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ZAPPED!

February 26, 2008

The TaxProf calls our attention to a novel use of technology for tax evasion: the "Zapper." No, it's not the purple lights that entice insects to a gruesome fiery death in the backyard. It's a software add-on to a point-of-sale accounting program that automatically skims and diverts cash receipts to other causes - like financing terror, for example.

The most notorious use of the Zapper has been the "La Shish" tax evasion case, where a husband and wife diverted $20 million of restaurant proceeds to the Hezbollah terror group. A Google search indicates that zappers are also a serious problem in Canada, with its GST national sales tax (take note, Fair-taxers). Some headlines from the Great White North:

Celine Dion-owned restaurants raided by Revenue Quebec

Quebec tests tool to halt tax evaders
Restaurant industry targeted. Province estimates use of 'zapper' software costs hundreds of millions of dollars a year

It's a much more sophisticated version of the traditional restaurant skimming technique of never closing the cash register drawer.

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