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11 Fiscal Service, Treasury Pt. 203 (d) Assignment. A depository that pledges securities which are not nego - tiable without its endorsement or as - signment may, in lieu of placing its un- qualified endorsement on each secu - rity, furnish an appropriate resolution and irrevocable power of attorney au - thorizing the Federal Reserve Bank to assign the securities. The resolution and power of attorney shall conform to such terms and conditions as the Fed - eral Reserve Banks shall prescribe. (e) Disposition of principal and interest payments of the pledged securities after a depositary is declared insolvent —(1) Gen- eral. In the event of the depositary’s in - solvency or closure, or in the event of the appointment of a receiver, conser - vator, liquidator, or other similar offi - cer to terminate its business, the de - positary agrees that all principal and interest payments on any security pledged to protect public money due as of the date of the insolvency or closure, or thereafter becoming due, shall be held separate and apart from any other assets and shall constitute a part of the pledged security available to sat - isfy any claim of the United States, in - cluding those not arising out of the de - positary relationship. (2) Payment procedures. (i) Subject to the waiver in paragraph (e)(2)(iii) of this section, each depositary (includ - ing, with respect to such depositary, an assignee for the benefit of creditors, a trustee in bankruptcy, or a receiver in equity) shall immediately remit each payment of principal and/or interest re- ceived by it with respect to collateral pledged pursuant to this section to the Federal Reserve Bank of the district, as fiscal agent of the United States, and in any event shall so remit no later than ten days after receipt of such a payment. (ii) Subject to the waiver in para - graph (e)(2)(iii) of this section, each ob- ligor on a security pledged by a deposi - tary pursuant to this section shall make each payment of principal and/or interest with respect to such security directly to the Federal Reserve Bank of the district, as fiscal agent of the United States. (iii) The requirements of paragraphs (e)(2) (i) and (ii) of this section are hereby waived for only so long as a pledging depositary remains solvent. The foregoing waiver is terminated without further action immediately upon the insolvency of a pledging de - positary or, if earlier, upon notice by the Treasury of such termination. For purposes of this paragraph, a deposi - tary is insolvent when, voluntarily or by action of competent authority, it is closed because of present or prospec - tive inability to meet the demands of its depositors or shareholders. [32 FR 14216, Oct. 13, 1967, as amended at 36 FR 6748, Apr. 8, 1971; 36 FR 17995, Sept. 8, 1971; 39 FR 30832, Aug. 26, 1974; 44 FR 53067, Sept. 11, 1979; 46 FR 28152, May 26, 1981; 62 FR 45521, Aug. 27, 1997; 65 FR 55428, Sept. 13, 2000] § 202.7 Maintenance of balances within authorizations. (a) Federal Government agencies shall contact the Department of the Treasury, Bureau of the Fiscal Service, before making deposits with a financial institution insured by a State or agen - cy thereof or by a corporation char - tered by a State for the sole purpose of insuring deposits or accounts. The con - tact should be directed to the Cash Management Policy and Planning Divi- sion, Federal Finance, Bureau of the Fiscal Service, Department of the Treasury, Washington, DC 20227. (b) Government agencies having con - trol or jurisdiction over public money on deposit in accounts with deposi - taries are responsible for the mainte - nance of balances in such accounts within the limits of the authorizations specified by the Secretary of the Treas- ury. [44 FR 53067, Sept. 11, 1979, as amended at 49 FR 47001, Nov. 30, 1984; 62 FR 45521, Aug. 27, 1997] 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.
