18-0329 Thursday “Daily Bugle”

18-0329 Thursday “Daily Bugle”

Thursday, 29 March 2018

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. Commerce/BIS: RPTAC to Meet on 17 Apr in Wash DC 
  2. Justice/ATF Seeks Comments on Clarification of Bump-Stock-Type Devices 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  1. Expeditors News: “GSP Renewed by Omnibus Spending Bill”
  2. ST&R Trade Report: “U.S. Details Additional Changes to Korea FTA”
  1. M. Volkov: “The State of Affairs: General Counsels and Chief Compliance Officers”
  2. Gary Stanley’s EC Tip of the Day
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (22 Feb 2018), DOD/NISPOM (18 May 2016), EAR (22 Mar 2018), FACR/OFAC (19 Mar 2018), FTR (20 Sep 2017), HTSUS (14 Mar 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


EXIM_a11. Commerce/BIS: RPTAC to Meet on 17 Apr in Wash DC
(Source: Federal Register, 29 Mar 2018.) [Excerpts.]
83 FR 13474-13475: Regulations and Procedures Technical Advisory Committee; Notice of Partially Closed Meeting
  The Regulations and Procedures Technical Advisory Committee (RPTAC) will meet April 17, 2018, 9:00 a.m., Room 3884, in the Herbert C. Hoover Building, 14th Street between Constitution and Pennsylvania Avenues NW, Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on implementation of the Export Administration Regulations (EAR) and provides for continuing review to update the EAR as needed.
Public Session
  (1) Opening remarks by the Chairman
  (2) Opening remarks by the Bureau of Industry and Security
  (3) Presentation of papers or comments by the Public
  (4) Export Enforcement update
  (5) Regulations update
  (6) Working group reports
  (7) Automated Export System update
Closed Session
  (8) Discussion of matters determined to be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 Sec. Sec. 10(a)(1) and 10(a)(3).
 The open session will be accessible via teleconference to 25 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov no later than April 10, 2018. …
  For more information, call Yvette Springer at (202) 482-2813.
Yvette Springer, Committee Liaison Officer.
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EXIM_a22. Justice/ATF Seeks Comments on Clarification of Bump-Stock-Type Devices
(Source: Federal Register, 29 Mar 2018.) [Excerpts.]
83 FR 13442-13457: Bump-Stock-Type Devices
* AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Department of Justice.
* ACTION: Notice of proposed rulemaking.
* SUMMARY: The Department of Justice (Department) proposes to amend the Bureau of Alcohol, Tobacco, Firearms, and Explosives regulations to clarify that “bumpfire” stocks, slide-fire devices, and devices with certain similar characteristics (bump-stock-type devices) are “machineguns” as defined by the National Firearms Act of 1934 (NFA) and the Gun Control Act of 1968 (GCA), because such devices allow a shooter of a semiautomatic firearm to initiate a continuous firing cycle with a single pull of the trigger. Specifically, these devices convert an otherwise semiautomatic firearm into a machinegun by functioning as a self-acting or self-regulating mechanism that harnesses the recoil energy of the semiautomatic firearm in a manner that allows the trigger to reset and continue firing without additional physical manipulation of the trigger by the shooter. Hence, a semiautomatic firearm to which a bump-stock-type device is attached is able to produce automatic fire with a single pull of the trigger. With limited exceptions, primarily as to government agencies, the GCA makes it unlawful for any person to transfer or possess a machinegun unless it was lawfully possessed prior to the effective date of the statute. The bump-stock-type devices covered by this proposed rule were not in existence prior to the GCA’s effective date, and therefore would fall within the prohibition on machineguns if this Notice of Proposed Rulemaking (NPRM) is implemented. Consequently, current possessors of these devices would be required to surrender them, destroy them, or otherwise render them permanently inoperable upon the effective date of the final rule.
* DATES: Written comments must be postmarked and electronic comments must be submitted on or before June 27, 2018. Commenters should be aware that the electronic Federal Docket Management System will not accept comments after midnight Eastern Daylight Time on the last day of the comment period. …
* FOR FURTHER INFORMATION CONTACT: Vivian Chu, Office of Regulatory Affairs, Enforcement Programs Services, Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 99 New York Ave. NE, Washington DC 20226; telephone: (202) 648-7070.
   In general, bump-stock-type devices–including those currently on the market with the characteristics described above–are designed to channel recoil energy to increase the rate of fire of semiautomatic firearms from a single trigger pull. Specifically, they are designed to allow the shooter to maintain a continuous firing cycle after a single pull of the trigger by directing the recoil energy of the discharged rounds into the space created by the sliding stock (approximately 1.5 inches) in constrained linear rearward and forward paths. Ordinarily, to operate a semiautomatic firearm, the shooter must repeatedly pull and release the trigger to allow it to reset, so that only one shot is fired with each pull of the trigger. When a bump-stock-type device is affixed to a semiautomatic firearm, however, the device harnesses the recoil energy to slide the firearm back and forth so that the trigger automatically re-engages by “bumping” the shooter’s stationary trigger finger without additional physical manipulation of the trigger by the shooter. The bump-stock-type device functions as a self-acting and self-regulating force that channels the firearm’s recoil energy in a continuous back-and-forth cycle that allows the shooter to attain continuous firing after a single pull of the trigger so long as the trigger finger remains stationary on the device’s extension ledge (as designed). No further physical manipulation of the trigger by the shooter is required.
