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Indiana Considers Banning "Sales Tax Zappers"

By Brandon Smith

Posted September 18, 2012

State lawmakers are exploring ways to crack down on "sales tax zappers," the 21st century's version of skimming from the cash register. Eight states have banned the programs, and CGI, a Canadian-based financial consulting firm, estimates Indiana could recover nearly $60 million in lost revenue if it found a way to prevent the use of zappers.

The sales tax zappers, computer programs that are typically downloaded from the internet and saved on a flash drive or CD, allow stores to delete purchases, or parts of purchases, from their records. The store then does not report the transaction to the government and does not pay sales tax on it.

Last session, a bill in the General Assembly that would make selling or owning a zapper a Class-C felony failed to make it out of committee. CGI consultant Bryce Berg says just banning zappers may not curb the practice. He says a more effective method is installing sales recording modules, small computers, between the cash register and the receipt printer.

"So anything that gets entered into the cash register would flow through this SRM, this sales recording module and would be captured in there," Berg says.

Those records would then be available to the government.

Cicero Republican Representative Eric Turner, who introduced last session's zapper bill, says SRMs could place a burden on restaurants, where zappers are most commonly use.

"Well, I would certainly first be concerned about the cost to those local restaurants.," he says. "We have a lot of mom and pops in this state."

Turner says he expects legislation to ban zappers next session but is not sure the General Assembly will want to go any farther than that.

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