BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair A
2013-2014 Regular Session B
7
8
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AB 781 (Bocanegra)
As Amended April 18, 2013
Hearing date: July 2, 2013
Revenue and Taxation Code
AA:mc
TAX FRAUD:
SALES SUPPRESSION DEVICES
HISTORY
Source: State Board of Equalization
Prior Legislation: None
Support: California Retailers Association; American Federation
of State, County, and Municipal
Employees; California Grocers Association; California State
Association of Counties; Los Angeles County District Attorney
(if amended)
Opposition:Taxpayers for Improving Public Safety
Assembly Floor Vote: Ayes 75 - Noes 1
KEY ISSUE
SHOULD NEW CRIMES BE ENACTED TO PROHIBIT THE PURCHASE, INSTALLATION,
TRANSFER OR POSSESSION OF SOFTWARE PROGRAMS THAT FALSIFY REPORTED
SALES, AS SPECIFIED?
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PURPOSE
The purpose of this bill is to enact new crimes (wobblers) for
any person to knowingly sell, purchase, install, transfer or
possess software programs that falsify reported sales, as
specified.
Current law generally provides that any person required to make,
render, sign, or verify any report who makes any false or
fraudulent tax return, with intent to defeat or evade the
determination of an amount due required by law to be made is
guilty of a misdemeanor punishable by a fine of not less than
$1,000 and not more than $5,000, or imprisonment not exceeding
one year in the county jail, or both the fine and imprisonment
in the discretion of the court. (Revenue and Taxation Code ��
7152(a) and 7153.)
Current law provides that any person who willfully aids or
assists in, or procures, counsels, or advises in, the
preparation or presentation, in connection with any matter
arising under this part, of a return, affidavit, claim, or other
document that is fraudulent or false as to any material matter,
whether or not the falsity or fraud is with the knowledge or
consent of the person authorized or required to present the
return, affidavit, claim, or document, is guilty of a
misdemeanor punishable by a fine of not less than $1,000 and
not more than $5,000, or imprisonment not exceeding one year in
the county jail, or both the fine and imprisonment in the
discretion of the court. (Revenue and Taxation Code � 7152(b)
and 7153.)
Current law generally provides that any person who violates
these provisions "with intent to defeat or evade the reporting,
assessment, or payment of a tax or an amount due required by law
to be made is guilty of a felony when the amount of unreported
tax liability aggregates . . . $25,000 or more in any
12-consecutive-month period. Each offense shall be punished by
a fine of not less than . . . $5,000 and not more than . . .
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$20,000, or imprisonment for 16 months, two years, or three
years, or both the fine and imprisonment in the discretion of
the court." (Revenue and Taxation Code � 7153.5.)
Current law imposes a penalty of 25 percent of the amount of any
tax deficiency due to fraud or an intent to evade existing laws,
as specified. (Revenue and Taxation Code � 6485.)
Current law , the "Fee Collection Procedures Law," provides that
any "person who knowingly or willfully files a false return or
report with the board, and any person who refuses to permit the
board or any of its authorized representatives to make any
inspection or examination for which provision is made in this
part, or who fails to keep any records prescribed by the board,
or who fails to preserve the records for the inspection of the
board for the time that the board deems necessary, or who
alters, cancels, or obliterates entries in the records for the
purpose of falsifying the records, is guilty of a misdemeanor
and shall be punished by a fine of not less than . . . $100 or
more than $1,000, by imprisonment in the county jail for not
less than one month or more than six months, or by both."
(Revenue and Taxation Code � 55362.)
Current law further provides that any person who willfully
evades or attempts in any manner to evade or defeat the payment
of the fee imposed by this part is guilty of a felony punishable
by imprisonment pursuant to subdivision (h) of Section 1170 of
the Penal Code for 16 months, two, or three years and a fine of
not more than . . . $5,000. (Revenue and Taxation Code �
55363.)
This bill would enact two new crimes pertaining to the use of
specified technology designed for purposes related to
underreporting tax liabilities. Specifically:
This bill would provide that "a person who knowingly sells,
purchases, installs, transfers, possesses, or uses in this state
any automated sales suppression device or zapper or phantom-ware
is guilty of an offense punishable by a fine of not more than .
