January 13, 2015

BOE Highlights Crackdown on Sales Suppression Software

California’s Board of Equalization issued a Special Notice in the latter part of 2014 making it clear that they were interested in prosecuting sales suppression cases.  The relevant text of the BOE Special Notice is below:

What is sales suppression software?

Sales suppression software, often called “zappers,” allows the user to remove or change sales transactions in electronic point of sale (POS) recordkeeping systems. The user then under-reports their taxable sales by making it appear they sold less than they actually did.

How does the BOE fight illegal sales suppression?

BOE auditors may make undercover merchandise buys to determine if a suspected business is illegally suppressing sales. If the BOE detects the use of sales suppression software, the reported sales amounts will be disregarded and the BOE will establish taxable sales using recognized audit techniques, including, but not limited to calculating sales based on:

Cash to credit card payment ratios

Purchase information obtained from suppliers

A daily sales average

Anyone caught using illegal sales suppression software could be sentenced up to three years in jail, fined up to $10,000, and be required to pay all illegally withheld taxes owed, including penalties and interest.

Get a receipt!

You can help us fight illegal sales suppression by asking for a receipt when you purchase food, beverages, or other merchandise, especially when you pay with cash. This discourages dishonest businesses from removing or changing sales in their electronic records and helps the BOE identify those businesses who illegally suppress sales.

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