18-1030 Tuesday “Daily Bugle”

18-1030 Tuesday “Daily Bugle”

Tuesday, 30 October 2018

TOPThe 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 here for free subscription. Contact us for advertising inquiries and rates

  1. Commerce/BIS Amends EAR, Adds One Entity to the Entity List
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Posts Reminder Concerning 2018 ACE Customer Satisfaction Survey
  4. DHS/CBP Updates Drawback CATAIR and Error Dictionary
  5. State/DDTC Announces Industry Testing Underway for DDTC’s New DECCS Applications
  1. Expeditors News: “UK Issues Guidance on Preparedness for the Exit from the EU”
  2. NetzPolitik.org: “Surveillance Exports: How EU Member States Are Compromising New Human Rights Standards”
  3. Reuters: “U.S. Restricts Exports to Chinese Semiconductor Firm Fujian Jinhua”
  1. M. Volkov: “Ethics and Compliance as a ‘Marketing’ Program”
  2. R.C. Thomsen II, A.D. Paytas & M.M. Shomali: “Revisions to the EAR to Implement 2017 Wassenaar Changes”
  1. ECTI Presents “Export Compliance Essentials for the Aerospace Industry” Webinar, 5 Dec
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (19 Sep 2018), DOD/NISPOM (18 May 2016), EAR (30 Oct 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (22 Oct 2018), ITAR (4 Oct 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



Federal Register, 30 Oct 2018.) [Excerpts.]
83 FR 54519-54521: Addition of an Entity to the Entity List
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: In this rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) by adding one entity to the Entity List. The entity that is added to the Entity List has been determined by the U.S. Government to pose a significant risk of becoming involved in activities contrary to the national security or foreign policy interests of the United States. This entity will be listed under the destination of China.
* DATES: Effective Date: This rule is effective October 30, 2018.
* FOR FURTHER INFORMATION CONTACT: Chair, End-User Review Committee, Office of the Assistant Secretary, Export Administration, Bureau of Industry and Security, Department of Commerce, Phone: (202) 482-5991, Fax: (202) 482-3911, Email: ERC@bis.doc.gov.
   This final rule adds the following entity to the Entity List:
  (1) Fujian Jinhua Integrated Circuit Company, Ltd., a.k.a., the following one alias: -JHICC.
  Sanchuang Park, Century Avenue, Jinjiang City, Fujian Province, China. …
   Dated: October 25, 2018.
Richard E. Ashooh, Assistant Secretary for Export Administration. 

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. Items Scheduled for Publication in Future Federal Register Editions

Federal Register)
[No items of interest noted today.]  

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4. DHS/CBP Posts Reminder Concerning 2018 ACE Customer Satisfaction Survey

(Source: CSMS #18-000637, 30 Oct 2018.)
This is a reminder that the 2018 ACE Customer Satisfaction Survey is now OPEN! CBP encourages all importers, brokers, carriers and other trade community users of ACE to take the 5-10-minute survey. The survey is voluntary and anonymous. Your response will help CBP understand users’ satisfaction with and impact of ACE capabilities, as well as identify areas where improvements are needed. A large number of responses will ensure more accurate representation across the import and export industries. The survey will remain open through midnight, November 9, 2018.
To access the survey, please click on the
following link*
Please note you may need to copy and paste the URL into your web browser.
* DISCLAIMER: You are now leaving a DHS website and are going to a website created and maintained by a public and/or private organizations. For more information to the DHS Redirection linking policy go to https://www.dhs.gov/redirect.
  – Related CSMS No. 18-000620, 18-000627

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5. DHS/CBP Updates Drawback CATAIR and Error Dictionary

(Source: CSMS #18-000641, 30 Oct 2018.)
An updated Drawback CATAIR is now posted with a corrected Table of Changes.
The updated Drawback CATAIR (V12) can be found here.
Additionally, an updated Drawback Error dictionary (V10) was posted and that can be found here.

