Quebec Offers States Way to Recoup Billions in Unpaid Sales Tax

The states and the Internal Revenue Service annually lose out on an estimated $30 billion in sales and income taxes from bars and restaurants because they can’t adequately police the firehose of transactions flowing through these cash-based businesses.

The huge shortfall is tied to the prevalence of “zappers,” software applications loaded into electronic cash registers that evade taxes by voiding cash transactions. Business owners and employees pocketing cash from the till, known as “skimming,” also contribute to the widening tax gap. Neither problem is new, but there is at least one solution being touted by the Canadian province of Québec, ...