OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5421

AN ACT CONCERNING "ZAPPERS".

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 13 $

FY 14 $

Department of Revenue Services

GF - Revenue Gain

See Below

See Below

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 13 $

FY 14 $

Various Municipalities

Revenue Gain

See Below

See Below

Explanation

The bill makes it illegal for anyone to willfully and knowingly possess or use a “zapper” or “phantom-ware” both of which allows the user to falsify sales records. This results in a potential revenue gain, to the extent that retailers in the state utilize “zappers” or “phantom-ware. ” The actual revenue impact is indeterminate at this time.

For illustrative purposes, if 1. 0% of all retail sales were falsified by either “zappers” or “phantom-ware,” the associated state revenue loss is estimated to be approximately $16. 2 million annually. The estimated revenue from the municipal share of the state sales tax is estimated to be $260,000. Under the bill, if the Department of Revenue Services (DRS) identified the entire $16. 2 million in audits, the state would see a revenue gain of the $16. 2 million plus any resulting penalties or interest. Municipalities would see a revenue gain of $260,000 from their proportion of the sales tax.

Ensuring compliance by DRS would be included as part of the normal course of sales tax audits. Consequently, there is no cost to the agency.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.