Perhaps the cashier is cheating the store owner and not the IRS?
The retailer paid the wholesales for 100 items … he then writes an invoice for 50 items and doubles the price so he can write it off the full expense … [whistles through teeth] … sounds like a red flag to me … why would he be buying wholesale at $5 a piece and then retailing it at $5 a piece …
But I see your point, my example here is extreme … if the retailer is only doing this in a limited manner then it would be hard to catch … declare the extra inventory on the books as “spoiled” or something …
Somebody explain to me why a legal tax loophole is moral, but an illegal tax loophole deserves the diligence of the general public acting as a tax enforcer. Both have exactly the same effect of reducing the revenue to the state, affecting the tax burden on others.
I’m not totally following that one. In any case, the wholesaler still wouldn’t come into play, whoever audits the retailer likely wouldn’t even know that [this example] was happening. You have to remember how many bills go through a business. In my small business, just from last year, I have, at least 3 file cabinet drawers absolutely stuffed will bills that I really need to empty out. The IRS isn’t going to walk in and say it was THAT, you were screwing with the price on the Big Red gum, let me see the bill.
Even if they did, it’s easy enough to write it off as a mistake. A large wholesaler wouldn’t have any interest in being involved in that. At least in Wisconsin it’s illegal to charge different customers different amounts for the same quantities, plus, the retailer would run afoul of the minimum markup law.
Now, as for what would happen in a case like that, the wholesaler would sell the retailer 100 units of something, bill him for 50 and he’d pay 50. Then he’d show up another time with the other 50 in his car and a steep discount and the retailer would pay cash. No invoices, no receipts, the salesperson pockets the money, the retailer does what he wants with the cheap product and has invoices to back up owning it.
That’s exceedingly common.
I’m pretty sure this guy is the franchise owner. Just him and his wife, and maybe kid work there. Could be wrong, though. In that case, he’s ripping off the owner without a doubt.
As far as inventory goes, this is a Subway. Trivially easy to hide any discrepancy with (the claim of) spoilage, waste, or just plain, “Gosh, I really put a lot of stuff on my sandwiches!”. Or, just buy a few veggies from the supermarket for cash and cut 'em up real fine. It would be tough to prove he only made 50 foot-longs with inventory to make 100.
But it would be pretty easy to look at the guy’s register tape and see he only rings up a couple sales per hour.
I might make a call on Tuesday and see if anybody in the Tax Dept. gives a fuck. Let them sort it out. Then I’ll be done with it.
it’s actually not easy to hide register fraud as food waste or ‘i put too much’ on the sandwiches. i’m not saying he’s not cheating, and if he’s the franchisee, he could very well be cooking the books, but there are very tight and well documented margins for food waste, as well as strict rules about the amounts that are allocated to each ‘serving’ of whatever. whatever software inventory and ordering system he was issued will have target percentages for each of those and have metrics to stay inside the margins or face consequences up to possibly having the franchise pulled from him. So if he is doing something like that, he’s going to be putting a decent amount of effort into keeping those records falsified also.
I reported something similar but even more petty that happened to me at a local convenience store/gas station not that long ago.
I had bought gas (and got a receipt from the pump) and also purchased two sodas at the counter. The cashier overcharged me by three cents on the soda purchase. I questioned the three cent overcharge and the cashier then gave me an extra 22 cents in change. We had a couple of short exchanges about it that ended up with the cashier refusing to give me a receipt.
I don’t know if the cashier used the cash register or not. The display a customer would usually see was turned away from the customers and toward the cashier.
I’ve shopped at this store plenty of times and never noticed anything “off”. The store carries the name of a ‘big-name’ company and is run by an extended family- dad, mom, son, etc. I suppose it’s a franchise of some sort.
The whole thing was just weird and the three cent discrepancy bothered me more than it should. The 3 cent overcharge just didn’t make any sense and it bugged me that I couldn’t figure out what the guy was up to.
Anyway, I used the Comptroller’s on-line complaint form to complain about the 3 cents. They followed up with a phone call.
I saw that not too long after I filed my complaint, the store’s gas pumps were inspected and the store was cited for overcharging on gasoline.
