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I know about the rule change of not tagging stamps below 10 cents in vale, but I don't understand how it would work since the machines only saw the stamp's tag, not the value.
You are correct. Automatic cancelling equipment cannot detect a stamp's denomination. This is why I once received an
ebay purchase in an envelope with a single tagged 10-cent stamp. This is also why my aging father was successfully able to mail his Christmas cards for two consecutive years with 41-cent stamps when the postal rates were 42-cents & 44-cents. Since the postal service never complained, I saw no reason to tell him that he should be using additional postage. In effect, anyone can use an old tagged stamp of any denomination and it is likely that their mail will be delivered. Of course, sometimes a human will notice ... and then there will be postage due or the item may be returned. This happened to me a couple of years ago when, while at the post office, I carelessly placed lick-and-stick stamps on a glossy surface. By the time the parcel reached a PO near its destination, most of the postage had slid off, never again to be seen. The package was returned and I got to mail it a second time.