Vermont Tax Zappers: Step Forward and Find Safe Harbor
- Sales Tax News
- Aug 13, 2013 | Gail Cole
Update, 11.22.13: Vermont's safe harbor provision of the tax zapper law expired on October 1, 2013.
Last spring, Vermont Governor Peter Shumlin (D) signed House Bill 511 into law, criminalizing the use of sales suppression software commonly known as tax zappers. The law took effect April 25, 2103, but grants a temporary safe harbor for individuals who voluntarily disclose their use of zappers.
Tax zappers falsify electronic records of sales in electronic cash registers or other point of sale systems. By creating false sales records, they enable users to under report sales and under remit sales tax. Under the new law, anyone found to possess, sell, purchase, install or transfer tax zappers may be charged with a felony. However, individuals who confess to their use of zapper software will not be prosecuted so long as they come forward prior to October 1 of this year.
To benefit from the safe harbor provision, individuals must notify the Department of Taxes (DOT) of their use of sales suppression devices, cooperate fully with DOT, and pay any amounts owed. In return, penalties will be limited to "a maximum of 25% of the taxes owed." It's a good deal, as penalties may amount to 100% of the taxes owed.
It's worth coming forward prior to October 1 for another reason. In addition to be liable for all taxes, penalties and interest:
"Once the safe harbor has expired, a person who is found in violation is subject to imprisonment for not less than one year and not more than five years, fined not more than $100,000.00 or both."
In other words, taking advantage of the safe harbor provision can keep you out of prison and save you $100k. To avoid prosecution, business owners are advised to contact the Compliance Division of the DOT at 802.828.2514 by October 1, 2013.
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