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6. State/DDTC Announces Industry Testing Underway for DDTC’s New DECCS Applications
(Source: State/DDTC, 30 Oct 2018.)
Want to provide feedback on test versions of DDTC’s latest Defense Export Control and Compliance System (DECCS) applications? Now is your chance! Industry Participants Wanted to test DDTC’s DECCS Advisory Opinions and Registration Applications.
Advisory Opinions Application
Participants can directly test the Advisory Opinion application through here. First time users must enroll to create a new user account, then use their account to login to the DECCS Portal. Once logged in, users can select Advisory Opinion from the menu bar at the top of the page to test the online form and provide feedback through the “Submit Feedback” button on the right-hand side of the screen.
Registration Application
Participants can test the registration application by contacting the DDTC Test Support Team at the number or email below to sign up and receive further guidance.
DDTC Test Support Team:
  – Email: PM-DDTC-DECCS@state.gov
  – Phone: (202) 663-1282 / (202) 663-2838
The DDTC Test Support Team will be available during the week from 10am to 4pm EST.
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Expeditors News, 29 Oct 2018.)
Last week, the Government of the United Kingdom (UK) issued two documents regarding preparedness in the event of an exit from the European Union (EU) without an agreement.
On October 22, 2018, Her Majesty’s Revenue and Customs (HMRC) issued a “Partnership pack”, which “provides a high-level guide to customs processes and procedures that are likely to apply in a ‘no deal’ scenario.”
According to the document, HMRC will provide additional guidance with specific actions that will need to be taken in order to prepare for a “no deal” scenario later this year.
On October 24, 2018, the National Audit Office (NAO) of the UK issued a report that discusses each of the different exit scenarios, and offers an assessment on the state of preparedness of certain departments of the Government of the UK for each of those scenarios.
The withdrawal of the UK from the EU is due to take place on March 29, 2019 if no deal is made.
The HMRC guidance may be found
The NAO report may be found

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NWS_a28. NetzPolitik.org: “Surveillance Exports: How EU Member States Are Compromising New Human Rights Standards”
(Source: NetzPolitik.org, 29 Oct 2018.)
In partnership with the human rights organization Reporters Without Borders Germany, we are disclosing the full text of many EU Council negotiation documents. Read the complete reporting in German.
Since 2016, the European Union has been working on proposals to implement stricter controls on the export of surveillance technology outside the EU. However, internal documents now prove that certain Member States – especially Sweden, Finland, and the United Kingdom – are succumbing to pressure from business interests. As a result, human rights safeguards are being diluted.
The discussion about European accountability for human rights abuses conducted through surveillance has been especially pressing since The Arab Spring in 2010. It became evident that
European companies were selling spy tools to authoritarian regimes such as Syria, Egypt and Libya. These technologies were then used against journalists, human rights activists, and opposition groups to suppress democratic movements.
In response, the European Commission proposed
a new regulation for export controls of surveillance technology. It was a recast of the so-called
“dual use regulation” in which goods are controlled with both a military and a civil end-use.
In early 2018, the European Parliament – with an overwhelming majority of 91 percent –
voted for changes in the Commission’s draft. However, none of the Commission’s approaches to safeguard human rights were principally challenged by the Parliament. The European legislative process now requires a position by the Member States, so that all three institutions can find a compromise in the trialogue.
However, the documents we are publishing reveal that Finland and Sweden in particular are fundamentally opposed to any improvements regarding stricter controls of new human rights standards. The position is supported by the United Kingdom, Ireland, Italy and Poland.
The countries explained in a paper brought into the negotiations in May that they consider all of the human rights proposals by the Commission as unnecessary. However, countries like Germany and France had also argued this position earlier on – that there was “no need” for some of the Commission’s improvements, such as the so-called “human rights catch-all clause”.
In May, a majority in the European Council already voted against this approach, now revealed by
the internal documents of the German government. In November, the European Member States will come together for their final discussions and voting on their positions. Adopting their current stance about the proposal – revealed in these documents – would be contradictory to their public discourse.

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9. Reuters: “U.S. Restricts Exports to Chinese Semiconductor Firm Fujian Jinhua”

(Source: Reuters, 29 Oct 2018.) [Excerpts.]
U.S. President Donald Trump’s administration took action on Monday to cut off a Chinese state-backed chipmaker from U.S. suppliers amid allegations the firm stole intellectual property from U.S. semiconductor company Micron Technology Inc
The Commerce Department said it had put Fujian Jinhua Integrated Circuit Co Ltd on a list of entities that cannot buy components, software and technology goods from U.S. firms.
The administration is concerned the Chinese firm could flood the market with cheap chips that are also made by U.S. companies that supply the U.S. military. If the U.S. chipmakers go out of business, the military would lose a supplier for an item that must come from the United States.
Trade experts said the Trump administration’s move may be an unprecedented effort to use a legal tool known for punishing foreign companies that send U.S.-origin goods to sanctioned countries such as Iran to instead protect the economic viability of a U.S. firm.
The move escalated what until now had been a business dispute into the realm of an international trade conflict between the United States and China. The Commerce Department spokesman said the move was “based on the regulatory standard.”
The action against Fujian Jinhua is likely to ignite new tensions between Beijing and Washington since the company is at the heart of the “Made in China 2025” program to develop new high-technology industries. …
The U.S. action is similar to a Commerce Department move that nearly put Chinese telecommunications equipment company ZTE Corp out of business earlier this year by cutting it off from U.S. suppliers. …

