What's happening
This bill creates the crime of defrauding the government using automated sales suppression devices to evade taxes, making it a felony.
Why it matters
Targets sophisticated tax evasion methods. The bill directly addresses the use of “automated sales suppression devices” (sometimes called “zappers”)—software specifically designed to falsify sales records and help businesses illegally underreport revenue, which is a growing tactic in tax fraud.
Expands criminal liability beyond users. By making it a felony to manufacture, sell, install, or attempt to provide these devices—not just to use them—the law targets both the creators/distributors and end-users, aiming to disrupt the supply chain of tax fraud technology.
Strengthens enforcement and deterrence. Including this crime in conspiracy statutes and tax fraud definitions empowers prosecutors to pursue not only individuals but also groups or networks involved in orchestrating automated tax evasion schemes, potentially leading to stiffer penalties.
Broadens coverage to local and state taxes. The amendments make it clear that evading any tax—state or local—using these devices is covered, enhancing protection for both state and municipal revenues and ensuring consistency across jurisdictions.
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Who cares
Businesses using sales-record software
Knowingly using or attempting to use software that falsifies electronic records to evade state or local taxes would become a class D felony.
Sales-suppression software makers, sellers and installers
Knowingly making, selling or installing these devices—or attempting to do so—to help anyone evade taxes would carry the same felony exposure.
Prosecutors
The bill would create a first-degree government fraud offense and expand fourth-degree conspiracy to cover agreements to commit it.
State and New York City tax enforcement agencies
The bill would add use of automated sales-suppression devices to the tax fraud acts defined in state tax law and the city administrative code.
Headline styles
Crack Down on Tax Fraud
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to codes
- Referred to codes
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Crack Down on Tax Fraud
In Senate Committee · Codes · Sponsor Liz Krueger
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
7408
2019-2020 Regular Sessions
IN ASSEMBLY
May 1, 2019
Introduced by M. of A. LENTOL -- read once and referred to the Committee on Codes
AN ACT to amend the penal law, in relation to creating the offense of defrauding the government in the first degree and expanding the definition of conspiracy in the fourth degree; and to amend the tax law and the administrative code of the city of New York, in relation to expanding the definition of tax fraud acts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The penal law is amended by adding a new section 195.22 to read as follows: § 195.22 Defrauding the government in the first degree.
A person is guilty of defrauding the government in the first degree when, he or she knowingly manufactures, sells, installs, or uses, or attempts to manufacture, sell, install or use, an automated sales suppression device for the purpose of enabling or assisting any person to evade any tax owed to the state or a political subdivision of the state or any instrumentality of the state.
For purposes of this section an "automated sales suppression device" is a software program that falsifies electronic records for the purpose of evading any tax owed to the state, or any political subdivision of the state, or any instrumentality of the state. An "automated sales suppression device" includes any software program that is (a) maintained on a USB memory stick or thumb drive, zapper, removable compact disc or other external device, or (b) embedded in the operating system as "phantom ware," or (c) otherwise accessed remotely.
Defrauding the government in the first degree is a class D felony.
§ 2. Section 105.10 of the penal law is amended by adding a new subdivision 4 to read as follows:
4. the felony of defrauding the government in the first degree as defined in section 195.22 of this part (defrauding the government in the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06760-01-9
A. 7408 2
first degree), be performed, he or she agrees with one or more persons to engage in or cause the performance of such conduct.
§ 3. Subparagraphs 7 and 8 of paragraph (a) of section 1801 of the tax law, as added by section 15 of subpart I of part V1 of chapter 57 of the laws of 2009, are amended and a new subparagraph 9 is added to read as follows:
(7) with intent to evade any tax fails to pay that tax; or
(8) issues an exemption certificate, interdistributor sales certificate, resale certificate, or any other document capable of evidencing a claim that taxes do not apply to a transaction, which he or she does not believe to be true and correct as to any material matter, which omits any material information, or which is false, fraudulent, or counterfeit[.]; or
(9) uses an automated sales suppression device as described in section 195.22 of the penal law (defrauding the government in the first degree).
§ 4. Subparagraphs 7 and 8 of paragraph (a) of section 11-4002 of the administrative code of the city of New York, as added by chapter 201 of the laws of 2009, are amended and a new subparagraph 9 is added to read as follows:
(7) with intent to evade any tax imposed under any designated chapter of this title, fails to pay that tax; or
(8) issues an exemption certificate, interdistributor sales certificate, resale certificate, or any other document capable of evidencing a claim that taxes imposed under a designated chapter of this title do not apply to a transaction, which he or she does not believe to be true and correct as to any material matter, which omits any material information, or which is false, fraudulent, or counterfeit[.]; or
(9) uses an automated sales suppression device as described in section 195.22 of the penal law (defrauding the government in the first degree).
§ 5. This act shall take effect on the first of November next succeeding the date upon which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.