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Richard Thompson Ainsworth - One of the best experts on this subject based on the ideXlab platform.
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washington s cutting edge technology solution to combating sales Tax Fraud real time data now real time remittance in the future
Social Science Research Network, 2020Co-Authors: Richard Thompson Ainsworth, Robert Chicoine, Andrew Leahey, Sunder GeeAbstract:Globally, consumption Tax compliance (value added Tax and retail sales Tax) has gone digital – digital invoices are becoming mandatory, centralized monitoring of transactions and Tax payments are increasingly common, and artificial intelligence is assessing Fraud risks in real-time. When Tax is collected, it is increasingly being remitted in near-real-time. This is the trajectory for the modern retail sales Tax (RST) imposed by most states in the US. While this may appear to be revolutionary to the average American, it is a well-worn path among global nations using the value added Tax (VAT). The RST will eventually be following suit. Washington has taken the first step on this journey with the help and cooperation of a small business owner who admitted to using an Electronic Sales Suppression (ESS) device when operating a highly regarded Asian restaurant in Seattle. To address sophisticated Tax Fraud in the digital age, the Washington State Legislature commissioned a world-wide study, conducted by Gartner, Inc. was delivered April 22, 2019, to the Washington Department of Revenue (DOR) which in turn “... completed [its] review of relevant research into technology trends; Point of Sales (POS) solutions, the ecosystem of integrated retail software solutions, cloud technologies, [and] other underpinning technologies ...” The Gartner research effort was practical, market-driven, and encapsulated in a set of “... scenarios represent[ing] the full set of reasonable solutions for DOR’s consideration, ...” Gartner’s scenarios in the commissioned study were distilled to four. In each instance the scenarios were numbered, characterized with a single word, differentiated by their primary focus, and then made more concrete by identifying (what Gartner considered to be) a representative country for each scenario. • Alternative #1: Foundational – Internal Focus (“Like UK”) (more properly Japan) • Alternative #2: Targeted – External Focus (“Like Netherlands”) • Alternative #3: Broad – External Focus (“Like Belgium”) • Alternative #4: Cutting Edge – External Focus (“Like Fiji”) Unfortunately, the report has major deficiencies. Notably, it makes no reference to an ongoing pilot project conducted by the DOR as a result of a plea agreement in the State of Washington v. Wong, that initially followed an Gartner’s Alternative #2 approach, and then shifted to Gartner’s Alternative #4 to improve data monitoring scope and accuracy. This paper largely corrects the focus and the conclusions of the Gartner report, which (at some cost) completely missed an opportunity to contribute substantively to this field of endeavor. The State of Washington’s pilot program on preventive technology for monitor electronic sale suppression is extraordinary, both in its design and in its implementation. As pilot programs go, this is a uniquely marketplace-driven effort controlled by self-interest and achievement not by fiat. This is not a top-down pilot. It is a DOR hands-off, but outcome-controlled effort that forces the parties (POS providers, third-party security firms, and businesses/Taxpayers) to explore the data security options that promise to counter suppression, and select the best. For example, there is no POS manufacturer or standardized file format, no third-party provider of security systems recommended or even suggested by the DOR (not in person, in regulation, nor on a DOR web site). The desired outcome is very clear, but the means each Taxpayer will employ to achieve that outcome is not dictated. It is entirely up to the Taxpayer to find an acceptable solution, pay for it, present it to the DOR and then convince the authority that this solution solves sales suppression, as the DOR sees it. There is no rule, regulation or other guidance provided by the DOR on what constitutes “a method acceptable to the department.” It is up to the Taxpayer to find an acceptable method. In a very real sense, the State of Washington’s electronic monitoring pilot project has been designed, developed, and paid for by Ms. Yu-Ling Wong. Without her sincere efforts to try one solution after another, the State of Washington would not have an electronic monitoring pilot. Washington would not be on the “cutting edge” without her.
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zappers technological Tax Fraud in new hampshire
Social Science Research Network, 2016Co-Authors: Richard Thompson AinsworthAbstract:No other State is as vulnerable to Zappers as is the State of New Hampshire. Zappers and related software programming, Phantom-ware, facilitate an old Tax Fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in New Hampshire. Seen from a global perspective however, it seems unlikely that they are not here.New Hampshire’s fiscal vulnerability to Zappers comes from its heavy reliance on precisely the industry segment that has been found to be the “hot bed” of this Fraud – the restaurant industry. In the most recent fiscal year the Meals and Room Tax (M&RT) trailed only the Business Profits Tax (BPT) in revenue yield ($206,726 to $317,439 million). Taxes on meals approximate 70% of the M&RT. As a result, when Tax Fraud arises in this industry segment it is a significant concern.
