Massachusetts Zappers - Collecting the Sales Tax that Has Already Been Paid

9 Pages Posted: 28 May 2009 Last revised: 2 Dec 2019

See all articles by Richard Thompson Ainsworth

Richard Thompson Ainsworth

NYU - Graduate Tax Program; Boston University - School of Law

Date Written: May 28, 2009


No other New England state is as vulnerable to Zappers as is the State of Massachusetts. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs).

Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in Massachusetts. A global perspective says: it is highly unlikely that Zappers are not in the Commonwealth – we just need to find them. In fact, using a Quebec template, tax losses from Zappers and related frauds in the Massachusetts restaurant industry alone could exceed $600 million.

Thus, if Massachusetts is indeed in need of revenue it might do well to looks for Zappers and Phantom-ware installed in the ECRs of retail establishments that have a high volume of cash sales. Given the recent attempt to increase in the sales tax by 25% to 6.25%, an effort that is supposed to raise $600 million in new taxes, it might be appropriate to consider looking for the software add-on programs that are taking the same amount of “old taxes” from the public fisc. There should be the political will to this. Governor Deval L. Patrick conceded that there is a need to raise additional revenue when he promised to veto the tax increase on April 27, 2009. The legislature agreed with the Governor (at least on this point) when it passed the rate increase by veto-proof margins. It is also likely that the citizens of the State are in accord. At least with respect to the sales tax, what we are essentially taking about is recovering the taxes that the citizens have already paid. This should be preferable to paying more taxes.

Zappers are a documented problem in Quebec, Germany, the Netherlands, Australia, Brazil, Sweden, Austria, France, the UK and the US. This is the reason that representatives of the German, Quebec and Dutch revenue authorities will be sharing both their technology solutions and their auditing techniques with other government officials at the Federation of Tax Administrators Annual Conference in Denver Colorado, June 2, 2009.

Keywords: Massachusetts, Tax fraud, MEV, Module d'enregistrement des ventes, Zapper, Phantom-ware, Smart card, Sales and Use Tax, SSUTA, CSP, ECR, POS system, Skimming

JEL Classification: H00, H20, H26, H71, K34, K42, O23, O33

Suggested Citation

Ainsworth, Richard Thompson, Massachusetts Zappers - Collecting the Sales Tax that Has Already Been Paid (May 28, 2009). Boston Univ. School of Law Working Paper No. 09-28, Available at SSRN: or

Richard Thompson Ainsworth (Contact Author)

NYU - Graduate Tax Program ( email )

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New York, NY 10003-711
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Boston University - School of Law ( email )

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