12 31 CFR Ch. II (7–1–25 Edition) § 203.1 203.7 Termination of agreement or change of election or option. 203.8 Application of part and procedural in - structions. 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 Col - lateral 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. SOURCE: 72 FR 59181, Oct. 19, 2007, unless otherwise noted. 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 op - eration 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 fi - nancial institution that accepts Fed - eral tax payments may do so through the paper tax system (PATAX), or Electronic Federal Tax Payment Sys - tem (EFTPS), or both. However, a fi - nancial institution is not designated as a TT&L depositary if it only processes EFTPS payments. § 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 origi - nated by a financial institution, at the direction of the taxpayer, in accord - ance with applicable ACH formats and applicable laws, regulations, and proce- dural instructions. ACH debit entry means a debit trans - action originated by the Treasury Fi - nancial Agent (TFA), at the direction of the taxpayer, in accordance with ap - plicable 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 Pro - gram (TIP) main account. Borrower-In-Custody (BIC) collateral means an arrangement by which a fi - nancial institution pledging collateral to secure special direct investments and certain term investments is per - mitted to retain possession of that col - lateral, 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 invest - ments 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 ac - count balance and any pending invest - ments, plus any pending withdrawals. With respect to an SDI account bal - ance, capacity means the dollar amount of collateral that the deposi - tary has pledged for SDIs under a BIC arrangement minus the total of: the depositary’s current SDI account bal - ance and any pending investments, plus any pending withdrawals. Collector depositary means a TT&L de- positary that accepts paper tax pay - ments from business customers and that may also process electronic tax
13 Fiscal Service, Treasury § 203.2 payments from customers, but that does not retain any such deposits as in- vestments or accept dynamic, direct, or special direct investments. A col - lector depositary may accept term in - vestments. Direct investment means the Depart - ment of the Treasury’s (Treasury’s) placement of funds with a TT&L depos- itary, which results in an increase to the depositary’s TIP main account bal - ance and a credit to its reserve ac - count. Dynamic investment means Treasury’s placement of funds with a TT&L depos- itary throughout the day, which re - sults 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 pay- ments 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 Treas - ury. A financial institution is deemed located in the same district it would be deemed located for purposes of Regula - tion 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 sup - plied to a taxpayer by Treasury to ac - company deposits of Federal taxes made through PATAX. Federal taxes means those Federal taxes or other payments specified by the Secretary of the Treasury as eligi - ble for payment through the proce - dures described in this part. Fedwire 1 means the funds transfer system owned and operated by the FRBs. Fedwire non-value transaction means the same-day Federal tax payment in - formation transmitted by a financial institution to an FRB using a Fedwire@ type 1090 message to author - ize a payment. Fedwire value transfer means a Fed - eral 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 all-inclu - sive name given to the programs by which Treasury invests excess oper - ating cash. Investor depositary means a TT&L de - positary that is authorized to partici - pate in the investment program by ac - cepting funds from Treasury via direct investments, special direct invest - ments, 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 por - tion 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 tax - payers remit Federal tax payments by presenting an FTD coupon and pay - ment to a TT&L depositary. Procedural instructions means the pro- cedures contained in the Treasury Fi - nancial Manual, Volume IV (IV TFM), other Treasury instructions issued by Treasury or through Treasury’s Finan - cial Agents and FRB operating circu - lars, and agreements issued consistent with this part. Recognized insurance coverage means the insurance provided by the Federal Deposit Insurance Corporation, the Na - tional Credit Union Administration, and insurance organizations specifi - cally qualified by the Secretary. Reserve account means an account at an FRB with reserve or clearing bal - ances held by a financial institution or its designated correspondent financial institution, if applicable. Retainer depositary means a TT&L de- positary that accepts electronic and/or paper Federal tax payments from its business customers and retains a por - tion of the Federal tax deposits in its TIP main account balance, depending on its balance limit, account balance, and collateral value. A retainer deposi - tary may also accept term invest - ments.