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zappers employment Tax Fraud
Social Science Research Network, 2013Co-Authors: Richard Thompson AinsworthAbstract:Beyond the grey area of worker misclassifications and general employment Tax irregularities there are darker employment relationships where workers are intentionally paid in cash “off-the-books” or “under-the-table.” Grey employment relationships present civil enforcement issues that may become criminal; darker-relationships are criminal from the beginning. Zappers are found on the dark side. Zappers are Fraud-technologies that automatically (and remotely) skim cash from electronic cash registers (ECRs) or back room point of sales (POS) systems. Globally, Tax auditors are finding that Zappers frequently provide the cash that is used to compensate “under-the-table” workers. In fact, a Zapper appears to be at the heart of the allegations in Ohio where seven I-HOP franchises allegedly used Zappers (with remote access functionality likely downloaded free from the Internet) to skim cash from their operations. The cash was allegedly used to pay more than 200 illegal immigrants “off-the-books.” This paper explores the relationship between Zappers and criminal employment Tax Fraud. It urges greater Federal/State enforcement efforts on the front end and adoption of secure technology-based solutions as part of the criminal restitution on the back end. Security-based restitution could either be statutorily mandated or court imposed. Zappers are far too easy to re-install if an owner is inclined to do so. There is technology that will detect (and prevent the use of) Zappers. Based on the published sample of 98 employment Tax Fraud cases pursued by the IRS over the past three years, and which provide the foundation for the Federal/State QETP initiative, it is clear that there are two major types of employment Tax Fraud – embezzlement Frauds and collusive Frauds. Embezzlements tend to be short-lived, although they can still involve large Tax losses. Embezzlements tend be identified after two years when third-party payroll providers are involved, but can last longer when the embezzler is the employer. Collusive employment Tax Frauds are more difficult to detect, and as a result tend to last longer. Collusive Frauds are vulnerable when the large amounts of cash needed to feed the Fraud starts to raise suspicion. Collusive Frauds facilitate further Frauds in Earned Income Tax Credits, Child and Dependent Care Credits, and Additional Child Tax Credits as well as Medicare, food stamp and welfare Fraud. If full Tax recovery is likely to be Pyrrhic when employment Tax Fraud lasts for more than a few years, then thoughtful use should be made of the plea bargain process. We can deepen our understanding of sales suppression technology in the US if we make good use of the cases we have.
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quebec s sales recording module srm fighting the zapper phantomware and Tax Fraud with technology
Social Science Research Network, 2010Co-Authors: Richard Thompson Ainsworth, Urs HengartnerAbstract:On January 28, 2008, Quebec's minister of revenue, Jean-Marc Fournier, announced that by late 2009 Revenu Quebec would begin testing an anti-Fraud device - the sales recording module (SRM) - in the restaurant sector. The SRM is designed to detect the erasure of digital sales records in electronic cash registers and point-of-sale systems - a type of Fraud that contributes to more than $425 million annually in lost Tax revenues in the restaurant sector alone. Quebec studies indicate that restaurateurs are increasingly employing technology to alter digital records in order to conceal income from the business and avoid reporting and remitting Taxes due. The SRM will assist provincial auditors in detecting such Fraudulent activities. Revenue authorities around the globe have taken two approaches to assuring the integrity of business records in cash-intensive industries: one approach secures the till; the other relies on principles of compliance and enforcement to encourage good business practices. With the introduction of the SRM, Quebec is taking steps to become a fiscal till jurisdiction. This article considers the SRM in a comparative context. The technological approaches of Germany and Greece (both of which are fiscal till jurisdictions) are contrasted with the approach adopted in the Netherlands (a principles-based jurisdiction), which relies on intensive technology-based audits to assure digital record accuracy. The article concludes with a suggestion that there may be something to learn from the US streamlined sales Tax initiative, which employs government certification of Tax technology to ensure the accuracy of transaction Tax determinations.
