Service Tag

A Service Tag is a tag that consists of one letter and two numbers in Halo 3, or 4 letters/numbers in Halo 3: ODST, meant to identify soldiers quickly during battle. They show-up when another soldier "sees" you through a wall or if their cross-hair is not pointed directly on you, but they still see you on their screen. This is used in the Halo 3 Multiplayer and in the Halo 3: ODST Firefight.

Advantages
It is good to set your service tag identical to your profile name, so allies can know which of their team-mates are with them. Also, if you cannot directly center a soldier, you are still able to catch their service tag.

Prohibited Service Tags
Some service tags are not allowed because they have vulgar or offensive references, used for guests only, or copyrighted. Here is a list of prohibited service tags in Halo 3 and Halo 3: ODST.

Halo 3

 * Every service tag ending in -00
 * A23 - reserved by UNSC
 * A55
 * L17 - reserved by UNSC
 * I17
 * E43
 * A01 - resembles 'AOL'
 * A20
 * C17
 * E51
 * E74
 * F43
 * F46
 * F48
 * F49
 * N34
 * N64 - a games console
 * N84
 * P52 -resembles "PS2"
 * T17
 * U50
 * V50
 * Z17

Halo 3: ODST

 * C0DY
 * B4K4
 * C0CK
 * Tags that have curseword references.

Trivia

 * When I17 (resembling 117) is entered as a service tag it will say "this service tag is currently reserved by the UNSC," likely due to the fact that it resembles John-117's tag.
 * Some of the above service tags (I17, for instance) actually can be used. It's pure luck, however, as you may be given that service tag at random when you first play Halo 3 on an Xbox 360 profile.
 * Some service tags that resemble Playstation or Nintendo products, like N35 (NES), P59 (PSP), W11 (Wii), P51 (PS1 or Playstation 1) and P53 (PS3 or Playstation 3) are not banned and can be used.
 * When people die, the service tag is replaced by a red cross, indicating that the player is dead.