14 31 CFR Ch. II (7–1–25 Edition) § 203.3 Same-day payment means a payment made by a Fedwire non-value trans - action or a Fedwire value trans - action. 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 arrange- ment. SDI account balance means an open- ended, interest-bearing note main - tained on the books of the Treasury Support Center representing the amount of SDIs held by an investor de - positary and secured by collateral pledged under a BIC arrangement. Tax due date means the day on which a Federal tax payment is due to Treas - ury, 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 par - ticipating in the Term Investment Op - tion. Term Investment Option (TIO) means the program available to depositaries that offers the ability to borrow excess Treasury operating funds for a pre - determined period of time. TIO account balance means an inter - est-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 tax - payer. 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 col - lections, invests funds, and monitors collateral pledged to secure public money. TIP main account balance means an open-ended interest-bearing note main- tained on the books of the Treasury Support Center (TSC) representing a retainer or investor depositary’s cur - rent net amount of (i) Federal tax de - posits 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 Treas - ury’s Fiscal agent, monitors collateral pledged to secure Treasury funds, man - ages 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) ac - count means a record of transactions on the books of a TT&L depositary re - flecting 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 deposi - taries, retainer depositaries, and col - lector 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 inter- est 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 inter - est rates. The rate and any rate changes will be announced through a TT&L Special Notice to Depositaries and will be published in the F EDERAL REGISTER and on a Web site maintained by Treasury’s Bureau of the Fiscal Service at http://www.fiscal.treasury.gov. § 203.3 TT&L depositaries. A financial institution that partici - pates in PATAX and/or the investment program must be a TT&L depositary. There are three kinds of TT&L deposi - taries. A collector depositary is a TT&L depositary that accepts paper Federal tax payments and also may ac - cept electronic Federal tax payments, but does not accept direct investments or SDIs. A retainer depositary is a
15 Fiscal Service, Treasury § 203.6 TT&L depositary that accepts elec - tronic and/or paper Federal tax pay - ments and retains a portion ofthe tax deposits in its TIP main account bal - ance. An investor depositary is a TT&L depositary that accepts direct invest - ments, SDIs, or dynamic investments and may accept electronic and/or paper Federal tax payments and retain a por - tion 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 deposi - tary. (a) To be designated as a TT&L de - positary, a financial institution must be insured as a national banking asso - ciation, state bank, savings bank, sav - ings association, building and loan, homestead association, Federal home loan bank, credit union, trust com - pany, or a U.S. branch of a foreign banking corporation, the establish - ment of which has been approved by the Comptroller of the Currency. (b) A financial institution must pos - sess the authority to pledge collateral to secure TT&L account balances, a TIP main account balance, an SDI ac - count 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 institu - tion must possess under its charter ei - ther general or specific authority per - mitting the maintenance of the TT&L account, the balance of which is pay - able on demand without previous no - tice of intended withdrawal. In addi - tion, investor depositaries and retainer depositaries must possess either gen - eral or specific authority permitting the maintenance of a TIP main ac - count 27 balance or an SDI account bal- ance. Investor, retainer, and collector depositaries that accept term invest - ments must possess either general or specific authority permitting the maintenance of a TIO account balance. In the case of investor and retainer de - positaries maintaining a TIP main ac - count balance or an SDI account bal - ance, 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. § 203.5 Designation of financial institu - tions as TT&L depositaries. (a) Parties to the agreement. To be des- ignated as a TT&L depositary, a finan - cial institution must enter into a de - positary agreement with Treasury or Treasury’s Fiscal agent. By entering into this agreement, the financial in - stitution 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 ac - count, or for processing tax payments through EFTPS or PATAX, unless oth - erwise provided for in procedural in - structions. (b) Application procedures. (1) An eligi- ble financial institution seeking des - ignation as a TT&L depositary must file the forms specified in the proce - dural 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 au - thorized to maintain a TT&L account, TIP main account balance, SDI ac - count balance, or TIO account balance until the TSC designates it as a TT&L depository. § 203.6 Obligations of TT&L deposi - taries. A TT&L depositary must: (a) Administer a TIP main account balance, SDI account balance, or TIO account balance, as applicable, if par - ticipating 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 Oppor - tunity’’ (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
