TRaCE, the Tax Recovery and Criminal Enforcement Task Force, represents multiple state entities that are looking into removing illegal transaction-altering software from restaurants' point-of-sale computers.
The technology, known as zappers, originated overseas but recently a domestic distributor was prosecuted in Washington.
"A zapper is a thumb drive or a CD put into a POS system that allows for sales records to be altered," Paul Cambra, public information officer for the Department of Tax and Fee Administration, told Techwire over email. "The program’s sole purpose is to change original records."
The sales suppression software has become easier to use as more data from POS records is moved to the cloud, the district administrator for the California Department of Tax and Fee Administration, Warren Klomp, told Tribune News Service.
"In the restaurant industry, when we discuss advances in technology, those discussions revolve around the growth of automation or the advancement of innovative mobile apps that are achieving all kinds of good," California Restaurant Association spokeswoman Sharokina Shams wrote to Techwire. "So, it’s disappointing to learn of what sounds in this instance like the use of tech for ill-gotten gains."
Such software can cost the state millions of dollars a year in lost tax revenue, according to Cambra.
"While that is a fraction of the sales tax dollars generated by restaurants in California, it is not a small figure," Shams said. The total restaurant sales figure for 2015, the most recent reporting year, was $69 billion, according to Shams.
The CDTFA declined to elaborate on its enforcement techniques, but Cambra did note that the TRaCE board has existed only since early 2014. The state has been involved in training across multiple state and federal agencies to improve detection and auditing techniques.
"The variety of point-of-sale systems, methods of sales suppression, and steps that businesses take to avoid detection all combine to make this a challenge that CDTFA continually works to combat," Cambra wrote.
