Payment of Federal Taxes and the Treasury Tax and Loan Program, 59177-59187 [07-5135]
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Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations
V. How Does This Rule Comply With
the Paperwork Reduction Act of 1995?
This final rule contains no collections
of information. Therefore, clearance by
the Office of Management and Budget
(OMB) under the Paperwork Reduction
Act of 1995 is not required. Elsewhere
in this issue of the Federal Register,
FDA is issuing a notice announcing the
guidance for the final rule. This
guidance, ‘‘Class II Special Controls
Guidance Document: Remote
Medication Management System,’’
references previously approved
collections of information found in FDA
regulations.
VI. What References Are on Display?
The following reference has been
placed on display in the Division of
Dockets Management (HFA–305), Food
and Drug Administration, 5630 Fishers
Lane, rm. 1061, Rockville, MD 20852,
and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday
through Friday.
1. Petition from INRange Systems, Inc.,
dated September 25, 2006.
List of Subjects in 21 CFR Part 880
Medical devices.
I Therefore, under the Federal Food,
Drug, and Cosmetic Act and under
authority delegated to the Commissioner
of Food and Drugs, 21 CFR part 880 is
amended as follows:
PART 880—GENERAL HOSPITAL AND
PERSONAL USE DEVICES
1. The authority citation for 21 CFR
part 880 continues to read as follows:
I
Authority: 21 U.S.C. 351, 360, 360c, 360e,
360j, 371.
2. Section 880.6315 is added to
subpart G to read as follows:
I
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§ 880.6315 Remote Medication
Management System.
(a) Identification. A remote
medication management system is a
device composed of clinical and
communications software, a medication
delivery unit, and medication
packaging. The system is intended to
store the patient’s prescribed
medications in a delivery unit, to permit
a health care professional to remotely
schedule the patient’s prescribed
medications, to notify the patient when
the prescribed medications are due to be
taken, to release the prescribed
medications to a tray of the delivery
unit accessible to the patient on the
patient’s command, and to record a
history of the event for the health care
professional. The system is intended for
use as an aid to health care
professionals in managing therapeutic
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regimens for patients in the home or
clinic.
(b) Classification. Class II (special
controls). The special control is: The
FDA guidance document entitled
‘‘Guidance for Industry and Food and
Drug Administration Staff; Class II
Special Controls Guidance Document:
Remote Medication Management
System.’’ See § 880.1(e) for availability
of this guidance document.
Dated: October 3, 2007.
Linda S. Kahan,
Deputy Director, Center for Devices and
Radiological Health.
[FR Doc. E7–20633 Filed 10–18–07; 8:45 am]
BILLING CODE 4160–01–S
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 203
RIN 1510–AB01
Payment of Federal Taxes and the
Treasury Tax and Loan Program
Financial Management Service,
Fiscal Service, Treasury.
ACTION: Interim final rule.
AGENCY:
SUMMARY: As part of an ongoing effort to
review and streamline its regulations,
the Financial Management Service
(FMS) has revised its regulation
governing the Treasury Tax and Loan
(TT&L) program. The changes update
the rule to reflect the reorganization and
enhancement of the TT&L program,
including changes in terminology, and
simplify the rule by deleting procedures
and provisions that appear in other
regulations or in the Treasury Financial
Manual. FMS also has rewritten this
regulation in plain language, thus
making it clearer and easier to
understand.
DATES: This interim final rule is
effective October 19, 2007. Comments
must be received by December 18, 2007.
ADDRESSES: The Financial Management
Service began participating in the U.S.
government’s eRulemaking Initiative by
publishing rulemaking information on
www.regulations.gov. Regulations.gov
offers the public the ability to comment
on, search, and view publicly available
rulemaking materials, including
comments received on rules.
Comments on this rule, identified by
docket FISCAL–FMS–2007–0007,
should only be submitted using the
following methods:
• Federal eRulemaking Portal:
www.regulations.gov. Follow the
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instructions on the Web site for
submitting comments.
• Mail: Thompson Sawyer, Director,
Investment Management Division,
Financial Management Service, 401
14th Street, SW., Washington, DC
20227.
The fax and e-mail methods of
submitting comments on rules to FMS
have been retired.
Instructions: All submissions received
must include the agency name
(‘‘Financial Management Service’’) and
docket number FISCAL–FMS–2007–
0007 for this rulemaking. In general,
comments will be published on
Regulations.gov without change,
including any business or personal
information provided. Comments
received, including attachments and
other supporting materials, are part of
the public record and subject to public
disclosure. Do not enclose any
information in your comment or
supporting materials that you consider
confidential or inappropriate for public
disclosure.
You may also inspect and copy this
proposed rule at: Treasury Department
Library, Freedom of Information Act
(FOIA) Collection, Room 1428, Main
Treasury Building, 1500 Pennsylvania
Avenue, NW., Washington, DC 20220.
Before visiting, you must call (202) 622–
0990 for an appointment.
FOR FURTHER INFORMATION CONTACT:
Thompson Sawyer, Director, Investment
Management Division, at (202) 874–
7150 or thompson.sawyer@fms.treas.gov
or Ellen M. Neubauer, Senior Attorney,
at (202) 874–6680 or
ellen.neubauer@fms.treas.gov.
SUPPLEMENTARY INFORMATION:
1. Background
The Treasury Tax and Loan (TT&L)
program encompasses two separate
components: A depositary component
through which we collect Federal tax
deposits and payments from business
taxpayers for employee withholding and
other types of taxes, and an investment
component through which we invest
short-term operating balances not
needed for immediate cash outlays.
Examples of the investment component
are retention of tax deposits, direct
investments, term investments or other
investment programs. Approximately
950 TT&L depositaries borrow excess
short-term Treasury operating funds by
participating in the investment
component of the TT&L program.
Through agreements executed pursuant
to Part 203, participating depositaries
borrow Treasury funds in the form of a
note secured with collateral pledged to
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Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations
Treasury and pay interest to Treasury on
these balances.
We have revised Part 203 to reflect
recent operational changes and changes
in terminology to the TT&L program,
and to streamline and simplify the
regulation. Because the predominant
intent of this rulemaking is to improve
the clarity of the regulation, we have
removed some procedural and technical
requirements and provisions, such as
references to specific Forms and filing
instructions, from the existing
regulation. All of the technical
requirements that we have removed and
that still apply are contained in Volume
IV of the Treasury Financial Manual
(see https://www.fms.treas.gov/tfm/vol4/
index.html). Those technical
requirements that don’t still apply have
been deleted. For example, current
§ 203.10 sets forth procedures for
financial institutions to enroll taxpayers
in the Electronic Federal Tax Payment
System (EFTPS) that no longer
accurately reflect the actual process.
Accordingly, we have deleted the
substance of current § 203.10 from the
regulation. The current procedures for
enrolling taxpayers in EFTPS are found
in Volume IV of the Treasury Financial
Manual, Part 1, Chapter 2200.
In addition, we have removed some of
the existing provisions of the regulation
because they duplicate provisions of 31
CFR part 210, which sets forth the rules
governing the Federal government’s
participation in the Automated Clearing
House (ACH) system. For example, the
substance of current § 203.15 has been
deleted from the interim final regulation
because everything in current § 203.15
is covered in 31 CFR part 210 (see
§ 210.8(b)(1)). For the same reason, the
substantive provisions of current
§ 203.12, which address ACH credit and
debit transactions, have been deleted.
Although a number of new terms have
been added to describe components of
the TT&L program, most aspects of the
operation of the program are not
changing. For example, the new term
‘‘Treasury Investment Program (TIP)’’ is
the automated system within the TT&L
program that receives tax collection
data, invests funds, and monitors
collateral pledged to secure invested
funds and public money. The new term
‘‘Paper Tax System (PATAX)’’ is the
automated system within TIP that
collects, adjusts, and reports paper
Federal tax deposits (FTDs).
The revisions to this rule reflect
changes that have been made to the
TT&L program over recent years. One of
the most significant changes requires
depositaries to have collateral in place
before any funds are credited to their
TIP main account balance or Special
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Direct Investment (SDI) account
balance. Previously, a depositary had
until the end of the day to have
collateral in place after the funds were
credited to its account. This change
helps ensure that Treasury investments
are adequately secured at all times.
Another change, reflected in § 203.20, is
that with the implementation of the
Treasury Investment Program,
transactions now post to financial
institutions’ reserve accounts
throughout the day.
Another change to the TT&L program
occurred in 2001, when the Department
of the Treasury announced that after
December 31, 2000, Federal Reserve
Banks (FRBs) would no longer accept
FTD paper coupons. The change
affected only a small percentage (less
than one-half of one percent) of FTD
deposits. It was no longer cost-effective
for the FRBs to process the small
number of FTD paper coupons they
received annually. We have deleted
§ 203.18(b) of the current regulation to
reflect this change. Financial
institutions that are TT&L depositaries
will still accept paper coupons. For
those taxpayers who do not have an
account with a TT&L depositary or who
do not wish to pay taxes electronically
through EFTPS, FMS has a mail-in
option.
Other changes to the TT&L program
and Part 203 are discussed in the
section-by-section analysis below.
II. Section-by-Section Analysis
Section 203.1
Scope
Amended § 203.1 is substantively
unchanged from current § 203.1, except
that language has been added to clarify
that there are various ways that a
financial institution may participate in
the TT&L program. A financial
institution may choose to participate in
the TT&L program by becoming an
investor depositary, a retainer
depositary, and/or a collector
depositary, or by processing tax
payments through EFTPS. Amended
§ 203.1 clarifies that a financial
institution does not become a TT&L
depositary, as defined, by processing tax
payments through EFTPS.
Section 203.2
Definitions
We have made a number of changes
to the definitions set forth at § 203.2.
Several definitions have been deleted
because they are not used in the interim
final regulation. These include: ‘‘Direct
Access transaction,’’ ‘‘Electronic Tax
Application,’’ ‘‘Electronic Tax
Application reference number,’’ ‘‘Input
Message Accountability Data,’’ and
‘‘Transaction trace number.’’ Other
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terms defined in the current regulation
are replaced by new terminology in the
interim final regulation, including
‘‘Federal Reserve account’’ (replaced by
‘‘Reserve account’’), ‘‘Federal Reserve
Bank of the district’’ (replaced by
‘‘Federal Reserve Bank (FRB)’’),
‘‘Federal Tax Deposit system’’ (replaced
by ‘‘Paper Tax System (PATAX)’’),
‘‘Note option’’ (replaced by ‘‘Retainer
depositary’’ and ‘‘Investor depositary’’),
and ‘‘Remittance option’’ (replaced by
‘‘Collector depositary’’). Several new
terms have been added to reflect
enhancements to the TT&L program,
including ‘‘Capacity,’’ ‘‘Dynamic
investment,’’ ‘‘Investment program,’’
‘‘Special Direct Investment (SDI)
account balance,’’ ‘‘Term Investment
Option (TIO) account balance,’’
‘‘Treasury Investment Program (TIP),’’
‘‘Treasury Support Center (TSC),’’ and
‘‘TIP main account balance.’’ A number
of definitions have been reworded to
make them easier to understand, but are
substantively unchanged. Significant
changes to specific definitions are
discussed below.
Balance Limit
The new term ‘‘balance limit’’ is
defined and replaces the term
‘‘maximum balance’’ in current Part
203. Although the term ‘‘maximum
balance’’ is used in current Part 203, it
is not defined.
Capacity
The new term ‘‘capacity’’ is being
added to refer to the additional amount
of a direct investment or special direct
investment that a designated depositary
is willing to receive or the additional
amount of tax deposits that a designated
depositary is willing to retain. The TIP
main account balance or SDI account
balance, current collateral value,
pending withdrawals, and pending
investments are considered when
determining capacity.
Collector Depositary
The new term ‘‘collector depositary’’
is used to describe a depositary that
uses the ‘‘remittance option’’ under
current Part 203 to better reflect the
activity performed by the depositary.
Dynamic Investment
The new term ‘‘dynamic investment’’
is used to describe investments placed
throughout the day.
Federal Reserve Bank (FRB)
The new term ‘‘Federal Reserve Bank’’
replaces ‘‘Federal Reserve Bank of the
district’’ in current Part 203.
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Investment Program
Special Direct Investment (SDI)
The new term ‘‘investment program’’
is used to provide an all-inclusive name
for the programs through which
Treasury invests excess operating cash.
Examples of the investment component
are retention of tax deposits, direct
investments, and term investments.
Depositaries do not have to accept
paper-based Federal Tax Deposit
coupons (PATAX) to participate in the
investment program.
This definition has been changed to
delete the reference to note account and
to add a reference to Borrower-InCustody (BIC) arrangements.
Investor Depositary
The new term ‘‘investor depositary’’ is
used to describe one of the two kinds of
depositaries that are referred to as ‘‘note
option’’ depositaries in the current
regulation. An investor depositary is a
depositary authorized to participate in
the investment program. In the interim
final regulation, the terms ‘‘investor
depositary’’ and ‘‘retainer depositary’’
are specific terms that replace the less
specific term ‘‘note option’’ in the
current regulation.
Paper Tax System (PATAX)
The new term ‘‘PATAX’’ replaces the
term ‘‘Federal Tax Deposit System’’ in
current Part 203, to better reflect the
activity performed by the system.
Reserve Account
SDI Account Balance
The new term ‘‘SDI account balance’’
is being added because there is now a
separate account for SDI funds. In the
current regulation, SDI funds are
allowed to be commingled with direct
investment funds and retained tax
deposits.
Term Investment Option (TIO) Account
Balance
The new term ‘‘TIO account balance’’
is being added to replace ‘‘Term note
balance.’’
Treasury Investment Program (TIP)
The new term ‘‘TIP’’ is being added to
describe the automated system within
the TT&L program that receives tax
collections, invests funds, and monitors
collateral pledged to secure invested
funds.
TIP Main Account Balance
The new term ‘‘TIP main account
balance’’ is being added to distinguish
retained tax deposits and direct
investments funds from SDI funds.
Treasury Support Center (TSC)
The new term ‘‘Reserve account’’
replaces ‘‘Federal Reserve account’’ in
current Part 203. The definition
incorporates the concept that a financial
institution’s reserve account may in
some cases be the reserve account of the
financial institution’s correspondent
bank.
The new term ‘‘TSC’’ is being added
to refer to the centralized office located
at an FRB that is responsible for
monitoring collateral pledged and
managing the TT&L program
participation for designated
depositaries.
Retainer Depositary
Treasury Tax & Loan (TT&L) Depositary
The new term ‘‘retainer depositary’’ is
used to describe a certain kind of
depositary known as a ‘‘note option’’
depositary in the current regulation. A
retainer depositary is a depositary that
retains a portion of the Federal tax
deposits it accepts. In the interim final
regulation, the terms ‘‘investor
depositary’’ and ‘‘retainer depositary’’
replace the less specific term ‘‘note
option’’ in the current regulation.
