The Washington Attorney General’s Office has filed the state’s third-ever sales suppression software case against a Camas woman and owner of J&C Cuisine, which operates a Vancouver restaurant.
The illegal software was allegedly used to bilk the state of $134,603 in collected sales tax, court records show.
In 2013, Washington passed a law making it a class C felony for anyone to “sell, purchase, install, transfer, manufacture, create, design, update, repair, use, possess, or otherwise make available” software or hardware that deletes transactions, according to the Attorney General’s Office.
Mei Yun Li, 51, has been summoned to appear April 3 in Clark County Superior Court on suspicion of first-degree theft and unlawful use of sales suppression software.
Between Feb. 1, 2013, and March 31, 2016, auditors with the Department of Revenue found that New King’s Buffet, 304 S.E. 123rd Ave., had been substantially under-reporting on its tax returns. The auditors suspected the restaurant was using sales suppression software, which operates on cash transactions, according to an affidavit of probable cause.
The software records cash transactions as less than what was actually paid. The taxpayer then avoids paying sales tax on the missing difference. The taxpayer can also delete entire transactions from the point of sale system, the affidavit states.
Several undercover employees with the Department of Revenue went to the restaurant five times between Dec. 18, 2015, and Jan. 31, 2016, and paid cash for meals. They also surveilled the restaurant on four other occasions between Jan. 31, 2016, and Aug. 11, 2016, and observed how customers paid, court records say.
During the audit, computer specialists determined that the receipts for all five undercover purchases were missing from the restaurant’s point of sale system. Auditors also found that the restaurant’s costs of goods compared to its reported sales was excessively high in comparison to industry averages. And the restaurant employed highly unusual cash handling procedures, according to court documents.
“When businesses pocket sales tax, they are stealing from Washington taxpayers. That money should be funding our schools and parks, not deceptive businesses,” Attorney General Bob Ferguson said in a written statement.
According to his office, prosecutors filed another sales suppression software case last week against a local restaurant chain in King and Snohomish counties. In 2016, the Attorney General’s Office filed its first sales suppression software case against a Bellevue restaurant owner, who later pleaded guilty.
