Skip to content

International Consulting and Investment Company

Tax Stamp Security

Cigarette tax stamps are presently in use in nearly every country in the world. In the US they are in use in every state and have different production, application, and inspection systems. The value if the stamp is quite high and the amount of money collected is quite high – however we are aware of many situations in which the amount of money collected is less than half of the expected total tax.

The historic method of taxing cigarettes is to print a paper labels about ¾” x 1 ¾” each in bulk on high speed web gravure or offset presses. These will be printed as much as 20 or more across the web and 20 – 40 around the print cylinder. The stamp will be printed on security paper and, possibly other secure features with ink and with complicated and intricate images. The quantities are quite large and may occupy one or two presses 24 -7-52, day and night year round. They may be printed either in a Government printing office or by a security printer contractor. They will be sheeted for some applications and sliced into single wide label rolls in others depending on the application machine in use by the manufacturer. They are sold to the manufacturers or importers for adherence to the individual box. Application is usually by glue with a high speed packaging machine. Usually it is as a “seal” covering the box opening. This is used with both soft and hard pack cigarette boxes and is applied at the final packaging step in the factory. Inspection method is not known to the public, but is apparently by inspectors who go to retail outlets and look at the stamps for the security features.

The tax stamp “business” is characterized by widespread cheating with various methods of diversion: The most obvious cheating is by the manufacturer buying fake sheets of stamps that have some of the same images and some of the security features (sometimes no security features).

Other cheating occurs when the importers and distributers are offered either fake cigarettes and boxes and tax stamps that are ‘easily” fed into the bulk distribution system. Others may just be shipped without stamps to outside the country and then brought into the country and sold with no stamp at all.

The New Method

We probably do not know all of the ways to beat the present system, but a Serialized Unique Identifier Code and Track and Trace computer system provides the primary basis for a comprehensive solution to the problem.

Such systems have been installed in at least 3 important locations around the world and the technology is verified in actual use.

The Unique Identifier Code is a singular “number” (UIC) at the individual pack level. It can be used to track the life cycle of that particular pack of cigarettes. This is a process learned from the drug industry and other places where the details are really important to the end user and to compliance with legal requirements. The printed mark process described herein is the result of many years of technology learned from the printing industry and uses the most reliable methods to mark objects or labels with the same confidence low cost that applies to ink on paper as in all labeling and marking operations. The industry has learned from the rfid chip approach to the same issue that the chip is valuable to bulk control and tracking, but not needed for the single part – and the cost of the new answer to this situation is in the very small fractions of a cent per stamp.

Computer systems generate a huge number of Unique Identifier Codes through an encryption technology. The codes are printed on the basic stamp sometime soon after the bulk printing operation , possibly while sheeting or slitting the stamps with digital printing heads (like in our desktop printers) and each stamp gets its permanent identity “passport”.

These special inks are used to add two very important elements; an optical feature for machine reading, and a forensic feature that provides a final element of legal identity security. These two features are usually printed invisibly so the do not copy and then they can only be seen by special readers.

Reading and Inspection

The new approach requires automation and computerization in several ways; a special program is needed to generate unique identifiers; digital printing heads must reliably place small data codes or glyphs that contain UIC as well as data on time date place (possibly several time stamps); storage of the information; input from automatic code reading devices; updated storage; and input from field readers enquiring about authenticity.

The system requires opto-electronic devices that can see covert inks. These are much like the bar code readers used in retail and in factories for quality control and production information. Except that they are tuned to very special inks. The first reader is placed on the print station just after the digital printer places the UIC onto the stamp. Each print head requires one reader as a two step operation – one to confirm that an otherwise invisible mark exists, and two to start the life cycle “passport” information collection.

Next, readers are placed at the point of stamp application. There the UIC is again recorded providing absolute verification of the particular stamp having some “existence” of use.

Then in any number of warehouse or transportation locations, the hand held version of the reader can be used to further update location and date/time information. If at any step in the process, the reader does not see a proper invisible UIC, the system is so notified. This may be because the stamp is a fake, no stamp was presented, or some substitute stamp copied for instance, but lacking the covert mark has just entered the normal pattern of life.

Finally, the field inspector can carry either an Authenticator that “sees ” the existence of the ink/dye; or a more sophisticated bar code reader can interpret the UIC and even go on line to a website where the computer once again comes to life to report this final event for that “passport. number”.

All forms of diversion and counterfeiting are monitored with this inexpensive approach.

Imagine that every single thing made anywhere in the world can be confirmed Genuine any where in the world by a hand held device that reads the date and place where it was made, where it should be and confirms its “passport number”. If desired – it can go back by internet to a source of information about its whole life. All made possible in a simple printed mark that is invisible but machine readable and contains a DNA molecular taggant!