An Act To Prohibit Computer Software Programs Used To Evade Sales Tax
Maine Legislature, Session 125, LD 1764
Committee: Taxation
Sponsors: BERRY, WOODBURY, HASKELL, KNIGHT, PLUMMER
Amends: 17-A MRSA §909

Legislative Document 
No. 1764
H.P. 1297 
House of Representatives, January 10, 2012
An Act To Prohibit Computer Software Programs Used To Evade 
Sales Tax 
(EMERGENCY) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative BERRY of Bowdoinham. 
Cosponsored by Senator WOODBURY of Cumberland and 
Representatives: HASKELL of Portland, KNIGHT of Livermore Falls, PLUMMER of 
Windham. 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, automated sales suppression devices, commonly referred to as "zappers" 
and "phantom-ware," are used to underreport sales and have enabled fraud and theft from 
government, from shareholders and business partners and from other state and federal 
taxpayers; and 
Whereas, the Province of Quebec, on Maine's northern border, has found that in one 
recent year it lost approximately $425,000,000 to fraud from zappers and phantom-ware 
in restaurants alone; and 
Whereas, if adjusted for Maine's smaller gross domestic product and lower tax 
rates, the same degree of undetected tax evasion from Maine's restaurant sector alone 
would mean the loss of $50,000,000 annually in sales tax, corporate income tax, personal 
income tax and related employment taxes; and 
Whereas, many foreign governments and several states have already acted to reduce 
and prevent the use of zappers and phantom-ware and their actions have yielded positive 
results; and 
Whereas, the Department of Administrative and Financial Services, Bureau of 
Revenue Services presently lacks sufficient technological and auditing resources to 
detect, document and control zapper and phantom-ware fraud and theft; and 
Whereas, the reputations and the fiscal competitiveness of all law-abiding 
businesses are harmed by the continued existence of this threat; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  17-A MRSA §909 is enacted to read: 
§909.  Possession of automated sales suppression device 
1.   A person is guilty of possession of an automated sales suppression device if the 
person sells, purchases, installs, manufactures, transfers or owns any automated sales 
suppression device or phantom-ware. 
2.   Possession of an automated sales suppression device is a Class C crime. 
3.     As used in this section, unless the context otherwise indicates, the following 
terms have the following meanings. 
A.  "Automated sales suppression device" means a computer software program, 
which may be stored on magnetic or optical media, accessed through the Internet or 
accessed through any other means, that is designed or used primarily to falsify the 
electronic records of an electronic cash register or other point-of-sale system, 
including, but not limited to, transaction data and transaction reports. 
B.  "Electronic cash register" means a device that keeps a register or supporting 
documents through the means of an electronic device or computer system designed to 
record transaction data for the purpose of computing, compiling or processing retail 
sales transaction data. 
C.  "Phantom-ware" means a hidden, preinstalled or installed programming option 
embedded in the operating system of an electronic cash register or hardwired into the 
electronic cash register that can be used to create a virtual 2nd cash register or to 
eliminate or manipulate transaction records, which may or may not be preserved in 
digital formats, and can represent either the true or the manipulated records of 
transactions in the electronic cash register. 
D.  "Transaction data" includes a description of items purchased by a customer; the 
price for each item; a taxability determination for each item; a segregated tax amount 
for each taxed item; the amount of cash or credit tendered; the net amount returned to 
the customer in change; the date and time of the purchase; the name, address and 
identification number of the vendor; and the receipt or invoice number of the 
transaction. 
E.  "Transaction report" means a report that includes, but is not limited to, sales, taxes 
collected, methods of payment and voided sales at an electronic cash register that is 
printed on cash register tape at the end of a day or shift or a report that includes every 
action at an electronic cash register that is stored electronically. 
Sec. 2.  Interim compliance period.  Notwithstanding the Maine Revised 
Statutes, Title 17-A, section 909 or any other law, a person who corrects and fully reports 
any previously underreported sales records between the effective date of this Act and 
September 1, 2012 is not subject to criminal and civil penalties for violating Title 17-A, 
section 909 in the absence of any audit, investigation or request by the Department of 
Administrative and Financial Services, Bureau of Revenue Services to correct and fully 
report previously underreported sales records.  Nothing in this section may be construed 
to restrict a person's liability for taxes and interest due to the State or Federal 
Government, for restitution to a person's shareholders or business partners or for any 
other liabilities arising from the underreporting of sales.  To qualify for a waiver of 
penalties under this section, a person must notify the bureau of the person's possession of 
an automated sales suppression device on or before September 1, 2012 and provide any 
information requested by the bureau, including but not limited to transaction records, 
software specifications, encryption keys, passwords and other data.  The bureau shall 
work with the business community to notify potentially affected taxpayers and may adopt 
rules to implement this section.  Rules adopted pursuant to this section are routine 
technical rules pursuant to Title 5, chapter 375, subchapter 2-A. 
Sec. 3.  Review and report.  The Department of Administrative and Financial 
Services, Bureau of Revenue Services shall immediately review its audit practices and 
results with respect to cash-intensive businesses and identify steps to improve the 
bureau's ability to audit those businesses and identify and prevent crimes involving 
automated sales suppression devices.  The bureau shall update the joint standing 
committee of the Legislature having jurisdiction over taxation matters on these efforts 
orally in January 2013 and submit to the committee a final, written report by December 
2014.  The final report must include an estimate of the extent of crimes involving 
automated sales suppression devices in the State and an update on the efforts of the 
bureau and of other domestic and international authorities in better identifying and 
preventing crimes involving automated sales suppression devices. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
This bill prohibits the possession of automated sales suppression devices, which alter 
the amounts of sales made by a business for the express purpose of illegally withholding 
or skimming sales taxes paid by customers.  For those persons who correct and fully 
report any previously underreported sales records before September 1, 2012, certain 
penalties are reduced but other existing financial liabilities are not reduced. The bill also 
authorizes the Department of Administrative and Financial Services, Bureau of Revenue 
Services to adopt routine technical rules to implement this interim compliance period. 
The bill also requires the bureau to report to the joint standing committee in January 2013 
and December 2014 on efforts to detect and prevent crimes involving automated sales 
suppression devices.