NY State Senate Bill 2025-S3204

Senate Bill S3204

2025-2026 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

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Current Bill Status - In Senate Committee Codes 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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 24, 2025	referred to codes

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2025-S3204 (ACTIVE) - Details

Current Committee:: Senate 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
2021-2022: S1331
2023-2024: S2266

2025-S3204 (ACTIVE) - Summary

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

2025-S3204 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S3204

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:

2023-24: S.2266 - Passed Senate

2021-22: S.1331 - Passed Senate

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

2017-18: S.4377 - Codes

 
EXISTING LAW:

None.

 
JUSTIFICATION:

For years, foreign countries with national sales taxes 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.

2025-S3204 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3204
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2025
                                ___________
 
 Introduced  by Sens. KRUEGER, LIU, WEBB -- read twice and ordered print-
   ed, 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,  SUCH  PERSON 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, as amended by chapter 489 of the
 laws of 2000, is amended to read as follows:
 § 105.10 Conspiracy in the fourth degree.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05666-01-5
 S. 3204                             2

 
   A person is guilty of conspiracy  in  the  fourth  degree  when,  with
 intent that conduct constituting:
   1.  a  class  B or class C felony be performed, [he or she] THE PERSON
 agrees with one or more persons to engage in or cause the performance of
 such conduct; or
   2. a felony be performed, [he or she] THE PERSON, being over  eighteen
 years of age, agrees with one or more persons under sixteen years of age
 to engage in or cause the performance of such conduct; or
   3.  the  felony  of money laundering in the third degree as defined in
 section 470.10 of this chapter, be performed, [he  or  she]  THE  PERSON
 agrees with one or more persons to engage in or cause the performance of
 such conduct[.]; OR
   4.  THE  FELONY  OF DEFRAUDING THE GOVERNMENT  IN  THE FIRST DEGREE AS
 DEFINED IN SECTION 195.22 OF THIS PART, BE PERFORMED, THE PERSON  AGREES
 WITH  ONE  OR MORE PERSONS TO ENGAGE IN OR CAUSE THE PERFORMANCE OF SUCH
 CONDUCT.
   Conspiracy in the fourth degree is a class E felony.
   § 3. Paragraphs 7, 8 and 9 of subdivision (a) of section 1801  of  the
 tax  law,  paragraph 7 as added by section 15 of subpart I of part V1 of
 chapter 57 of the laws of 2009 and paragraph 8 as amended and  paragraph
 9  as  added  by section 7 of part UU of chapter 56 of the laws of 2023,
 are amended 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] THE
 PERSON does not believe to be  true  and  correct  as  to  any  material
 matter, which omits any material information, or which is false, fraudu-
 lent, or counterfeit; [or]
   (9) USES AN AUTOMATED SALES SUPPRESSION DEVICE AS DESCRIBED IN SECTION
 195.22 OF THE PENAL LAW; OR
   (10)  (a)  knowingly  fails  to  collect or remit any taxes imposed by
 section four hundred ninety-three of this chapter on  the  sale  of  any
 adult-use cannabis product; or (b) knowingly possesses for sale, as such
 term  is defined in section four hundred ninety-two of this chapter, any
 such product on which the tax required to be paid under subdivision  (a)
 of such section has not been paid.
   §  4.  Paragraphs 7 and 8 of subdivision (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 paragraph 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] THE PERSON 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.
   § 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 S3204

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Sponsored By

Liz Krueger