So, I guess it the three cent cheat makes sense now. It’s a big and very busy gas/convenience store. They have a lot of counter traffic and 16 gas pumps. If they cheat every, or every other, or every third, or whatever, customer by a few pennies, they are probably making quite a bit of extra money on an annual basis.
At to StrTrkr777’s comment about calculating tax. Lots of folks do this. If the grandma in line behind you is already sorting her change, she may be doing this too.
I once worked at a conveneince store. Out of sheer boredom, I would “race” the cash register when making change and as a result can (add and) subtract in my head pretty quickly. It’s a bit of a cheat really because customers almost always give you a whole number (like 10.00) to subtract from, and the math is actually easier for me when they provide change to get “whole dollars” or “whole coins” such as quarters back.
I can also calculate tax in my fairly quickly, but not as quickly or as accurately as I can with just simple addition and subtraction. I usually know at least the approximate total of what I’m expecting to be charged when making a purchase. In the case of the 3 cents, it was just a case of easy math because of the low price (low number) and the rounded price due to a two-for-one sale on the sodas that made it an easy calculation.
I taught my kids to do thiswhen they were little, too but not in such a detailed way. I just taught them to know approximately what they are spending and how much change to expect back so they, as little kids, didn’t get short changed by adults.
Any cash business is susceptible to this kind of thing. The local tax departments know it. It’s a question of reasonable cost of enforcement. If the tax forms filed look reasonable there’s nothing much they can do. If they get a report from someone that sales aren’t being recorded they may look a little harder but it’s difficult to find evidence. In the case of a franchise it’s possible that inventory controls are in place that would turn up missing items, but that’s not the way all franchises work. Unless the amounts are large enough to ring a bell in an audit there’s not much chance the authorities will be able to do anything, or will even try since they suspect every small retailer is doing this to some degree.
Unscientific comparison but there seems less ‘moral’ reluctance to report a tax cheat than a govt benefits cheat comparing to a recent ‘should I report?’ about that. It was rightly pointed out the benefit cheat evidence was weak, but some posts on that thread said in essence, ‘small scale benefits cheating is none of my business’. Nobody has said that yet about small scale tax cheating.
But the evidence here while a little stronger doesn’t seem air tight either. Or even in cases where merchants say ‘pay cash and I won’t charge sales tax’. Car dealers have commercials where they say they’ll sell you at cost. Do you really believe you’ll end up walking out with a car at their cost? (not impossible, but not common). It can be a sales tactic to make people think they are getting a ‘deal’. And tax cheating could be hidden in the numbers in ways customers would never see.
With either benefits or tax cheating, show me incontrovertible evidence and assuming it’s not entirely trivial, I’d report it. I don’t see a reason to differentiate them (people of a certain POV not common on this board would probably go the opposite way and have more of a problem with benefit than tax cheating). But in real life, if you’re not nosing aggressively into other people’s affairs, it’s generally not incontrovertible.
Similar story:
There was a little “Mom and Pop” gas station down the road from me, and my POS Jeep broke down and I was hanging around waiting for a friend to come and rescue me. I was probably in the place, reading the free want-ads paper, for maybe 10 minutes.
In that time, maybe 10-15 folks came and went. Of that many, nearly half complained they were short-changed or over-charged!
A couple folks pointed out they were a few coins short with the change, a couple others pointed out that the advertised price was less then they were charged.
Each time, the Shithook at the register would argue with the customer!
*“Oh, what? You want me to open the register again for 35 cents? I don’t have time for that!”
“No, no! That price if for that other beer! You go now!” * :rolleyes:
Unbelievable. They shut down a while later. Who didn’t see that coming?
I would look into county auditor before state, if you are reporting them.
It is very doubtful that his profit before expenses is 10%. Most small businesses run much lower than that. In fact, it is entirely possible that his net profit is negative, and that skimming the sales tax is what is keeping him afloat.
Doesn’t justify it, if you can’t keep your doors open legitimately, you shouldn’t keep you doors open, but it could well be the motive is less about greed, and more about desperation.
In a small business, that isn’t really necessary. I only have the one POS, and if I wanted to cheat things, I could just do it. There literally is no one at all that is looking over my books to ensure that I am ringing things in properly. (Of course, being a service, I don’t pay sales taxes, except when I sell retail items, and any embezzling is just money coming out of my own pocket.)