. . $10,000, by imprisonment in a county jail for not more than
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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."
This bill would provide that, 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."
This bill would enact the following definitions for purposes of
these provisions:
(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
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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.
This bill additionally would provide that "a person who
knowingly sells, purchases, installs, transfers, possesses, or
uses in this state any automated sales suppression device or
zapper or phantom-ware is guilty of an offense punishable by a
fine of not more than . . . $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."
This bill would provide, 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."
This bill would enact the same definitions enumerated above for
purposes of these provisions, except for the following
definition of "transaction data":
"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.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
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prisons has been the focus of evolving and expensive litigation
relating to conditions of confinement. On May 23, 2011, the
United States Supreme Court ordered California to reduce its
prison population to 137.5 percent of design capacity within two
years from the date of its ruling, subject to the right of the
state to seek modifications in appropriate circumstances.
Beginning in early 2007, Senate leadership initiated a policy to
hold legislative proposals which could further aggravate the
prison overcrowding crisis through new or expanded felony
prosecutions. Under the resulting policy known as "ROCA" (which
stands for "Receivership/ Overcrowding Crisis Aggravation"), the
Committee held measures which created a new felony, expanded the
scope or penalty of an existing felony, or otherwise increased
the application of a felony in a manner which could exacerbate
the prison overcrowding crisis. Under these principles, ROCA
was applied as a content-neutral, provisional measure necessary
to ensure that the Legislature did not erode progress towards
reducing prison overcrowding by passing legislation which would
increase the prison population. ROCA necessitated many hard and
difficult decisions for the Committee.
In January of 2013, just over a year after the enactment of the
historic Public Safety Realignment Act of 2011, the State of
California filed court documents seeking to vacate or modify the
federal court order issued by the Three-Judge Court three years
earlier to reduce the state's prison population to 137.5 percent
of design capacity. The State submitted in part that the, ". .
. population in the State's 33 prisons has been reduced by over
24,000 inmates since October 2011 when public safety realignment
went into effect, by more than 36,000 inmates compared to the
2008 population . . . , and by nearly 42,000 inmates since 2006
. . . ." Plaintiffs, who opposed the state's motion, argue in
part that, "California prisons, which currently average 150% of
capacity, and reach as high as 185% of capacity at one prison,
continue to deliver health care that is constitutionally
deficient." In an order dated January 29, 2013, the federal
court granted the state a six-month extension to achieve the
137.5 % prisoner population cap by December 31st of this year.
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In an order dated April 11, 2013, the Three-Judge Court denied
the state's motions, and ordered the state of California to
"immediately take all steps necessary to comply with this
Court's . . . Order . . . requiring defendants to reduce overall
prison population to 137.5% design capacity by December 31,
2013."
The ongoing litigation indicates that prison capacity and
related issues concerning conditions of confinement remain
unresolved. However, in light of the real gains in reducing the
prison population that have been made, although even greater
reductions are required by the court, the Committee will review
each ROCA bill with more flexible consideration. The following
questions will inform this consideration:
whether a measure erodes realignment;
whether a measure addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
whether a bill corrects a constitutional infirmity or
legislative drafting error;
whether a measure proposes penalties which are
proportionate, and cannot be achieved through any other
reasonably appropriate remedy; and
whether a bill addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy.
COMMENTS
1. Stated Need for This Bill
The author states:
California's tax system is based on the principal of
voluntary contribution. Most taxpayers comply with
the law. However, some taxpayers cheat the system by
omitting certain sales and as a way of evading taxes.
This is especially true for cash businesses that don't
always ring up sales. This process generally required
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maintaining two sets of books, one for the BOE and
IRS, and one for the store owner which provides actual
sales. This process used to be very labor intensive
and discouraged many from attempting to omit a
percentage of sales. However, the process is now
incredibly easy to accomplish because of new
electronic record keeping systems. These kinds of
devices have been referred to as "zappers" or "sales
suppression devices." It is now incredibly easy for a
store owner to delete a percentage of sales. In fact,
depending on the program, a store owner can now enter
the percentage of sales to be omitted and keep two
sets of books that can be updated on a regular basis.
Even if a business is audited, it is incredibly
difficult for tax auditor to detect the zapper program
or any irregularities in the sales record.