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Volkov Law Group Blog, 29 Oct 2018. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group,
mvolkov@volkovlaw.com, 240-505-1992.
Right up front, I want to confess. I am a lawyer, and I love being a lawyer. So forgive me for this posting and perhaps my narrow-minded view but I have to take a moment to express some concerns about ethics and compliance.
I am continuing to hear CCOs, especially at global companies, who describe their ethics and compliance program as a “marketing” program or a “public relations” program. In describing their programs, these CCOs carry with them a number of slick videos touting the company’s commitment to ethical principles, integrity and “feeling good” messages.
Perhaps today’s culture and communications are passing me by, or I am a little outdated, but I am not so sure that a positive message of ethics and integrity is all there is to an effective ethics and compliance program. I understand the value of a brand, the importance of building commitment and the need to underscore a company’s ethical culture. But slick feel good videos, while fun to watch, may not be as effective as CCOs think.
My legal-focused thinking may be getting the better of me, but I tend to see things a different way. An effective ethics and compliance program depends on two core missions – a culture of ethics and compliance and a set of compliance controls that are designed to mitigate risks and prevent and detect potential violations.
In this mix, there definitely is room for – indeed even a critical role for – internal (and external) communications touting the company’s mission, its commitment to trust and integrity and building of employee support and adoption of this message. The “feel good” videos have a place in a compliance program but describing a compliance program as a “marketing” program or “public relations” campaign misses the point. It is one aspect of a multi-faceted system.
In my view, an effective ethics and compliance program is a complex management system that incorporates a company’s culture and its controls. Keep in mind, the ultimate purpose is to “prevent and detect” potential code or legal violations. Certainly, promoting a culture of ethics is an important aspect of prevention. Indeed, I have often stated that a company’s cultured is its most effective control, even better than the complex complement of 25 specific controls designed to prevent misconduct. But there is culture and then there is culture.
A company’s mission statement is a valuable guidepost for everyone and can be an effective rallying cry. Employees want to believe in their company and they want to believe that they are contributing to the company and overall society. We can see how the public has been devoted to community service, public good, and helping others in need. This is a great trend. But I am not sure that the mission of a corporate ethics and compliance program can be defined through the communications of feel good videos touting the company’s commitment to trust and integrity.
There has to be a balance – CCO have to spend some time promoting a message of ethical principles and values. In addition, CCOs have to attend to the efficacy of their controls, the company’s risk profile and the design of controls needed to mitigate the company’s risks.
CCOs have to avoid losing perspective – they cannot solely operate as legal technocrats to the exclusion of the company’s culture, and conversely, they cannot focus only on the company’s culture to the exclusion of its controls. As I always say (and repeat myself), a company’s ethics and compliance program requires a careful balance between culture and controls. These two functions reinforce each other and create a perpetual cycle of effectiveness.
In the end, there is a place for the slick videos and the feel good moments, but there also has to be a place for controls, accountability and enforcement. These two categories of effort have to co-exist in a healthy balance.
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(Source: Authors, 24 Oct 2018)
* Authors: Roszel C. Thomsen II, Esq., +1 410-539-2596, roz@t-b.com; Antoinette D. Paytas, Esq., +1 410-539-2655, toni@t-b.com; and Maher M. Shomali, Esq., +1 410-539-6336, maher@t-b.com.  All of Thomsen and Burke LLP.
The Department of Commerce’s Bureau of Industry and Security (BIS) published amendments last week (24 October 2018) in the Federal Register to the Export Administration Regulations (EAR). These amendments include changes agreed upon by the Wassenaar Arrangement at the 2017 Plenary meeting advocating implementation of effective export controls on strategic items. We have included several noteworthy changes to the EAR, highlighted below.
A copy of the changes can be found on the Federal Register’s Page.
Changes to Category 2: Materials Processing
. This control on in paragraph .a on “[Robots] capable in real-time of full three-dimensional image processing or full three-dimensional “scene analysis” to generate or modify “programs” or to generate or modify numerical program data” is removed and reserved because of insufficient connection to military capabilities. Robots of national security concern are controlled under 2B007.b, .c and .d.
Changes to Category 3: Electronics
. This control on analog-to-digital converters (ADCs) is revised. The ADC control thresholds were not updated, but there were amendments to the language and definitions in the control parameters and corresponding technical notes.
. The frequency parameter for electronic assemblies is raised from “exceeding 10 MHz” to “exceeding 40 MHz” for certain signal analyzers. BIS estimates that this change will reduce the annual license application submissions.
Changes to Category 4: Computers
Increase in the Adjusted Peak Performance for Computers
“Digital computers,” “electronic assemblies,” and related equipment: The “Adjusted Peak Performance” for “digital computers” is raised from 16 to 29 Weighted TeraFLOPS (WT) in Items paragraph 4A003.b.
“Software” and 4E001 “Technology” are amended as follows:
  (1) The TSR paragraph in the List Based License Exceptions section is revising the APP from 16 to 29 WT, and
  (2) Items paragraph .b.1 in the List of Items Controlled section is amended by revising the APP from 8.0 to 15 WT.
Changes to Category 5, Part 1: Telecommunications
. The control on ‘electronically steerable phased array antennae’ is revised to include the following exclusion note, as phased array antennae are increasingly being developed for civil telecommunications applications, including cellular, WLAN, 802.15, and wireless HDMI:
Note 2: 5A001.d does not apply to antennae specially designed for any of the following:
  a. Civil cellular or WLAN radio-communications systems;
  b. IEEE 802.15 or wireless HDMI; or
  c. Fixed or mobile satellite earth stations for commercial civil telecommunications.
It now controls equipment employing digital signal processing to provide voice coding output at rates less than 700 bit/s. [This refers to taking samples of human voice and then converting these samples of human voice into a digital signal taking into account specific characteristics of human speech.] The previous entry specified 2,400 bit/s.
Changes to Category 5, Part 2: Information Security
. 5A002 is amended to clarify controls on products with dormant encryption. The revision clarifies that an item is controlled if:
  (1) the ‘cryptography for data confidentially’ is usable from the beginning regardless of “cryptographic activation” (i.e., not dormant),
  (2) the cryptographic capability was previously dormant but is now usable (whether by “cryptographic activation” or by other means; or
  (3) the “cryptographic activation” mechanism is not secure (i.e., the cryptographic capability is not securely kept dormant).
Changes to Category 6: Sensors and Lasers
. This control on Radar systems, equipment and assemblies is amended by replacing “steerable array antennas” with “scanned array antennae” as well as adding a Technical Note to make people aware that electronically scanned array antennae are also known as electronically steerable array antennae. This revision uses more current, and standard, language to describe E-scan radar.
In total, 50 ECCNs were revised by this final rule, so we do encourage exporters to review the entire rule and determine if it affects your current export classification and licensing strategy. Some practical tips include:
  – Review any existing items/technologies currently classified under the impacted ECCNs for potential updates. This could include a minor change in subparagraph for a controlled ECCN or a drop to a less restrictive ECCN due to the control parameter increase under the rule change.
  – Review the updates on “dormant” encryption items to determine whether your classifications for dormant encryption items and cryptographic activation mechanisms are consistent with the regulatory clarifications.

