Date Requested:January 27, 2012
Time Requested:11:23 AM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1720 Introduced SB411
CBD Subject: CASH REGISTER AUTOMATED SALES SUPPRESSION DEVICE
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to make the use in West Virginia of electronic cash register automated sales suppression devices unlawful.
    
    As written, this bill would make it “unlawful to willfully and knowingly sell, purchase, install, transfer or possess” in West Virginia any automated sales suppression device or zapper or phantom-ware. The aforementioned devices and software are typically used to falsify electronic records of electronic cash registers and other point-of-sale systems. By using the devices or software, businesses erase some transactions and thus evade sales and income tax on the erased transactions. The bill designates such devices as contraband, and as such, subject to seizure and destruction. The bill specifies penalties related to the possession and use of the devices.
    
    According to our interpretation, making the use of automated sales suppression devices unlawful would preserve current revenue.
    
    Based upon the experience of other tax jurisdictions where these devices have proliferated, if the devices become widely used in West Virginia it is estimated that the reduction in the General Revenue Fund could be roughly $44 million per year if the automated sales suppression devices were to be used at 85 percent of West Virginia point of sale locations and potentially up to $52 million per year if the devices were to be used at every West Virginia point of sale location.
    
    Additional administrative costs to the State Tax Department due to passage of this bill would be minimal.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill would make it “unlawful to willfully and knowingly sell, purchase, install, transfer or possess” in West Virginia any automated sales suppression device or zapper or phantom-ware. The aforementioned devices and software are typically used to falsify electronic records of electronic cash registers and other point-of-sale systems. By using the devices or software, businesses erase some transactions and thus evade sales and income tax on the erased transactions. The bill designates such devices as contraband, and as such, subject to seizure and destruction. The bill specifies penalties related to the possession and use of the devices.
    
    According to our interpretation, making the use of automated sales suppression devices unlawful would preserve current revenue.
    
    Based upon the experience of other tax jurisdictions where these devices have proliferated, if the devices become widely used in West Virginia it is estimated that the reduction in the General Revenue Fund could be roughly $44 million per year if the automated sales suppression devices were to be used at 85 percent of West Virginia point of sale locations and potentially up to $52 million per year if the devices were to be used at every West Virginia point of sale location.
    
    Additional administrative costs to the State Tax Department due to passage of this bill would be minimal.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to make the use in West Virginia of electronic cash register automated sales suppression devices unlawful.
    
    The title of the bill appears to have two potential defects: (1) the title does not include “phantom-ware” as an unlawful device to willfully and knowingly sell, purchase, install, transfer or possess; and (2) does not specify that conviction of violation would be a felony, subject to jail for not less than one year.