Additionally, the process of deleting sales is already
illegal. A seller must disclose all income and remit
all sales taxes collected. However, because the
programs are difficult to detect, even if the business
is audited, it is important that we make the sale and
use of these devices illegal. This prevents dishonest
taxpayers from ever obtaining these kinds of programs.
2. Double-Referral
This bill was heard on June 19, 2013, by the Senate Committee on
Governance and Finance. That Committee passed this bill by a
vote of 6-0.
3. Background on the Problem
As noted by the author, technology has provided more
sophisticated methods for evading taxes. As explained in a 2009
paper on this issue:
Skimming cash receipts is an old fashioned tax fraud;
a fraud traditionally associated with small or medium
sized enterprises. Large businesses with formalized
internal control mechanisms, external accountants, and
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professional management structures do not normally
engage in skimming, although personal conversations
with auditors from Revenue Quebec indicate that this
may not be a solid assumption any more. Businesses
that skim frequently keep two sets of books (one for
the tax man, the other for the owner). In its
simplest (nontechnological) form there are two tills,
and the cashier simply diverts some cash from selected
sales into a secret drawer. A record of the diversion
may be maintained, but it will be kept outside the
formal accounting system. Businesses that skim rarely
do so with credit card transactions precisely because
these sales can be documented externally through the
banking system. Skimming frauds thrive when the owner
(or a close family member) is the cashier.
Technology is changing how businesses skim. The
agents of change are software
applications - phantom-ware and zappers. Phantom-ware
is a "hidden," pre-installed programming option(s)
embedded within the operating system of a modern
electronic cash register (ECR). It can be used to
create a virtual second till and may preserve a
digital (off-line) record of the skimming (a second
set of digital books). The physical diversion of
funds into a second drawer is no longer required, and
the need for manual recordkeeping of the skim is
eliminated. Because phantom-ware programming is part
of the operating system of an ECR its use can be
detected with the assistance of a computer audit
specialist.
Zappers are more advanced technology than
phantom-ware. Zappers are special
programming options added to ECRs or point of sale
(POS) networks. They are carried on memory sticks,
removable CDs or can be accessed through an internet
link. Because zappers are not integrated into
operating systems their use is more difficult to
detect. Zappers liberate owners from the need to
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personally operate the cash register. Remote skimming
of cash transactions is now possible without the
knowing participation of the cashier who physically
rings up the sale. This attribute of zappers allows
the incidence of skimming fraud to migrate
beyond the traditional "mom and pop" stores. Zappers
allow owners to place employees at the cash register,
check their performance (monitor employee theft), but
then remotely skim sales to cheat the taxman.<1>
4. Intent
As currently drafted, the crimes this bill would enact would be
strict liability crimes - that is, no intent to commit or
facilitate tax fraud would be required. The current tax fraud
crimes require "intent to defeat or evade the determination of
an amount due required by law to be made . . . ." In addition,
current law makes it a crime for a person who "willfully aids or
assists in, or procures, counsels, or advises in, . . . "
fraudulent tax documents, as specified.
As explained in a 2004 California Supreme Court decision:
For criminal liability to attach to an action, the
standard rule is that "there must exist a union, or
joint operation of act and intent, or criminal
negligence." (Pen. Code, � 20.) "[T]he requirement
that, for a criminal conviction, the prosecution prove
some form of guilty intent, knowledge, or criminal
negligence is of such long standing and so fundamental
to our criminal law that penal statutes will often be
construed to contain such an element despite their
failure expressly to state it. 'Generally, "'[t]he
existence of a mens rea is the rule of, rather than
the exception to, the principles of Anglo-American
criminal jurisprudence.' ?" [Citation.] In other
----------------------
<1> Ainsworth, California Zappers: A Proposal for California's
Commission on the 21st Century Economy
(Boston University School of Law Working Paper No. 09-01,
January 8, 2009 (footnotes omitted).)
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words, there must be a union of act and wrongful
intent, or criminal negligence. [Citations.] "So
basic is this requirement that it is an invariable
element of every crime unless excluded expressly or by
necessary implication." [Citation.]' [Citation.]"
(In re Jorge M. (2000) 23 Cal.4th 866, 872 [98 Cal.
