 Opponents of the FairTax argue that imposing a national retail sales tax would drive transactions underground and create a vast underground economy . Under a retail sales tax system , the purchase of intermediate goods and services that are factors of production are not taxed , since those goods would produce a final retail good that would be taxed . Individuals and businesses may be able to manipulate the tax system by claiming that purchases are for intermediate goods , when in fact they are final purchases that should be taxed . Proponents point out that a business is required to have a registered seller 's certificate on file , and must keep complete records of all transactions for six years . Businesses must also record all taxable goods bought for seven years . They are required to report these sales every month ( see Personal vs. business purchases ) . The government could also stipulate that all retail sellers provide buyers with a written receipt , regardless of transaction type ( cash , credit , etc . ) , which would create a paper trail for evasion with risk of having the buyer turn them in ( the FairTax authorizes a reward for reporting tax cheats ) . 
