Xerox Helps States Stamp Out Tobacco Tax Fraud

The Department of Justice estimates that state governments lose $5 billion a year due to cigarette smuggling. As taxes on tobacco products steadily increase in most states, counterfeit tax stamps have become more and more common. Many states are still using 50 year old, heat-applied, wax-based cigarette tax stamps which are limited in security and do not readily support digital signatures.

To help stamp out tobacco tax fraud, Xerox is deploying a Secure Intelligent Tax Tag (SecureITT) – a pressure stamp with a unique, protected holographic imprint created by OpSec Security Inc. (OpSec), a company specializing in anti-counterfeiting technology.

According to spokesmen, SecureITT is the only tax stamp solution that combines physical stamp characteristics, electronic security features and digital reporting data with Xerox’s eTRACS (Electronic Tax Reporting and Audit Compliance System) tracking software.

Craig Galler, Director of Business Development at Xerox, told Supply Chain Management Review—a sister publication, that there are considerable reverse logistics implications, too.

“With the installation of our SecureITT / eTRACS solution, the wholesaler will be able to scan the product when it is returned – either back into inventory (if it can be re-distributed) or to create an automatic inventory adjustment to be reported electronically to the state,” he said. “This process ensures credits are accurately tracked and processed between the state and the wholesaler.”

Xerox’s tax stamp solution goes beyond what current stamp solutions can offer by enabling secure data access without the use of proprietary hardware devices, added Galler.

“And while state authorities are the only ones authorized to access certain restricted data on the SecureITT stamp, anyone with a smartphone or laptop can report basic tracking information to authorities no matter where the tobacco products end up.”