Electronic Sales Suppression Software – Illegal and Attracts Severe Penalties
Zapper software used to conceal sales carries CRA penalties up to $100,000 and jail terms up to five years. The Voluntary Disclosure Program is the way back.
New penalties for businesses that use illegal electronic sales suppression software
Are you using Electronic Sales Suppression (ESS) software to conceal your sales? The CRA can impose severe penalties and pursue prosecution leading to a jail term of up to five years.
What is ESS?
ESS software, commonly known as zapper software, is illegal and is designed to work with point-of-sale systems and electronic cash registers. Businesses use it to knowingly delete or conceal part of their sales from their computer records, in order to reduce their GST/HST and income tax obligations. That is unlawful evasion of tax and a punishable offence. It also gives an unfair advantage to those who use it, which undermines the competitiveness of businesses that follow the rules.
Penal consequences
The CRA works to identify businesses that use ESS software to reduce their tax burden, and to detect those behind the development of such software, as part of its wider effort to combat the underground economy.
Measures that took effect on 1 January 2014 allow the CRA to impose civil and criminal penalties for designing, using, possessing, acquiring, manufacturing, developing, selling, possessing for sale, offering for sale, or otherwise making available ESS software.
Individuals and businesses that possess or use ESS software face monetary penalties, court fines and possibly jail time. Penalties for using ESS software can reach $50,000, with jail time of up to two years. Anyone who manufactures, develops, sells, possesses for sale, offers for sale or otherwise makes ESS software available faces up to $100,000 in penalties and up to five years in jail.
Voluntary Disclosure Program
If you are using ESS software to report reduced or inaccurate sales and so avoid your tax liabilities, make a disclosure under the CRA’s Voluntary Disclosures Program immediately, to correct the particulars filed in your previous tax returns and pay the tax and interest due. Making a disclosure under the programme can protect you from penal consequences.
If you would like help reviewing your position, contact us at cs@bkcprohub.com.