16 31 CFR Ch. II (7–1–25 Edition) § 203.7 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 indi - viduals with disabilities. (e) Comply with the requirements of Section 503 of the Vietnam Era Vet - erans’ Readjustment Assistance Act of 1972, as amended, 38 U.S.C. 4212, Execu - tive 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 spe - cial disabled veterans and Vietnam-era veterans. § 203.7 Termination of agreement or change of election or option. (a) Termination by Treasury. The Sec- retary 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 depos- itary 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 proce - dural instructions. The terms of this part and the proce - dural instructions issued pursuant to this part will be binding on financial institutions that process Federal tax payments or maintain a TT&L ac - count, TIP main account balance, SDI account balance, or a TIO account bal - ance under this part. By accepting or originating Federal tax payments, the financial institution agrees to be bound by this part and by procedural instruc - tions issued pursuant to this part. Subpart B—Electronic Federal Tax Payments § 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 in - stitution is not required to be des - ignated as a TT&L depositary in order to process electronic Federal tax pay - ments. In addition, a financial institu - tion does not become a TT&L deposi - tary by processing electronic Federal tax payments under this subpart and may not represent itself as a TT&L de - positary 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 cus - tomers regarding the terms and condi - tions 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 inter - est on any payment that a financial in - stitution erroneously originates and that subsequently is refunded. § 203.11 Same-day reporting and pay - ment mechanisms. (a) General. A financial institution or its authorized correspondent may ini - tiate 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 instruc - tions. (b) Fedwire non-value transaction. By initiating a Fedwire non-value trans- action, a financial institution author - izes the TSC to debit its reserve ac - count for the amount of the Federal tax payment specified in the trans - action. (1) For an investor or retainer deposi- tary using a Fedwire non-value trans- action, the TSC will credit the Federal tax payment amount, up to the deposi - tary’s available TIP main account bal - ance capacity, to the depositary’s TIP main account balance on the day of the transaction. Throughout the course of the day, the TSC will debit from the
17 Fiscal Service, Treasury § 203.12 depositary’s reserve account, and cred - it to the TGA, any portion of a tax pay- ment amount that would exceed the in- stitution’s available TIP main account balance capacity. (2) For a collector depositary or a non-TT&L depositary financial institu- tion using a Fedwire non-value trans- action, the TSC will debit the financial institution’s reserve account for the Federal tax payment amount and cred - it that amount to the TGA on the day of the transaction. (c) Cancellations and reversals. In addi- tion to cancellations due to insuffi - cient funds in the financial institu - tion’s reserve account, the FRB may reverse a same-day transaction: (1) If the transaction: (i) Is originated by a financial insti - tution after the deadline established by Treasury in the procedural instruc - tions; (ii) Has an unenrolled taxpayer iden - tification number; or (iii) Does not meet the edit and for - mat requirements set forth in the pro - cedural 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 in - stitution that sent the same-day trans - action, if the request is made prior to the payment day deadline established by Treasury in the procedural instruc - tions. (d) Other than as stated in paragraph (c) of this section, Treasury is not obli - gated to reverse all or any part of a payment. § 203.12 EFTPS interest assessments. (a) Circumstances subject to interest as - sessments. 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 in - structions to the financial institution was timely and that the taxpayer satis- fied the conditions imposed by the fi - nancial institution pursuant to § 203.10(b). Treasury also may assess in- terest 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 sec - tion will be at the TT&L rate of inter - est. Treasury will assess the interest from the day the taxpayer specified that its payment should settle to the Treasury until the day Treasury re - ceives the payment, subject to the fol - lowing 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 electroni - cally 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 finan - cial 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 fi - nancial institution if a taxpayer fails to meet a tax due date because the tax- payer has not satisfied conditions im - posed by the financial institution pur - suant to § 203.10(b) and the financial in- stitution has not contributed to the delay. The burden is on the financial institution to establish, pursuant to the procedures in § 203.13, that the tax - payer 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
18 31 CFR Ch. II (7–1–25 Edition) § 203.13 to the delay. The burden is on the fi - nancial institution to establish, pursu - ant 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 re - ceived, in writing, by the Treasury offi- cer 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 § 203.17. The Treasury officer or Fis - cal agent will make a decision to: Up - hold, reverse, or modify the assess - ment, 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 fur - ther administrative review of Treas - ury’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 in - stitution’s reserve account. Subpart C—PATAX § 203.14 Scope of the subpart. This subpart applies to all TT&L de - positaries that accept FTD coupons and governs the acceptance and proc - essing of those coupons. § 203.15 Tax deposits using FTD cou - pons. 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 pre - sents 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 re - ceived the tax deposit and the name and location of the depositary. The IRS will determine whether the tax pay - ment is on time by referring to the date stamped on the FTD coupon. (c) Forward, each day, to the IRS Service Center serving the geo - graphical area in which the TT&L de - positary 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 taxpayer identifica - tion number, the amount of the de - posit, the tax period ending date, the type of tax deposited, and the employer name. Alternatively, the TT&L deposi - tary may retain a copy of each FTD coupon forwarded to the IRS Service Center. (e) On the business day following re - ceipt of an FTD coupon, submit the AOC information electronically to the TSC. (f) Not accept compensation from taxpayers for accepting FTDs and han - dling them as required by this section. § 203.16 Retainer and investor deposi - taries. (a) Credit to TIP main account balance. On the business day that the TSC re - ceives an AOC from a retainer or inves- tor 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
