State governments target retailers’ tax-cheating software

AUGUSTA, Maine >> Cash-strapped state governments that are searching every crevice for money have found a new target: computer programs that enable businesses to keep two sets of books simply by plugging a flash drive into their cash registers. The so-called tax-zapper software lets businesses, especially those that deal mostly in cash, underreport taxable sales and pocket money that should go to the government. Five states — Florida, Georgia, Maine, Utah and West Virginia — have enacted laws cracking down on the programs. One expert says states are losing billions of dollars to the software.

The new laws are the first to target tax zappers, making it illegal to possess or install any devices designed to falsify a cash register’s electronic records. The software, which sells for about $500, can be installed directly in registers or through small memory devices that plug into them and will re-total and recalculate the transactions.