State of Michigan Tax Stamp Program

Case Study

Michigan tax stamp being scanned on mobile phone

Overview

When the State of Michigan Department of Treasury required a new solution to replace their traditional thermal tax stamp program, OpSec was able to provide a complete cigarette tax stamp solution for the state. The overall solution offered by OpSec provides the utmost in ease of use, speed, and accuracy – as well as fully electronic tax tracking and enforcement features.

Business Problem


When the State of Michigan Department of Treasury required a new solution to replace their traditional thermal tax stamp solution, OpSec was able to provide a complete cigarette tax stamp solution for the state, including:

  • The supply of digital cigarette stamps
  • Approved configuration of application machines
  • Cameras, scanners, and software to capture unique tax stamps; and related services for the state

This meant changes for the application method of tax stamps in the state with the payoff being tremendous amounts of information and visibility of the cigarette supply chain in Michigan. 

This would provide an opportunity for the Department of Treasury to fully maximize their tax collections relating to cigarette sales and to interact with the consuming public. 

The overall cigarette stamping/enforcement solution offered by OpSec was a two-pronged approach that provides the utmost in ease of use, speed, and accuracy – as well as fully electronic tax tracking and enforcement features.  

 

MI Tax Stamp Features

OpSec Solution

Implementation of the Michigan program was a large and complex process which meant working and communicating closely with all stakeholders in the industry. 

Implementing the project from the planning stage to ‘go live’ took just six months. This included design and manufacture of the new stamp, integration of the stamp format and third-party software (via API), intensive testing and qualification of stamping machines and development of the OpSec Contraband Watch Solution (CWS) solution.

Remaining old stamps were drafted out over several months as new application machines were commissioned at remaining wholesale sites.

APPLICATION PROCESS

Along with the OpSec-approved set of scanners, cameras, and software, the application machinery also collects cigarette data in real-time and high-speed application rates. The OpSec designed configuration: 

MI Application Workflow

As the roll-out of the stamping machines continued, data received from stamping sites confirmed speeds in excess of 1,000 packs per minute.

 

MOBILE AUTHENTICATION PORTAL

Specialized smartphone applications allow Michigan’s enforcement officials secure access to the OpSec InSightTM authentication portal, providing clarity of the supply chain and case reports on location.

Simply by scanning the QR code, officials can quickly investigate detail such as:

  • Stamp authenticity
  • Brand/manufacturer detail
  • Wholesaler name and PO number
  • Pack size

Support is provided by a virtual forensics team of experts for real-time counterfeit examination and on-the-spot certification.

 

MI Tax Stamp Authentication

 

CONSUMER ENGAGEMENT


The tax stamp program seized the opportunity to utilize the QR code to provide enforcement officers with tracking information via the mobile application. However, the QR code also enables a direct communication link between the Treasury and the public.

Whereas customs officials utilize specific secure mobile applications to track and authenticate the tax stamps, the public can interact with the QR code using any open QR code reading application.

Benefits of consumer engagement for Michigan include:

  • Promoting State-sponsored smoking cessation programs
  • Enabling concerned citizens to report under-aged smoking
  • Establishing a consumer “tip-line”
  • Educating the public on the dangers and impact to Michigan’s economy resulting from illicit tobacco sales

 

CONTRABAND WATCH SERVICES

Unlike any other tax stamp offering today, OpSec actively monitors the online market looking for counterfeit or simulated stamps.

Many vendors employ a reactive response to change their tax stamp security features after counterfeits are found by state enforcement personnel. OpSec assists clients to develop and employ a more proactive monitoring approach.

The dedicated services team and proprietary software applications comb numerous Internet portals and social media (B2B sites, trade boards, blogs, and internet stores) searching for potential counterfeit stamps from illicit trade markets worldwide.

Results

  • Additional information found to support ongoing investigations by Attorney General’s office
  • Proactive discovery of counterfeiting attempts with information provided to Law Enforcement and Treasury

 

Program Return on Investment

MI Tax Stamp Program ROI

 

BY THE NUMBERS

Michigan Tax Stamp Results