Retainer depositaries do not have to
accept paper-based Federal Tax Deposit
coupons (PATAX).
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Same-Day Payment
The reference to direct access
transactions in the current definition of
‘‘same-day payment’’ has been deleted
in the amended definition because these
transactions are no longer available.
These transactions have been replaced
by Fedwire non-value transactions.
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The definition of ‘‘TT&L depositary’’
has been changed to reflect new
terminology.
TT&L Program
The definition of ‘‘TT&L program’’
has been revised to add references to
PATAX, TIP, and EFTPS.
Section 203.3
TT&L Depositaries
We have added a new § 203.3 to
clarify the different kinds of TT&L
depositaries and the circumstances in
which a financial institution must be a
TT&L depositary. A financial institution
must be a TT&L depositary in order to
participate in either PATAX or the
investment program, but not in order to
participate in EFTPS alone. There are
three kinds of TT&L depositaries:
• Collector depositaries—depositaries
that accept paper tax payments and may
accept electronic tax payments, but that
do not retain any such deposits in a TIP
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59179
main account or accept direct or special
direct investments. A collector
depositary may accept term
investments.
• Retainer depositaries—depositaries
that accept electronic and/or paper tax
payments and retain a portion of the tax
deposits in a TIP main account balance
but do not accept direct or special direct
investments. A retainer depositary may
accept term investments.
• Investor depositaries—depositaries
that participate in the investment
program by accepting direct
investments, special direct investments,
and dynamic investments. Investor
depositaries may accept electronic and/
or paper tax payments and may retain
a portion of those tax deposits. An
investor depositary may also accept
term investments.
Section 203.4 Financial Institution
Eligibility for Designation as a TT&L
Depositary
Amended § 203.4 sets forth the
criteria a financial institution must meet
to be eligible for designation as a TT&L
depositary. The criteria in the amended
rule are unchanged from those in the
current § 203.3.
Section 203.5 Designation of Financial
Institutions as TT&L Depositaries
Amended § 203.5 sets forth the
substance of current § 203.4 with certain
changes. Subsection (a) is unchanged
except that language contained in
current § 203.6 which provides that
Treasury will not compensate
depositaries for servicing and
maintaining a TT&L account, or for
processing tax payments through EFTPS
or P AT AX, has been relocated to
§ 203.5(a).
Amended § 203.5(b) simplifies the
current regulation by deleting references
to specific forms, which are set forth in
procedural instructions.
Section 203.6
Depositaries
Obligations of TT&L
We have not made any substantive
change to the obligations of TT&L
depositaries described in current
§ 203.5.
Section 203.7 Termination of
Agreement or Change of Election or
Option
We have not revised § 203.7 except for
minor wording changes.
Section 203.8 Application of Part and
Procedural Instructions
Amended § 203.8 is unchanged from
current § 203.8 except that terminology
has been updated.
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Section 203.9 Scope of the Subpart
We have not made any substantive
changes to § 203.9.
that the order of subsections (a) and (b)
has been reversed.
Section 203.10 Electronic Payment
Methods
Amended § 203.10 sets forth the
substance of current § 203.11. The
second sentence of current § 203.11(a) is
deleted because it restates the point
made in amended § 203.9 that a
financial institution need not be a TT&L
depositary in order to process payments
through EFTPS.
We have not revised the scope of
subpart D.
Section 203.18
Section 203.11 Same-Day Reporting
and Payment Mechanisms
Details regarding some of the
requirements of Fedwire value
transactions which are set forth in
current § 203.13(b) have been
eliminated as unnecessary. References
to direct access transactions set forth in
current § 203.713(d) have been deleted
because these transactions are no longer
available.
Section 203.12 EFTPS Interest
Assessments
We have not made any substantive
changes to the application or calculation
of EFTPS interest assessments.
Section 203.13
Resolution
Appeal and Dispute
We have not made any substantive
changes to the appeal and dispute
resolution procedures.
Section 203.14
Scope of the Subpart
We have not changed the scope of
subpart C.
Section 203.15
FTD Coupons
Tax Deposits Using
Amended § 203.15 sets forth the
provisions of current § 203.18, with a
number of changes. We have deleted
entirely the substance of § 203.18(b),
which provides that FRBs must accept
FTDs directly from taxpayers and sets
forth procedures governing 13 these
transactions. FRBs no longer accept
FTDs directly from the taxpayer. We
also have deleted from this section
many procedural steps that are
adequately addressed in procedural
instructions.
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Section 203.16
Depositaries
Retainer and Investor
Amended § 203.16 sets forth the
substance of current § 203.19. The order
of subsections (a) and (b) has been
reversed.
Section 203.17
Collector Depositaries
Amended § 203.17 sets forth the
substance of current § 203.20, except
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Section 203.19
Scope of the Subpart
Sources of Balances
Amended § 203.19 sets forth the
substance of current § 203.22 with the
addition of dynamic investments and
term investments.
Section 203.20
Requirements
Investment Account
We have not changed the provisions
governing TIP main account balances,
SDI account balances, and no account
balances. The section title was changed
to reflect the inclusion of the no account
balances.
Section 203.21
Requirements
Collateral Security
The classes of securities or
instruments that are acceptable
collateral to secure deposits and
investments, and their respective
valuations, as described in 31 CFR part
380, can be viewed at Treasury’s Bureau
of the Public Debt’s Web site at 14 http:
//www.treasurydirect.gov/instit/statreg/
collateral/
collateral_fiscalprograms.htm#ttl
Amended § 203.21(c)(2) has been
updated to reflect changes in the
Uniform Commercial Code (which
provides a private sector analogue for
Treasury’s BIC arrangements), relative to
perfecting security interests in BIC
collateral. Section 203.21(e) has also
been changed. Under current § 203.21(f),
when a TT&L depositary pledges
acceptable securities that are not
negotiable without its endorsement or
assignment, it may, in lieu of placing its
unqualified endorsement on each
security, provide an irrevocable power
of attorney authorizing the FRB to
assign the securities. Amended
§ 203.21(e) states that by pledging
acceptable securities which are not
negotiable without the depositary’s
endorsement or assignment, a TT&L
depositary, in lieu of placing its
unqualified endorsement on each
security, automatically grants the FRB
an irrevocable power of attorney to
endorse, assign or transfer the securities.
The purpose of this change is to relieve
both TT&L depositaries and the FRB
from the administrative burden
associated with providing a power-ofattorney each time such securities are
pledged.
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DERIVATION CHART FOR REVISED
PART 203
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Old section
203.1 .......................................
203.2 .......................................
—— .........................................
203.3 .......................................
203.4 .......................................
203.5 .......................................
203.6 .......................................
203.7 .......................................
203.8 .......................................
203.9 .......................................
203.10 .....................................
203.11 .....................................
203.12 .....................................
203.13 .....................................
203.14 .....................................
203.15 .....................................
203.16 .....................................
203.17 .....................................
203.18 .....................................
203.19 .....................................
203.20 .....................................
203.21 .....................................
203.22 .....................................
203.23 .....................................
203.24 .....................................
New section
203.1
203.2
203.3
203.4
203.5
203.6
203.5
203.7
203.8
203.9
Removed
203.10
Removed
203.11
203.12
Removed
203.13
203.14
203.15
203.16
203.17
203.18
203.19
203.20
203.21
III. Regulatory Analyses
Administrative Procedures Act
The public is invited to submit
comments on the interim rule which
will be taken into account before this
interim rule is confirmed as final.
This interim final rule does not
substantively change the TT&L program
but rather describes operational changes
that have already taken place, updates
terminology, and removes duplicative or
unnecessary provisions. The updates in
this rule will avoid confusion about the
operation of the program. Under 5
U.S.C. 553(b), this rule is exempt from
prior notice and comment rulemaking
requirements on the grounds that the
amendments are non-substantive and
further delay in making these
amendments is unnecessary and
contrary to the public interest. For the
same reasons, good cause exists to make
the rule effective upon publication.
Request for Comment on Plain Language
Executive Order 12866 requires each
agency in the Executive branch to write
regulations that are simple and easy to
understand. We invite comment on how
to make this final rule clearer. For
example, you may wish to discuss: (1)
Whether we have organized the material
to suit your needs; (2) whether the
requirements of this final rule are clear;
or (3) whether there is something else
we could do to make this rule easier to
understand.
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Regulatory Planning and Review
The final rule does not meet the
criteria for a ‘‘significant regulatory
action’’ as defined in Executive Order
12866. Therefore, the regulatory review
procedures contained therein do not
apply.
Regulatory Flexibility Act Analysis
Because no notice of proposed
rulemaking is required, the provisions
of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.) do not apply.
Paperwork Reduction Act
This rule contains no new collections
of information. Therefore, the
Paperwork Reduction Act does not
apply.
List of Subjects in 31 CFR Part 203
Banks, Banking, Electronic funds
transfers, Taxes.
Words of Issuance
For the reasons set out in the
preamble, the Financial Management
Service amends 31 CFR chapter II by
revising part 203 to read as follows:
I
Subpart A—General Information
Sec.
203.1 Scope.
203.2 Definitions.
203.3 TT&L depositaries.
203.4 Financial institution eligibility for
designation as a TT&L depositary.
203.5 Designation of financial institutions
as TT&L depositaries.
203.6 Obligations of TT&L depositaries.
203.7 Termination of agreement or change
of election or option.
203.8 Application of part and procedural
instructions.
Subpart B—Electronic Federal Tax
Payments
203.9 Scope of the subpart.
203.10 Electronic payment methods.
203.11 Same-day reporting and payment
mechanisms.
203.12 EFTPS interest assessments.
203.13 Appeal and dispute resolution.
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Subpart C—PATAX
203.14 Scope of the subpart.
203.15 Tax deposits using FTD coupons.
203.16 Retainer and investor depositaries.
203.17 Collector depositaries.
Subpart D—Investment Program and
Collateral Security Requirements for TT&L
Depositaries
203.18 Scope of the subpart.
203.19 Sources of balances.
203.20 Investment account requirements.
203.21 Collateral security requirements.
Authority: 12 U.S.C. 90,265–266, 332, 391,
1452(d), 1464(k), 1767, 1789a, 2013, 2122,
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Subpart A—General Information
§ 203.1
Scope.
The regulations in this part govern the
processing by financial institutions of
electronic and paper-based deposits and
payments of Federal taxes; the operation
of the Treasury Tax and Loan (TT&L)
program; the designation of TT&L
depositaries; and the operation of the
investment program. A financial
institution may participate in the TT&L
program by participating in the
investment program or by accepting
Federal tax payments, or both. A
financial institution that accepts Federal
tax payments may do so through the
paper tax system (PATAX), or Electronic
Federal Tax Payment System (EFTPS),
or both. However, a financial institution
is not designated as a TT&L depositary
if it only processes EFTPS payments.
§ 203.2
PART 203—PAYMENT OF FEDERAL
TAXES AND THE TREASURY TAX AND
LOAN PROGRAM
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and 3102; 26 U.S.C. 6302; 31 U.S.C. 321, 323,
and 3301–3304.
Definitions.
Advice of credit (AOC) means the
paper or electronic form depositaries
use to summarize and report Federal
Tax Deposit (FTD) coupon deposits to
the Internal Revenue Service (IRS) and
the Federal Reserve Bank (FRB).
Automated Clearing House (ACH)
credit entry means a credit transaction
originated by a financial institution, at
the direction of the taxpayer, in
accordance with applicable ACH
formats and applicable laws,
regulations, and procedural
instructions.
ACH debit entry means a debit
transaction originated by the Treasury
Financial Agent (TFA), at the direction
of the taxpayer, in accordance with
applicable ACH formats and applicable
laws, regulations, and instructions.
Balance limit means the highest
amount a depositary has stated it will
accept in its Treasury Investment
Program (TIP) main account.
Borrower-In-Custody (BIC) collateral
means an arrangement by which a
financial institution pledging collateral
to secure special direct investments and
certain term investments is permitted to
retain possession of that collateral,
subject to terms and conditions agreed
upon between the FRB and the financial
institution.
Business day means any day on
which a financial institution’s FRB is
open.
Capacity means a TT&L depositary’s
ability to accept additional investments
in its TIP main account balance and/or
its Special Direct Investment (SDI)
account balance. With respect to a TT&L
depositary’s TIP main account balance,
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capacity means the balance limit or
current collateral value, whichever is
lower, minus the total of: the
depositary’s current TIP main account
balance and any pending investments,
plus any pending withdrawals. With
respect to an SDI account balance,
capacity means the dollar amount of
collateral that the depositary has
pledged for SDIs under a BIC
arrangement minus the total of: the
depositary’s current SDI account
balance and any pending investments,
plus any pending withdrawals.
Collector depositary means a TT&L
depositary that accepts paper tax
payments from business customers and
that may also process electronic tax
payments from customers, but that does
not retain any such deposits as
investments or accept dynamic, direct,
or special direct investments. A
collector depositary may accept term
investments.
Direct investment means the
Department of the Treasury’s
(Treasury’s) placement of funds with a
TT&L depositary, which results in an
increase to the depositary’s TIP main
account balance and a credit to its
reserve account.
Dynamic investment means
Treasury’s placement of funds with a
TT&L depositary throughout the day,
which results in an increase to the
depositary’s TIP main account balance
and a credit to its reserve account.
Electronic Federal Tax Payment
System (EFTPS) means the system
through which taxpayers remit Federal
tax payments electronically.
Federal Reserve Bank (FRB) means
the FRB of the district where the
financial institution is located, or such
other FRB that may be designated in an
FRB operating circular, or such other
FRB that may be designated by the
Treasury. A financial institution is
deemed located in the same district it
would be deemed located for purposes
of Regulation D (12 CFR 204.3(b)(2)),
even if the financial institution is not
otherwise subject to Regulation D.
Federal Tax Deposit (FTD) means a
Federal tax deposit made using an FTD
coupon.
FTD coupon means a paper form
supplied to a taxpayer by Treasury to
accompany deposits of Federal taxes
made through PATAX.
Federal taxes means those Federal
taxes or other payments specified by the
Secretary of the Treasury as eligible for
payment through the procedures
described in this part.
Fedwire1 means the funds transfer
system owned and operated by the
FRBs.
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Fedwire non-value transaction
means the same-day Federal tax
payment information transmitted by a
financial institution to an FRB using a
Fedwire@ type 1090 message to
authorize a payment.
Fedwire value transfer means a
Federal tax payment made by a financial
institution using a Fedwire type 1000
message.
Financial institution means any bank,
savings bank, savings association, credit
union, or similar institution.
Fiscal agent means the FRB acting as
agent for Treasury.
