back to article Bloke sold cash register code to restaurants that deliberately hid sales from taxmen

A salesman sold cash register software that allowed business bosses to cheat on their taxes. John Yin, 66, appeared before the US district court in Seattle to plead guilty to wire fraud and conspiracy to defraud Uncle Sam. He faces up to 25 years behind bars and must cough up $3,445,589 to the authorities. Yin, of Everett, …

  1. Yet Another Anonymous coward Silver badge

    You can't do that ...

    Unless you are an accountant or a billionaire real-estate developer.

    Then it's just being smart

    1. DNTP

      Re: You can't do that ...

      Based on my experiences dating a bunch of them in college, I think >90% of restaurant workers in the US have experienced some sort of cash-based wage fuckery from management. Wow, big surprise that the bosses who will cheat downward will also cheat upward.

    2. This post has been deleted by its author

      1. JetSetJim

        Re: You can't do that ...

        It would be interesting to know the implications of *if* the IRS finally finish their audit during the next presidential term and come to the (unlikely) conclusion that Drumpf was deliberately and convincingly a crook, would it be possible to throw him in jail (although he's much more likely to enter into "negotiations" as to his tax liability under such circumstances).

        Would he then publish his returns, too?

        1. Deltics
          Pint

          Re: You can't do that ...

          No more likely than His Holiness Obama being thrown in jail for exchanging emails via an illegal email server.

          That right there is the only reason the FBI decided there was no case to answer on that score: If Hil's had to answer for it then so would everybody who had knowingly permitted and participated in that answerable activity.

          Watergate still stings, and the idea of throwing a president under the bus for merely breaking the law is beyond the pale for the worlds leading "democracy". Of course, if there's a whiff of juicy sex scandal... bring it on! That sh*t sells copy like you wouldn't believe!

        2. Anonymous Coward
          Anonymous Coward

          You're assuming he really is being audited

          We only have his word on that, and we all know what that's worth. Besides, the IRS can only audit for a limited range of years, so there are many years of tax returns he could release other than the latest one.

          He will NEVER release any of his tax returns while he's president. If he bothers to answer such questions at all, he'll claim "it doesn't matter now since I'm already president" or fall back on the "there are no laws that say I have to release them". He's got plenty to hide, and nothing to gain by releasing them now that he's been elected.

    3. NoneSuch Silver badge
      FAIL

      Re: You can't do that ...

      "we will continue to prosecute those who threaten the integrity and equity of our nation's tax system."

      As they are 20 Trillion dollars in debt as a nation, I question that 'equity'.

  2. Anonymous Coward
    Anonymous Coward

    Skimming is naughty

    That's the Tax Man's job!

  3. bombastic bob Silver badge
    Facepalm

    the various tax boards WILL check up...

    you know, when you report your annual revenue filing for your business, on various tax forms to various entities, and you've also filed your state sales tax (and possibly other municipalities) returns like you're supposed to, then... SOMEONE out there is adding those numbers up and figuring out how much sales tax you're supposed to be paying based on your revenue and type of business... because THOSE! NUMBERS! ARE! IN! YOUR! RETURNS!!!

    and the tax revenue bean counters just LOVE to find things. It's like they live for that schtuff...

    So what part of "you're gonna get caught" did they NOT understand???

    Then again, minimum wages and OBAKACARE and OSHA and "all that other schtuff" is bad enough on small businesses [like restaurants] but if you're forced to be a TAX CHEAT to stay afloat, maybe something's wrong with the economics of the situation...

    1. druck Silver badge

      Re: the various tax boards WILL check up...

      They aren't forced to be a tax cheat in the same way you aren't forced in to childish uppercase name calling.

      1. Anonymous Coward
        Anonymous Coward

        Re: the various tax boards WILL check up...

        They aren't forced to be a tax cheat in the same way you aren't forced in to childish uppercase name calling.

        I find the exclamation marks more annoying. It's bad enough that Yahoo does it. And Joomla.

        :)

        1. A. Coatsworth Silver badge
          Facepalm

          Re: the various tax boards WILL check up...

          I can't fathom under what tortured, Bizarro-world logic, can a minimum wage law and a barebones social security initiative be a bad thing.

          1. patrickstar

            Re: the various tax boards WILL check up...

            By artificially raising the price of something, say labor, you reduce demand. Basic economics.

            Another way of viewing a minimum wage law is that it forces you into unemployment unless your labor is worth at least that much.

            1. Deltics

              Re: the various tax boards WILL check up...

              Price Elasticity is to Economics as Newtons Laws are to physics.

              A mathematical theory which holds under certain conditions but which by no means are a Universal truth extant beyond those conditions.

    2. Version 1.0 Silver badge

      Re: the various tax boards WILL check up...

      "maybe something's wrong with the economics of the situation..."

