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April 4, 2012

Maine joins fight against ‘tax zappers’

The state of Maine has joined four others in efforts to identify and prosecute retailers using a device that allows them to underreport taxable sales.

The device, called a tax zapper, deducts a certain amount from an electronic cash register’s memory at the end of a business day, then recalculates the tax owed, according to The Associated Press. The retailer keeps the difference between the recalculated tax owed and what was actually collected from customers.

Maine’s law, signed last month, makes it illegal to possess or install a tax zapper and carries penalties of up to five years in jail and a $5,000 fine. Maine lawmakers became aware of the fraud after hearing of Quebec’s efforts to neutralize tax zappers, which officials credit with the loss of $417 million in tax revenue from restaurants in fiscal year 2007-2008. Florida, Georgia, Utah and West Virginia have a similar law.

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