Investment program is the allinclusive name given to the programs by
which Treasury invests excess operating
cash.
Investor depositary means a TT&L
depositary that is authorized to
participate in the investment program
by accepting funds from Treasury via
direct investments, special direct
investments, dynamic investments, or
term investments. In addition, an
investor depositary may accept
electronic or paper Federal tax
payments from its business customers
and retain a portion of those tax
deposits, depending on the capacity of
its TIP main account balance.
Paper Tax System (PATAX) means
the paper-based system through which
taxpayers remit Federal tax payments by
presenting an FTD coupon and payment
to a TT&L depositary.
Procedural instructions means the
procedures contained in the Treasury
Financial Manual, Volume IV (IV TFM),
other Treasury instructions issued by
Treasury or through Treasury’s
Financial Agents and FRB operating
circulars, and agreements issued
consistent with this part.
Recognized insurance coverage means
the insurance provided by the Federal
Deposit Insurance Corporation, the
National Credit Union Administration,
and insurance organizations specifically
qualified by the Secretary.
Reserve account means an account at
an FRB with reserve or clearing balances
held by a financial institution or its
designated correspondent financial
institution, if applicable.
Retainer depositary means a TT&L
depositary that accepts electronic and/
or paper Federal tax payments from its
business customers and retains a
portion of the Federal tax deposits in its
TIP main account balance, depending
on its balance limit, account balance,
and collateral value. A retainer
depositary may also accept term
investments.
Same-day payment means a payment
made by a Fedwire non-value
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transaction or a Fedwire value
transaction.
Secretary means the Secretary of the
Treasury, or the Secretary’s delegate.
Special Direct Investment (SDI) means
the placement by Treasury of funds with
an investor depositary secured by
collateral pledged under a BIC
arrangement.
SDI account balance means an openended, interest-bearing note maintained
on the books of the Treasury Support
Center representing the amount of SDIs
held by an investor depositary and
secured by collateral pledged under a
BIC arrangement.
Tax due date means the day on which
a Federal tax payment is due to
Treasury, as determined by statute and
IRS regulations.
Term Investments means Treasury’s
excess operating funds that have been
offered for a predetermined period of
time and accepted by depositaries
participating in the Term Investment
Option.
Term Investment Option (TIO) means
the program available to depositaries
that offers the ability to borrow excess
Treasury operating funds for a
predetermined period of time.
TIO account balance means an
interest-bearing note maintained on the
books of the Treasury Support Center
for a predetermined period of time.
Treasury Financial Agent (TFA)
means a financial institution designated
as an agent of Treasury for processing
EFTPS enrollments, consolidating
EFTPS tax payment information, and
originating ACH debit entries on behalf
of Treasury as authorized by the
taxpayer.
Treasury General Account (TGA)
means an account maintained in the
name of the United States Treasury at an
FRB.
Treasury Investment Program (TIP)
means the automated system under the
TT&L program that receives tax
collections, invests funds, and monitors
collateral pledged to secure public
money.
TIP main account balance means an
open-ended interest-bearing note
maintained on the books of the Treasury
Support Center (TSC) representing a
retainer or investor depositary’s current
net amount of (i) Federal tax deposits
retained by the depositary and/or (ii)
Treasury investments made under the
Direct investment program.
Treasury Support Center (TSC) means
the office at the FRB that, as Treasury’s
Fiscal agent, monitors collateral pledged
to secure Treasury funds, manages
TT&L program participation for
depositaries, and/or carries on its books
depositaries’ TIP main account
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balances, SDI account balances, and/or
Term Investment Option (TIO) account
balances.
Treasury Tax and Loan (TT&L)
account means a record of transactions
on the books of a TT&L depositary
reflecting paper tax deposits received by
the depositary.
TT&L depositary or depositary means
a financial institution designated as a
depositary by Treasury or the FRB of St.
Louis acting as Treasury’s Fiscal agent,
for the purpose of participating in the
investment program and/or PATAX.
There are three kinds of TT&L
depositaries: investor depositaries,
retainer depositaries, and collector
depositaries.
TT&L program means the program for
collecting Federal taxes and investing
the Government’s excess operating
funds.
TT&L rate of interest means the
interest charged on the TIP main
account balance and the SDI account
balance. The TT&L rate of interest is the
rate prescribed by the Secretary taking
into consideration prevailing market
interest rates. The rate and any rate
changes will be announced through a
TT&L Special Notice to Depositaries and
will be published in the Federal
Register and on a Web site maintained
by Treasury’s Financial Management
Service at https://www.fms.treas.gov.
§ 203.3
TT&L depositaries.
A financial institution that
participates in PATAX and/or the
investment program must be a TT&L
depositary. There are three kinds of
TT&L depositaries. A collector
depositary is a TT&L depositary that
accepts paper Federal tax payments and
also may accept electronic Federal tax
payments, but does not accept direct
investments or SDIs. A retainer
depositary is a TT&L depositary that
accepts electronic and/or paper Federal
tax payments and retains a portion ofthe
tax deposits in its TIP main account
balance. An investor depositary is a
TT&L depositary that accepts direct
investments, SDIs, or dynamic
investments and may accept electronic
and/or paper Federal tax payments and
retain a portion of those tax deposits.
Collector, retainer, and investor
depositaries may accept term
investments. Retainer and investor
depositaries do not have to participate
in PATAX.
§ 203.4 Financial institution eligibility for
designation as a TT&L depositary.
(a) To be designated as a TT&L
depositary, a financial institution must
be insured as a national banking
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association, state bank, savings bank,
savings association, building and loan,
homestead association, Federal home
loan bank, credit union, trust company,
or a U.S. branch of a foreign banking
corporation, the establishment of which
has been approved by the Comptroller
of the Currency.
(b) A financial institution must
possess the authority to pledge
collateral to secure TT&L account
balances, a TIP main account balance,
an SDI account balance, or a no account
balance as applicable.
(c) In order to be designated as a
TT&L depositary for the purposes of
processing Federal tax deposits through
PATAX, a financial institution must
possess under its charter either general
or specific authority permitting the
maintenance of the TT&L account, the
balance of which is payable on demand
without previous notice of intended
withdrawal. In addition, investor
depositaries and retainer depositaries
must possess either general or specific
authority permitting the maintenance of
a TIP main account 27 balance or an SDI
account balance. Investor, retainer, and
collector depositaries that accept term
investments must possess either general
or specific authority permitting the
maintenance of a TIO account balance.
In the case of investor and retainer
depositaries maintaining a TIP main
account balance or an SDI account
balance, the authority must perm it the
maintenance of a TIP main account
balance or an SDI account balance
which is payable on demand without
previous notice of intended withdrawal.
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§ 203.5 Designation of financial
institutions as TT&L depositaries.
(a) Parties to the agreement. To be
designated as a TT&L depositary, a
financial institution must enter into a
depositary agreement with Treasury or
Treasury’s Fiscal agent. By entering into
this agreement, the financial institution
agrees to be bound by this part, and
procedural instructions issued pursuant
to this part. Treasury will not
compensate depositaries for servicing
and maintaining a TT&L account, or for
processing tax payments through EFTPS
or PATAX, unless otherwise provided
for in procedural instructions.
(b) Application procedures. (1) An
eligible financial institution seeking
designation as a TT&L depositary must
file the forms specified in the
procedural instructions with the TSC. A
TT&L depositary must elect to be one or
more of the following:
(i) A collector depositary;
(ii) a retainer depositary;
(iii) an investor depositary.
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(2) A financial institution is not
authorized to maintain a TT&L account,
TIP main account balance, SDI account
balance, or TIO account balance until
the TSC designates it as a TT&L
depository.
balance, or a TIO account balance under
this part. By accepting or originating
Federal tax payments, the financial
institution agrees to be bound by this
part and by procedural instructions
issued pursuant to this part.
§ 203.6
Subpart B—Electronic Federal Tax
Payments
Obligations of TT&L depositaries.
A TT&L depositary must:
(a) Administer a TIP main account
balance, SDI account balance, or TIO
account balance, as applicable, if
participating in the investment program.
(b) Administer a TT&L account, if
participating in PATAX.
(c) Comply with the requirements of
Section 202 of Executive Order 11246,
entitled ‘‘Equal Employment
Opportunity’’ (3 CFR, 1964–1965
Comp., p. 339) as amended by Executive
Orders 11375 and 12086 (3 CFR, 1966–
1970 Comp., p. 684; 3 CFR, 1978 Comp.,
p. 230), and the regulations issued
thereunder at 41 CFR chapter 60.
(d) Comply with the requirements of
Section 503 of the Rehabilitation Act of
1973, as amended, and the regulations
issued thereunder at 41 CFR part 60–
741, requiring Federal contractors to
take affirmative action to employ and
advance in employment qualified
individuals with disabilities.
(e) Comply with the requirements of
Section 503 of the Vietnam Era
Veterans’ Readjustment Assistance Act
of 1972, as amended, 38 U.S.C. 4212,
Executive Order 11701 (3 CFR 1971–
1975 Comp., p. 752), and the regulations
issued thereunder at 41 CFR parts 60–
250 and 61–250, requiring Federal
contractors to take affirmative action to
employ and advance in employment
qualified special disabled veterans and
Vietnam-era veterans.
§ 203.7 Termination of agreement or
change of election or option.
(a) Termination by Treasury. The
Secretary may terminate the agreement
of a TT&L depositary at any time upon
notice to that effect to that depositary,
effective on the date set forth in the
notice.
(b) Termination or change of election
or option by the depositary. A TT&L
depositary may terminate its depositary
agreement, or change its option or
election, consistent with this part and
the procedural instructions, by prior
written notice to the TSC.
§ 203.8 Application of part and procedural
instructions.
The terms of this part and the
procedural instructions issued pursuant
to this part will be binding on financial
institutions that process Federal tax
payments or maintain a TT&L account,
TIP main account balance, SDI account
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§ 203.9
Scope of the subpart.
This subpart prescribes the rules that
financial institutions must follow when
they process electronic Federal tax
payment transactions. A financial
institution is not required to be
designated as a TT&L depositary in
order to process electronic Federal tax
payments. In addition, a financial
institution does not become a TT&L
depositary by processing electronic
Federal tax payments under this subpart
and may not represent itself as a TT&L
depositary because it does so.
§ 203.10
Electronic payment methods.
(a) General. Electronic payment
methods for Federal tax payments
available under this subpart include
ACH debit entries, ACH credit entries,
and same-day payments.
(b) Conditions to making an electronic
payment. This part does not affect the
authority of financial institutions to
enter into contracts with their customers
regarding the terms and conditions for
processing payments, as long as the
terms and conditions of those contracts
are not inconsistent with this part and
with any laws that apply to the
particular transactions.
(c) Payment of interest for time value
of funds held. Treasury will not pay
interest on any payment that a financial
institution erroneously originates and
that subsequently is refunded.
§ 203.11 Same-day reporting and payment
mechanisms.
(a) General. A financial institution or
its authorized correspondent may
initiate same-day reporting and payment
transactions on behalf of taxpayers. A
same-day payment must be received by
the FRB by the deadline established by
Treasury in the procedural instructions.
(b) Fedwire non-value transaction.
By initiating a Fedwire non-value
transaction, a financial institution
authorizes the TSC to debit its reserve
account for the amount of the Federal
tax payment specified in the
transaction.
(1) For an investor or retainer
depositary using a Fedwire non-value
transaction, the TSC will credit the
Federal tax payment amount, up to the
depositary’s available TIP main account
balance capacity, to the depositary’s TIP
main account balance on the day of the
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transaction. Throughout the course of
the day, the TSC will debit from the
depositary’s reserve account, and credit
to the TGA, any portion of a tax
payment amount that would exceed the
institution’s available TIP main account
balance capacity.
(2) For a collector depositary or a nonTT&L depositary financial institution
using a Fedwire non-value transaction,
the TSC will debit the financial
institution’s reserve account for the
Federal tax payment amount and credit
that amount to the TGA on the day of
the transaction.
(c) Cancellations and reversals. In
addition to cancellations due to
insufficient funds in the financial
institution’s reserve account, the FRB
may reverse a same-day transaction:
(1) If the transaction:
(i) Is originated by a financial
institution after the deadline established
by Treasury in the procedural
instructions;
(ii) Has an unenrolled taxpayer
identification number; or
(iii) Does not meet the edit and format
requirements set forth in the procedural
instructions; or
(2) At the direction of the IRS, for the
following reasons:
(i) Incorrect taxpayer name;
(ii) Overpayment; or
(iii) Unidentified payment; or
(3) At the request of the financial
institution that sent the same-day
transaction, if the request is made prior
to the payment day deadline established
by Treasury in the procedural
instructions.
(d) Other than as stated in paragraph
(c) of this section, Treasury is not
obligated to reverse all or any part of a
payment.
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§ 203.12
EFTPS interest assessments.
(a) Circumstances subject to interest
assessments. Treasury may assess
interest on a financial institution in
instances where a taxpayer that failed to
meet a tax due date proves to the IRS
that the delivery of Federal tax payment
instructions to the financial institution
was timely and that the taxpayer
satisfied the conditions imposed by the
financial institution pursuant to
§ 203.10(b). Treasury also may assess
interest where a financial institution
fails to respond to an ACH
prenotification entry on an ACH debit as
required under part 210 of this title, or
fails to originate an ACH prenotification
or zero dollar entry on an ACH credit at
a taxpayer’s request, which then results
in a late payment.
(b) Calculation of interest assessment.
Any interest assessed under this section
will be at the TT&L rate of interest.
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Treasury will assess the interest from
the day the taxpayer specified that its
payment should settle to the Treasury
until the day Treasury receives the
payment, subject to the following
limitations: for ACH debit transactions,
interest will be limited to no more than
seven calendar days; For ACH credit
and same-day transactions, interest will
be limited to no more than 45 calendar
days. The limitation of liability in this
paragraph does not apply to any interest
assessment in which there is an
indication of fraud, the presentation of
a false claim, or misrepresentation or
embezzlement on the part of the
financial institution or any employee or
agent of the financial institution.
(c) Authorization to assess interest. A
financial institution that processes
Federal tax payments made
electronically under this subpart is
deemed to authorize the TSC to debit its
reserve account for any interest assessed
under this section. Upon the direction
of Treasury, the TSC will debit the
financial institution’s reserve account
for the amount of the assessed interest.
(d) Circumstances not resulting in the
assessment of interest.
(1) Treasury will not assess interest on
a taxpayer’s financial institution if a
taxpayer fails to meet a tax due date
because the taxpayer has not satisfied
conditions imposed by the financial
institution pursuant to § 203.10(b) and
the financial institution has not
contributed to the delay. The burden is
on the financial institution to establish,
pursuant to the procedures in § 203.13,
that the taxpayer has not satisfied the
conditions and that the financial
institution has not caused or
contributed to the delay.
