Amended in Assembly April 18, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 781

Introduced by Assembly Member Bocanegra

February 21, 2013

An act to add Sections 7153.6 and 55363.5 to the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 781, as amended, Bocanegra. Sales and use taxes: fees: administration: violations for noncompliance: sales suppression devices.

Existing law requires the payment of taxes, fees, and surcharges that are administered by the State Board of Equalization under the provisions of the Sales and Use Tax Law and the Fee Collection Procedures Law, as prescribed.

This bill would, under those laws, provide that a person who knowingly sells, purchases, installs, transfers, begin delete or end delete possesses begin insert , or uses end insert in this state any automated sales suppression device or zapper or phantom-ware is guilty of begin delete a felony punishable by imprisonment for one, 3, or 5 years, and by a fine of not more than $100,000 end delete begin insert an offense punishable by a fine, imprisonment, or both, as specified end insert . This bill would also provide that the person is liable for all taxes, interest, and penalties due as the result of the use of an automated sales suppression device or zapper or begin delete phantom-ware and is required to forfeit to the state all profits associated with the sale or use of an automated sales suppression device or zapper or end delete phantom-ware. By creating a new crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 7153.6 is added to the Revenue and
Taxation Code, to read:

7153.6.  

(a) Notwithstanding any other provision of this part,
a person who knowingly sells, purchases, installs, transfers, begin delete or end delete
possesses begin insert , or uses end insert in this state any automated sales suppression
device or zapper or phantom-ware is guilty of begin delete a felony punishable
by imprisonment pursuant to subdivision (h) of Section 1170 of
the Penal Code for one, three, or five years, and by a fine of not
more than one hundred thousand dollars ($100,000). In addition,
the person shall be liable for all taxes, interest, and penalties due
as the result of the use of an automated sales suppression device
or zapper or phantom-ware and shall forfeit to the state all profits
associated with the sale or use of an automated sales suppression
device or zapper or phantom-ware end delete begin insert an offense punishable by a fine
of not more than ten thousand dollars ($10,000), by imprisonment
in a county jail for not more than one year, or, pursuant to
subdivision (h) of Section 1170 of the Penal Code, for 16 months,
or two, or three years, or by both that fine and imprisonment. In
addition, any person who uses an automated sales suppression
device or zapper or phantom-ware shall be liable for all taxes,
interest, and penalties due as a result of the use of that device end insert .

(b) For purposes of this section:

(1) “Automated sales suppression device” or “zapper” means
a software program carried on a memory stick or removable
compact disc, accessed through an Internet link, or accessed
through any other means, that falsifies the electronic records of
electronic cash registers and other point-of-sale systems, including,
but not limited to, transaction data and transaction reports.

(2) “Electronic cash register” means a device that keeps a
register or supporting documents through the means of an
electronic device or computer system designed to record transaction
data for the purpose of computing, compiling, or processing retail
sales transaction data in whatever manner.

(3) “Phantom-ware” means a hidden, preinstalled, or installed
at a later time programming option embedded in the operating
system of an electronic cash register or hardwired into the
electronic cash register that can be used to create a virtual second
till or may eliminate or manipulate transaction records that may
or may not be preserved in digital formats to represent the true or
manipulated record of transactions in the electronic cash register.

(4) “Transaction data” includes information regarding items
purchased by a customer, the price for each item, a taxability
determination for each item, a segregated tax amount for each of
the taxed items, the amount of cash or credit tendered, the net
amount returned to the customer in change, the date and time of
the purchase, the name, address, and identification number of the
vendor, and the receipt or invoice number of the transaction.

SEC. 2.  

Section 55363.5 is added to the Revenue and Taxation
Code, to read:

55363.5.  

(a) Notwithstanding any other provision of this part,
a person who knowingly sells, purchases, installs, transfers, begin delete or end delete
possesses begin insert , or uses end insert in this state any automated sales suppression
device or zapper or phantom-ware is guilty of begin delete a felony punishable
by imprisonment pursuant to subdivision (h) of Section 1170 of
the Penal Code for one, three, or five years, and by a fine of not
more than one hundred thousand dollars ($100,000). In addition,
the person shall be liable for all fees, interest, and penalties due
as the result of the use of an automated sales suppression device
or zapper or phantom-ware and shall forfeit to the state all profits
associated with the sale or use of an automated sales suppression
device or zapper or phantom-ware end delete begin insert an offense punishable by a fine
of not more than ten thousand dollars ($10,000), by imprisonment
in a county jail for not more than one year, or, pursuant to
subdivision (h) of Section 1170 of the Penal Code, for 16 months,
or two, or three years, or by both that fine and imprisonment. In
addition, any person who uses an automated sales suppression
device or zapper or phantom-ware shall be liable for all taxes,
interest, and penalties due as a result of the use of that device end insert .

(b) For purposes of this section:

(1) “Automated sales suppression device” or “zapper” means
a software program carried on a memory stick or removable
compact disc, accessed through an Internet link, or accessed
through any other means, that falsifies the electronic records of
electronic cash registers and other point-of-sale systems, including,
but not limited to, transaction data and transaction reports.

(2) “Electronic cash register” means a device that keeps a
register or supporting documents through the means of an
electronic device or computer system designed to record transaction
data for the purpose of computing, compiling, or processing retail
sales transaction data in whatever manner.

(3) “Phantom-ware” means a hidden, preinstalled, or installed
at a later time programming option embedded in the operating
system of an electronic cash register or hardwired into the
electronic cash register that can be used to create a virtual second
till or may eliminate or manipulate transaction records that may
or may not be preserved in digital formats to represent the true or
manipulated record of transactions in the electronic cash register.

(4) “Transaction data” includes information regarding items
purchased by a customer, the price for each item, a taxability
determination for each item, a segregated tax or fee amount for
each of the items subject to the tax or fee, the amount of cash or
credit tendered, the net amount returned to the customer in change,
the date and time of the purchase, the name, address, and
identification number of the vendor, and the receipt or invoice
number of the transaction.

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.