Rev. Proc. 62-15

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to set forth the requirements to be met in order to obtain authorization from the Internal Revenue Service to manufacture and lease documentary stamp tax meter machines.

SEC. 2. BACKGROUND.

Section 47.6801-1 of the Documentary Stamp Tax Regulations provides, in part, that the Commissioner of Internal Revenue or his delegate shall have the authority to set the standards for and to approve meter machines for use in the sale of documentary stamps.

SEC. 3. APPLICATION.

Any person who desires to manufacture and lease documentary stamp tax meters may apply for authorization in writing to the Commissioner of Internal Revenue. Upon approval, he will be notified in writing by the Service.

SEC. 4. QUALIFICATIONS.

Any person desiring authorization to manufacture and lease documentary stamp tax meter machines must qualify as follows:

.01 Present satisfactory evidence to the Commissioner as to integrity and financial responsibility.

.02 Obtain approval of the specific model to be used. The model must incorporate all of the mechanical features and safeguards set forth in section 5 of this Revenue Procedure.

.03 Maintain manufacturing control and maintenance facilities satisfactory to the Service. Such facilities shall be subject to inspection by the Service. At the time of such inspection, the authorization of the manufacturer may be suspended if conditions are found which indicate that meters, dies or keys are not properly controlled or accounted for.

.04 Maintain adequate facilities to control, distribute and maintain documentary stamp tax meters and to replace them, if necessary.

SEC. 5. SPECIFICATIONS.

To qualify under this Revenue Procedure, documentary stamp meters must incorporate all of the following mechanical features and safeguards:

.01 A documentary stamp meter may be either a complete machine or it may be a detachable portion of a complete machine, provided such detachable portion contains the printing die and registering mechanism. It must be suitable for the user to bring it to the designated Service office for setting as provided in section 6 of Revenue Procedure 62-16, page 451 of this Bulletin.

.02 A documentary stamp meter must be capable of printing a stamp for any amount up to $999.99. The printing die or die counters, and the counter-actuating mechanism must be inseparable in the unit.

.03 In each documentary stamp meter, there must be two accurate and dependable counting devices, one ascending and registering the total tax amounts which have been imprinted by the machine and the other descending and registering the balance of the tax amount unused. The descending register must actuate a locking mechanism preventing further operation of the meter after the register has been reduced to an amount less than $100.00. The descending register must be so constructed as to be easily set at the designated Service office for a total value of documentary stamps up to $99,999.99.

.04 The printing die must be approved by an authorized Service representative. Such die must include, as part of the printing surface, the name or identifying symbol of its manufacturer, the identification number of the meter machine and spaces so that, when the machine is activated, it will automatically print on each stamp the date, a stamp serial number and the money value of the stamp. There should be associated with such die a timing or date setting device which must be easily accessible to the user without requiring access to the mechanism of the meter. The printing mechanism must be so constructed and shielded as to prevent fraudulent imprints. Each meter machine manufacturer will use only one design for the printing surface of dies which are intended to be used in meter machines to print documentary stamps. Such design must be approved by the Commissioner or his delegate.

.05 The meter die or printing plate and numerals must be made of suitable durable material which will provide a sharp legible impression. Also the die, plate and numerals must be of such durability as not to soften or disintegrate while in normal use. The die or plate must be well-fitted and so securely fastened to the printing mechanism that it will not normally become loose or detached or otherwise interfere with the proper operation of the meter.

.06 The entire mechanism must be encased in a durable or permanent-type housing. The descending register must be accessible, to the person authorized by the Service to set the meter, by means of a door equipped with a suitable lock and with mechanism for an Internal Revenue Service seal. The ascending register and all other related internal mechanism must be so shielded as not to be accessible even when the door is open. The readings of both registers and the consecutive imprint serial number must be visible through closed windows, so as to be easily obtainable at any time between operations. The housing must be of such construction that it is impossible (1) to alter the readings of the ascending register or to alter the serial stamp numbering device, except by normal operation, or (2) to gain access to the internal mechanism, except by a representative of the Service authorized to set the descending register.

.07 The entire mechanism must be of such solid substantial and dependable design and construction as to protect the Federal Government against loss of revenue from fraud, manipulation, misoperation, or breakdown.

.08 The ink used in the meter must be indelible and of a quality approved by an authorized Service representative.

.09 The meter must be so designed that it may be used to imprint a stamp either directly on a document or on paper tape which can be affixed to a document. The paper tape used for this purpose must be a protected paper of a quality equal to that normally used for bank checks and must have a durable adhesive on the reverse side.

SEC. 6. TESTING AND APPROVAL.

.01 Submission of model .-Prior to approval, each model proposed for manufacture must be submitted to the Service for tests of the meter at the expense of the manufacturer.

.02 Restriction on distribution .-Meters may not be distributed or used for payment of documentary stamp tax until a complete unit made to production drawings and specifications has been submitted, tested, and approved, except as may be specifically authorized for preliminary field testing.

.03 Deposit of specimen meter .-The manufacturer of the meter must deposit a sample of each production model with the Service, and no changes affecting the basic features or safeguards may be made thereafter without the approval of the Service.

.04 Tests after approval .-If requested by the Service, additional meters from current manufacture must be supplied for testing at the expense of the manufacturer.

SEC. 7. SAFEGUARDS.

.01 Materials and workmanship .-All meters must closely adhere to the quality in materials and workmanship of the approved production model and must be manufactured with suitable jigs, dies, tools, etc., to assure proper maintenance and interchangeability of parts.

.02 Breakdown tests .-At reasonably frequent intervals, the manufacturer must take meters at random from production and subject them to breakdown tests to make certain that quality and performance standards are being maintained.