Rptr. 2d 466, 4 P.3d 297] (Jorge M.); see 1 Witkin &
Epstein, Cal. Criminal Law (3d ed. 2000) Elements, �
1, pp. 198-199.)
The prevailing trend in the law is against imposing
criminal liability without proof of some mental state
where the statute does not evidence the Legislature's
intent to impose strict liability. (People v. Simon
(1995) 9 Cal.4th 493, 521 [37 Cal. Rptr. 2d 278, 886
P.2d 1271]; Liparota v. United States (1985) 471 U.S.
419, 426 [85 L. Ed. 2d 434, 105 S. Ct. 2084]
[extension of strict liability crimes disfavored]; see
1 Witkin & Epstein, Cal. Criminal Law, supra,
Elements, � 18, p. 223 [examples given of strict
liability crimes are not "indicative of a trend.
Indeed, the opposite appears to be true"].)
"Equally well recognized, however, is that for certain
types of penal laws, often referred to as public
welfare offenses, the Legislature does not intend that
any proof of scienter or wrongful intent be necessary
for conviction. 'Such offenses generally are based
upon the violation of statutes which are purely
regulatory in nature and involve widespread injury to
the public. [Citation.] " Under many statutes enacted
for the protection of the public health and safety,
e.g., traffic and food and drug regulations, criminal
sanctions are relied upon even if there is no wrongful
intent. These offenses usually involve light
penalties and no moral obloquy or damage to
reputation . Although criminal sanctions are relied
upon, the primary purpose of the statutes is
regulation rather than punishment or correction. The
offenses are not crimes in the orthodox sense, and
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wrongful intent is not required in the interest of
enforcement ."'" (Jorge M., supra, 23 Cal.4th at p.
872.) . . .<2>
As now drafted, this bill would impose a misdemeanor or a felony
- both with incarceration penalties and significant criminal
fines - for a person to sell, purchase, install, transfer, use
or possess one of the proscribed devices without requiring a
showing of intent to commit or facilitate tax fraud. Thus, this
bill could subject a small restaurant owner, for example, to
felony liability if he or she was offered such a device and, to
avoid confrontation, accepted the device and stashed it away in
a drawer with no intent to ever use it. Similarly, this bill
could subject someone to felony liability if there is a device
installed on their cash register and they have no knowledge of
its purpose or function - for example, a sole proprietor whose
son or daughter does their bookkeeping, and encourages them to
"update" their software. Without requiring any showing of
intent, this bill would criminalize unwitting passivity where
there was no intent on the part of the shop owner to commit tax
fraud.
Comment 7 below contains draft amendments agreed to by the
author which would address these issues in a manner consistent
with the goals of the bill.
5. Penalties
As explained in detail above, making a fraudulent tax return is
a crime under current law. Penalties currently are misdemeanor
and civil, unless the amount of the tax fraud aggregates at
$25,000 or more in a 12-month period, in which case the crime is
a felony punishable by $5,000 to $20,000 in fines and/or a
sentence of 16 months, two or three years.
This bill would enact two discrete crimes in the Revenue and
Taxation Code specifically proscribing automated sales
suppression devices. The following chart summarizes current law
and this bill:
---------------------------
<2> In re Jennings, 34 Cal. 4th 254 (2004) (emphasis added.)
