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The No-Ring Fast Food

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We have a local chain of fast-casual restaurants here in Lincoln. They are quite good and I hit them up about once a month since I moved to town.

I've noticed that when I buy and pay cash.. it's almost never rung into the register. The employee does a register open, inserts the money, makes my change but there's no receipt. When I pay with credit card I get a receipt. These are casual observations. I may be totally wrong and everything is being rung in- it just doesn't look that way to my untrained eye.

At first I thought it was employees stealing from the owner but it's so pervasive I'm wondering if it's not actually franchisee's doing the no-ring and therefore avoiding sales taxes?

If my suspicions are correct I wonder why this isn't a more widespread practice by small businesses? Top line revenue but reduced expenses? What's the check and balance? Obviously if you report very little income on your taxes but tons of expenses you'll raise some eyebrows but what if it's just a few hundred here/there to keep a little more in the owner's pocket and a little less in the hands of the always-hungry-for-more government?

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  1. We have a deli here in Blue Bell, PA where, every Sunday, the drawer is open all day and nothing is rung up by the owner. Interpretation: if I have to work on Sunday, that's my money. It gets stashed at home. Receipts are handwritten upon request but with a scowl.

    1 Reply
    1. re: Chefpaulo

      The deli where I worked in the 1980s (they are long out of business now, by choice, so I don't think it matters if I say): Really really busy breakfast and lunch. Never stopped. At 11 AM, when breakfast officially ended, we had to close out the register and give everything to the boss. All cash. They made plenty at lunch too so I doubt it looked bad on the books. We did ring it up but the cash register tape went with the money. Hey I could be wrong, who knows. That was just the way it was.

    2. Why then do some restaurants want the tip left in cash only?

      1 Reply
      1. re: PHREDDY

        Because credit card fees can be high (usually paid as a flat amount plus a percentage of the sale), especially for smaller operators.

      2. It's entirely done for the purposes of evading sales tax. It's illegal, which is why more small businesses don't do it. If you feel strongly about it, call your state tax inspector and get them out there.

        5 Replies
        1. re: travelmad478

          "It's entirely done for the purposes of evading sales tax."

          That's a pretty BROAD statement with NO proof to back it up.

          I am not condoning theft of sales tax, BUT the proprietor who doesn't ring up the sale is more likely NOT avoiding just sales tax, an amount less than 10% of the sales, BUT is hiding the entire amount of the sale to avoid tax on the profits.
          Why do this to save 6 cents on the dollar, when you could hide the entire dollar?

          BTW>>>>>>>>>>>>>>>>the proprietor has to record sales and taxes received. He does NOT have to retain cash register tapes in most jusrisdictions. In fact he doesn't have to have a cash register at all (with or without tape) he could use a cash drawer, a cash box, a cigar box or whatever he chooses.

          1. re: bagelman01

            BUT is hiding the entire amount of the sale to avoid tax on the profits.
            Why do this to save 6 cents on the dollar, when you could hide the entire dollar?

            ~~~~

            this.

            i used to live near a very famous pizza place that is cash only. one night the b/f and i were eating at the bar when he overheard one staffer say to another, "damn, the old man is here. now we have to ring in EVERYTHING." b/f had no idea what they were talking about til i explained they obviously stole the house blind when the owner wasn't around. he was shocked, i tell you. shocked, lol.

            however in many cases, not ringing stuff in to cook the books will shoot you in the foot when it comes time to get a loan or sell the business.

            1. re: hotoynoodle

              My father was in the reatil business and bought many stores over the years.
              Anytime an owner/seller, said the books say volume is X, but it actually is X PLUS what we took, my father replied, than you already profited from that, you can't sell waht you can't prove!

              Employee theft is a whole other matter than what the OP seems to be saying.

            2. re: bagelman01

              +1
              i used to work in a restaurant that only had a cash drawer: NO mechanized register whatsoever.
              obviously, the owner didn't take ANY charge cards.
              this was not a franchise operation.
              in the years i worked there i NEVER saw an employee steal a dime from the place despite all the unsolicited dire warnings about employee theft that the owner received.

              1. re: westsidegal

                One of my first jobs was working at a bar/restaurant where the register drawer was never closed. I ask how to use the register several times and was told not to worry about it. It was a very busy place and the staff was paid quite well, all under the table. I don't know of anyone that stole from the owners. Not saying it didn't happen but employees talk and I never heard anyone mention "taking a bit extra."

                At my next serving job, most of the employees stole regularly.

                I am an accountant and had the experience of working on an audit several months back. The state rep told me that tax evasion in the bar and restaurant industry has significantly declined solely due to the increased use of credit/debit cards. (computerized point of sale/inventory systems also helped) Owners simply cannot hide revenue like they could when most sales were cash.

          2. If the restaurant is a franchise, the store owner may also be doing this as a way to deprive the franchisor of licensing fees, which may be based on a percentage of revenue.

            1 Reply
            1. re: masha

              Or possibly trying to avoid rent. Many commercial rental properties charge a lease rate plus take a percentage of sales receipts.

              I work for a property management company...one of our agents did a stakeout on a Subway store that was a tenant of ours. Couldn't figure out why their receipts were always reported so low when the place was always hopping.