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12. ECTI Presents “Export Compliance Essentials for the Aerospace Industry” Webinar, 5 Dec

(Source: Danielle Hatch, danielle@learnexportcompliance.com)
* What: Export Compliance Essentials for the Aerospace Industry
* When: December 5, 2018; 1:00 p.m. (EST)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Scott Gearity
* Register: Here or Danielle Hatch, 540-433-3977, danielle@learnexportcompliance.com.

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. Bartlett’s Unfamiliar Quotations

(Source: Editor)
* John Adams (30 Oct 1735 – 4 Jul 1826; was one of the Founding Fathers of the United States, who served as the first Vice President (1789-1797) and as the second President of the United States (1797-1801). He was a notable lawyer, diplomat, and leader of American independence from Great Britain.)
  – “Old minds are like old horses; you must exercise them if you wish to keep them in working order.”

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EN_a214. 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.

ATF ARMS IMPORT REGULATIONS: 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. 

CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 19 Sep 2018: 
83 FR 47283-47284
: Extension of Import Restrictions Imposed on Archaeological Material From Cambodia 

  – 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 


– Last Amendment: 30 Oct 2018: 83 FR 54519-54521: Addition of an Entity to the Entity List 


FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment:
29 June 2018: 83 FR 30541-30548: Global Magnitsky Sanctions Regulations; and 83 FR 30539-30541: Removal of the Sudanese Sanctions Regulations and Amendment of the Terrorism List Government Sanctions Regulations 



  – Last Amendment: 24 Apr 2018:
83 FR 17749-17751
: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates

  – HTS codes that are not valid for AES are available 
The latest edition (30 April 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 
BITAR 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
* HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 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: 22 Oct 2018: Harmonized System Update 1818
containing 1,544 ABI records and 286 harmonized tariff records.

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


  – Last Amendment: 
4 Oct 2018: 
83 FR 50003-50007
: Regulatory Reform Revisions to the International Traffic in Arms Regulations
  – The only available fully updated copy (latest edition: 4 Oct 2018) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”)
, 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 Daily Bugle Top Stories” posted here.

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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, Alex Witt. The Ex/Im Daily Update is emailed every business day to approximately 6,000 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.  If you would to submit material for inclusion in the The Export/Import Daily Update (“Daily Bugle”), please find instructions here.

* CAVEAT: The contents 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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