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| Provision | Prohibited Act | Penalty |
|---------------------+---------------------+---------------------|
|Current law -- |Make any false or |Misdemeanor: fine of |
|Revenue and Taxation |fraudulent tax |not less than $1,000 |
|Code �� 7152(a) and |return, with intent |and not more than |
|7153. |to defeat or evade |$5,000, or |
| |the determination of |imprisonment not |
| |an amount due |exceeding one year |
| |required by law to |in the county jail, |
| |be made. |or both the fine and |
| | |imprisonment in the |
| | |discretion of the |
| | |court. |
| | | |
|---------------------+---------------------+---------------------|
|Current law -- |Willfully aid or |Misdemeanor: fine of |
|Revenue and Taxation |assist in, or |not less than $1,000 |
|Code �� 7152(b) and |procure, counsel, or |and not more than |
|7153. |advise in, the |$5,000, or |
| |preparation or |imprisonment not |
| |presentation, in |exceeding one year |
| |connection with any |in the county jail, |
| |matter arising under |or both the fine and |
| |this part, of a |imprisonment in the |
| |return, affidavit, |discretion of the |
| |claim, or other |court. |
| |document that is | |
| |fraudulent or false | |
| |as to any material | |
| |matter, whether or | |
| |not the falsity or | |
| |fraud is with the | |
| |knowledge or consent | |
| |of the person | |
| |authorized or | |
| |required to present | |
| |the return, | |
| |affidavit, claim, or | |
| |document. | |
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|---------------------+---------------------+---------------------|
|Current law -- |Intent to defeat or |Felony: each offense |
|Revenue and Taxation |evade the reporting, |punishable by a fine |
|Code � 7153.5. |assessment, or |of not less than |
| |payment of a tax or |$5,000 and not more |
| |an amount due |than $20,000, or |
| |required by law when |imprisonment for 16 |
| |the amount of |months, two years, |
| |unreported tax |or three years, or |
| |liability aggregates |both the fine and |
| |at $25,000 or more |imprisonment in the |
| |in any |discretion of the |
| |12-consecutive-month |court. |
| |period. | |
|---------------------+---------------------+---------------------|
|Current law -- |Fraud or an intent |Civil penalty of 25 |
|Revenue and Taxation |to evade existing |percent of the |
|Code � 6485. |tax laws. |amount of any tax |
| | |deficiency. |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|---------------------+---------------------+---------------------|
| Provision | Prohibited Act | Penalty |
|---------------------+---------------------+---------------------|
|Current law -- the |Knowingly or |Misdemeanor: |
|"Fee Collection |willfully files a |punishable by a fine |
|Procedures Law" -- |false return or |of not less than |
|Revenue and Taxation |report with the |$100 or more than |
|Code � 55362. |board; refuses to |$1,000, by |
| |permit the board or |imprisonment in the |
| |any of its |county jail for not |
| |authorized |less than one month |
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| |representatives to |or more than six |
| |make any inspection |months, or by both. |
| |or examination for | |
| |which provision is | |
| |made in this part | |
| |(relating to | |
| |specified fees); | |
| |fails to keep any | |
| |records prescribed | |
| |by the board; fails | |
| |to preserve the | |
| |records for the | |
| |inspection of the | |
| |board for the time | |
| |that the board deems | |
| |necessary; or | |
| |alters, cancels, or | |
| |obliterates entries | |
| |in the records for | |
| |the purpose of | |
| |falsifying the | |
| |records. | |
|---------------------+---------------------+---------------------|
|Current law -- |Willfully evades or |Felony: jail |
|Revenue and Taxation |attempts in any |felony, 16 months, |
|Code � 55363. |manner to evade or |two, or three years |
| |defeat the payment |and a fine of not |
| |of specified fees. |more than . . . |
| | |$5,000. |
|---------------------+---------------------+---------------------|
|This bill -- as to |Knowingly sells, |Wobbler: misdemeanor |
|sales and use tax |purchases, installs, |penalty: fine of not |
|(according to the |transfers, |more than $10,000, |
|sponsor). |possesses, or uses |imprisonment in a |
| |in this state any |county jail for not |
| |automated sales |more than one year; |
| |suppression device |felony penalty: jail |
| |or zapper or |felony, 16 months, |
| |phantom-ware, as |or two, or three |
| |defined. |years, or by both |
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| | |that fine and |
| | |imprisonment. |
|---------------------+---------------------+---------------------|
|This bill -- as to |Use an automated |Liable for all |
|sales and use tax |sales suppression |taxes, interest, and |
|(according to the |device or zapper or |penalties due as a |
|sponsor). |phantom-ware. |result of the use of |
| | |that device. |
|---------------------+---------------------+---------------------|
|This bill - as to |knowingly sells, |Wobbler: |
|specified fees |purchases, installs, |misdemeanor penalty: |
|(according to the |transfers, |a fine of not more |
|sponsor). |possesses, or uses |than $10,000, by |
| |in this state any |imprisonment in a |
| |automated sales |county jail for not |
| |suppression device |more than one year; |
| |or zapper or |Felony penalty: jail |
| |phantom-ware. |felony, 16 months, |
| | |or two, or three |
| | |years, or by both |
| | |that fine and |
| | |imprisonment. |
| | | |
|---------------------+---------------------+---------------------|
| Provision | Prohibited Act |Penalty |
|---------------------+---------------------+---------------------|
|This bill - as to |Bill uses an |Liable for all |
|specified fees |automated sales |taxes, interest, and |
|(according to the |suppression device |penalties due as a |
|sponsor). |or zapper or |result of the use of |
| |phantom-ware. |that device. |
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Until the budget year 2002-2003, there was 170% in penalty
assessments applied on top of every fine, the current penalty
assessments are approximately 310% plus a flat fee of $79. (See
Penal Code � 1464; Penal Code � 1465.7; Penal Code � 1465.8;
Government Code � 70373; Government Code � 7600.5; Government
Code � 76000 et seq; Government Code �76000.10; Government Code
� 76104.6; Government Code �76104.7.) Thus, a $10,000 criminal
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fine under this bill would be $41,000.
