Cigarette Tax Stamp Contract
Senate Bill (SB) 1701 (Chapter 881, Statutes 2002) was enacted to combat the increasing use of counterfeit cigarette tax stamps. California was losing an estimated $280 million in cigarette taxes annually. SB 1701, operative January 1, 2005, required the California Department of Tax and Fee Administration1 (CDTFA) to replace the heat-applied decal tax stamps with a technology based counterfeit resistant stamp capable of being read by a scanning or similar device, and encrypted with specific information.
In 2004, the CDTFA and Department of General Services (DGS) conducted a formal procurement to purchase cigarette tax stamps, application machinery, and scanning or similar validation devices. The procurement was a success and resulted in a three (3) year contract with an option for two (2) one-year extensions with the prime contractor, SICPA Product Security, LLC (SICPA) and its subcontractors Meyercord Revenue and Form 10. The CDTFA exercised both of the one-year options and received approval of a Non-Competitive Bid (NCB) that extended the contract through June 30, 2010.
In 2009, the CDTFA and DGS conducted a formal procurement to solicit bidders to offer their best solutions to the CDTFA cigarette tax stamp requirements. Following a competitive bid process, a multi-year contract was awarded to SICPA Product Security, LLC, by the Department of General Services on July 23, 2010. The contract provides for encrypted cigarette tax stamps, stamping machinery, stamp validation equipment, and necessary services to support the administration of the Cigarette and Tobacco Products Tax Law (Revenue and Taxation Code section 30161, et seq.). The current contract is for a term of five years and contains optional provisions to extend the term up to an additional four years (in two two-year increments). The CDTFA exercised both of the two year extensions, which effectively extends the contract through July 22, 2019.
1 As a result of the Taxpayer Transparency and Fairness Act of 2017, effective July 1, 2017, the California Department of Tax and Fee Administration (CDTFA) replaced the Board of Equalization (BOE) in the administration of the Cigarette and Tobacco Products Licensing and Tax Laws. Pursuant to Government Code section 15570.24, any reference to the board (BOE) in statute or regulation is deemed to refer to the department (CDTFA).
- Important Notice to Cigarette Distributors: Bar Code Readers to be Installed on Existing High Volume Stamp Machines (HVSM)