(2) Treasury will not assess interest on
a financial institution if a taxpayer fails
to meet a tax due date because the FRB
or the TFA caused a delay and the
financial institution did not contribute
to the delay. The burden is on the
financial institution to establish,
pursuant to the procedures in § 203.13,
that it did not cause or contribute to the
delay.
203.13
Appeal and dispute resolution.
(a) Contest. A financial institution
may contest any interest assessed under
§ 203.12 or any late fees assessed under
§ 203.17. To do so, the financial
institution must submit information
supporting its position and the relief
sought. The information must be
received, in writing, by the Treasury
officer or Fiscal agent identified in the
procedural instructions, no later than 90
calendar days after the date the TSC
debits the Federal reserve account of the
financial institution under § 203.12 or
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§ 203.17. The Treasury officer or Fiscal
agent will make a decision to: Uphold,
reverse, or modify the assessment, or
mandate other action.
(b) Appeal. The financial institution
may appeal the decision referenced in
subsection (a) to Treasury as set forth in
the procedural instructions. No further
administrative review of Treasury’s
decision is available under this part.
(c) Recoveries. In the event of an over
or under recovery of interest, principal,
or late fees, Treasury will instruct the
TSC to credit or debit the financial
institution’s reserve account.
Subpart C—PATAX
§ 203.14
Scope of the subpart.
This subpart applies to all TT&L
depositaries that accept FTD coupons
and governs the acceptance and
processing of those coupons.
§ 203.15
Tax deposits using FTD coupons.
A TT&L depositary processing FTD
coupons may choose to be designated as
a retainer depositary, an investor
depositary, or a collector depositary. A
TT&L depositary that accepts FTD
coupons through any of its offices that
accept demand and/or savings deposits
must:
(a) Accept from a taxpayer that
presents an FTD coupon: cash, a postal
money order drawn to the order of the
depositary, or a check or draft drawn on
and to the order of the depositary,
covering an amount to be deposited as
Federal taxes. A TT&L depositary may
accept, at its discretion, a check drawn
on another financial institution, but it
does so at its option and absorbs for its
own account any float and other costs
involved.
(b) Place a stamp impression on the
face of each FTD coupon in the space
provided. The stamp must reflect the
date on which the TT&L depositary
received the tax deposit and the name
and location of the depositary. The IRS
will determine whether the tax payment
is on time by referring to the date
stamped on the FTD coupon.
(c) Forward, each day, to the IRS
Service Center serving the geographical
area in which the TT&L depositary is
located, the FTD coupons for all FTD
deposits received that day and a copy of
the AOC reflecting the total amount of
all FTD coupons.
(d) Establish an adequate record of all
FTD deposits prior to transmitting them
to 36 the IRS Service Center so that the
TT&L depositary will be able to identify
deposits in the event the FTD coupons
are lost in shipment. To be adequate, the
record must show, at a minimum for
each deposit, the date of the deposit, the
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taxpayer identification number, the
amount of the deposit, the tax period
ending date, the type of tax deposited,
and the employer name. Alternatively,
the TT&L depositary may retain a copy
of each FTD coupon forwarded to the
IRS Service Center.
(e) On the business day following
receipt of an FTD coupon, submit the
AOC information electronically to the
TSC.
(f) Not accept compensation from
taxpayers for accepting FTDs and
handling them as required by this
section.
§ 203.16 Retainer and investor
depositaries.
(a) Credit to TIP main account
balance. On the business day that the
TSC receives an AOC from a retainer or
investor depositary, the TSC will credit
the depositary’s TIP main account
balance for the amount reported on the
AOC unless there isn’t sufficient
capacity. In that case, any amount in
excess of the capacity will be debited to
the reserve account and credited to the
TGA.
(b) Late delivery of AOC. If an AOC
does not arrive at the TSC before the
designated cutoff time for receipt, the
TSC will credit the amount of funds to
the depositary’s TIP main account
balance as of the date of receipt of the
AOC. However, the date on which funds
will begin to earn interest for Treasury
is the next business day after the AOC
date.
§ 203.17
Collector depositaries.
(a) Debit to reserve account. On the
business day that the TSC receives an
AOC from a collector depositary, the
TSC will debit the depositary’s reserve
account for the amount reported on the
AOC and credit that amount to
Treasury’s account.
(b) Late delivery of AOC. If an AOC
does not arrive at the TSC before the
designated cutoff time on the first
business day after the AOC date, an FTD
late fee in the form of interest at the
TT&L rate of interest will.be assessed for
each day’s delay in receipt of the AOC.
Upon the direction of Treasury, the TSC
will debit the depositary’s reserve
account for the amount of the late fee.
Subpart D—Investment Program and
Collateral Security Requirements for
TT&L Depositaries
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§ 203.18
Scope of the subpart.
This subpart governs the operation of
the investment program, including the
rules that TT&L depositaries must
follow in crediting and debiting TIP
main account balances, SDI account
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Jkt 214001
balances, and TIO account balances, and
pledging collateral security.
§ 203.19
Sources of balances.
A financial institution must be a
collector depositary that accepts term
investments, an investor depositary, or
a retainer depositary to participate in
the investment program. Depositaries
electing to participate in the investment
program can receive Treasury’s
investments in obligations of the
depositary from the following sources:
(a) FTDs that have been credited to
the depositary’s TIP main account
balance pursuant to subpart C of this
part;
(b) EFTPS ACH credit and debit
transactions, Fedwire non-value
transactions, and Fedwire value
transfers pursuant to subpart B of this
part;
(c) Direct investments, SDIs, dynamic
investments, and term investments
pursuant to subpart D of this part; and
(d) Other excess Treasury operating
funds.
§ 203.20 Investment account
requirements.
(a) Additions. Treasury will invest
funds in obligations of collector
depositaries that accept term
investments, investor depositaries, or
retainer depositaries. Such obligations
will be in the form of open-ended
interest-bearing notes, or in the case of
term investments, interest-bearing notes
maintained for a predetermined period
of time, and additions and reductions
will be reflected on the books of the
TSC.
(1) PATAX. The TSC will credit the
TIP main account balance as stated in
§ 203.16(a) for an investor or retainer
depositary processing tax deposits
through PATAX.
(2) EFTPS.
(i) ACH debit and ACH credit. The
TSC will credit a depositary’s TIP main
account balance, and credit the
depositary’s reserve account if capacity
exists, for the amount of EFTPS ACH
debit and credit entries on the day such
entries settle.
(ii) Fedwire reg; value and nonvalue transactions. The TSC will credit
a depositary’s TIP main account balance
if capacity exists, throughout the day on
the day of settlement, for the amount of
Fedwire reg; value and non-value
transactions. In the case of Fedwire
value transactions, the depositary’s
reserve account will also be credited.
(b) Additional offerings. Other funds
from Treasury may be offered from time
to time to depositaries participating in
the investment program through direct
investments, SDIs, term investments, or
other investment programs.
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59185
(c) Withdrawals. The amount of a TIP
main account balance or SDI account
balance is payable on demand without
prior notice. The TSC will make calls
for payment at the direction of the
Secretary. On behalf of Treasury, the
TSC will debit the depositary’s reserve
account on the day specified in the call
for payment.
(d) Interest. The TIP main account
balance and the SDI account balance
bear interest at the TT&L rate of interest.
Such interest is payable by a charge to
the depositary’s reserve account in the
manner prescribed in the procedural
instructions.
(e) Balance limits.
(1) Retainer and investor depositaries.
A retainer or investor depositary must
establish an initial balance limit for its
TIP main account balance by providing
notice to that effect in writing to the
TSC. The balance limit is the amount of
funds for which a retainer or investor
depositary is willing to provide
collateral in accordance with
§ 203.21(c)(1). The depositary must
follow the procedural instructions
before reducing the established balance
limit unless the reduction results from
a collateral revaluation as determined
by the FRB. That portion of any PATAX
or EFTPS tax payment which, when
posted at the FRB, would cause the TIP
main account balance to exceed the
balance limit specified by the
depositary, will be withdrawn by the
FRB that day.
(2) Direct investments. An investor
depositary that participates in direct
investments must set a balance limit for
direct investment purposes which is
higher than the peak balance normally
generated by the depositary’s PATAX
and EFTPS tax payment inflow. The
depositary must follow the procedural
instructions before reducing the
established balance limit.
(3) SDIs. SDIs are credited to the SDI
account balance and are not considered
in setting the amount of the TIP main
account balance limit or in determining
the amounts to be withdrawn where a
depositary exceeds its TIP main account
balance limit.
(f) TIO. Treasury may, from time to
time, invest excess operating funds in
obligations of depositaries awarded
funds under TIO. Such obligations will
be in the form of interest-bearing notes
payable upon a predetermined period of
time not to exceed 90 days. Such notes
will bear interest at a rate prescribed by
the Secretary by auction or otherwise
taking into consideration prevailing
market interest rates.
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sroberts on PROD1PC70 with RULES
§ 203.21
Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations
Collateral security requirements.
Financial institutions that process
EFTPS tax payments, but that are not
TT&L depositaries, have no collateral
requirements under this part. Financial
institutions that are TT&L depositaries
have collateral security requirements, as
follows:
(a) Investor and retainer depositaries.
(1) PATAX and EFTPS tax payments.
Investor and retainer depositaries must
pledge collateral security in accordance
with the requirements of paragraphs
(c)(l), (d), and (e) of this section in an
amount that is sufficient to cover the
TIP main account balance and the
balance in the TT&L account that
exceeds the recognized insurance
coverage.
(2) Direct investments. An investor
depositary is required to pledge
collateral in accordance with the
requirements of paragraphs (c), (d), and
(e) of this section no later than the day
before a direct investment is placed.
However, each investor depositary
participating in same-day direct
investments must pledge, prior to the
announcement, collateral up to its
balance limit to obtain the depositary’s
maximum portion of the same-day
direct investment.
(3) SDIs. The day before SDIs are
credited to an investor depositary’s SDI
account balance, the depositary must
pledge collateral security, in accordance
with the requirements of paragraphs
(c)(2), (d), and (e) of this section, to
cover the total of the SDIs to be
received.
(4) TIO. Each depositary participating
in the term investment program must
pledge, prior to the time the term
investment is placed, collateral in
accordance with paragraphs (c)(1), (c)(2)
for certain term investments as
determined by Treasury, (d), and (e) of
this section sufficient to cover the total
TIO account balance.
(b) Collector depositaries. Prior to
crediting FTD deposits to the TT&L
account, a collector depositary must
pledge collateral security, in accordance
with the requirements of paragraphs
(c)(1), (d), and (e) of this section, in an
amount which is sufficient to cover the
balance in the TT&L account that
exceeds the recognized insurance
coverage.
(c) Deposits of securities. (1) Collateral
security required under paragraphs
(a)(1), (2), (4) (except as provided in
subparagraph (2) below), and (b) of this
section must be deposited with the
depositary’s FRB, or with a custodian or
custodians within the United States
designated by the TSC or FRB, under
terms and conditions prescribed by the
TSC or FRB.
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16:59 Oct 18, 2007
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(2) A depositary pledging collateral
security as required under paragraph
(a)(3) or paragraph (a)(4) (when
permitted) of this section must pledge
the collateral under a written security
agreement on a form provided by the
FRB. The collateral security pledged to
satisfy the requirements of paragraphs
(a)(3) and (a)( 4) (when permitted) of
this section may remain in the pledging
depositary’s possession provided that
the pledging is evidenced by advices of
custody incorporated by reference in the
written security agreement. The
depositary must provide the written
security agreement and all advices of
custody covering collateral security
pledged under that agreement to the
FRB. Collateral security pledged under
the agreement may not be substituted
for or released without the advance
approval of the FRB, and any collateral
security subject to the security
agreement will remain so subject until
an approved substitution is made. No
substitution or release will be approved
until an advice of custody containing
the description required by the written
security agreement is received by the
FRB.
(3) Treasury’s security interest in
collateral security pledged by a
depositary in accordance with
paragraphs (c)(2) of this section to
secure SDIs and certain term
investments is perfected without
Treasury taking possession of the
collateral security by filing or, absent
filing, for a period not to exceed 20
calendar days from the day of the
depositary’s receipt of the special direct
or term investment.
(d) Acceptable collateral. The types of
securities that may be used as collateral,
and how those securities are valued, are
set forth in 31 CFR part 380.
( e) Assignment of securities. By
pledging acceptable securities which are
not negotiable without the depositary’s
endorsement or assignment, a TT&L
depositary, in lieu of placing its
unqualified endorsement on each
security, appoints the FRB or its assigns
as the depositary’s attorney-in-fact with
full irrevocable power and authority to
endorse, assign or transfer the securities,
and represents and warrants that an
appropriate resolution authorizing the
granting of such irrevocable power of
attorney has been executed and
adopted. The powers of attorney so
granted are coupled with an interest and
are irrevocable, and full power of
substitution is granted to the assignee or
holder.
(f) Effecting payments of principal
and interest on securities or instruments
pledged as collateral. (1) General.
Treasury, without notice or demand,
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Frm 00034
Fmt 4700
Sfmt 4700
may sell or otherwise collect the
proceeds of all or part of the collateral,
including additions, substitutions,
interest, and distribution of principal,
and apply the proceeds to satisfy any
claims of the United States against the
depositary, if any of the following
events occur:
(i) The depositary fails to pay, when
due, the whole or any part of the funds
received by it for credit to the TT&L
account and, if applicable, its TIP main
account balance, SDI account balance,
or TIO account balance;
(ii) The depositary fails to pay when
due amounts owed to the United States
or the United States Treasury;
(iii) The depositary otherwise violates
or fails to perform any of the terms of
this part or any of the procedural
instructions entered into hereunder; or
(iv) The depositary is closed for
business by regulatory action or by
proper corporate action, or a receiver,
conservator, liquidator, or any other
officer is appointed for the depositary.
All principal and interest payments on
any security pledged to protect the TIP
main account balance, the SDI account
balance, the TIO account balance or the
TT&L account, as applicable, due as of
the date of the insolvency or closure or
thereafter becoming due, will be held
separate and apart from any other assets
and will constitute a part of the pledged
security available to satisfy any claim of
the United States.
(2) Payment procedures. (i) Subject to
the waiver in paragraph (f)(2)(iii) of this
section, each depositary (including,
with respect to such depositary, an
assignee for the benefit of creditors, a
trustee in bankruptcy, or a receiver in
equity) will, as soon as possible, remit
to the FRB, as Fiscal agent, each
payment of principal and/or interest
received by it with respect to collateral
pledged pursuant to this section. The
remittance will be made no later than 10
days after receipt of such a payment.
