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Manhattan DA Cracking Down on Restaurants That Skirt Sales Tax With Software

Software allows restaurants to record fewer sales than they actually makes.

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Paid for a meal at a restaurant lately? That cash may or may not have been officially counted. An unknown number of New York City restaurants are using sales-suppression software called "zappers," which allow restaurants to skip out on paying part of the sales tax they owe. Essentially, a program that lets restaurants record fewer sales than they actually make, meaning the money goes straight into the hand of the owners, while the state misses out on tax revenue.

The software has been around for a while now, but Manhattan's district attorney Cyrus Vance seems to be the first local official to crack down on it, according to a Post op-ed by John Crudell. Last week, a grand jury indicted one of the makers of zappers, and 10 restaurants pleaded guilty to tax evasion. But as Crudell points out, given the sheer number of restaurants in this city, there could be way more restaurants using these machines than just 10. In an unfinished sting in 2009, state investigators set up four dummy restaurants, spoke to 26 point of service providers, and found that every single one of them offered zappers.

Vance didn't name the restaurants that pled guilty or the indicted zapper company, but his investigation is continuing. "I'd bet that the zapper maker who got caught is probably squealing right now," writes Crudell. "And there are at least 25 more who should be expecting a call."

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