19 Fiscal Service, Treasury § 203.20 the capacity will be debited to the re - serve 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 bal - ance 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 Treas - ury’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 as - sessed for each day’s delay in receipt of the AOC. Upon the direction of Treas - ury, the TSC will debit the depositary’s reserve account for the amount of the late fee. Subpart D—Investment Program and Collateral Security Re - quirements for TT&L Deposi - taries § 203.18 Scope of the subpart. This subpart governs the operation of the investment program, including the rules that TT&L depositaries must fol - low in crediting and debiting TIP main account balances, SDI account bal - ances, and TIO account balances, and pledging collateral security. § 203.19 Sources of balances. A financial institution must be a col - lector depositary that accepts term in - vestments, an investor depositary, or a retainer depositary to participate in the investment program. Depositaries electing to participate in the invest - ment program can receive Treasury’s investments in obligations of the de - positary from the following sources: (a) FTDs that have been credited to the depositary’s TIP main account bal - ance 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, dy - namic investments, and term invest - ments pursuant to subpart D of this part; and (d) Other excess Treasury operating funds. § 203.20 Investment account require - ments. (a) Additions. Treasury will invest funds in obligations of collector deposi- taries that accept term investments, investor depositaries, or retainer de - positaries. Such obligations will be in the form of open-ended interest-bear - ing notes, or in the case of term invest- ments, interest-bearing notes main - tained 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 de- positary processing tax deposits through PATAX. (2) EFTPS—(i) ACH debit and ACH credit. The TSC will credit a deposi - tary’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 value and non-value transactions. The TSC will credit a de - positary’s TIP main account balance if capacity exists, throughout the day on the day of settlement, for the amount of Fedwire value and non-value trans- actions. 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 partici - pating in the investment program through direct investments, SDIs, term investments, or other investment pro - grams. (c) Withdrawals. The amount of a TIP main account balance or SDI account balance is payable on demand without
20 31 CFR Ch. II (7–1–25 Edition) § 203.21 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 in - terest. Such interest is payable by a charge to the depositary’s reserve ac - count in the manner prescribed in the procedural instructions. (e) Balance limits—(1) Retainer and in - vestor depositaries. A retainer or inves - tor depositary must establish an initial balance limit for its TIP main account balance by providing notice to that ef - fect 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 accord - ance with § 203.21(c)(1). The depositary must follow the procedural instruc - tions before reducing the established balance limit unless the reduction re - sults 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 de - positary that participates in direct in - vestments 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 estab - lished 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 deter - mining 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 other - wise taking into consideration pre - vailing market interest rates. § 203.21 Collateral security require - ments. Financial institutions that process EFTPS tax payments, but that are not TT&L depositaries, have no collateral requirements under this part. Finan - cial institutions that are TT&L deposi - taries have collateral security require - ments, as follows: (a) Investor and retainer depositaries — (1) PATAX and EFTPS tax payments. In- vestor and retainer depositaries must pledge collateral security in accord - ance with the requirements of para - graphs (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 ex - ceeds the recognized insurance cov - erage. (2) Direct investments. An investor de - positary is required to pledge collat - eral in accordance with the require - ments of paragraphs (c), (d), and (e) of this section no later than the day be - fore a direct investment is placed. However, each investor depositary par - ticipating in same-day direct invest - ments must pledge, prior to the an - nouncement, collateral up to its bal - ance limit to obtain the depositary’s maximum portion of the same-day di - rect investment. (3) SDIs. The day before SDIs are credited to an investor depositary’s SDI account balance, the depositary must pledge collateral security, in ac - cordance 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 partici - pating in the term investment program must pledge, prior to the time the term investment is placed, collateral in ac - cordance with paragraphs (c)(1), (c)(2) for certain term investments as deter - mined 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