(ii) Subject to the waiver in paragraph
(f)(2)(iii) of this section, each obligor on
a security pledged by a depositary
pursuant to this section, upon
notification that Treasury is entitled to
any payment associated with that
pledged security, must make each
payment of principal and/or interest
due with respect to such security
directly to the FRB, as Fiscal agent of
the United States.
(iii) The requirements of paragraphs
(f)(2)(i) and (ii) of this section are hereby
waived for only so long as a pledging
depositary avoids both termination from
the program under § 203.7 and also
those circumstances identified in
paragraph (f)(1) which may lead to the
collection of the proceeds of collateral
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Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations
or the waiver is otherwise terminated by
Treasury.
Dated: October 11, 2007.
Kenneth R. Papaj,
Commissioner.
[FR Doc. 07–5135 Filed 10–18–07; 8:45 am]
BILLING CODE 4810–35–M
DEPARTMENT OF AGRICULTURE
Forest Service
36 CFR Part 223
RIN 0596–AB70
Sale and Disposal of National Forest
System Timber; Modification of Timber
Sale Contracts in Extraordinary
Conditions; Noncompetitive Sale of
Timber
Forest Service, USDA.
Final rule.
AGENCY:
ACTION:
SUMMARY: This final rule revises
regulations at Title 36, Code of Federal
Regulations, part 223, on
noncompetitive disposal of timber and
other forest products based on the
Secretary of Agriculture’s determination
that extraordinary conditions exist. A
notice with request for comment on an
interim final rule was published in the
Federal Register on June 16, 2006. The
Forest Service made appropriate
changes to the rule in response to the
public comments.
DATE: This rule is effective November
19, 2007.
ADDRESSES: The public may inspect
comments received at Office of the
Director, Forest Management Staff,
Forest Service, USDA, 201 14th Street,
SW., Washington, DC 20250. Visitors
are encouraged to call ahead to (202)
205–1496 to facilitate entry to the
building.
FOR FURTHER INFORMATION CONTACT:
Forest Management Staff personnel,
Lathrop Smith (202) 205–0858, or
Richard Fitzgerald (202) 205–1753.
Individuals who use
telecommunication devices for the deaf
(TDD) may call the Federal Information
Relay Service (FIRS) at 1–800–877–8339
between 8 a.m. and 8 p.m., Eastern
Standard Time, Monday through Friday.
SUPPLEMENTARY INFORMATION:
sroberts on PROD1PC70 with RULES
Background
The National Forest Management Act
(NFMA), codified in part at Title 16
U.S.C. 472a(d), requires the Secretary of
Agriculture to advertise all sales of
forest products unless the appraised
value of the sale is less than $10,000, or
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16:59 Oct 18, 2007
Jkt 214001
the Secretary determines that
extraordinary conditions exist, as
defined by regulation. The requirement
to advertise sales unless extraordinary
conditions exist applies to the
substitution of timber outside a sale
contract area.
Prior to NFMA, the Government
Accountability Office (formerly the
General Accounting Office) held that
substitution of timber outside the
contract area for timber in the contract
area violated the Agency’s authority to
sell timber.1 Since the passage of
NFMA, but in the absence of a
regulation defining ‘‘extraordinary
conditions,’’ the Agriculture Board of
Contract Appeals has decided similarly
in several cases.2
Before authorizing activities on
National Forest System lands, the Forest
Service must ensure compliance with
applicable laws and regulations and
with conditions on the ground at the
time of the authorization. Even so, after
entering into timber sale contracts,
environmental changes may occur such
as the listing of a new species on the
endangered species list, or a
catastrophic event may occur, such as a
large wildfire, resulting in the need to
modify the contracts. Also, court orders
and decisions resulting from
environmental litigation may require
making changes to existing contracts
even when those contracts are not
specifically named in the litigation if
they are similar to contracts that were
named. When this occurs, it is essential
for Forest Service officials to have
flexibility to adjust management
activities and contractual arrangements
without incurring enormous financial
liability associated with unilateral
modifications or contract cancellations.
At the time a sale is sold, there is no
way to predict what future litigation or
environmental changes may occur that
will result in the sale contract needing
to be changed. Each occurrence is a
unique situation that constitutes an
extraordinary condition. The Forest
Service needs the ability to provide
replacement timber or forest products
for contracts that must be modified to
prevent environmental degradation or
resource damage, or as a result of
administrative appeals, litigation, court
orders, or catastrophic events that occur
after contract award. Thus, the Forest
Service promulgated an interim final
1 Letter to Mr. Secretary, 1973 WL 7905 (Comp.
Gen.), B–177602 (1973).
2 See Appeal of Summit Contractors, 1986 WL
19566 (AGBCA), Nos. 81–252–1, No. 83–312–1 (Jan.
8, 1986), and Appeal of Jay Rucker, 1980 WL 2345
(AGBCA) Nos. 79–211A, 79–211B (June 11, 1980).
See also, Croman Corporation v. United States, 31
Fed. Cl. 741, 746–47 (August 16, 1994).
PO 00000
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59187
rule, published June 16, 2006 (71 FR
34823), on noncompetitive sale of
timber and other forest products based
on the Secretary of Agriculture’s
determination that extraordinary
conditions exist whenever a timber or
forest products contract needs to be
modified or canceled to address such
unexpected changes. This benefits the
Government by providing contracting
officers with an opportunity to avert
costly claims by providing replacement
timber or forest products from outside
the contract area when replacement
timber is not available within the
contract area. Replacement timber also
helps maintain the industry
infrastructure, which in turn will
maintain forest management options.
Response to Comments
A 60-day comment period on the
interim final rule was initiated on June
16, 2006, (71 FR 34823). Only two
respondents replied. One respondent is
an individual and the other respondent
is a timber industry association.
Comment 1: The constraints that the
value of replacement material may not
exceed the value of the material it is
replacing by more than 10% or $10,000,
whichever is less, are too restrictive and
will hamper implementation and use of
this valuable tool. On small amounts of
replacement timber, 10% may represent
a very small amount of money, and on
large volumes the $10,000 may
represent a small percentage of value. If
one or both of these numbers has some
basis in law and cannot be removed, the
only fair way to deal with this situation
is to have these be upper and lower
limits.
Response 1: The limitations were
intended to reduce potential impacts to
other purchasers while making the
purchaser of a sale that must be
modified or terminated whole.
Replacement timber from outside the
sale area will most likely come from
some other sale that would otherwise be
offered competitively on the open
market. Offering substantially more
replacement timber than the amount or
value being deleted by a unilateral
termination goes beyond making a
purchaser whole, circumvents fair and
open competition and could have
detrimental consequences to other
purchasers, the public, and Forest
Service program objectives. For the
following reasons the Forest Service
agrees that the 10% limit is unnecessary
but disagrees that the $10,000 limit is
overly restrictive.
The National Forest Management Act
(NFMA) requires advertising sales
greater than $10,000 in appraised value
unless the Secretary determines, as
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]]>Agencies
[Federal Register Volume 72, Number 202 (Friday, October 19, 2007)]
[Rules and Regulations]
[Pages 59177-59187]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-5135]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 203
RIN 1510-AB01
Payment of Federal Taxes and the Treasury Tax and Loan Program
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Interim final rule.
-----------------------------------------------------------------------
SUMMARY: As part of an ongoing effort to review and streamline its
regulations, the Financial Management Service (FMS) has revised its
regulation governing the Treasury Tax and Loan (TT&L) program. The
changes update the rule to reflect the reorganization and enhancement
of the TT&L program, including changes in terminology, and simplify the
rule by deleting procedures and provisions that appear in other
regulations or in the Treasury Financial Manual. FMS also has rewritten
this regulation in plain language, thus making it clearer and easier to
understand.
DATES: This interim final rule is effective October 19, 2007. Comments
must be received by December 18, 2007.
ADDRESSES: The Financial Management Service began participating in the
U.S. government's eRulemaking Initiative by publishing rulemaking
information on www.regulations.gov. Regulations.gov offers the public
the ability to comment on, search, and view publicly available
rulemaking materials, including comments received on rules.
Comments on this rule, identified by docket FISCAL-FMS-2007-0007,
should only be submitted using the following methods:
Federal eRulemaking Portal: www.regulations.gov. Follow
the instructions on the Web site for submitting comments.
Mail: Thompson Sawyer, Director, Investment Management
Division, Financial Management Service, 401 14th Street, SW.,
Washington, DC 20227.
The fax and e-mail methods of submitting comments on rules to FMS
have been retired.
Instructions: All submissions received must include the agency name
(``Financial Management Service'') and docket number FISCAL-FMS-2007-
0007 for this rulemaking. In general, comments will be published on
Regulations.gov without change, including any business or personal
information provided. Comments received, including attachments and
other supporting materials, are part of the public record and subject
to public disclosure. Do not enclose any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure.
You may also inspect and copy this proposed rule at: Treasury
Department Library, Freedom of Information Act (FOIA) Collection, Room
1428, Main Treasury Building, 1500 Pennsylvania Avenue, NW.,
Washington, DC 20220. Before visiting, you must call (202) 622-0990 for
an appointment.
FOR FURTHER INFORMATION CONTACT: Thompson Sawyer, Director, Investment
Management Division, at (202) 874-7150 or thompson.sawyer@fms.treas.gov
or Ellen M. Neubauer, Senior Attorney, at (202) 874-6680 or
ellen.neubauer@fms.treas.gov.
SUPPLEMENTARY INFORMATION:
1. Background
The Treasury Tax and Loan (TT&L) program encompasses two separate
components: A depositary component through which we collect Federal tax
deposits and payments from business taxpayers for employee withholding
and other types of taxes, and an investment component through which we
invest short-term operating balances not needed for immediate cash
outlays. Examples of the investment component are retention of tax
deposits, direct investments, term investments or other investment
programs. Approximately 950 TT&L depositaries borrow excess short-term
Treasury operating funds by participating in the investment component
of the TT&L program. Through agreements executed pursuant to Part 203,
participating depositaries borrow Treasury funds in the form of a note
secured with collateral pledged to
[[Page 59178]]
Treasury and pay interest to Treasury on these balances.
We have revised Part 203 to reflect recent operational changes and
changes in terminology to the TT&L program, and to streamline and
simplify the regulation. Because the predominant intent of this
rulemaking is to improve the clarity of the regulation, we have removed
some procedural and technical requirements and provisions, such as
references to specific Forms and filing instructions, from the existing
regulation. All of the technical requirements that we have removed and
that still apply are contained in Volume IV of the Treasury Financial
Manual (see https://www.fms.treas.gov/tfm/vol4/). Those
technical requirements that don't still apply have been deleted. For
example, current Sec. 203.10 sets forth procedures for financial
institutions to enroll taxpayers in the Electronic Federal Tax Payment
System (EFTPS) that no longer accurately reflect the actual process.
Accordingly, we have deleted the substance of current Sec. 203.10 from
the regulation. The current procedures for enrolling taxpayers in EFTPS
are found in Volume IV of the Treasury Financial Manual, Part 1,
Chapter 2200.
In addition, we have removed some of the existing provisions of the
regulation because they duplicate provisions of 31 CFR part 210, which
sets forth the rules governing the Federal government's participation
in the Automated Clearing House (ACH) system. For example, the
substance of current Sec. 203.15 has been deleted from the interim
final regulation because everything in current Sec. 203.15 is covered
in 31 CFR part 210 (see Sec. 210.8(b)(1)). For the same reason, the
substantive provisions of current Sec. 203.12, which address ACH
credit and debit transactions, have been deleted.
Although a number of new terms have been added to describe
components of the TT&L program, most aspects of the operation of the
program are not changing. For example, the new term ``Treasury
Investment Program (TIP)'' is the automated system within the TT&L
program that receives tax collection data, invests funds, and monitors
collateral pledged to secure invested funds and public money. The new
term ``Paper Tax System (PATAX)'' is the automated system within TIP
that collects, adjusts, and reports paper Federal tax deposits (FTDs).
The revisions to this rule reflect changes that have been made to
the TT&L program over recent years. One of the most significant changes
requires depositaries to have collateral in place before any funds are
credited to their TIP main account balance or Special Direct Investment
(SDI) account balance. Previously, a depositary had until the end of
the day to have collateral in place after the funds were credited to
its account. This change helps ensure that Treasury investments are
adequately secured at all times. Another change, reflected in Sec.
203.20, is that with the implementation of the Treasury Investment
Program, transactions now post to financial institutions' reserve
accounts throughout the day.
Another change to the TT&L program occurred in 2001, when the
Department of the Treasury announced that after December 31, 2000,
Federal Reserve Banks (FRBs) would no longer accept FTD paper coupons.
The change affected only a small percentage (less than one-half of one
percent) of FTD deposits. It was no longer cost-effective for the FRBs
to process the small number of FTD paper coupons they received
annually. We have deleted Sec. 203.18(b) of the current regulation to
reflect this change. Financial institutions that are TT&L depositaries
will still accept paper coupons. For those taxpayers who do not have an
account with a TT&L depositary or who do not wish to pay taxes
electronically through EFTPS, FMS has a mail-in option.
Other changes to the TT&L program and Part 203 are discussed in the
section-by-section analysis below.
II. Section-by-Section Analysis
Section 203.1 Scope
Amended Sec. 203.1 is substantively unchanged from current Sec.
203.1, except that language has been added to clarify that there are
various ways that a financial institution may participate in the TT&L
program. A financial institution may choose to participate in the TT&L
program by becoming an investor depositary, a retainer depositary, and/
or a collector depositary, or by processing tax payments through EFTPS.
Amended Sec. 203.1 clarifies that a financial institution does not
become a TT&L depositary, as defined, by processing tax payments
through EFTPS.
Section 203.2 Definitions
We have made a number of changes to the definitions set forth at
Sec. 203.2. Several definitions have been deleted because they are not
used in the interim final regulation. These include: ``Direct Access
transaction,'' ``Electronic Tax Application,'' ``Electronic Tax
Application reference number,'' ``Input Message Accountability Data,''
and ``Transaction trace number.'' Other terms defined in the current
regulation are replaced by new terminology in the interim final
regulation, including ``Federal Reserve account'' (replaced by
``Reserve account''), ``Federal Reserve Bank of the district''
(replaced by ``Federal Reserve Bank (FRB)''), ``Federal Tax Deposit
system'' (replaced by ``Paper Tax System (PATAX)''), ``Note option''
(replaced by ``Retainer depositary'' and ``Investor depositary''), and
``Remittance option'' (replaced by ``Collector depositary''). Several
new terms have been added to reflect enhancements to the TT&L program,
including ``Capacity,'' ``Dynamic investment,'' ``Investment program,''
``Special Direct Investment (SDI) account balance,'' ``Term Investment
Option (TIO) account balance,'' ``Treasury Investment Program (TIP),''
``Treasury Support Center (TSC),'' and ``TIP main account balance.'' A
number of definitions have been reworded to make them easier to
understand, but are substantively unchanged. Significant changes to
specific definitions are discussed below.