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Tax Fraud in the sales Tax zappers what are they how can puerto rico block them
Social Science Research Network, 2009Co-Authors: Richard Thompson AinsworthAbstract:The Sales and Use Tax is an essential part of Puerto Rico’s revenue profile. Effective only recently (November 15, 2006) the Impuesto a las Ventas y Uso (IVU) was expected to raise between $2.3 and $1.05 billion annually, and has already become the Commonwealth’s fourth largest revenue source. Actual revenue results for 2007-2008 came in at $1.1 billion, which admittedly is closer to the low end than the high end of what is possible, but now that the Tax is in place the next pressing question is how can its performance be improved?This paper generally proposes that Puerto Rico look to technology for improvements. It suggests that Puerto Rico consider adopting one or more of the software certification efforts underway globally to boost revenue results. The specific focus of this paper is on stopping cash skimming Frauds (the use of Zappers), but it is important to see this as part of a wider movement to utilize certified technology to improve compliance and enhance revenue.Two IVU issues should be at the top Puerto Rico’s Tax policy agenda: (1) should the Commonwealth adopt the Streamlined Sales and Use Tax Agreement (SSUTA) and (2) how can Puerto Rico stem revenue losses from automated sales suppression software (Zappers). The first initiative would yield additional revenue of $200 million; the second effort would likely yield an additional $170 million. Because joining the SSUTA is as much a political as it is a Tax question, this paper has focused on preventing automated sales suppression as a way of enhancing revenue. This is a global problem that will only grow in significance. It is difficult to believe that the Zappers that are rampant throughout the world and not also very common in Puerto Rico. It seems that wherever ECRs are used to record sales, Zappers have been found removing cash sales and allowing businesses to siphon off revenue. With Puerto Rican revenue losses possibly in the hundreds of millions of dollars this paper has made an effort to point to cost-effective remedies within the Streamlined Sales Tax, notably, the certified service provider (CSP) option. Puerto Rico has not become a full member of SSUTA, but that does not prevent it from taking an arrow from the SSUTA’s quiver and directing it at the Zapper. Zappers are a documented problem in Quebec, Germany, the Netherlands, Australia, Brazil, Sweden, Austria, France, the UK and the US. This is the reason that representatives of the German, Quebec and Dutch revenue authorities will be sharing both their technology solutions and their auditing techniques with other government officials at the Federation of Tax Administrators Annual Conference in Denver Colorado, June 2, 2009.
Maryfidelis Chidoziem Abiahu - One of the best experts on this subject based on the ideXlab platform.
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forensic accounting and Tax Fraud detection in the nigerian public sector
Social Science Research Network, 2021Co-Authors: Maryfidelis Chidoziem Abiahu, Hilary Nosiri, Theresa Nnenna UwakweAbstract:Financial Fraud had for long been seen as a menace that led to the collapse of many organizations in the world. The Federal Government in a bid to reduce the cases of financial Fraud, established many anti-graft agencies but yet the efforts seemed not to have yielded any results. Recently, the Federal Government approved the establishment of a new anti-graft agency, “The Proceeds of Crime Recovery and Management Agency. This goes to buttress that the issue of financial Fraud, Tax Fraud inclusive has overwhelmed the government. Forensic accounting has been conceived as one of the most effective ways of reducing cases of Tax Fraud in Nigeria. Forensic accounting and Tax Fraud in the public sector was examined. The results showed that forensic accounting reduces the occurrence of Tax Fraud in the public sector and recommended that forensic accounting should be adopted by the public sector to meet up with the demand of technology.
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the role of forensic accountants in Tax Fraud prevention in nigeria
Social Science Research Network, 2021Co-Authors: Innocent Augustine Nwaorgu, Jacob Aondohemba Iormbagah, Maryfidelis Chidoziem AbiahuAbstract:Over the past decades, actual Tax revenue generated has consistently fall short of the budgeted Tax revenue expected due to Tax Fraud; this is issue has left government with little funds to finance the huge capital expenditure needed for economic development. It is important to address the issue of Tax Fraud in Nigeria. As such, this study examines the role of forensic accountants in prevention of Tax Fraud in Nigeria. The study adopts a survey research design. Data is collected with the aid of questionnaires (5 Likert’s scale) targeted at practicing financial accountants, forensic accountants, Tax experts and academics. Out of 200 questionnaires sent online, 38 were returned which formed the sample for the study. Data gotten is analyzed with Descriptive statistics (mean and percentages). Findings revealed that the role of forensic accounting has not improved Tax Fraud detection and prevention in Nigeria which consequently has negative impact on Tax revenue generation in Nigeria. In consonance with the study findings, the study recommends that, government should create a strong data base for all eligible Tax payer that is electronical. Also, there should be data harmonization across all sectors of the economic so as to prevent easy facilitation of offshore account running, false payroll filing, payment of employees in cash and non-remittal of withholding Tax. By doing this, Tax payers can easily be tracked and any event of Tax Fraud easily be detected by forensic accounting experts. There should be creation of specific court by law for special and speedy prosecution of Tax Fraudsters aided by forensic evidence. This will improve the effectiveness of Tax administration in Nigeria.