21 Fiscal Service, Treasury § 203.21 pledge collateral security, in accord - ance with the requirements of para - graphs (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 sub- paragraph (2) below), and (b) of this section must be deposited with the de - positary’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 per - mitted) 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 pledg - ing depositary’s possession provided that the pledging is evidenced by ad - vices of custody incorporated by ref - erence in the written security agree - ment. The depositary must provide the written security agreement and all ad - vices of custody covering collateral se - curity pledged under that agreement to the FRB. Collateral security pledged under the agreement may not be sub - stituted for or released without the ad - vance approval of the FRB, and any collateral security subject to the secu - rity agreement will remain so subject until an approved substitution is made. No substitution or release will be ap - proved until an advice of custody con - taining the description required by the written security agreement is received by the FRB. (3) Treasury’s security interest in collateral security pledged by a deposi - tary 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, ab - sent filing, for a period not to exceed 20 calendar days from the day of the de - positary’s receipt of the special direct or term investment. (d) Acceptable collateral. The types of securities that may be used as collat - eral, and how those securities are val - ued, are set forth in 31 CFR part 380. (e) Assignment of securities. By pledg - ing acceptable securities which are not negotiable without the depositary’s en - dorsement or assignment, a TT&L de - positary, in lieu of placing its unquali - fied endorsement on each security, ap - points the FRB or its assigns as the de - positary’s attorney-in-fact with full ir - revocable power and authority to en - dorse, 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 adopt - ed. The powers of attorney so granted are coupled with an interest and are ir - revocable, and full power of substi - tution is granted to the assignee or holder. (f) Effecting payments of principal and interest on securities or instruments pledged as collateral —(1) General. Treas- ury, without notice or demand, 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 vio - lates or fails to perform any of the terms of this part or any of the proce - dural instructions entered into here - under; or (iv) The depositary is closed for busi - ness by regulatory action or by proper corporate action, or a receiver, conser - vator, 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
22 31 CFR Ch. II (7–1–25 Edition) Pt. 205 as of the date of the insolvency or clo - sure 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 (includ - ing, 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 pay - ment of principal and/or interest re - ceived 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 para - graph (f)(2)(iii) of this section, each ob - ligor on a security pledged by a deposi - tary pursuant to this section, upon no - tification that Treasury is entitled to any payment associated with that pledged security, must make each pay - ment 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 here - by waived for only so long as a pledg - ing depositary avoids both termination from the program under § 203.7 and also those circumstances identified in para - graph (f)(1) which may lead to the col - lection of the proceeds of collateral or the waiver is otherwise terminated by Treasury. PART 204 [RESERVED] PART 205—RULES AND PROCE - DURES FOR EFFICIENT FEDERAL- STATE FUNDS TRANSFERS Sec. 205.1 What Federal assistance programs are covered by this part? 205.2 What definitions apply to this part? Subpart A—Rules Applicable to Federal Assistance Programs Included in a Treasury-State Agreement 205.3 What Federal assistance programs are subject to this subpart A? 205.4 Are there any circumstances where a Federal assistance program that meets the criteria of § 205.3 would not be subject to this subpart A? 205.5 What are the thresholds for major Federal assistance programs? 205.6 What is a Treasury-State agreement? 205.7 Can a Treasury-State agreement be amended? 205.8 What if there is no Treasury-State agreement in effect? 205.9 What is included in a Treasury-State agreement? 205.10 How do you document funding tech - niques? 205.11 What requirements apply to funding techniques? 205.12 What funding techniques may be used? 205.13 How do you determine when State or Federal interest liability accrues? 205.14 When does Federal interest liability accrue? 205.15 When does State interest liability ac - crue? 205.16 What special rules apply to Federal assistance programs and projects funded by the Federal Highway Trust Fund? 205.17 Are funds transfers delayed by auto - mated payment systems restrictions based on the size and timing of the draw - down request subject to this part? 205.18 Are administrative costs subject to this part? 205.19 How is interest calculated? 205.20 What is a clearance pattern? 205.21 When may clearance patterns be used? 205.22 How are accurate clearance patterns maintained? 205.23 What requirements apply to esti - mates? 205.24 How are accurate estimates main - tained? 205.25 How does this part apply to certain Federal assistance programs or funds? 205.26 What are the requirements for pre - paring Annual Reports? 205.27 How are Interest Calculation Costs calculated? 205.28 How are interest payments ex - changed? 205.29 What are the State oversight and compliance responsibilities? 205.30 What are the Federal oversight and compliance responsibilities? 205.31 How does a State or Federal Program Agency appeal a determination made by us and resolve disputes? Subpart B—Rules Applicable to Federal Assistance Programs Not Included in a Treasury-State Agreement 205.32 What Federal assistance programs are subject to this subpart B? 205.33 How are funds transfers processed? 205.34 What are the Federal oversight and compliance responsibilities?