NY State Senate Bill 2021-S1331

Senate Bill S1331

2021-2022 Legislative Session

Creates the offense of defrauding the government in the first degree and expands the definition of conspiracy in the fourth degree; relates to expanding the definition of tax fraud acts

download bill text pdf

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Apr 26, 2022	referred to codes delivered to assembly passed senate
Feb 02, 2022	advanced to third reading
Feb 01, 2022	2nd report cal.
Jan 31, 2022	1st report cal.367
Jan 05, 2022	referred to codes
Feb 08, 2021	reported and committed to finance
Jan 11, 2021	referred to codes

Votes

- Apr 26, 2022 - Floor Vote
  S1331
  
  62
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Apr 26, 2022
      
      aye (62)
      
      Addabbo Jr.
      
      Akshar
      
      Bailey
      
      Biaggi
      
      Borrello
      
      Boyle
      
      Breslin
      
      Brisport
      
      Brooks
      
      Cleare
      
      Comrie
      
      Cooney
      
      Felder
      
      Gallivan
      
      Gaughran
      
      Gianaris
      
      Gounardes
      
      Griffo
      
      Harckham
      
      Helming
      
      Hinchey
      
      Hoylman-Sigal
      
      Jackson
      
      Jordan
      
      Kaminsky
      
      Kaplan
      
      Kavanagh
      
      Kennedy
      
      Krueger
      
      Lanza
      
      Liu
      
      Mannion
      
      Martucci
      
      Mattera
      
      May
      
      Mayer
      
      Myrie
      
      O'Mara
      
      Oberacker
      
      Ortt
      
      Palumbo
      
      Parker
      
      Persaud
      
      Ramos
      
      Rath III
      
      Reichlin-Melnick
      
      Ritchie
      
      Rivera
      
      Ryan
      
      Salazar
      
      Sanders Jr.
      
      Savino
      
      Sepúlveda
      
      Serino
      
      Serrano
      
      Skoufis
      
      Stavisky
      
      Stec
      
      Stewart-Cousins
      
      Tedisco
      
      Thomas
      
      Weik
      
      excused (1)
      
      Brouk
  Jan 31, 2022 - Codes Committee Vote
  S1331
  
  11
  
  Aye
  
  0
  
  Nay
  
  2
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Codes Committee Vote: Jan 31, 2022
      
      aye (11)
      
      Akshar
      
      Bailey
      
      Biaggi
      
      Brisport
      
      Cooney
      
      Kaminsky
      
      Kavanagh
      
      Myrie
      
      Palumbo
      
      Savino
      
      Sepúlveda
      
      aye wr (2)
      
      Gallivan
      
      O'Mara
  Feb 8, 2021 - Codes Committee Vote
  S1331
  
  12
  
  Aye
  
  0
  
  Nay
  
  1
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Codes Committee Vote: Feb 8, 2021
      
      aye (12)
      
      Akshar
      
      Bailey
      
      Benjamin
      
      Biaggi
      
      Brisport
      
      Cooney
      
      Kaminsky
      
      Kavanagh
      
      Myrie
      
      O'Mara
      
      Palumbo
      
      Savino
      
      aye wr (1)
      
      Gallivan

co-Sponsors

2021-S1331 (ACTIVE) - Details

Current Committee:: Assembly Codes
Law Section:: Penal Law
Laws Affected:: Add §195.22, amd §105.10, Pen L; amd §1801, Tax L; amd §11-4002, NYC Ad Cd
Versions Introduced in Other Legislative Sessions:: 2017-2018: S4377
2019-2020: S2647
2023-2024: S2266

2021-S1331 (ACTIVE) - Summary

Creates the offense of defrauding the government in the first degree and expands the definition of conspiracy in the fourth degree; relates to expanding the definition of tax fraud acts.

