Italian Secrets For Hiding Receipts And Dodging The Taxman

With new no-nonsense Prime Minister Mario Monti committed to cracking down on tax evasion, La Stampa explores the time-honored (and cutting-edge) tricks that some Italian merchants use to duck requirements that all purchases are registered in official sal

An Italian receipt, called a
An Italian receipt, called a
Flavia Amabile

ROME – Even with winter sales on, January is generally not a good month for store merchants in the capital. There are fewer tourists, and locals have already done their spending on Christmas gifts. Still, a group of 20-something Spanish women walking through the scenic Campo de" Fiori on a recent afternoon decide to stop for an ice cream. We watch six of the women enter the gelateria in Via dei Baullari. Each one orders, pays for and is handed her own ice cream. And the receipts? Not a trace. "No they didn't give us any," the customers confirm.

In Italy, any purchase must be accompanied by a sales receipt (scontrino) handed directly to the customer, which is central to monitoring done by the nation's tax collectors and finance police. Authorities recently raided homes, stores and restaurants in the mountain resort town of Cortina, where allegations of widespread tax evasion also included charges that business owners tried to skirt the strict sales receipts requirements.

With Italy's new rigorous Prime Minister Mario Monti vowing to crack down on tax evaders, La Stampa has looked into both the oldest and newest tricks that Italian merchants play with the books…and cash register.

Piccolo compromise

There is a shared wink between customer and sales clerk, who can punch in a lower amount than the real selling price. This method is usually used with friends, and allows both parties to feel like they are "almost" doing the legal thing.

No, no, no, Yes, no, no…

One of the most common methods used by Italian merchants is to simply ring up one receipt out of every five or ten, usually reserving the proper behavior for new faces entering the store (strangers might be the tax authorities or others who could report you). To aid in the charade, clerks often punch in all the numbers on the cash register except the last ‘Sale" button that brings out the receipt.

Counterfeit slips

A more sophisticated method involves the production of a piece of paper that is virtually identical to an official receipt except that the Finance Ministry considers it just a piece of paper. You may be able to spot these fraudulent receipts by looking at the bottom, it should say "not valid for tax purposes."

Evading electronic controls

Have you ever wondered why some Italian stores and restaurants still don't let you pay with credit cards and ATM cards? They always say the reason is the fees that card companies charge. That's not it. The problem is that when you accept electronic money you can no longer hide anything (or almost anything…see below) from the Treasury.

And yet, there is always a way to stay one step ahead. For those intent on evasion, they can count on a ten-minute lag between the time of the electronic payment and the issuing of the receipt. During this gap, they can type one fewer zeros, and hope the finance inspectors don't check too carefully that the timetables of the receipts coincide with all the credit and debit card records.

Dasterdly digital innovation

Dodging taxes means staying up with technological advances. There are even programs that you can download for free from the Internet that produce fake receipts. The most widely used is "Custom receipt maker," perfect for those who carry out activities such as home deliveries or sell their products online. The product is such a success that there is now even an iPhone application: It's called "Magic Receipt."

The price of it all

To get an sense of ​​the scale of tax evasion in Italy, look at these numbers:

In 2010, Italians failed to declare nearly 50 billion euros of income tax, 46% more than in 2009. The illegal turnover in the field of tourism, where receipt fraud is highest, was 36 billion euros.

And yet in the final year of Silvio Berlusconi's rule, the Italian association for the equity of tax law says that inspections to verify the correct issuing of receipts fell seven-fold in 2010 compared to 2009 and twenty-fold compared to 2007, which was the year of greater effort in fiscal checking. That year the finance inspectors made 84,091 inspections. Since then it has started an inexorable decline, culminating with just 4,788 controls in 2010.

Nevertheless, when checks are made, one can see the results. Last October, for example, tax authorities began to patrol the streets of the northern city of Rovigo, and registered revenue of merchants shot up: one hairdresser recorded a gain of more than 6 times the average of the previous week. The same thing happened this summer in the region of Puglia, where one night club's take rose five-fold. In the northern region of Emilia Romagna, finance police focused on a seemingly idyllic sector: uncovering 56 florists actively hiding their earnings.

Read the original article in Italian.

Photo - Randy OHC

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