      I agree, however I think that your name calling is offbase. Taxes exist for the purpose of raising the revenue necessary to keep your level of comfort in society - clean water, security, highways, retirement pension, medical care etc.

      Perhaps you should move the restaurant to Mogadishu - given your mindset you might find the tax situation there more to your liking - no income tax, state tax, police, roads, OSHA, medical care etc.

      1. Alumoi Silver badge

        Re: the various tax boards WILL check up...

        Taxes exist for the purpose of raising the revenue necessary to keep your level of comfort in society - clean water, security, highways, retirement pension, medical care etc.

        You're about 50 years off. Nowadays taxes exists for the sole purpose of paying the ever growing bureaucracy, social workers and big business.

    3. Tom 7

      Re: the various tax boards WILL check up...

      Bob, I'd love to see a small area of some country where they try and emulate Ayn Rands childrens books as a way of actually living. The joy of seeing your food deliveries arriving and rotting at the bottom of the truck due to having to shell out for private provision of everything taxes currently cover that in private hands would be prohibitively gouging.

      1. patrickstar

        Re: the various tax boards WILL check up...

        Just like free markets and private enterprise have resulted in such massive price gouging and utter disaster when it comes to say, food, technology, or anything else it's been tried for?

    4. John Brown (no body) Silver badge

      Re: the various tax boards WILL check up...

      "So what part of "you're gonna get caught" did they NOT understand???"

      The bit where skimming a little of what you want turns to greed and the tax returns are blatantly not enough to represent the purported business model and causes blindness to the obvious.

  4. kmac499

    The HMRC in the UK has some fairly sophisticated software that can delve into POS and accountancy databases to verify the 'honesty' of the raw data let alone any audit trails.

    We never 'tidied up' our customers databases if for whatever reason we had duff transactions in there. It's far better to say to a VAT man "it screwed up, we don't know why but there is the wreckage", rather than trying to explain away deleted records, which just raises the level of suspicion and examination..

  5. Anonymous Coward
    Anonymous Coward

    It just business, mister

    Why you try to break my balls, you got something against capitalism?

  6. Buzzword

    The moral of the story...

    ... is to only keep paper records, presumably? Much safer to toss a couple of paper receipts into the fire than to risk being caught operating software with a great big red button marked "CLICK HERE TO AVOID TAX".

    1. Anonymous Coward
      Anonymous Coward

      Re: The moral of the story...

      Why do you think HMRC wants it all electronic? They're not stupid.

  7. Doctor Syntax Silver badge

    "to give businesses a leg up" does seem a curious turn of phrase coming from a US Attorney. It implies that payment of taxes presents a barrier to businesses that they need to surmount if they're to succeed. It's almost an official admission that tax rates are too high.

    1. Wzrd1 Silver badge

      "It's almost an official admission that tax rates are too high."

      We just had that argument on a US news program, where the corporate talking head went on and on about the US having "the highest business tax rates in the industrialized world", then attempted to link that and "mom and pop" (small businesses) enterprises and the anchor for a change, calling him on it.

      Small businesses, such as those involved in this story, are taxed at an private individual rate, not at a corporation rate.

      The anchor also called him on the fact that corporations never pay that "huge rate", as they write off so many expenses and costs in such a way that they frequently pay precisely zero tax.

      1. a_yank_lurker

        "Small businesses, such as those involved in this story, are taxed at an private individual rate, not at a corporation rate." - The tax rate for business depends heavily on the corporate structure. In most US states there are at least 4: sole/joint proprietorship, LLC (Limited Liability Corporation), Chapter S, and publicly traded companies. The tax rate paid by the company depends on its structure, some are friendlier to owners. The tax rate being quoted is one paid by publicly traded companies.

        One of the major differences in these structures is how ownership can be sold/transferred and the amount of liability the owners are personally responsible for versus the company. Gets very complicated in a hurry.

  8. Unicornpiss
    Meh

    Liability?

    While the developer may have written software that makes it easier to cheat, surely it is the user that made the choice to use it illegally. If you're going to prosecute the developer, you may as well find the makers of guns, lockpicks, encryption software, radar/lidar jammers and detectors, software to "crack" ebooks, jailbreak iPhones, clone DVDs, etc. guilty as well, as many/most of these are used primarily to circumvent existing laws, and arguably have no legitimate lawful purpose either.

    Unless "zapper" is enabled all the time, or is randomly hiding transactions without the proprietor's knowledge, I don't see why the developer should be held responsible, whether the software is shady or not.

    1. AIBailey

      Re: Liability?

      Because in all the examples you've just given, there can be legitimate reasons for owning or using those tools. The fact that they can be used for other, "less legitimate" purposes is a byproduct.

      This software, however, has absolutely no legal purpose whatsoever. It's 100% designed to deliberately help you evade paying tax. For that reason, the developer should deservedly get his arse totally kicked in court.

      1. patrickstar

        Re: Liability?