Balance Limit
The new term ``balance limit'' is defined and replaces the term
``maximum balance'' in current Part 203. Although the term ``maximum
balance'' is used in current Part 203, it is not defined.
Capacity
The new term ``capacity'' is being added to refer to the additional
amount of a direct investment or special direct investment that a
designated depositary is willing to receive or the additional amount of
tax deposits that a designated depositary is willing to retain. The TIP
main account balance or SDI account balance, current collateral value,
pending withdrawals, and pending investments are considered when
determining capacity.
Collector Depositary
The new term ``collector depositary'' is used to describe a
depositary that uses the ``remittance option'' under current Part 203
to better reflect the activity performed by the depositary.
Dynamic Investment
The new term ``dynamic investment'' is used to describe investments
placed throughout the day.
Federal Reserve Bank (FRB)
The new term ``Federal Reserve Bank'' replaces ``Federal Reserve
Bank of the district'' in current Part 203.
[[Page 59179]]
Investment Program
The new term ``investment program'' is used to provide an all-
inclusive name for the programs through which Treasury invests excess
operating cash. Examples of the investment component are retention of
tax deposits, direct investments, and term investments. Depositaries do
not have to accept paper-based Federal Tax Deposit coupons (PATAX) to
participate in the investment program.
Investor Depositary
The new term ``investor depositary'' is used to describe one of the
two kinds of depositaries that are referred to as ``note option''
depositaries in the current regulation. An investor depositary is a
depositary authorized to participate in the investment program. In the
interim final regulation, the terms ``investor depositary'' and
``retainer depositary'' are specific terms that replace the less
specific term ``note option'' in the current regulation.
Paper Tax System (PATAX)
The new term ``PATAX'' replaces the term ``Federal Tax Deposit
System'' in current Part 203, to better reflect the activity performed
by the system.
Reserve Account
The new term ``Reserve account'' replaces ``Federal Reserve
account'' in current Part 203. The definition incorporates the concept
that a financial institution's reserve account may in some cases be the
reserve account of the financial institution's correspondent bank.
Retainer Depositary
The new term ``retainer depositary'' is used to describe a certain
kind of depositary known as a ``note option'' depositary in the current
regulation. A retainer depositary is a depositary that retains a
portion of the Federal tax deposits it accepts. In the interim final
regulation, the terms ``investor depositary'' and ``retainer
depositary'' replace the less specific term ``note option'' in the
current regulation. Retainer depositaries do not have to accept paper-
based Federal Tax Deposit coupons (PATAX).
Same-Day Payment
The reference to direct access transactions in the current
definition of ``same-day payment'' has been deleted in the amended
definition because these transactions are no longer available. These
transactions have been replaced by Fedwire[supreg] non-value
transactions.
Special Direct Investment (SDI)
This definition has been changed to delete the reference to note
account and to add a reference to Borrower-In-Custody (BIC)
arrangements.
SDI Account Balance
The new term ``SDI account balance'' is being added because there
is now a separate account for SDI funds. In the current regulation, SDI
funds are allowed to be commingled with direct investment funds and
retained tax deposits.
Term Investment Option (TIO) Account Balance
The new term ``TIO account balance'' is being added to replace
``Term note balance.''
Treasury Investment Program (TIP)
The new term ``TIP'' is being added to describe the automated
system within the TT&L program that receives tax collections, invests
funds, and monitors collateral pledged to secure invested funds.
TIP Main Account Balance
The new term ``TIP main account balance'' is being added to
distinguish retained tax deposits and direct investments funds from SDI
funds.
Treasury Support Center (TSC)
The new term ``TSC'' is being added to refer to the centralized
office located at an FRB that is responsible for monitoring collateral
pledged and managing the TT&L program participation for designated
depositaries.
Treasury Tax & Loan (TT&L) Depositary
The definition of ``TT&L depositary'' has been changed to reflect
new terminology.
TT&L Program
The definition of ``TT&L program'' has been revised to add
references to PATAX, TIP, and EFTPS.
Section 203.3 TT&L Depositaries
We have added a new Sec. 203.3 to clarify the different kinds of
TT&L depositaries and the circumstances in which a financial
institution must be a TT&L depositary. A financial institution must be
a TT&L depositary in order to participate in either PATAX or the
investment program, but not in order to participate in EFTPS alone.
There are three kinds of TT&L depositaries:
Collector depositaries--depositaries that accept paper tax
payments and may accept electronic tax payments, but that do not retain
any such deposits in a TIP main account or accept direct or special
direct investments. A collector depositary may accept term investments.
Retainer depositaries--depositaries that accept electronic
and/or paper tax payments and retain a portion of the tax deposits in a
TIP main account balance but do not accept direct or special direct
investments. A retainer depositary may accept term investments.
Investor depositaries--depositaries that participate in
the investment program by accepting direct investments, special direct
investments, and dynamic investments. Investor depositaries may accept
electronic and/or paper tax payments and may retain a portion of those
tax deposits. An investor depositary may also accept term investments.
Section 203.4 Financial Institution Eligibility for Designation as a
TT&L Depositary
Amended Sec. 203.4 sets forth the criteria a financial institution
must meet to be eligible for designation as a TT&L depositary. The
criteria in the amended rule are unchanged from those in the current
Sec. 203.3.
Section 203.5 Designation of Financial Institutions as TT&L
Depositaries
Amended Sec. 203.5 sets forth the substance of current Sec. 203.4
with certain changes. Subsection (a) is unchanged except that language
contained in current Sec. 203.6 which provides that Treasury will not
compensate depositaries for servicing and maintaining a TT&L account,
or for processing tax payments through EFTPS or P AT AX, has been
relocated to Sec. 203.5(a).
Amended Sec. 203.5(b) simplifies the current regulation by
deleting references to specific forms, which are set forth in
procedural instructions.
Section 203.6 Obligations of TT&L Depositaries
We have not made any substantive change to the obligations of TT&L
depositaries described in current Sec. 203.5.
Section 203.7 Termination of Agreement or Change of Election or Option
We have not revised Sec. 203.7 except for minor wording changes.
Section 203.8 Application of Part and Procedural Instructions
Amended Sec. 203.8 is unchanged from current Sec. 203.8 except
that terminology has been updated.
[[Page 59180]]
Section 203.9 Scope of the Subpart
We have not made any substantive changes to Sec. 203.9.
Section 203.10 Electronic Payment Methods
Amended Sec. 203.10 sets forth the substance of current Sec.
203.11. The second sentence of current Sec. 203.11(a) is deleted
because it restates the point made in amended Sec. 203.9 that a
financial institution need not be a TT&L depositary in order to process
payments through EFTPS.
Section 203.11 Same-Day Reporting and Payment Mechanisms
Details regarding some of the requirements of Fedwire[supreg] value
transactions which are set forth in current Sec. 203.13(b) have been
eliminated as unnecessary. References to direct access transactions set
forth in current Sec. 203.713(d) have been deleted because these
transactions are no longer available.
Section 203.12 EFTPS Interest Assessments
We have not made any substantive changes to the application or
calculation of EFTPS interest assessments.
Section 203.13 Appeal and Dispute Resolution
We have not made any substantive changes to the appeal and dispute
resolution procedures.
Section 203.14 Scope of the Subpart
We have not changed the scope of subpart C.
Section 203.15 Tax Deposits Using FTD Coupons
Amended Sec. 203.15 sets forth the provisions of current Sec.
203.18, with a number of changes. We have deleted entirely the
substance of Sec. 203.18(b), which provides that FRBs must accept FTDs
directly from taxpayers and sets forth procedures governing 13 these
transactions. FRBs no longer accept FTDs directly from the taxpayer. We
also have deleted from this section many procedural steps that are
adequately addressed in procedural instructions.
Section 203.16 Retainer and Investor Depositaries
Amended Sec. 203.16 sets forth the substance of current Sec.
203.19. The order of subsections (a) and (b) has been reversed.
Section 203.17 Collector Depositaries
Amended Sec. 203.17 sets forth the substance of current Sec.
203.20, except that the order of subsections (a) and (b) has been
reversed.
Section 203.18 Scope of the Subpart
We have not revised the scope of subpart D.
Section 203.19 Sources of Balances
Amended Sec. 203.19 sets forth the substance of current Sec.
203.22 with the addition of dynamic investments and term investments.
Section 203.20 Investment Account Requirements
We have not changed the provisions governing TIP main account
balances, SDI account balances, and no account balances. The section
title was changed to reflect the inclusion of the no account balances.
Section 203.21 Collateral Security Requirements
The classes of securities or instruments that are acceptable
collateral to secure deposits and investments, and their respective
valuations, as described in 31 CFR part 380, can be viewed at
Treasury's Bureau of the Public Debt's Web site at 14 http: //
www.treasurydirect.gov/instit/statreg/collateral/collateral_
fiscalprograms.htm#ttl
Amended Sec. 203.21(c)(2) has been updated to reflect changes in
the Uniform Commercial Code (which provides a private sector analogue
for Treasury's BIC arrangements), relative to perfecting security
interests in BIC collateral. Section 203.21(e) has also been changed.
Under current Sec. 203.21(f), when a TT&L depositary pledges
acceptable securities that are not negotiable without its endorsement
or assignment, it may, in lieu of placing its unqualified endorsement
on each security, provide an irrevocable power of attorney authorizing
the FRB to assign the securities. Amended Sec. 203.21(e) states that
by pledging acceptable securities which are not negotiable without the
depositary's endorsement or assignment, a TT&L depositary, in lieu of
placing its unqualified endorsement on each security, automatically
grants the FRB an irrevocable power of attorney to endorse, assign or
transfer the securities. The purpose of this change is to relieve both
TT&L depositaries and the FRB from the administrative burden associated
with providing a power-of-attorney each time such securities are
pledged.
Derivation Chart for Revised Part 203
------------------------------------------------------------------------
Old section New section
------------------------------------------------------------------------
203.1.................................... 203.1
203.2.................................... 203.2
----..................................... 203.3
203.3.................................... 203.4
203.4.................................... 203.5
203.5.................................... 203.6
203.6.................................... 203.5
203.7.................................... 203.7
203.8.................................... 203.8
203.9.................................... 203.9
203.10................................... Removed
203.11................................... 203.10
203.12................................... Removed
203.13................................... 203.11
203.14................................... 203.12
203.15................................... Removed
203.16................................... 203.13
203.17................................... 203.14
203.18................................... 203.15
203.19................................... 203.16
203.20................................... 203.17
203.21................................... 203.18
203.22................................... 203.19
203.23................................... 203.20
203.24................................... 203.21
------------------------------------------------------------------------
III. Regulatory Analyses
Administrative Procedures Act
The public is invited to submit comments on the interim rule which
will be taken into account before this interim rule is confirmed as
final.
This interim final rule does not substantively change the TT&L
program but rather describes operational changes that have already
taken place, updates terminology, and removes duplicative or
unnecessary provisions. The updates in this rule will avoid confusion
about the operation of the program. Under 5 U.S.C. 553(b), this rule is
exempt from prior notice and comment rulemaking requirements on the
grounds that the amendments are non-substantive and further delay in
making these amendments is unnecessary and contrary to the public
interest. For the same reasons, good cause exists to make the rule
effective upon publication.
Request for Comment on Plain Language
Executive Order 12866 requires each agency in the Executive branch
to write regulations that are simple and easy to understand. We invite
comment on how to make this final rule clearer. For example, you may
wish to discuss: (1) Whether we have organized the material to suit
your needs; (2) whether the requirements of this final rule are clear;
or (3) whether there is something else we could do to make this rule
easier to understand.
[[Page 59181]]
Regulatory Planning and Review
The final rule does not meet the criteria for a ``significant
regulatory action'' as defined in Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.
Regulatory Flexibility Act Analysis
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do
not apply.
Paperwork Reduction Act
This rule contains no new collections of information. Therefore,
the Paperwork Reduction Act does not apply.
List of Subjects in 31 CFR Part 203
Banks, Banking, Electronic funds transfers, Taxes.
Words of Issuance
0
For the reasons set out in the preamble, the Financial Management
Service amends 31 CFR chapter II by revising part 203 to read as
follows:
PART 203--PAYMENT OF FEDERAL TAXES AND THE TREASURY TAX AND LOAN
PROGRAM
Subpart A--General Information
Sec.
203.1 Scope.
203.2 Definitions.
203.3 TT&L depositaries.
203.4 Financial institution eligibility for designation as a TT&L
depositary.
203.5 Designation of financial institutions as TT&L depositaries.
203.6 Obligations of TT&L depositaries.
203.7 Termination of agreement or change of election or option.
203.8 Application of part and procedural instructions.
Subpart B--Electronic Federal Tax Payments
203.9 Scope of the subpart.
203.10 Electronic payment methods.
203.11 Same-day reporting and payment mechanisms.
203.12 EFTPS interest assessments.
203.13 Appeal and dispute resolution.
Subpart C--PATAX
203.14 Scope of the subpart.
203.15 Tax deposits using FTD coupons.
203.16 Retainer and investor depositaries.
203.17 Collector depositaries.
Subpart D--Investment Program and Collateral Security Requirements for
TT&L Depositaries
203.18 Scope of the subpart.
203.19 Sources of balances.
203.20 Investment account requirements.
203.21 Collateral security requirements.
Authority: 12 U.S.C. 90,265-266, 332, 391, 1452(d), 1464(k),
1767, 1789a, 2013, 2122, and 3102; 26 U.S.C. 6302; 31 U.S.C. 321,
323, and 3301-3304.
Subpart A--General Information
Sec. 203.1 Scope.
The regulations in this part govern the processing by financial
institutions of electronic and paper-based deposits and payments of
Federal taxes; the operation of the Treasury Tax and Loan (TT&L)
program; the designation of TT&L depositaries; and the operation of the
investment program. A financial institution may participate in the TT&L
program by participating in the investment program or by accepting
Federal tax payments, or both. A financial institution that accepts
Federal tax payments may do so through the paper tax system (PATAX), or
Electronic Federal Tax Payment System (EFTPS), or both. However, a
financial institution is not designated as a TT&L depositary if it only
processes EFTPS payments.
Sec. 203.2 Definitions.
Advice of credit (AOC) means the paper or electronic form
depositaries use to summarize and report Federal Tax Deposit (FTD)
coupon deposits to the Internal Revenue Service (IRS) and the Federal
Reserve Bank (FRB).
Automated Clearing House (ACH) credit entry means a credit
transaction originated by a financial institution, at the direction of
the taxpayer, in accordance with applicable ACH formats and applicable
laws, regulations, and procedural instructions.
