North Dakota – Possession of Sales Suppression Devices is a Criminal Offense

SALT Report 2431 – North Dakota recently passed a Bill that makes it illegal to sell, buy, possess, install, transfer, manufacture, own or use an automated sales suppression device, zapper, or phantom ware within the state. These devices are typically used to falsify the electronic records, transaction data or the transaction reports of electronic cash registers and other point-of-sales systems.

Zappers and Phantom-Ware

Any person found to be in possession of one of these devices will be held liable for all sales and use tax, as well as any penalties and interest due as the result of the fraudulent use of an automated sales suppression device, zapper, or phantom-ware.

Any tax found to be due will be assessed at double the amount. All proceeds associated with the sale or use of an automated sales suppression device, zapper, or phantom-ware must be forfeited and the proceeds will be turned over to the state treasurer for deposit in the state general fund.

Devices

Automated sales suppression devices include any software program accessed through any method that will falsify the electronic records, transaction data, or transaction reports of electronic cash registers or other point-of-sale systems.

Phantom-ware includes any programming option embedded in the operating system of an electronic cash register or hardwired into an electronic cash register. These devices are generally used to create a virtual second cash register or are used to eliminate or manipulate the true transaction records in an effort to falsify the records of an electronic cash register or other point-of-sale system.

Penalties

Anyone found in possession of one of these devices or in violation of the law, will be charged with a class B felony for the first offense, and a class A felony for a second offense. Violators will also be subject to a civil penalty of up to $100,000.

Additionally, sales tax permit holders convicted of violating the prohibition against zappers will have their permit revoked and they will not be eligible to receive another permit for a period of 10 years from the date of conviction. If the person does not hold a permit and is convicted of violating the prohibition against zappers they will not be eligible to receive a permit for a period of 10 years from the date of conviction.

These provisions are effective August 1, 2013.

For Further Information

North Dakota State Legislature – Senate Bill 2126, Laws 2013