.03 Protection of printing dies and keys .-During the process of fabricating parts and assembling documentary stamp meters, the manufacturer must exercise special care to prevent the loss or theft of keys, meters, dies or component parts. All printing dies and keys produced shall be accounted for, the dies by assembly into meters or by mutilation or destruction recorded and certified by an officer of the manufacturer, the keys by transfer to authorized Service representatives or by mutilation or destruction recorded and certified by an officer of the manufacturer.

.04 Destruction of meter stamps .-All meter stamps printed in the process of testing dies and meters must be collected and destroyed by an officer of the manufacturer. The manufacturer will maintain a record of the machine number, serial number and date of all stamps destroyed.

.05 Inspection of new and rebuilt meters .-All new and rebuilt meters must be carefully inspected before leaving the manufacturer's meter service station.

.06 Keys and setting equipment .-The meter manufacturer must furnish keys and other essential equipment for setting his meters to each Service representative authorized to set documentary stamp meters. These items shall be protected and not furnished to any persons except those authorized by the Commissioner to set documentary stamp meters.

SEC. 8. DISTRIBUTION.

.01 Facilities .-Each authorized manufacturer must maintain adequate facilities for the distribution, maintenance and control of documentary stamp meters. All such facilities will be subject to inspection by the Service.

.02 Controls .-Each authorized manufacturer is required to:

(1) Retain title permanently to all meters of his manufacture except those which may be sold to a department or agency of the United States Government.

(2) Lease meters only to users who have been granted permission by the Service to use these meters.

(3) Deliver each meter only to the Service office designated in the approved Form 2969, Application and Permit to Use Documentary Stamp Tax Meter, which meter is to be set and sealed by the proper Service representative before release to an approved user.

(4) Take special precautions in the transportation, storage and maintenance of the meters to prevent their reaching the hands of unauthorized persons.

(5) Report immediately the loss or theft of any of his meters or the recovery of any stolen meters to the local police and to the District Director for the district in which the meter is located.

(6) Maintain at a central headquarters within the United States a complete record by identification number of all meters manufactured, showing all movements of each and the users thereof from the time it is produced until it is scrapped, and the readings of the ascending register and the last consecutive imprint serial number each time it is checked into or out of service through the Service office designated by Form 2969 to set the meter. These records must be available for inspection at any time by the Internal Revenue Service. Upon the sale of a meter machine to a United States Government agency, as authorized in section 8.02(1) above, such record keeping requirements will be suspended upon presentation of notice of the sale to the Commissioner or his delegate. The records must not be destroyed until at least three years after the meter is scrapped.

(7) Cancel the lease agreement with any user whose meter authorization is cancelled by the Service and promptly remove the meter from the user's premises.

(8) Maintain a permanent record, which shall include signed receipt cards, by identification number of all meter keys issued to Service representatives authorized to set meters. Such records are required to be certified to by an officer of the manufacturer.

(9) Examine each meter withdrawn from service for mechanical failure and report to the Service the mechanical condition or fault which caused the failure and the action taken to correct it.

SEC. 9. MAINTENANCE.

.01 The manufacturer must maintain his meters in proper operating condition for users by repairing or replacing them when necessary or desirable to forestall mechanical breakdown.

.02 The manufacturer will provide each meter user with a meter record book of a style approved by the Service and will furnish a new or additional one when necessary.

.03 The manufacturer will at all times, have a sufficient stock of approved ink and approved protected paper tape to keep each user's meter in a proper operating condition.

SEC. 10. INSPECTION.

The manufacturer must inspect, at least once each six months, all of his meters in service. Inspections must be sufficiently thorough to determine that each meter is clean and in proper operating condition, that it is recording its operations correctly and accurately, and that neither the Internal Revenue Service seal nor any seal placed on it by the manufacturer to prevent access to the mechanism has been removed or tampered with. Any irregularities found in the operation of a meter at any time or any improper usage of a meter must be reported immediately to the District Director, and appropriate steps must be taken to remove the meter from service.

SEC. 11. REPAIR OF INTERNAL MECHANISM.

Repair or reconditioning of meters involving access to internal mechanism must be performed only within a factory or suitable meter repair department under the direct control and supervision of the manufacturer. Each meter requiring internal repair must be checked out of service through the Service office designated to set the meter before it is opened or any internal repairs are undertaken and such meter must be checked back into service through a Service office.

SEC. 12. REVOCATION.

Among the reasons for which a manufacturer's authorization may be revoked are the following:

(1) If the manufacturer, any of his employees or representatives engages in any scheme or enterprise involving misuse of stamp meters, keys or dies for meters that results in loss of revenue to the Federal Government.

(2) If the manufacturer fails to maintain standards for control, distribution and maintenance of the documentary stamp tax meters required by this Revenue Procedure. (The manufacturer's facilities shall be subject to inspection to determine if the requirements are met.)

(3) If the machine proves to be unsatisfactory or if it is found to be susceptible to fraud.

SEC. 13. SUSPENSION.

The Service may require a manufacturer to suspend production and distribution of any model of documentary stamp tax meter pending an investigation to determine whether his authorization should be continued, modified or revoked. The manufacturer will be informed of the facts which may warrant adverse action and will be given an opportunity to be heard and to demonstrate or achieve compliance with the requirements of the Service within a reasonable, specified time limit.

SEC. 14. INQUIRIES.

Inquiries concerning this Revenue Procedure should refer to its number and be addressed to the Commissioner of Internal Revenue, Washington 25, D.C., Attention: D:S:P.