2021-S1331 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1331

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the penal law, in relation to creating the offense of
defrauding the government in the first degree and expanding the defi-
nition of conspiracy in the fourth degree; and to amend the tax law and
the administrative code of the city of New York, in relation to expand-
ing the definition of tax fraud acts

 
PURPOSE:

1. Creates the offense of defrauding the government in the first degree.

2. Expands the definition of conspiracy in the fourth degree; relates to
expanding the definition of tax fraud acts.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 adds section 195.22 to the penal law, creating a first degree

offense for defrauding the government through an automated sales
suppression device, defining automated sales suppression devices, and
extending defrauding government in the first degree as a class D felony;

Section 2 adds subdivision 4 to section 105.10 of the penal law, expand-
ing the definition of conspiracy in the fourth degree to include felony
of defrauding government in the first degree;

Section 3 amends subparagraphs 7 and 8 of paragraph (a) in section 1801
of tax law and adds subparagraph 9, expanding the definition of tax
fraud acts to include the use of automatic sales suppression devices.

Section 4 amends subparagraphs 7 and 8 of paragraph (a) of section
11-4002 of the administrative codes of the city of New York and adds
subparagraph 9, expanding the definition of tax fraud acts to include
the use of automatic sales suppression devices.

Section 5 states the effective date.

 
LEGISLATIVE HISTORY:

2019-20: S.2647/A.7408 Lentol -Codes
2017-18: S.4377 - Codes

 
EXISTING LAW:

None.

 
JUSTIFICATION:

For years, foreign countries with national sales taxe have struggled to
combat technology that enables retailers to skim sales taxes and under
report other tax liabilities (e.g. personal income tax, corporate income
tax) by concealing from auditors their actual sales data. This technolo-
gy, which includes automatic sales suppression devices, such as
"zappers" and "phantom-ware," automatically suppresses digital sales
figures recorded at electronic cash registers and Point of Sale systems.

It is difficult for auditors to detect the use of automated sales
suppression devices through the traditional process of cross checking
transaction documents because the technology conceals almost all traces
of the digital manipulation. Countries such as Germany and Greece have
required retailers to install technological countermeasures that make it
easier for auditors to detect the use of automated sales suppression
devices. In September 2010, the Canadian province of Quebec began
requiring all restaurants to install in their electronic cash registers
anti-sales suppression devices. This cost Quebec an estimated $425
million ($410 million U.S.) in 2007-2008. Richard T. Ainsworth, a Boston
University school of Law tax professor and a leading expert on zappers
and other automated sales suppression devices, estimates that New York
has faced a loss of $1.7 billion annually due to these devices.

Because the United States lacks a national sales tax, there is no feder-
al initiative to combat this tax fraud and most states are ill-prepared
to deal with this issue. Nationwide, only a handful of people have been
caught using this technology, including two in Michigan and one in
Connecticut. Over 20 states have already enacted legislation to prohibit
and criminalize automated sales suppression devices. Ainsworth has
published several papers documenting the spread of zappers and phantom-
ware in Quebec, Greece, Germany, the Netherlands and other European
nations. Given that the first zappers were made in the United States and
that this technology is widely used in the Canadian province just above
of New York's northern border, it is imperative for the State to address
this issue.

The legislation would establish prohibitions and penalties related to
the manufacture, sale, purchase, or use of automated sales suppression
technology, creation of conspiracy for those who defraud the government,
and the liability of those who perpetrate tax fraud.  Additionally, this
legislation would increase tax revenue by over $1 billion annually.

 
FISCAL IMPACTS:

Estimates increased tax revenue as high as $1 billion annually.

 
EFFECTIVE DATE:
This act shall take effect on the first November next succeeding the
date upon which it shall have become a law.

2021-S1331 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1331
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 11, 2021
                                ___________
 
 Introduced  by Sens. KRUEGER, LIU -- read twice and ordered printed, and
   when printed to be committed to the Committee on Codes
 