   In 2006, ATF concluded that certain bump-stock-type devices qualified as machineguns under the GCA and NFA. Specifically, ATF concluded that devices attached to semiautomatic firearms that use an internal spring to harness the force of the recoil so that the firearm shoots more than one shot with a single pull of the trigger are machineguns. Between 2008 and 2017, however, ATF also issued classification decisions concluding that other bump-stock-type devices were not machineguns, including a device submitted by the manufacturer of the bump-stock-type devices used in the Las Vegas shooting. Those decisions did not include extensive legal analysis relating to the definition of “machinegun.” Nonetheless, they indicated that semiautomatic firearms modified with these bump-stock-type devices did not fire “automatically,” and were thus not “machineguns,” because the devices did not rely on internal springs or similar mechanical parts to channel recoil energy. ATF has now determined that that conclusion does not reflect the best interpretation of the term “machinegun” under the GCA and NFA. In this proposed rule, the Department accordingly interprets the definition of “machinegun” to clarify that all bump-stock-type devices are “machineguns” under the GCA and NFA because they convert a semiautomatic firearm into a firearm that shoots automatically more than one shot, without manual reloading, by a single function of the trigger. …
   ATF has now determined, based on its interpretation of the relevant statutory language, that these bump-stock-type devices, which harness recoil energy in conjunction with the shooter’s maintenance of pressure, turn legal semiautomatic firearms into machineguns. Specifically, ATF has determined that these devices initiate an “automatic[]” firing cycle sequence “by a single function of the trigger” because the device is the primary impetus for a firing sequence that fires more than one shot with a single pull of the trigger. 26 U.S.C. 5845(b). ATF’s classifications of bump-stock-devices between 2008 and 2017 did not include extensive legal analysis of these terms in concluding that the bump-stock-type devices at issue were not “machineguns.” The statutory definition of machinegun includes bump-stock-type devices–irrespective of whether the devices harness recoil energy using a mechanism like an internal spring or in conjunction with the shooter’s maintenance of pressure–because these devices enable a semiautomatic firearm to fire “automatically more than one shot, without manual reloading, by a single function of the trigger.” Id. This proposed rule is the appropriate mechanism for ATF to set forth its analysis for its changed assessment. See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 57 (1983). …
   The regulations in 27 CFR part 479 contain the procedural and substantive requirements relative to the importation, manufacturing, making, exportation, identification and registration of, and dealing in machineguns, destructive devices, and certain other firearms and weapons under the NFA.Currently, the regulatory definition of “machine gun” in 27 CFR 479.11 matches the statutory definition of “machinegun” in the NFA quoted in Part I, above. The definition includes the terms “single function of the trigger” and “automatically,” but those terms are not expressly defined in the statutory text. Those terms are best interpreted, however, to encompass firearms equipped with bump-stock-type devices. As discussed above, bump-stock-type devices like the Akins Accelerator and other devices that operate to mimic automatic fire when added to semiautomatic rifles present the same risk to public safety that Congress has already deemed unacceptable by enacting and amending the GCA (18 U.S.C. 922(o)). Therefore, the Department proposes to exercise its delegated authority to clarify its interpretations of the statutory terms “single function of the trigger,” “automatically,” and “machinegun.” Specifically, the Department proposes to amend 27 CFR 479.11 by defining the term “single function of the trigger” to mean “single pull of the trigger.” The Department further proposes to amend these regulations by defining the term “automatically” to mean “as the result of a self-acting or self-regulating mechanism that allows the firing of multiple rounds through a single pull of the trigger.” Finally, the Department proposes to clarify that the definition of a “machinegun” includes a device that allows semiautomatic firearms to shoot more than one shot with a single pull of the trigger by harnessing the recoil energy of the semiautomatic firearm to which it is affixed so that the trigger resets and continues firing without additional physical manipulation of the trigger by the shooter (commonly known as bump-stock-type devices). …
   Dated: March 23, 2018.
Jefferson B. Sessions III, Attorney General.
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OGS_a13. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Drawback Process Regulations [Publication Date: 30 March 2018.]
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6. Expeditors News: “GSP Renewed by Omnibus Spending Bill”
(Source: Expeditors News, 28 Mar 2018.)
On March 23, 2018, President Trump signed into law the Omnibus Spending Bill to fund the federal government, which contains provisions to renew the Generalized System of Preferences (GSP) until December 31, 2020.
U.S. Customs and Border Protection (CBP) will apply GSP retroactively to entries filed after December 31, 2017, provided a request is filed with CBP within 180 days after the bill is enacted, and contains enough information for CBP to locate or reconstruct the entry.
The renewal of the GSP will go into effect 30 days after the House passed the legislation.
The text of the Bill may be found here.