Comment 7 below contains draft amendments agreed to by the
author which address these issues in a manner consistent with
the goals of the bill.
6. Impact on Criminal Justice System - Incarceration
The Assembly Appropriations Committee analysis of this bill
included the following, concerning the potential impact of this
bill on custodial facilities:
Unknown, probably minor nonreimbursable local law
enforcement and incarceration costs, offset to a
degree by increased fine revenue and offender
financial liability.
It is not likely many offenders would serve actual
jail time under this bill. By creating an alternate
felony/misdemeanor, however, the bill does create the
possibility of longer jail terms that could impact
future realignment formulae and exacerbate jail
overcrowding.
7. Draft Amendments
The following mock-up reflects amendments to be offered in
Committee by the author which would address the issues raised
above:
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, any person who purchases, installs or uses
in this state any automated sales suppression device
or zapper or phantom-ware with the intent to defeat or
evade the determination of an amount due required by
law to be made is guilty of a misdemeanor.
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AB 781 (Bocanegra)
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(b) Notwithstanding any other provision of this part,
a Any person who , for commercial gain, knowingly
sells, purchases, installs, transfers, or possesses ,
or uses in this state any automated sales suppression
device or zapper or phantom-ware with the knowledge
that the sole purpose of the device is to defeat or
evade the determination of an amount due required by
law to be made is guilty of an offense punishable by a
fine as specified in paragraphs (1) and (2) 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.
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1. Where a person is guilty of the offense
described in subdivision (b) and he or she sold,
installed, transferred, or possessed three or
fewer automated sales suppression devices or
zappers or phantom-ware, they shall be punished
by a fine of not more than $5,000.
2. Where a person is guilty of the offense
described in subdivision (b) and he or she sold,
installed, transferred, or possessed more than
three automated sales suppression devices or
zappers or phantom-ware, they shall be punished
by a fine of not more than $10,000.
( b c ) For purposes of this section: . . . (no
amendments to this subdivision)
(d) This section shall not preclude prosecution
under any other law.
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,
any person who purchases, installs or uses in this
state any automated sales suppression device or zapper
or phantom-ware with the intent to defeat or evade the
determination of an amount due required by law to be
made is guilty of a misdemeanor.
(b) Notwithstanding any other provision of this part,
a Any person who , for commercial gain, knowingly
sells, purchases, installs, transfers, or possesses ,
or uses in this state any automated sales suppression
device or zapper or phantom-ware with the knowledge
that the sole purpose of the device is to defeat or
evade the determination of an amount due required by
law to be made is guilty of an offense punishable by
(More)
AB 781 (Bocanegra)
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a fine as specified in paragraphs (1) and (2) 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.
1. Where a person is guilty of the offense
described in subdivision (b) and he or she sold,
installed, transferred, or possessed three or
fewer automated sales suppression devices or
zappers or phantom-ware, they shall be punished
by a fine of not more than $5,000.
2. Where a person is guilty of the offense
described in subdivision (b) and he or she sold,
installed, transferred, or possessed more than
three automated sales suppression devices or
zappers or phantom-ware, they shall be punished
by a fine of not more than $10,000.
( b c ) For purposes of this section: . . . (no
amendments to this subdivision)
(d) This section shall not preclude prosecution
under any other law.
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