s nearly 10,000 restaurants, an additional $1.13 in sales is generated for our state’s economy.”

The Revenue Department is asking for a new law making it a felony to sell — or even possess — a Zapper.

“Once a practice like this takes hold, it can grow,” Bauerly said. “And so we want to make sure we nip it in the bud.”

Twenty states have restricted the sale or possession of automated sales suppression devices.

More from Pat Kessler
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