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7. ST&R Trade Report: “U.S. Details Additional Changes to Korea FTA”
The U.S. has secured a number of changes to its free trade agreement with Korea, some of which were reported previously. The Office of the U.S. Trade Representative asserts that these changes will reduce the U.S. trade deficit with Korea, which has increased 70 percent since the KORUS agreement took effect in 2012. USTR notes that once the amendments are completed they will undergo domestic review procedures in both countries, which in the U.S. will include a 60-day consultation period with Congress on any required modifications to the tariff schedule.

According to USTR, key changes to the agreement include the following.
  – The U.S. will have an additional 20 years, until 2041, to phase out its 25 percent tariff on Korean trucks.
  – Korea will double the number of U.S. automobile exports, to 50,000 cars per manufacturer per year, that can meet U.S. safety standards (in lieu of Korean standards) and enter the Korean market without further modification.
  – U.S. gasoline engine vehicle exports will be able to show compliance with Korea’s emission standards using the same tests they conduct to show compliance with U.S. regulations without additional or duplicative testing for the Korean market.
  – Korea will recognize U.S. standards for auto parts necessary to service U.S. vehicles and reduce labeling burdens for parts.
  – Korea will expand the amount of “eco-credits” available to help meet fuel economy and greenhouse gas requirements under the regulations currently in force while also ensuring that fuel economy targets in future regulations will be set taking U.S. regulations into account. Korea will also continue to include more lenient targets for small volume manufacturers.
  – Korea has agreed to principles for conducting verifications of origin of exports under KORUS and will establish a working group to monitor and address future issues that arise.
  – By the end of 2018 Korea will amend its Premium Pricing Policy for Global Innovative Drugs to make it consistent with Korea’s commitments to ensure non-discriminatory and fair treatment for U.S. pharmaceutical exports.
  – The two sides are negotiating a side agreement on provisions to prohibit competitive devaluation and exchange rate manipulation. While USTR states that this agreement will include strong commitments on transparency and accountability, press sources note that it will not be subject to the FTA’s dispute settlement provisions.
  – U.S. imports of steel products from Korea will not be subject to a recently announced 25 percent additional tariff but will be subject to a product-specific quota equivalent to 70 percent of the average annual import volume of such products during the period 2015 to 2017.

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8. M. Volkov: “The State of Affairs: General Counsels and Chief Compliance Officers”
(Source: Volkov Law Group Blog, 28 Mar 2018. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
In the last few years, the tension between chief compliance officers and general counsels appears to have subsided.  The issue of separating CCOs from legal departments is not as important as it used to be.  Why?
I would like to think that CCOs have gained independence, authority and line of sight across their organizations.  General counsels have acknowledged the importance of this change and accepted it as the new norm in the compliance landscape.  But has change really occurred?
The facts clearly establish that change has occurred.  Years ago, almost two-thirds of CCOs reported to the general counsel.  Now, with the support of government prosecutors and regulators, and compliance advocates, the number of CCOs reporting to general counsels has dwindled to approximately one-third.  I predict this number will continue to fall below one-quarter.
  – Has the so-called “rise” of the compliance profession been more form over substance? 
  – Has independence and authority truly elevated the CCO into the C-Suite? 
  – Has the CCO become a trusted advisor to the CEO and senior managers?
I suspect the answers to these questions varies from company to company. I am not so naive to believe that form will always trump substance.
As I have witnessed in my own career, it is hard to generalize about professions because the most significant influence on a company’s operations may vary based on personalities. The form or organization of a compliance infrastructure may not be determinative of the role of the CCO and the influence of the CCO with the CEO.
On the other hand, corporate politics, jockeying and ultimate influence requires access and contact. A CCO in the C-Suite provides opportunities that a CCO would not otherwise have.
A general counsel always has access to the CCO and the C-Suite as the chief legal advisor. But again, in some companies, the general counsel sits at the right hand of the CEO, and in others, the general counsel and the CEO have occasional contact. I have yet to see an organization where the CCO sits at the right hand (or even left hand) of the CEO.
Some have suggested there is an inherent bias by the CEO and senior managers to favor the general counsel over the CCO. I do not believe that.
The CCO’s elevated importance has not had enough time to take hold in corporate governance. We will see the ultimate rise of the compliance profession as a trusted business partner in those organizations that understand the importance of ethics and compliance to a successful and sustainable business. A new breed of leadership is evolving in the corporate landscape – one that avoids cutting corners, living for quarterly results – and instead embraces the true support multiplier of corporate success: a commitment to ethical business as a sustainable business model.
Corporate leaders that eschew ethics and compliance will no longer be successful in the long run. They may move from company to company, but they will not be leaders of the new model for corporate governance that is built on long-run results.
The natural partner for sustainable growth, however, is the CCO. Certainly, general counsels can play that role as well, and I have seen numerous conversions by general counsels who now acknowledge the importance of an independent CCO with authority and resources. In fact, with the rise of CCOs, I have seen more collaboration than antagonism between CCOs and general counsels.
The road may have been bumpy but coordination and partnership between the legal and compliance functions is increasing rapidly. In the end, CCOs and general counsel realized that they needed each other more than they needed to disagree. It was bound to play out this way and general counsels and CCOs have made it work.

