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Utah Gets Tough on Sales Tax Evasion Software

  • Mar 23, 2012 | Will Frei

Utah cracks down on software designed to evade sales tax obligations with H.B. 96

The Utah bill makes it a third degree felony to "willfully or knowingly sell, purchase, install, transfer, use, or possess . . . any automated sales suppression device or phantomware."

The software in question creates false records for point of sale systems, acting as a "virtual alternate register," and/or manipulating transaction records. Offenders then use the spurious records to under-report the amount of transactions they have made, thus making it seem as though they owe less sales tax.

H.B. 96 lists the following penalties for possessing or operating sales tax evasion software:

  • First offense = third degree felony.
  • Subsequent offense = second degree felony.
  • A fine for no more than twice the amount of taxes that "would otherwise be due."
  • Loss of profits associated with illegal software.
  • Forfeiture of illegal software/device.

Earlier this year, Maine also passed a bill that specifically prohibits "tax zapper" software.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.