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Boston University School of Law




On January 28, 2008 the Quebec Minister of Revenue, Jean-Marc Fournier, announced that by late 2009 the MRQ will begin testing a device, the module d’enregistrement des vents (MEV) that is projected to substantially reduce tax fraud in the restaurant sector. By 2010 or 2011 MEVs will be mandatory in all Quebec restaurants, where they will assure accuracy and retention of business records within electronic cash registers (ECRs).

It is clear to the Minister that not only are large volumes of cash being skimmed, removed from the sales and profits records of restaurants by their owners, but also that this fraud against the public fisc is increasingly facilitated by technology – through the digital manipulation of business records kept by modern ECRs. Add-on software (zappers), factory or distributor installed software, and old fashioned manual re-programming of ECRs (phantom-ware) are the mechanisms through which the manipulations arise. Known generally in Quebec as camifleur de ventes (or sales zappers), the MRQ has pursued these devices over the past decade, and is convinced that something more than a traditional audit is needed to counteract the manipulations.

The zappers (and phantom-ware applications) that are the major facilitators of this fraud are not confined to Quebec. Zappers and phantom-ware have spread throughout Canada and around the world. It is not surprising therefore that a number of jurisdictions have looked at automated sales suppression and have adopted technological countermeasures, some of which are strikingly similar to the MEV. Other jurisdictions look to technology for answers, but differ with respect to the sophistication of the technology they would deploy. In yet other jurisdictions, traditional audit rather than technology is preferred – but the most successful of these “audit only” jurisdictions are adopting comprehensive (multi-tax) audit strategies with teams of auditors supported by computer specialists – in effect, a “super-sized” traditional audit.

This paper moves beyond a discussion of the variety of sales suppression programs in use – zappers and phantom-ware. Those matters have been considered elsewhere. The concern here is on enforcement efforts, particularly the MEV. The intent is to assess the workability and effectiveness of the MEV solution by contrasting it with solutions adopted elsewhere.

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