New York City is mounting a crackdown on the use of high-tech “skimmers” to underreport restaurant sales to tax authorities.
Seven restaurants have already admitted to using the devices to evade $2 million in sales taxes, according to a report drafted by a New York State Supreme Court Grand Jury.
“Sales tax evasion is nothing new, but software that helps unscrupulous merchants commit fraud is,” Manhattan District Attorney Cyrus Vance, Jr., said in a statement. “The pressures on the city’s restaurant industry – skyrocketing rents, labor costs, food commodity pricing fluctuations, and intense competition – make it especially vulnerable.”
Vance indicated that he intends to employ recommendations in the Grand Jury report to halt the use of the gizmos, which prompt POS systems not to record transactions. The devices are not illegal in New York state, though their use for tax evasion is.
Twenty states have already moved toward bans on skimmers, according to Vance. The Grand Jury report recommends that New York follow their lead and outlaw the devices. It also advises that new laws be adopted to hold vendors accountable for helping restaurants evade taxes, and that the form and method for recording and reporting sales results be standardized.