            2. I once heard that this is very common at Chinese restaurants and *have* noticed, when picking up takeout at various ones, that the cash sales are not rung up. How widespread the practice is, and whether or not it is more common in Chinese places than other restaurants, I have not the slightest idea.

              1 Reply
              1. re: greygarious

                In our area it is quite common that Chinese takeout places don't ring up the sale on the cash register. They run a tape on the printing calculator which gets stalled to each menu/order. The calculators do have memory capability and can store the day's volume. Generally only a family member takes money from customers.
                Growing up in the era before liberalized immigration there were only traditional full scale Cantonese restaurants. Traditionally they rang 0.00 when handling your bill. Each check then went on a spindle for safekeeping. They had cash registers to fit into American society but really did their math on an abacus and only made use of the till.

              2. This happens a lot. Also, states are getting much more hard core about pursuing sales tax. One state I practice in is routinely filing felony charges on business owners who don't file/pay. In my opinion this is overstepping the requirement for intent in criminal culpability, but it's certainly a serious penalty. When i worked as a state revenue agent years ago, occasionally we would be sent on sales tax stings.

                9 Replies
                1. re: Teague

                  Teague.................
                  I don't know which state you practice in. I practice in a few Northeast states. You paint with a broad brush when you write about a requirement for intent in criminal culpability.

                  Need I remind you of the difference between First Degree Murder and Involuntary Manslaughter or criminally negligent vehicular homicide.

                  Not all crimes require intent.

                  That said, if a business person doesn't pay 100K in sales tax it would be a felony in many states, while $2k might be a misdemeanor, codes vary.

                  If the resto owner collects the sales tax from the custoiners and steals it from the state, he not only should be charged with the sales tax issues, BUT also with FRAUD. I'd love to see some bright young 3Ls bring a class action suit for identifiable customers (charge records obtained through discovery) against an operator who collected sales tax and pocketed it,

                  1. re: bagelman01

                    Curious: "3Ls" ??? Third-year law students?

                    1. re: Midlife

                      yup. :-)

                    2. re: bagelman01

                      hi bagelman,

                      I recognize that you need not have intent for all criminal culpability. However, in my state (MO) the DOR has a practice of charging all persons with fraud, which is a felony. in my opinion, and as far as I know it's not been ruled upon, there's a great big step from being a marginal business person and failing to file, often failing to even collect, sales tax, and felony fraud intent. And in my exp with these legal aid clients I've had, usually it went for payroll, the nonpayment of which is also potentially criminal. Statutorily, failing to collect carries a fine but I cannot find support for this being a state law felony. The taxing authority just assumes fraud, which really just hurts the ones who will never be able to pay anyway. It's a hammer with great cost to the least able to defend themselves. plenty of people should be charged maybe, but the blanket approach is disturbing to me.

                      1. re: Teague

                        Please excuse typos as I typing on a Kindle from my hospital bed...be out by Tuesday.
                        Here in CT we had a major grocer who rigged his scales to shortweight customers and his cash registers to collect sales tax but then reallocated sales dollars to non-taxable items and stole millions. The president of the family owned chain did years in prison for this. To this day I won't patronize their stores.
                        I understand intent and the problems small businesses run by immigrants may have in complying with the laws. Friday my daughter went to a new nail salon run by immigrants. There was a sign over the cash register: Mani/Pedi Special $25 cash. If you use a credit card or debit card we charge sales tax.
                        Never mind that the state charges tax and the merchant only collects the tax; here the merchant is enticing customers to cheat the government. My 25yo used her debit card...her generation doesn't carry cash. She also took a photo of the sign with her phone and intends to send it to our Dept of Revenue Services.

                        1. re: bagelman01

                          bagelman hope you are on the mend!!!
                          Does your hospital also give cash discounts?? LOL??
                          You are a wise man as opposed to a wise guy!! Maybe both.

                          1. re: Motosport

                            Thanks for your good wishes, they let me eat today for the first time since last Tuesday and I'm heading home.

                            The hospital will cut a deal for payment at time of service instead of either waiting for the insurance company to pay or accepting the insurance company rate.

                            I have full coverage, but negotiated a private room and I would pay on discharge the insurance company rate (semi-private room, etc) and submit the bill to the insurance company for reimbursement. In this case I'll be laying out about 25K for 30-60 days but saving the out of pocket cost of $500/day for private room upgrade the insurance company won't pay.

                          2. re: bagelman01

                            That "grocer" was also caught keeping 2 sets of books...and given the millions he skimmed and the easy time he did, he's laughed all the way to the bank, or the Caymans. Get well bagel-dude

                            1. re: BiscuitBoy

                              Thanks BB....I'm home now, but there will be surgery in 2014.
                              My 16 yo's BF works in the Norwalk store. BF doesn't understand why we won't shop there. So, last week I explained it to him.
                              I have a long memory....
                              That grocer is planted in the family mausoleum in Westport. Jr, who should have gone to prison for 20 years, got his payback when the 3rd drowned.
                              The sins of the father and son have visited the 3rd generation.
                              I can buy my dairy products elsewhere.

                    3. "Render unto Caesar the things that are Caesar's, and unto god the things that are god's."