Kentucky, Indiana, and Tennessee have a new law in common, assuming – which is highly likely – that Kentucky’s governor signs legislation sent to him on March 14 that will zap whatever use of “zappers” is underway by Bluegrass State businesses.
“A "zapper" is a software program, often run untraceably from a USB flash drive, that accesses the POS (point of sale) system records and allows the owner of a business to alter the records so as to make it credibly appear that fewer transactions have occurred than has actually been the case. This reduces the tax burden on the business, which is generally proportional to the volume of the transactions.”
Thus, the higher the transaction volume the more sales tax state governments are shorted. Richard Ainsworth, director of Boston University’s School of Law’s graduate-level program, “expects” the devices are in use in Kentucky and that the state is losing perhaps $200 million a year.
Kentucky wanted no part of that, hence the legislation against “automated business record falsification devices.” The law makes use of a zapper a Class D felony, which carries a maximum prison term of not less than one year up to a maximum of five years.
Legally justified and cited tax avoidance – as in not paying more tax than required by law – is a right and option of Americans at any level, state, local or federal. Tax evasion, in the form of automated business record falsification devices or by any other means, is illegal. It's considered theft.
In Kentucky, the legislation wasn’t exactly controversial. It passed 36-0 in the Senate, 96-0 in the House. That’s not surprising: not many businesses are going to lobby for the right to short the state on its taxes. The laws also passed overwhelmingly in Indiana and Tennessee.
As of 2013, Indiana law makes use of a zapper by a business a Class C felony, with prison terms of from two-to-eight years and a fine of up to $10,000.
Tennessee’s anti-zapper law passed and was signed into law in 2012. Violation is a Class E felony, making violators subject to a fine of up to $100,000.