Adrien Bussy - One of the best experts on this subject based on the ideXlab platform.
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cross border value added Tax Fraud in the european union
Social Science Research Network, 2020Co-Authors: Adrien BussyAbstract:This paper quantifies Value Added Tax (VAT) Fraud involving missing traders in the European Union (EU), whereby traders collect VAT and disappear before remitting it to the Tax authorities. This scheme is thought to cause large revenue losses to governments, yet estimates of its importance are sparse. It involves cross-border trade and results in firms misreporting their transactions, which in turn affects reported trade statistics in the country in which Fraud takes place, yet not in the partner country. To quantify Fraud, I exploit the implementation of the Reverse Charge Mechanism to domestic transactions, a reform eliminating missing trader Fraud. Based on 54 reform episodes in 24 countries over 2004-2019, I estimate pre-reform Fraud levels based on how discrepancies in product-level mirror statistics change at the time of reform, comparing products targeted be the reform (treated) to non-targeted products (control). I find that trade associated with Fraudulent activity represents 3.3%-4.2% of trade of treated products, which implies that Fraud worth up to EUR 1.7 billion annually is removed thanks to the reform, amounting to 0.21% of VAT revenues.
Theresa Nnenna Uwakwe - One of the best experts on this subject based on the ideXlab platform.
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forensic accounting and Tax Fraud detection in the nigerian public sector
Social Science Research Network, 2021Co-Authors: Maryfidelis Chidoziem Abiahu, Hilary Nosiri, Theresa Nnenna UwakweAbstract:Financial Fraud had for long been seen as a menace that led to the collapse of many organizations in the world. The Federal Government in a bid to reduce the cases of financial Fraud, established many anti-graft agencies but yet the efforts seemed not to have yielded any results. Recently, the Federal Government approved the establishment of a new anti-graft agency, “The Proceeds of Crime Recovery and Management Agency. This goes to buttress that the issue of financial Fraud, Tax Fraud inclusive has overwhelmed the government. Forensic accounting has been conceived as one of the most effective ways of reducing cases of Tax Fraud in Nigeria. Forensic accounting and Tax Fraud in the public sector was examined. The results showed that forensic accounting reduces the occurrence of Tax Fraud in the public sector and recommended that forensic accounting should be adopted by the public sector to meet up with the demand of technology.
Marc Hooghe - One of the best experts on this subject based on the ideXlab platform.
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does political trust matter an empirical investigation into the relation between political trust and support for law compliance
European Journal of Political Research, 2011Co-Authors: Sofie Marien, Marc HoogheAbstract:Scholars have repeatedly expressed concern about the consequences low levels of political trust might have for the stability of democratic political systems. Empirical support and the identification of causal mechanisms for this concern, however, are often lacking. In this article, the relation between political trust and law-abiding attitudes is investigated. It is expected that citizens with low levels of trust in the institutions of the political system will find it more acceptable to break the law. As a result, low levels of political trust might undermine the effectiveness and legitimacy of government action and its ability to imple- ment legislation. Based on survey data from 33 European countries using the 1999-2001 European Values Study (N = 41,125), the relation between political trust and legal permis- siveness is examined using a multilevel ordered logistic regression analysis.The results show that respondents with low levels of political trust are significantly more likely to accept illegal behaviour such as Tax Fraud than respondents with high levels of political trust. Since it is known from earlier research that actors who are permissive towards law-breaking behaviour are more likely to commit these acts themselves, the hypothesis that low levels of political trust will be associated with less law compliance within a society is supported.