ACH debit entry means a debit transaction originated by the
Treasury Financial Agent (TFA), at the direction of the taxpayer, in
accordance with applicable ACH formats and applicable laws,
regulations, and instructions.
Balance limit means the highest amount a depositary has stated it
will accept in its Treasury Investment Program (TIP) main account.
Borrower-In-Custody (BIC) collateral means an arrangement by which
a financial institution pledging collateral to secure special direct
investments and certain term investments is permitted to retain
possession of that collateral, subject to terms and conditions agreed
upon between the FRB and the financial institution.
Business day means any day on which a financial institution's FRB
is open.
Capacity means a TT&L depositary's ability to accept additional
investments in its TIP main account balance and/or its Special Direct
Investment (SDI) account balance. With respect to a TT&L depositary's
TIP main account balance, capacity means the balance limit or current
collateral value, whichever is lower, minus the total of: the
depositary's current TIP main account balance and any pending
investments, plus any pending withdrawals. With respect to an SDI
account balance, capacity means the dollar amount of collateral that
the depositary has pledged for SDIs under a BIC arrangement minus the
total of: the depositary's current SDI account balance and any pending
investments, plus any pending withdrawals.
Collector depositary means a TT&L depositary that accepts paper tax
payments from business customers and that may also process electronic
tax payments from customers, but that does not retain any such deposits
as investments or accept dynamic, direct, or special direct
investments. A collector depositary may accept term investments.
Direct investment means the Department of the Treasury's
(Treasury's) placement of funds with a TT&L depositary, which results
in an increase to the depositary's TIP main account balance and a
credit to its reserve account.
Dynamic investment means Treasury's placement of funds with a TT&L
depositary throughout the day, which results in an increase to the
depositary's TIP main account balance and a credit to its reserve
account.
Electronic Federal Tax Payment System (EFTPS) means the system
through which taxpayers remit Federal tax payments electronically.
Federal Reserve Bank (FRB) means the FRB of the district where the
financial institution is located, or such other FRB that may be
designated in an FRB operating circular, or such other FRB that may be
designated by the Treasury. A financial institution is deemed located
in the same district it would be deemed located for purposes of
Regulation D (12 CFR 204.3(b)(2)), even if the financial institution is
not otherwise subject to Regulation D.
Federal Tax Deposit (FTD) means a Federal tax deposit made using an
FTD coupon.
FTD coupon means a paper form supplied to a taxpayer by Treasury to
accompany deposits of Federal taxes made through PATAX.
Federal taxes means those Federal taxes or other payments specified
by the Secretary of the Treasury as eligible for payment through the
procedures described in this part.
Fedwire[reg]1 means the funds transfer system owned and operated by
the FRBs.
[[Page 59182]]
Fedwire[reg] non-value transaction means the same-day Federal tax
payment information transmitted by a financial institution to an FRB
using a Fedwire@ type 1090 message to authorize a payment.
Fedwire[reg] value transfer means a Federal tax payment made by a
financial institution using a Fedwire[reg] type 1000 message.
Financial institution means any bank, savings bank, savings
association, credit union, or similar institution.
Fiscal agent means the FRB acting as agent for Treasury.
Investment program is the all-inclusive name given to the programs
by which Treasury invests excess operating cash.
Investor depositary means a TT&L depositary that is authorized to
participate in the investment program by accepting funds from Treasury
via direct investments, special direct investments, dynamic
investments, or term investments. In addition, an investor depositary
may accept electronic or paper Federal tax payments from its business
customers and retain a portion of those tax deposits, depending on the
capacity of its TIP main account balance.
Paper Tax System (PATAX) means the paper-based system through which
taxpayers remit Federal tax payments by presenting an FTD coupon and
payment to a TT&L depositary.
Procedural instructions means the procedures contained in the
Treasury Financial Manual, Volume IV (IV TFM), other Treasury
instructions issued by Treasury or through Treasury's Financial Agents
and FRB operating circulars, and agreements issued consistent with this
part.
Recognized insurance coverage means the insurance provided by the
Federal Deposit Insurance Corporation, the National Credit Union
Administration, and insurance organizations specifically qualified by
the Secretary.
Reserve account means an account at an FRB with reserve or clearing
balances held by a financial institution or its designated
correspondent financial institution, if applicable.
Retainer depositary means a TT&L depositary that accepts electronic
and/or paper Federal tax payments from its business customers and
retains a portion of the Federal tax deposits in its TIP main account
balance, depending on its balance limit, account balance, and
collateral value. A retainer depositary may also accept term
investments.
Same-day payment means a payment made by a Fedwire[reg] non-value
transaction or a Fedwire[reg] value transaction.
Secretary means the Secretary of the Treasury, or the Secretary's
delegate.
Special Direct Investment (SDI) means the placement by Treasury of
funds with an investor depositary secured by collateral pledged under a
BIC arrangement.
SDI account balance means an open-ended, interest-bearing note
maintained on the books of the Treasury Support Center representing the
amount of SDIs held by an investor depositary and secured by collateral
pledged under a BIC arrangement.
Tax due date means the day on which a Federal tax payment is due to
Treasury, as determined by statute and IRS regulations.
Term Investments means Treasury's excess operating funds that have
been offered for a predetermined period of time and accepted by
depositaries participating in the Term Investment Option.
Term Investment Option (TIO) means the program available to
depositaries that offers the ability to borrow excess Treasury
operating funds for a predetermined period of time.
TIO account balance means an interest-bearing note maintained on
the books of the Treasury Support Center for a predetermined period of
time.
Treasury Financial Agent (TFA) means a financial institution
designated as an agent of Treasury for processing EFTPS enrollments,
consolidating EFTPS tax payment information, and originating ACH debit
entries on behalf of Treasury as authorized by the taxpayer.
Treasury General Account (TGA) means an account maintained in the
name of the United States Treasury at an FRB.
Treasury Investment Program (TIP) means the automated system under
the TT&L program that receives tax collections, invests funds, and
monitors collateral pledged to secure public money.
TIP main account balance means an open-ended interest-bearing note
maintained on the books of the Treasury Support Center (TSC)
representing a retainer or investor depositary's current net amount of
(i) Federal tax deposits retained by the depositary and/or (ii)
Treasury investments made under the Direct investment program.
Treasury Support Center (TSC) means the office at the FRB that, as
Treasury's Fiscal agent, monitors collateral pledged to secure Treasury
funds, manages TT&L program participation for depositaries, and/or
carries on its books depositaries' TIP main account balances, SDI
account balances, and/or Term Investment Option (TIO) account balances.
Treasury Tax and Loan (TT&L) account means a record of transactions
on the books of a TT&L depositary reflecting paper tax deposits
received by the depositary.
TT&L depositary or depositary means a financial institution
designated as a depositary by Treasury or the FRB of St. Louis acting
as Treasury's Fiscal agent, for the purpose of participating in the
investment program and/or PATAX. There are three kinds of TT&L
depositaries: investor depositaries, retainer depositaries, and
collector depositaries.
TT&L program means the program for collecting Federal taxes and
investing the Government's excess operating funds.
TT&L rate of interest means the interest charged on the TIP main
account balance and the SDI account balance. The TT&L rate of interest
is the rate prescribed by the Secretary taking into consideration
prevailing market interest rates. The rate and any rate changes will be
announced through a TT&L Special Notice to Depositaries and will be
published in the Federal Register and on a Web site maintained by
Treasury's Financial Management Service at https://www.fms.treas.gov.
Sec. 203.3 TT&L depositaries.
A financial institution that participates in PATAX and/or the
investment program must be a TT&L depositary. There are three kinds of
TT&L depositaries. A collector depositary is a TT&L depositary that
accepts paper Federal tax payments and also may accept electronic
Federal tax payments, but does not accept direct investments or SDIs. A
retainer depositary is a TT&L depositary that accepts electronic and/or
paper Federal tax payments and retains a portion ofthe tax deposits in
its TIP main account balance. An investor depositary is a TT&L
depositary that accepts direct investments, SDIs, or dynamic
investments and may accept electronic and/or paper Federal tax payments
and retain a portion of those tax deposits. Collector, retainer, and
investor depositaries may accept term investments. Retainer and
investor depositaries do not have to participate in PATAX.
Sec. 203.4 Financial institution eligibility for designation as a
TT&L depositary.
(a) To be designated as a TT&L depositary, a financial institution
must be insured as a national banking
[[Page 59183]]
association, state bank, savings bank, savings association, building
and loan, homestead association, Federal home loan bank, credit union,
trust company, or a U.S. branch of a foreign banking corporation, the
establishment of which has been approved by the Comptroller of the
Currency.
(b) A financial institution must possess the authority to pledge
collateral to secure TT&L account balances, a TIP main account balance,
an SDI account balance, or a no account balance as applicable.
(c) In order to be designated as a TT&L depositary for the purposes
of processing Federal tax deposits through PATAX, a financial
institution must possess under its charter either general or specific
authority permitting the maintenance of the TT&L account, the balance
of which is payable on demand without previous notice of intended
withdrawal. In addition, investor depositaries and retainer
depositaries must possess either general or specific authority
permitting the maintenance of a TIP main account 27 balance or an SDI
account balance. Investor, retainer, and collector depositaries that
accept term investments must possess either general or specific
authority permitting the maintenance of a TIO account balance. In the
case of investor and retainer depositaries maintaining a TIP main
account balance or an SDI account balance, the authority must perm it
the maintenance of a TIP main account balance or an SDI account balance
which is payable on demand without previous notice of intended
withdrawal.
Sec. 203.5 Designation of financial institutions as TT&L
depositaries.
(a) Parties to the agreement. To be designated as a TT&L
depositary, a financial institution must enter into a depositary
agreement with Treasury or Treasury's Fiscal agent. By entering into
this agreement, the financial institution agrees to be bound by this
part, and procedural instructions issued pursuant to this part.
Treasury will not compensate depositaries for servicing and maintaining
a TT&L account, or for processing tax payments through EFTPS or PATAX,
unless otherwise provided for in procedural instructions.
(b) Application procedures. (1) An eligible financial institution
seeking designation as a TT&L depositary must file the forms specified
in the procedural instructions with the TSC. A TT&L depositary must
elect to be one or more of the following:
(i) A collector depositary;
(ii) a retainer depositary;
(iii) an investor depositary.
(2) A financial institution is not authorized to maintain a TT&L
account, TIP main account balance, SDI account balance, or TIO account
balance until the TSC designates it as a TT&L depository.
Sec. 203.6 Obligations of TT&L depositaries.
A TT&L depositary must:
(a) Administer a TIP main account balance, SDI account balance, or
TIO account balance, as applicable, if participating in the investment
program.
(b) Administer a TT&L account, if participating in PATAX.
(c) Comply with the requirements of Section 202 of Executive Order
11246, entitled ``Equal Employment Opportunity'' (3 CFR, 1964-1965
Comp., p. 339) as amended by Executive Orders 11375 and 12086 (3 CFR,
1966-1970 Comp., p. 684; 3 CFR, 1978 Comp., p. 230), and the
regulations issued thereunder at 41 CFR chapter 60.
(d) Comply with the requirements of Section 503 of the
Rehabilitation Act of 1973, as amended, and the regulations issued
thereunder at 41 CFR part 60-741, requiring Federal contractors to take
affirmative action to employ and advance in employment qualified
individuals with disabilities.
(e) Comply with the requirements of Section 503 of the Vietnam Era
Veterans' Readjustment Assistance Act of 1972, as amended, 38 U.S.C.
4212, Executive Order 11701 (3 CFR 1971-1975 Comp., p. 752), and the
regulations issued thereunder at 41 CFR parts 60-250 and 61-250,
requiring Federal contractors to take affirmative action to employ and
advance in employment qualified special disabled veterans and Vietnam-
era veterans.
Sec. 203.7 Termination of agreement or change of election or option.
(a) Termination by Treasury. The Secretary may terminate the
agreement of a TT&L depositary at any time upon notice to that effect
to that depositary, effective on the date set forth in the notice.
(b) Termination or change of election or option by the depositary.
A TT&L depositary may terminate its depositary agreement, or change its
option or election, consistent with this part and the procedural
instructions, by prior written notice to the TSC.
Sec. 203.8 Application of part and procedural instructions.
The terms of this part and the procedural instructions issued
pursuant to this part will be binding on financial institutions that
process Federal tax payments or maintain a TT&L account, TIP main
account balance, SDI account balance, or a TIO account balance under
this part. By accepting or originating Federal tax payments, the
financial institution agrees to be bound by this part and by procedural
instructions issued pursuant to this part.
Subpart B--Electronic Federal Tax Payments
Sec. 203.9 Scope of the subpart.
This subpart prescribes the rules that financial institutions must
follow when they process electronic Federal tax payment transactions. A
financial institution is not required to be designated as a TT&L
depositary in order to process electronic Federal tax payments. In
addition, a financial institution does not become a TT&L depositary by
processing electronic Federal tax payments under this subpart and may
not represent itself as a TT&L depositary because it does so.
Sec. 203.10 Electronic payment methods.
(a) General. Electronic payment methods for Federal tax payments
available under this subpart include ACH debit entries, ACH credit
entries, and same-day payments.
(b) Conditions to making an electronic payment. This part does not
affect the authority of financial institutions to enter into contracts
with their customers regarding the terms and conditions for processing
payments, as long as the terms and conditions of those contracts are
not inconsistent with this part and with any laws that apply to the
particular transactions.
(c) Payment of interest for time value of funds held. Treasury will
not pay interest on any payment that a financial institution
erroneously originates and that subsequently is refunded.
Sec. 203.11 Same-day reporting and payment mechanisms.
(a) General. A financial institution or its authorized
correspondent may initiate same-day reporting and payment transactions
on behalf of taxpayers. A same-day payment must be received by the FRB
by the deadline established by Treasury in the procedural instructions.
(b) Fedwire[reg] non-value transaction. By initiating a
Fedwire[reg] non-value transaction, a financial institution authorizes
the TSC to debit its reserve account for the amount of the Federal tax
payment specified in the transaction.
(1) For an investor or retainer depositary using a Fedwire[supreg]
non-value transaction, the TSC will credit the Federal tax payment
amount, up to the depositary's available TIP main account balance
capacity, to the depositary's TIP main account balance on the day of
the
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transaction. Throughout the course of the day, the TSC will debit from
the depositary's reserve account, and credit to the TGA, any portion of
a tax payment amount that would exceed the institution's available TIP
main account balance capacity.
(2) For a collector depositary or a non-TT&L depositary financial
institution using a Fedwire[supreg] non-value transaction, the TSC will
debit the financial institution's reserve account for the Federal tax
payment amount and credit that amount to the TGA on the day of the
transaction.