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* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,

In accordance with ITAR § 124.9(a)(5) (MLAs) and ITAR § 124.14(c)(6) (WDAs), the applicant must submit an annual report of sales or other transfers pursuant to the agreement of the licensed articles, by quantity, type, U.S. dollar value, and purchaser or recipient to DTCL. This report of sales is for the sale of manufactured or distributed hardware alone. Sales reports must be based on the transfer of hardware: if an order was placed but the hardware has not yet been transferred, that hardware will not be reported until the year when that hardware is transferred. For MLAs, reported sales must indicate the total value of the manufactured end items, to include any hardware that was exported and incorporated into the manufactured end items. An electronic copy of the Annual Sales Report should be uploaded to the respective approved license for the base agreement. For a new MLA or WDA, an Annual Sales Report is not required until the agreement has been executed since sales/transfers could not occur until the agreement had been executed. The first Annual Sales Report would be required for the year in which the agreement was executed. For an MLA or WDA that was not active in a particular year, a report of “No Sales” is required. Although not required, it is preferred that Annual Sales Reports come to DTCL from the applicant and not directly from the foreign manufacturer. Annual Sales Reports may cover either calendar or fiscal years.

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* Sam Walton (Samuel Moore Walton; 29 Mar 1918 – 5 Apr 1992; was an American businessman and entrepreneur best known for founding the retailers Walmart and Sam’s Club. Wal-Mart Stores Inc. grew to be the world’s largest corporation by revenue as well as the biggest private employer in the world. At one point in his life, he was the richest man in America.  The Walton family held five spots in the top ten richest people in the United States until 2005.)
  – “High expectations are the key to everything.”
  – “If you love your work, you’ll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you — like a fever.”
James E. Casey (29 Mar 1888 – 6 Jun 1983; American businessman, in 1907, 19-year-old James Casey founded the American Messenger Company in Seattle, Washington.)
  – “One measure of your success will be the degree to which you build up others who work with you. While building up others, you will build up yourself.”

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. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 22 Feb 2018: 83 FR 7608-7610: Technical Amendment to List of User Fee Airports: Name Changes of Several Airports and the Addition of Five Airports

  – Last Amendment: 18 May 2016: Change 2
: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary 

: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 22 Mar 2018: 83 FR 12475-12483: Addition of Certain Persons to the Entity List and Removal of Certain Persons from the Entity List; Correction of License Requirements  

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment: 19 Mar 2018:
83 FR 11876-11881: Inflation Adjustment of Civil Monetary Penalties 

: 15 CFR Part 30
  – Last Amendment:
20 Sep 2017:
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
  – HTS codes that are not valid for AES are available
  – The latest edition (16 March 2018) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and approximately 250 footnotes containing case annotations, practice tips, Census/AES guidance, and explanations of the numerous errors contained in the official text. Subscribers receive revised copies in Microsoft Word every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance websiteBITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR. Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu.  
, 1 Jan 2018: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
Last Amendment: 14 Mar 2018: Harmonized System Update 1803, containing 449 ABI records and 92 harmonized tariff records.

  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.


  – Last Amendment: 14 Feb 2018: 83 FR 6457-6458: Amendment to the International Traffic in Arms Regulations: Addition of South Sudan [Amends ITAR Part 126.] 

  – The only available fully updated copy (latest edition: 14 Feb 2018) of the ITAR with all amendments is contained in Bartlett’s Annotated 

, by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.
 The BITAR is available by annual subscription from the Full Circle Compliance
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission, provided attribution is given to “The Export/Import Daily Bugle of (date)”. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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