It's called the biggest case of the use of 'sales suppression software' in the state, possibly in US history.

Attorney General Bob Ferguson announced Friday the owner of a string of popular Mexican restaurants on the West side is accused of using software to under report earnings, cutting his tax bill by $5.6 million dollars.

Ferguson says Salvador Sahagun, the owner of the Tacos Guaymas chain in King and Snohomish counties, is facing a penalty of $150,000 and possibly up to $5 million in restitution for the taxes.

Tax suppression software is used at the register, or point-of-sale. It deliberately deletes or under-reports cash transactions.  The customer still gets their receipt showing the 'full' amount, but the value sent to accounting software is under-reported.

The system them re-balances the company's financial records to show lower sales figures which then reduces their tax burden.

Department of Revenue officials were suspicious that Sahagun was using the software, and paid visits to his 7 restaurants, they paid cash for their meals. Then, they compared the receipts they were given with those from the company books, and found their cash purchases had been deleted. This triggered an accounting audit, which came up with the fraud and they found the suppression software.

In 2013 laws were passed making the use of the software illegal. This is the 2nd such case in WA, in 2016 a Bellevue restaurant was busted for a similar scheme.


More From 870 AM KFLD