(c) Cancellations and reversals. In addition to cancellations due
to insufficient funds in the financial institution's reserve account,
the FRB may reverse a same-day transaction:
(1) If the transaction:
(i) Is originated by a financial institution after the deadline
established by Treasury in the procedural instructions;
(ii) Has an unenrolled taxpayer identification number; or
(iii) Does not meet the edit and format requirements set forth in
the procedural instructions; or
(2) At the direction of the IRS, for the following reasons:
(i) Incorrect taxpayer name;
(ii) Overpayment; or
(iii) Unidentified payment; or
(3) At the request of the financial institution that sent the same-
day transaction, if the request is made prior to the payment day
deadline established by Treasury in the procedural instructions.
(d) Other than as stated in paragraph (c) of this section, Treasury
is not obligated to reverse all or any part of a payment.
Sec. 203.12 EFTPS interest assessments.
(a) Circumstances subject to interest assessments. Treasury may
assess interest on a financial institution in instances where a
taxpayer that failed to meet a tax due date proves to the IRS that the
delivery of Federal tax payment instructions to the financial
institution was timely and that the taxpayer satisfied the conditions
imposed by the financial institution pursuant to Sec. 203.10(b).
Treasury also may assess interest where a financial institution fails
to respond to an ACH prenotification entry on an ACH debit as required
under part 210 of this title, or fails to originate an ACH
prenotification or zero dollar entry on an ACH credit at a taxpayer's
request, which then results in a late payment.
(b) Calculation of interest assessment. Any interest assessed under
this section will be at the TT&L rate of interest. Treasury will assess
the interest from the day the taxpayer specified that its payment
should settle to the Treasury until the day Treasury receives the
payment, subject to the following limitations: for ACH debit
transactions, interest will be limited to no more than seven calendar
days; For ACH credit and same-day transactions, interest will be
limited to no more than 45 calendar days. The limitation of liability
in this paragraph does not apply to any interest assessment in which
there is an indication of fraud, the presentation of a false claim, or
misrepresentation or embezzlement on the part of the financial
institution or any employee or agent of the financial institution.
(c) Authorization to assess interest. A financial institution that
processes Federal tax payments made electronically under this subpart
is deemed to authorize the TSC to debit its reserve account for any
interest assessed under this section. Upon the direction of Treasury,
the TSC will debit the financial institution's reserve account for the
amount of the assessed interest.
(d) Circumstances not resulting in the assessment of interest.
(1) Treasury will not assess interest on a taxpayer's financial
institution if a taxpayer fails to meet a tax due date because the
taxpayer has not satisfied conditions imposed by the financial
institution pursuant to Sec. 203.10(b) and the financial institution
has not contributed to the delay. The burden is on the financial
institution to establish, pursuant to the procedures in Sec. 203.13,
that the taxpayer has not satisfied the conditions and that the
financial institution has not caused or contributed to the delay.
(2) Treasury will not assess interest on a financial institution if
a taxpayer fails to meet a tax due date because the FRB or the TFA
caused a delay and the financial institution did not contribute to the
delay. The burden is on the financial institution to establish,
pursuant to the procedures in Sec. 203.13, that it did not cause or
contribute to the delay.
203.13 Appeal and dispute resolution.
(a) Contest. A financial institution may contest any interest
assessed under Sec. 203.12 or any late fees assessed under Sec.
203.17. To do so, the financial institution must submit information
supporting its position and the relief sought. The information must be
received, in writing, by the Treasury officer or Fiscal agent
identified in the procedural instructions, no later than 90 calendar
days after the date the TSC debits the Federal reserve account of the
financial institution under Sec. 203.12 or Sec. 203.17. The Treasury
officer or Fiscal agent will make a decision to: Uphold, reverse, or
modify the assessment, or mandate other action.
(b) Appeal. The financial institution may appeal the decision
referenced in subsection (a) to Treasury as set forth in the procedural
instructions. No further administrative review of Treasury's decision
is available under this part.
(c) Recoveries. In the event of an over or under recovery of
interest, principal, or late fees, Treasury will instruct the TSC to
credit or debit the financial institution's reserve account.
Subpart C--PATAX
Sec. 203.14 Scope of the subpart.
This subpart applies to all TT&L depositaries that accept FTD
coupons and governs the acceptance and processing of those coupons.
Sec. 203.15 Tax deposits using FTD coupons.
A TT&L depositary processing FTD coupons may choose to be
designated as a retainer depositary, an investor depositary, or a
collector depositary. A TT&L depositary that accepts FTD coupons
through any of its offices that accept demand and/or savings deposits
must:
(a) Accept from a taxpayer that presents an FTD coupon: cash, a
postal money order drawn to the order of the depositary, or a check or
draft drawn on and to the order of the depositary, covering an amount
to be deposited as Federal taxes. A TT&L depositary may accept, at its
discretion, a check drawn on another financial institution, but it does
so at its option and absorbs for its own account any float and other
costs involved.
(b) Place a stamp impression on the face of each FTD coupon in the
space provided. The stamp must reflect the date on which the TT&L
depositary received the tax deposit and the name and location of the
depositary. The IRS will determine whether the tax payment is on time
by referring to the date stamped on the FTD coupon.
(c) Forward, each day, to the IRS Service Center serving the
geographical area in which the TT&L depositary is located, the FTD
coupons for all FTD deposits received that day and a copy of the AOC
reflecting the total amount of all FTD coupons.
(d) Establish an adequate record of all FTD deposits prior to
transmitting them to 36 the IRS Service Center so that the TT&L
depositary will be able to identify deposits in the event the FTD
coupons are lost in shipment. To be adequate, the record must show, at
a minimum for each deposit, the date of the deposit, the
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taxpayer identification number, the amount of the deposit, the tax
period ending date, the type of tax deposited, and the employer name.
Alternatively, the TT&L depositary may retain a copy of each FTD coupon
forwarded to the IRS Service Center.
(e) On the business day following receipt of an FTD coupon, submit
the AOC information electronically to the TSC.
(f) Not accept compensation from taxpayers for accepting FTDs and
handling them as required by this section.
Sec. 203.16 Retainer and investor depositaries.
(a) Credit to TIP main account balance. On the business day that
the TSC receives an AOC from a retainer or investor depositary, the TSC
will credit the depositary's TIP main account balance for the amount
reported on the AOC unless there isn't sufficient capacity. In that
case, any amount in excess of the capacity will be debited to the
reserve account and credited to the TGA.
(b) Late delivery of AOC. If an AOC does not arrive at the TSC
before the designated cutoff time for receipt, the TSC will credit the
amount of funds to the depositary's TIP main account balance as of the
date of receipt of the AOC. However, the date on which funds will begin
to earn interest for Treasury is the next business day after the AOC
date.
Sec. 203.17 Collector depositaries.
(a) Debit to reserve account. On the business day that the TSC
receives an AOC from a collector depositary, the TSC will debit the
depositary's reserve account for the amount reported on the AOC and
credit that amount to Treasury's account.
(b) Late delivery of AOC. If an AOC does not arrive at the TSC
before the designated cutoff time on the first business day after the
AOC date, an FTD late fee in the form of interest at the TT&L rate of
interest will.be assessed for each day's delay in receipt of the AOC.
Upon the direction of Treasury, the TSC will debit the depositary's
reserve account for the amount of the late fee.
Subpart D--Investment Program and Collateral Security Requirements
for TT&L Depositaries
Sec. 203.18 Scope of the subpart.
This subpart governs the operation of the investment program,
including the rules that TT&L depositaries must follow in crediting and
debiting TIP main account balances, SDI account balances, and TIO
account balances, and pledging collateral security.
Sec. 203.19 Sources of balances.
A financial institution must be a collector depositary that accepts
term investments, an investor depositary, or a retainer depositary to
participate in the investment program. Depositaries electing to
participate in the investment program can receive Treasury's
investments in obligations of the depositary from the following
sources:
(a) FTDs that have been credited to the depositary's TIP main
account balance pursuant to subpart C of this part;
(b) EFTPS ACH credit and debit transactions, Fedwire[reg] non-value
transactions, and Fedwire[reg] value transfers pursuant to subpart B of
this part;
(c) Direct investments, SDIs, dynamic investments, and term
investments pursuant to subpart D of this part; and
(d) Other excess Treasury operating funds.
Sec. 203.20 Investment account requirements.
(a) Additions. Treasury will invest funds in obligations of
collector depositaries that accept term investments, investor
depositaries, or retainer depositaries. Such obligations will be in the
form of open-ended interest-bearing notes, or in the case of term
investments, interest-bearing notes maintained for a predetermined
period of time, and additions and reductions will be reflected on the
books of the TSC.
(1) PATAX. The TSC will credit the TIP main account balance as
stated in Sec. 203.16(a) for an investor or retainer depositary
processing tax deposits through PATAX.
(2) EFTPS.
(i) ACH debit and ACH credit. The TSC will credit a depositary's
TIP main account balance, and credit the depositary's reserve account
if capacity exists, for the amount of EFTPS ACH debit and credit
entries on the day such entries settle.
(ii) Fedwire\[reg]\ value and non-value transactions. The TSC will
credit a depositary's TIP main account balance if capacity exists,
throughout the day on the day of settlement, for the amount of
Fedwire\[reg]\ value and non-value transactions. In the case of
Fedwire[reg] value transactions, the depositary's reserve account will
also be credited.
(b) Additional offerings. Other funds from Treasury may be offered
from time to time to depositaries participating in the investment
program through direct investments, SDIs, term investments, or other
investment programs.
(c) Withdrawals. The amount of a TIP main account balance or SDI
account balance is payable on demand without prior notice. The TSC will
make calls for payment at the direction of the Secretary. On behalf of
Treasury, the TSC will debit the depositary's reserve account on the
day specified in the call for payment.
(d) Interest. The TIP main account balance and the SDI account
balance bear interest at the TT&L rate of interest. Such interest is
payable by a charge to the depositary's reserve account in the manner
prescribed in the procedural instructions.
(e) Balance limits.
(1) Retainer and investor depositaries. A retainer or investor
depositary must establish an initial balance limit for its TIP main
account balance by providing notice to that effect in writing to the
TSC. The balance limit is the amount of funds for which a retainer or
investor depositary is willing to provide collateral in accordance with
Sec. 203.21(c)(1). The depositary must follow the procedural
instructions before reducing the established balance limit unless the
reduction results from a collateral revaluation as determined by the
FRB. That portion of any PATAX or EFTPS tax payment which, when posted
at the FRB, would cause the TIP main account balance to exceed the
balance limit specified by the depositary, will be withdrawn by the FRB
that day.
(2) Direct investments. An investor depositary that participates in
direct investments must set a balance limit for direct investment
purposes which is higher than the peak balance normally generated by
the depositary's PATAX and EFTPS tax payment inflow. The depositary
must follow the procedural instructions before reducing the established
balance limit.
(3) SDIs. SDIs are credited to the SDI account balance and are not
considered in setting the amount of the TIP main account balance limit
or in determining the amounts to be withdrawn where a depositary
exceeds its TIP main account balance limit.
(f) TIO. Treasury may, from time to time, invest excess operating
funds in obligations of depositaries awarded funds under TIO. Such
obligations will be in the form of interest-bearing notes payable upon
a predetermined period of time not to exceed 90 days. Such notes will
bear interest at a rate prescribed by the Secretary by auction or
otherwise taking into consideration prevailing market interest rates.
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Sec. 203.21 Collateral security requirements.
Financial institutions that process EFTPS tax payments, but that
are not TT&L depositaries, have no collateral requirements under this
part. Financial institutions that are TT&L depositaries have collateral
security requirements, as follows:
(a) Investor and retainer depositaries.
(1) PATAX and EFTPS tax payments. Investor and retainer
depositaries must pledge collateral security in accordance with the
requirements of paragraphs (c)(l), (d), and (e) of this section in an
amount that is sufficient to cover the TIP main account balance and the
balance in the TT&L account that exceeds the recognized insurance
coverage.
(2) Direct investments. An investor depositary is required to
pledge collateral in accordance with the requirements of paragraphs
(c), (d), and (e) of this section no later than the day before a direct
investment is placed. However, each investor depositary participating
in same-day direct investments must pledge, prior to the announcement,
collateral up to its balance limit to obtain the depositary's maximum
portion of the same-day direct investment.
(3) SDIs. The day before SDIs are credited to an investor
depositary's SDI account balance, the depositary must pledge collateral
security, in accordance with the requirements of paragraphs (c)(2),
(d), and (e) of this section, to cover the total of the SDIs to be
received.
(4) TIO. Each depositary participating in the term investment
program must pledge, prior to the time the term investment is placed,
collateral in accordance with paragraphs (c)(1), (c)(2) for certain
term investments as determined by Treasury, (d), and (e) of this
section sufficient to cover the total TIO account balance.
(b) Collector depositaries. Prior to crediting FTD deposits to the
TT&L account, a collector depositary must pledge collateral security,
in accordance with the requirements of paragraphs (c)(1), (d), and (e)
of this section, in an amount which is sufficient to cover the balance
in the TT&L account that exceeds the recognized insurance coverage.
(c) Deposits of securities. (1) Collateral security required under
paragraphs (a)(1), (2), (4) (except as provided in subparagraph (2)
below), and (b) of this section must be deposited with the depositary's
FRB, or with a custodian or custodians within the United States
designated by the TSC or FRB, under terms and conditions prescribed by
the TSC or FRB.
(2) A depositary pledging collateral security as required under
paragraph (a)(3) or paragraph (a)(4) (when permitted) of this section
must pledge the collateral under a written security agreement on a form
provided by the FRB. The collateral security pledged to satisfy the
requirements of paragraphs (a)(3) and (a)( 4) (when permitted) of this
section may remain in the pledging depositary's possession provided
that the pledging is evidenced by advices of custody incorporated by
reference in the written security agreement. The depositary must
provide the written security agreement and all advices of custody
covering collateral security pledged under that agreement to the FRB.
Collateral security pledged under the agreement may not be substituted
for or released without the advance approval of the FRB, and any
collateral security subject to the security agreement will remain so
subject until an approved substitution is made. No substitution or
release will be approved until an advice of custody containing the
description required by the written security agreement is received by
the FRB.
(3) Treasury's security interest in collateral security pledged by
a depositary in accordance with paragraphs (c)(2) of this section to
secure SDIs and certain term investments is perfected without Treasury
taking possession of the collateral security by filing or, absent
filing, for a period not to exceed 20 calendar days from the day of the
depositary's receipt of the special direct or term investment.
(d) Acceptable collateral. The types of securities that may be used
as collateral, and how those securities are valued, are set forth in 31
CFR part 380.
( e) Assignment of securities. By pledging acceptable securities
which are not negotiable without the d