Being a subway franchise, I think that that explains it. He is ripping off subway. They demand a certain percentage of his sales as a franchise fee. If he doesn’t ring them in, then he doesn’t have to pay them. The sales tax part is just a little bonus.
Also, depending on where you live, there may not be tax due. I know that in Ohio, if you get food to go, there is not tax. I don’t know your tax situation, but if it is similar, then he is only ripping off subway, not your community’s tax.
It’s really not all that hard, as long as you don’t have a manager in the store looking out for it. Who is comparing your books to your orders, exactly? Unless you are being audited, no one is going to notice, and if you are audited, it’s not that hard to hide it.
Were I him, and looking to defraud whoever it is that is supposed to be getting the money, I’d ring in lunch rush stuff normally, but when you are only doing a few customers an hour, then it is easy to get away with only ringing in half or so.
I read a story several months back about a buffet restaurant that during the lunch rush would process debit and credit card sales and a few cash sales through the register, but most of the cash sales directly to a cash box. They got busted when they processed the cash sale of an actual auditor one day. I kind of got the impression that he wasn’t eating there by accident.
And rewards
Even though both methods have the effect of lowering the bank’s cash reserves, one should not call the cops when witnessing someone withdraw money from a bank via a legal check but should report it if the withdrawal is via a pistol and note.
Now closed but there was a dry cleaner around here for generations used an ancient cash register (like most things in the place) and it had paper taped over the window where you’d see the flag pop up with the amount he put in.
Just learned it was because he rang up everything for $1, no matter what he actually charged.
When I was a kid, I worked in a pizza place that was located in a mall and I noticed the owner doing this occasionally. He said he wasn’t ringing up the sale because his rent was based (partially, I assume) on his gross sales. If he reached a certain point in sales, his rent would be charged at a higher percentage. The mall was badly dilapidated, half vacant, and on the verge of being redeveloped into a more useful non-enclosed type of mall at the time and he was in the process of moving his business to another state and was trying to save up some money. I have no idea if he was also cheating taxes, that wasn’t really discussed.
I read somewhere that one way the IRS would try to spot tax cheats was by comparing the supplies purchased to the claimed sales. So if a pizza restaurant claimed to sell only a small number of pies each day but was buying enough flour to make ten times that amount, there might be cheating going on.
Several years ago (20+?) we would frequently go to Olive Garden for Soup Salad & Breadsticks. One day I went with my wife and the waiter brought us out bill but it looked a little worn out. It didn’t look freshly printed. We paid cash, but my spidey sense was tingling. I looked at the menu and realized that tea was priced higher on the menu than on the receipt. To make a long story short; I realized that a LOT of people come in to order order Soup/Salad/Breadsticks with a beverage. I also realized the waiter would skim some of these orders by never ringing them up; and pocketing the money. If he had bothered to get an updated receipt I probably wouldn’t have ever noticed. I let the manager know that he had a thief working for him.
So my question to the OP: were you dealing with an employee or the owner? If it’s an employee, he’s likely ripping off his boss. If it’s the owner, it sounds like he’s collecting taxes and not reporting the income.
We live in a democracy. The solution to a horribly unfair tax system, full of ridiculous complexity that only the rich can legally exploit, is to vote for a non-crony government that will fix the system, not for everyone to cheat as they see fit to compensate. The vast majority of small time tax cheats are not making some kind of moral stand, they are just more unscrupulously selfish than most people. That’s not to say I’d report somebody on the poverty line for a minor infraction, anymore than I’d report a starving man for stealing bread. But I’m skeptical that there’s much correlation between cheating on your taxes and poverty. There are dishonest people at all income levels.
When the Metro store started charging for parking, you could still park for free by showing the invoice upon leaving. My driver used the same invoice to get out of the lot for free for over two years. To be fair, I always had an invoice; it’s just that it was always tucked into one of the grocery bags.
Your anecdote suddenly makes me realize why the “training mode” on our POS machine was password protected at the pizzeria I delivered for ages and ages ago: it would have been trivial to take orders in training mode, and pocket the money.