Development of a�Compliance Initiative to Address�

Electronic Sales Suppression

FTA Technology Conference, Pittsburgh, PA, August 8-10, 2016

Will Hartman, Chief, Bureau of Enforcement Planning, Analysis & Discovery

Louis Dondero, Revenue Tax Auditor Program Specialist, Bureau of Audits

Adam Hovne, Fiscal Analyst, Bureau of Enforcement Planning, Analysis & Discovery

AGENDA• PROGRAM GOALS• ESS: SAME OLD STUFF• ESS TECHNOLOGY• UNIQUE CHALLENGES• DATA ANALYTICS• GOVERNMENT RESPONSES• BIG PICTURE MOVING

FORWARDPA ESS Compliance Initiative, FTA Technology Conference 2016, Page 2

WE HAVE BROAD GOALS FOR THE PROGRAM.

1.  Voluntary Compliance

2.  Protect Honest Business Owners

3.  Ensure Taxes Reach Government

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 3

UNDERREPORTING IS NOT NEW. ESS IS SYSTEMATIC, SCALABLE, AND SWEEPING.

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 4

SCHEMES ARE ELABORATE.Suppression

Tools

Phantomware

Zappers

ESS as a Service

Suppression Methods

POS Functions

Database

Software

Use of Voids, Comps or Training

Mode

Deleting or Altering

Transactions

Deleting and Re-indexing Transactions

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 5

Noncompliance Indicators

THIS PROGRAM ENCOUNTERS UNIQUE CHALLENGES.

Learning POS/ECR

Systems

Exchanging & Disseminating Information

Evidence for Enforcement, Policies, and Legislation

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 6

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 7

DATA ANALYTICS CAN HELP ESTIMATE LOSSES, SELECT AUDITS, AND TRACK PERFORMANCE.

THIS IS A GLOBAL PROBLEM. GOVERNMENTS HAVE IMPLEMENTED DIFFERENT SOLUTIONS.

Sales Recording

Module (SRM)

Quality Mark Legislation

Level of Control

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 8

OUR PLANS MOVING FORWARD

Tax Fraud Digitization

•  ECR/POS systems•  E-commerce, Digital Currencies•  Cloud, Internet of Things

Big Data•  New Data for Taxation•  Analytics•  New Business Processes

Evidence & Policy

•  Increase Cooperation•  State-wide Rollout

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 9

QUESTIONS?

PA ESS Compliance Initiative, FTA Technology Conference 2016, Page 10