United States– SICPA Product Security LLC, a leading provider of integrated government security solutions on high excise tax products, was awarded a contract with the California State Board of Equalization (BOE) to provide the state with a secure cigarette tax stamping system following a competitive bid process. The new system builds upon the successful completion of SICPA’s groundbreaking initial five-year cigarette tax stamp contract, which delivered more than 5 billion secure, encrypted tax stamps.

Under the new agreement, SICPA will provide an upgraded encrypted cigarette tax stamp with track and trace capabilities, hand-held portable readers for law enforcement, and customized management reports issued from a centralized data management server. Implementation is currently in progress with statewide system operation expected by May 2011.

In 2005, California became the first state in the U.S. to move to an encrypted cigarette tax stamping platform to secure excise revenues and protect consumers and legitimate businesses from illicit products. SICPA has operated the California system since its inception, and with great success. Earlier this year, the BOE concluded that the deployment of SICPA’s tax stamp system, the Cigarette and Tobacco Licensing Act of 2003, and increased enforcement collectively have helped recover over $150 million in annual revenues. BOE also contends that the “encrypted stamp is an integral part of the BOE’s efforts to combat cigarette tax evasion.”

Now, with SICPA’s advanced tax collection platform, including upgraded overt, semi-covert, and covert stamp security features, the BOE is even better equipped to control and monitor the distribution of cigarette packs in California using the proven and effective functionalities of SICPA’s track and trace system.

Multiple layers of sophisticated material and information-based security on each tax stamp provide for counterfeit-resistance and ensure the system cannot be compromised. SICPA’s dedicated hand-held readers use embedded communication modules to securely exchange data with the data management server. Equipped with these readers, state investigators and law enforcement field agents can not only verify stamp authenticity in real time, but they can also read each stamp’s unique invisible tracking feature to reveal distribution activity. This latest security platform will improve cigarette-distribution reporting, thereby ensuring the accurate collection of the Tobacco Master Settlement Agreement (MSA) reporting information and full collection of excise taxes, which will also reduce illicit tobacco trade.

The SICPA platform also provides stamp authentication features at the retail level. Licensed retailers benefit from low-cost validation devices that allow immediate verification of genuine tax stamps. Consumers and retailers can also identify the stamp with its enhanced design and will be informed to look for specific features which differentiate genuine from fake stamps.

Use of the upgraded stamp and system components will continue to protect legitimate California businesses and tax revenues from illicit cigarette trade. The tax stamp system has proven to be an effective tool in reducing tax evasion and increasing government tax revenue collection in multiple government jurisdictions worldwide.