 AN ACT to amend the penal law, in relation to creating  the  offense  of
   defrauding  the government in the first degree and expanding the defi-
   nition of conspiracy in the fourth degree; and to amend  the  tax  law
   and  the  administrative  code of the city of New York, in relation to
   expanding the definition of tax fraud acts
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. The penal law is amended by adding a new section 195.22 to
 read as follows:
 § 195.22 DEFRAUDING THE GOVERNMENT IN THE FIRST DEGREE.
   A PERSON IS GUILTY OF DEFRAUDING THE GOVERNMENT IN  THE  FIRST  DEGREE
 WHEN,  HE  OR  SHE  KNOWINGLY MANUFACTURES, SELLS, INSTALLS, OR USES, OR
 ATTEMPTS TO MANUFACTURE,  SELL,  INSTALL  OR  USE,  AN  AUTOMATED  SALES
 SUPPRESSION  DEVICE  FOR THE PURPOSE OF ENABLING OR ASSISTING ANY PERSON
 TO EVADE ANY TAX OWED TO THE STATE OR A  POLITICAL  SUBDIVISION  OF  THE
 STATE OR ANY INSTRUMENTALITY OF THE STATE.
   FOR  PURPOSES  OF THIS SECTION AN "AUTOMATED SALES SUPPRESSION DEVICE"
 IS A SOFTWARE PROGRAM THAT FALSIFIES ELECTRONIC RECORDS FOR THE  PURPOSE
 OF  EVADING  ANY  TAX OWED TO THE STATE, OR ANY POLITICAL SUBDIVISION OF
 THE STATE, OR ANY INSTRUMENTALITY OF  THE  STATE.  AN  "AUTOMATED  SALES
 SUPPRESSION DEVICE" INCLUDES ANY SOFTWARE PROGRAM THAT IS (A) MAINTAINED
 ON  A USB MEMORY STICK OR THUMB DRIVE, ZAPPER, REMOVABLE COMPACT DISC OR
 OTHER EXTERNAL DEVICE, OR (B) EMBEDDED IN THE OPERATING SYSTEM AS "PHAN-
 TOM WARE," OR (C) OTHERWISE ACCESSED REMOTELY.
   DEFRAUDING THE GOVERNMENT IN THE FIRST DEGREE IS A CLASS D FELONY.
   § 2. Section 105.10 of the penal law is amended by adding a new subdi-
 vision 4 to read as follows:
   4. THE FELONY OF DEFRAUDING THE GOVERNMENT  IN  THE  FIRST  DEGREE  AS
 DEFINED IN SECTION 195.22 OF THIS PART (DEFRAUDING THE GOVERNMENT IN THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD04926-01-1

 S. 1331                             2
 
 FIRST  DEGREE),  BE PERFORMED, HE OR SHE AGREES WITH ONE OR MORE PERSONS
 TO ENGAGE IN OR CAUSE THE PERFORMANCE OF SUCH CONDUCT.
   § 3. Subparagraphs 7 and 8 of paragraph (a) of section 1801 of the tax
 law, as added by section 15 of subpart I of part V1 of chapter 57 of the
 laws  of  2009, are amended and a new subparagraph 9 is added to read as
 follows:
   (7) with intent to evade any tax fails to pay that tax; OR
   (8) issues an exemption certificate,  interdistributor  sales  certif-
 icate, resale certificate, or any other document capable of evidencing a
 claim that taxes do not apply to a transaction, which he or she does not
 believe  to  be  true and correct as to any material matter, which omits
 any material information, or which is  false,  fraudulent,  or  counter-
 feit[.]; OR
   (9) USES AN AUTOMATED SALES SUPPRESSION DEVICE AS DESCRIBED IN SECTION
 195.22 OF THE PENAL LAW (DEFRAUDING THE GOVERNMENT IN THE FIRST DEGREE).
   §  4. Subparagraphs 7 and 8 of paragraph (a) of section 11-4002 of the
 administrative code of the city of New York, as added by chapter 201  of
 the  laws of 2009, are amended and a new subparagraph 9 is added to read
 as follows:
   (7) with intent to evade any tax imposed under any designated  chapter
 of this title, fails to pay that tax; OR
   (8)  issues  an  exemption certificate, interdistributor sales certif-
 icate, resale certificate, or any other document capable of evidencing a
 claim that taxes imposed under a designated chapter of this title do not
 apply to a transaction, which he or she does not believe to be true  and
 correct as to any material matter, which omits any material information,
 or which is false, fraudulent, or counterfeit[.]; OR
   (9) USES AN AUTOMATED SALES SUPPRESSION DEVICE AS DESCRIBED IN SECTION
 195.22 OF THE PENAL LAW (DEFRAUDING THE GOVERNMENT IN THE FIRST DEGREE).
   § 5. This act shall take effect on the first of November next succeed-
 ing the date upon which it shall have become a law.

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Senate Bill S1331

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Sponsored By

Liz Krueger