        Fixed it for you:

        This software, called DeCSS, however, has absolutely no legal purpose whatsoever. It's 100% designed to deliberately help you evade paying for movies. For that reason, the developer should deservedly get his arse totally kicked in court.

        1. JLV

          Re: Liability?

          What about the purpose of letting me watch _my_ legally purchased movies on the device/os of my choice?

          Besides, one's a minor infraction, much as RIAA/MPAA would like Gulags for them. The other is just ripping off everyone who's dumb enough to pay their taxes .

          Should I type more slowly?

    2. Wzrd1 Silver badge

      Re: Liability?

      One can build a machine gun or artillery piece as well, but if one sells it to an unauthorized person, one is in trouble for doing so.

      If one doesn't pay the making tax for that weapon, one is also criminally liable.

      Interestingly, one can build semiautomatic firearms legally, provided one isn't adjudicated mentally incompetent, a substance abuser, domestic abuser or a felon. One need only provide a serial number if one is building such weapons for resale.

      Yeah, US laws are a bit weird.

      1. Chez

        Re: Liability?

        Regrettably, one cannot legally build a machine gun legally in the US. A damn shame, really. ATF regs for full-auto require it to be pre-1986. For artillery, destructive device laws are fairly bizarre - I think you're allowed the artillery itself, but each piece of ammo requires a DD tax stamp that will cost significantly more than the actual round.

        Because any item that can be used to convert semi-auto to full-auto is considered subject to the aforementioned ATF regulations, for three years, shoestrings were considered machine guns. One can tie any length of string off to the bolt of, say, an SKS, and wrap it around the trigger in such a way that pulling on it results in fully automatic fire. The decision was reversed in 2007, and shoestrings were deemed machine guns only when used in conjunction with a semi-automatic rifle.

        This is a legal, serialized shoestring machine gun from 1996: http://www.everydaynodaysoff.com/wp-content/uploads/2010/01/shoestring-machinegun.jpg

  9. bazza Silver badge

    I know a pub in deepest darkest Devon that had no cash register, just an ancient wooden box. The VAT man was unhappy with this, certain that they weren't paying enough VAT.

    So in came a modern electronic till, and a proper sales record presented to the VAT man the following year. Turned out that they'd been massively over paying their VAT for years, and got a healthy rebate. Drinks all round!

    1. agurney

      One of the earliest VAT computer frauds involved accounting software on an Apple IIE in the early days of VAT (1974 ish).

      Following suspicions, the computer investigation branch (Customs & Excise in Southend) identified that the software would provide accurate records, but by appending digits to the password it would do something similar to the zapper in the article. For example, password "qwerty" would show clean acounts, but "qwerty25" would produce accounts with 25% of the records removed.

  10. McSounds

    Been There.

    In the days when I was writing POS software for pubs/restaurants we had an customer request something similar - run EOD reports then delete a definable % of transactions and run a new set of EOD reports. They got very upset when we refused to do it.

    1. Bob Dole (tm)

      Re: Been There.

      I've had a similar encounter. Worked on mobile pos software. Was asked to add a bit to identify which customer records would show up on certain reports. When I thought about I realized what was going on and walked away from the project. They even went so far as to threaten to sue me to finish it. I told them that I was the taxmen would love to know about this feature request. They went away.

  11. Anonymous Coward
    Anonymous Coward

    I know of several small businesses that have a similar set up, the transactions of the EPOS system are altered in order to reduce turnover. In some cases this is to show a smaller turnover to accountants and pay less VAT, and in some other cases where payments are linked to turnover (e.g. a news kiosk where the landowner charges a percentage of turnover as well as rent) it is to show a smaller turnover and therefore lower rent.

    This happens a lot in stores that are part of a "symbol group" e.g. Costcutter/Nisa/Spar etc.

  12. networkboy

    Worked at a place

    worked at a place in the 90's that did this. Will leave industry and name out.

    The register system was bespoke for the place and the guy who wrote it ultimately ate a shotgun. Bad things happened when the system eventually had a fault (as most bespoke single dev systems tend to) and there was no one with access to the software to "fix" it.

    Ultimately the whole house of cards came crashing down. It was not a pretty workday.

  13. Mike 16

    Reminds me of Petrol Pumps

    (Well, gas pumps, since this was in the U.S. ) Several places were caught with "special" firmware which would "measure" more than was pumped, until they approached 5 gallons, then under-measure to compensate so the amount pumped matched the size of the Weights and Measures official 5 Gallon test container. Then off to the races again.

    1. bazza Silver badge

      Re: Reminds me of Petrol Pumps

      Sounds very similar to VW's emissions controls software!

  14. Medixstiff

    I didn't twig until my friend started working for the Department of Finance, how many Asian run shops had two tills, one with an EFTPOS machine and the cash only one. If he sees that happening, he knows which ones to pass the details to the ATO for possible audits.

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