PURPOSE: This rule prescribes where and in what quantity tax stamps may be purchased and sets forth the minimum specifications for the manufacture of cigarette tax stamps.

1. (1) Tax stamps representing the state and county tax levied on a package of cigarettes can only be purchased from the director of revenue.
2. (2) Cigarette tax stamps will be sold in units of not less than one thousand (1000) stamps.

3. (3) The director will periodically initiate bid procedures for the manufacturer of cigarette tax stamps which meet the following minimum specifications:

   1. (A) Type. The stamps manufactured must be genuine lithographed, layer built transfer type, of approved quality, processed in two

4. (2) colors; or the stamps must be manufactured on a permanent-type (self-destructive) pressure sensitive material with an easy release feature from the backing material. Stamps may be manufactured in either sheets or rolls;

   1. (B) Size and Design. Stamps are to be of irregular shape and outline—processed in two

5. (2) colors—to measure not less than threeeighths by fifteen thirty-secondths inch (3/8" × 15/32") nor more than three-fourths by five-eighths inch (3/4" × 5/8");

   1. (C) Application. All stamps furnished under these specifications shall be waterapplied decalcomania transfer stamps, permanent-type pressure-sensitive material or heat transfer stamps, and shall satisfactorily adhere to cellophane, tinfoil or paper. The contractor shall furnish illustrated direction sheets showing the method of affixing the stamps to package or container and offer such help as may be necessary to acquaint users to properly affix stamps;
   2. (D) Paper. Stamps shall be made on unique, safety tinted, yellow paper or permanent-type (self-destructive) pressure-sensitive or heat-applied material furnished by contractor. The name of the paper manufacturer is to be furnished with bid;
   3. (E) Protection. Stamps must be manufactured with features against illegal reproduction and incorporate a ready identification of any counterfeiting attempt. Further, bidder shall be prepared to furnish this department a full explanation of these features and give the department immediate assistance to detect any counterfeiting attempt during the time the bidder’s stamps are being used by the department;
   4. (F) Layout. Stamps shall be furnished in sheets or rolls as prescribed by the director of revenue or his/her representative. Each sheet or roll of stamps is to be serially and consecutively numbered;
   5. (G) Accounting. A full and accurate accounting must be made to the state for all spoiled sheets, plates, designs, patterns, films, negatives, etc. Plates, designs, patterns, films, etc., when not in use for the manufacture of tax stamps, must be locked in a safe or vault or secure area. All the plates, designs, films, etc., will be destroyed and disposed of as directed by the state. A complete and accurate accounting of each and every stamp and all sheets of special paper used for these stamps and any other material used in their production must be given to authorized representatives of the state upon demand at any time. Inspection of the plant and of all records and books of account will be allowed by the contractor at any time upon demand of authorized representatives of the state. At all times, the contractor will supervise closely the production of the stamps and will not permit employees or any others to enter or leave the building or that part of the building where stamps are being produced until first assured that all material used in their production is properly accounted for. Every precaution will be taken to make certain that the stamps are not counterfeited or produced anywhere for any other purpose than the use of the state. All shipments must be by bonded carrier, insured and prepaid, and contractor will be responsible for safe and proper delivery;
   6. (H) Production Control. The bid must be accompanied by a full explanation of the precautions which the manufacturer proposes to observe within his/her plant and organization to protect the state against unlawful production of the stamps. The bidder must designate the means by which s/he proposes to guard against the loss of stamps during both the process of manufacture and storage. A secure depository approved by the state shall be installed or designated by the manufacturer for the storage of photographs, films, stones, zincs, plates, drawings, stamps, etc., when not in use or, in the case of stamps, while awaiting shipment. All work must be performed wholly within the premises of the contractor. No part of the contract may be sublet or performed in any other establishment. No assignment of the contract in whole or in part may be made without the consent of the state. Bidders, if required, shall furnish evidence satisfactory to the state that they possess the facilities, tools, machinery, equipment and resources necessary to efficiently and promptly carry out the terms of the contract;
   7. (I) Delivery. Delivery of stamps in the quantities as may be specified by the Department of Revenue must be made;
   8. (J) Bid Binder. A certified check or bid bond for one thousand dollars ($1000) payable to the state treasurer must accompany the bid. The check or bond will be returned after award is made to the successful bidder unless forfeited by a violation of bid terms by the bidder;
   9. (K) Bond. A successful bidder must furnish a performance bond acceptable to the state in the amount of one hundred percent (100%), guaranteeing the state as to the faithful performance of the contract and against loss of stamps through or from any act of omission or commission by him/her contrary to the terms of the contract; and
   10. (L) Award. Before an award is made, the Department of Revenue reserves the right to summon the bidder to appear before it and demonstrate and prove to its satisfaction the acceptability of his/her stamp to the Department of Revenue. The department also reserves the right to summon the bidder to demonstrate and prove the effectiveness of any and all protective features required. The state reserves the right to waive technicalities and to reject any and all bids. Any proposal offer is subject to the option of the state as to whether it is to the best interest of the state. The price of the stamps will be given consideration, but the primary consideration in choosing a stamp will be the maximum protection offered to the state against illegal reproduction or counterfeiting and for general adaptability to the purpose required.

AUTHORITY: sections 66.380, 149.015 and 210.320, RSMo (Cum. Supp. 1993) and 136.030, 136.120 and 149.021, RSMo (1986).* Cigarette Tax Regulation 4 was last filed Dec. 31, 1975, effective Jan. 10, 1976. Amended: Filed March 13, 1984, effective June 11, 1984. *Original authority: 66.380, RSMo (1967), amended 1993; 136.030, RSMo (1945), amended 1947, 1949, 1965; 136.120, RSMo (1945); 149.015, RSMo (1974), amended 1982, 1993; 149.021, RSMo (1974), amended 1982; and 210.320, RSMo (1939), amended 1969, 1976, 1978, 1993.