[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2000 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    31


          Part 200 to end

                         Revised as of July 1, 2000

Money and Finance: Treasury





          Containing a Codification of documents of general 
          applicability and future effect
          As of July 1, 2000
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

As a Special Edition of the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2000



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 31:
    Subtitle B--Regulations Relating to Money and Finance 
      (Continued):
          Chapter II--Fiscal Service, Department of the 
          Treasury                                                   5
          Chapter IV--Secret Service, Department of the 
          Treasury                                                 465
          Chapter V--Office of Foreign Assets Control, 
          Department of the Treasury                               475
          Chapter VI--Bureau of Engraving and Printing, 
          Department of the Treasury                               915
          Chapter VII--Federal Law Enforcement Training 
          Center, Department of the Treasury                       921
          Chapter VIII--Office of International Investment, 
          Department of the Treasury                               925
  Finding Aids:
      Material Approved for Incorporation by Reference........     953
      Table of CFR Titles and Chapters........................     955
      Alphabetical List of Agencies Appearing in the CFR......     973
      List of CFR Sections Affected...........................     983



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  31 CFR 202.1 refers 
                       to title 31, part 202, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2000), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 523-4534.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

SALES

    The Government Printing Office (GPO) processes all sales and 
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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
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Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
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    The Office of the Federal Register also offers a free service on the 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2000.



[[Page ix]]



                               THIS TITLE

    Title 31--Money and Finance: Treasury is composed of two volumes. 
The parts in these volumes are arranged in the following order: parts 0 
to 199, and part 200 to end. The contents of these volumes represent all 
of the current regulations codified under this title of the CFR as of 
July 1, 2000.

    A redesignation table for subtitle A--Office of the Secretary of the 
Treasury appears in the Finding Aids section of the first volume.

    For this volume, Jonn V. Lilyea was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



                  TITLE 31--MONEY AND FINANCE: TREASURY




                  (This book contains part 200 to end)

  --------------------------------------------------------------------



  Editorial Note: Other regulations issued by Department of the Treasury 
appear in title 12, chapter I; title 19, chapter I; title 26, chapter I; 
title 27, chapter I; title 48, chapter 10.
                                                                    Part

    SUBTITLE B--Regulations Relating to Money and Finance (Continued)

chapter ii--Fiscal Service, Department of the Treasury......         202

chapter iv--Secret Service, Department of the Treasury......         401

chapter v--Office of Foreign Assets Control, Department of 
  the Treasury..............................................         500

chapter vi--Bureau of Engraving and Printing, Department of 
  the Treasury..............................................         601

chapter vii--Federal Law Enforcement Training Center, 
  Department of the Treasury................................         700

chapter viii--Office of International Investment, Department 
  of the Treasury...........................................         800

[[Page 3]]

                    Subtitle B--Regulations Relating

                          to Money and Finance

                               (Continued)

[[Page 5]]



                       CHAPTER II--FISCAL SERVICE,
                       DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------

               SUBCHAPTER A--FINANCIAL MANAGEMENT SERVICE
Part                                                                Page
202             Depositaries and financial agents of the 
                    Government..............................           9
203             Payment of Federal taxes and the Treasury 
                    Tax and Loan Program....................          11
204

[Reserved]

205             Rules and procedures for funds transfers....          23
206             Management of Federal agency receipts, 
                    disbursements, and operation of the Cash 
                    Management Improvements Fund............          36
208             Management of Federal agency disbursements..          42
210             Federal Government participation in the 
                    Automated Clearing House................          46
211             Delivery of checks and warrants to addresses 
                    outside the United States, its 
                    territories and possessions.............          54
215             Withholding of District of Columbia, State, 
                    city and county income or employment 
                    taxes by Federal agencies...............          55
223             Surety companies doing business with the 
                    United States...........................          60
224             Federal process agents of surety companies..          67
225             Acceptance of bonds secured by Government 
                    obligations in lieu of bonds with 
                    sureties................................          68
226             Recognition of insurance covering Treasury 
                    tax and loan depositaries...............          73
235             Issuance of settlement checks for forged 
                    checks drawn on designated depositaries.          74
240             Indorsement and payment of checks drawn on 
                    the United States Treasury..............          75
245             Claims on account of Treasury checks........          83

[[Page 6]]

248             Issue of substitutes of lost, stolen, 
                    destroyed, mutilated and defaced checks 
                    of the United States drawn on accounts 
                    maintained in depositary banks in 
                    foreign countries or United States 
                    territories or possessions..............          84
250             Payment on account of awards of the Foreign 
                    Claims Settlement Commission of the 
                    United States...........................          87
256             Payments under judgments and private relief 
                    acts....................................          89
270             Availability of records.....................          90
281             Foreign exchange operations.................          91
285             Debt collection authorities under the Debt 
                    Collection Improvement Act of 1996......          93
                 SUBCHAPTER B--BUREAU OF THE PUBLIC DEBT
306             General regulations governing U.S. 
                    securities..............................         125
308             General regulations governing full-paid 
                    interim certificates....................         153
309             Issue and sale of Treasury bills............         153
312             Federal savings and loan associations and 
                    Federal credit unions as fiscal agents 
                    of the United States....................         157
315             Regulations governing U.S. Savings Bonds, 
                    Series A, B, C, D, E, F, G, H, J, and K, 
                    and U.S. Savings Notes..................         158
316             Offering of United States Savings Bonds, 
                    Series E................................         183
317             Regulations governing agencies for issue of 
                    United States Savings Bonds.............         190
321             Payments by banks and other financial 
                    institutions of United States Savings 
                    Bonds and United States Savings Notes 
                    (Freedom Shares)........................         195
323             Disclosure of records.......................         212
328             Restrictive endorsements of U.S. bearer 
                    securities..............................         214
330             Regulations governing payment under special 
                    endorsement of United States Savings 
                    Bonds and United States Savings Notes 
                    (Freedom Shares)........................         217
332             Offering of United States Savings Bonds, 
                    Series H................................         221
337             Supplemental regulations governing Federal 
                    Housing Administration debentures.......         224
339             Exchange offering of United States Savings 
                    Bonds, Series H.........................         227
340             Regulations governing the sale of Treasury 
                    bonds through competitive bidding.......         230
341             Regulations governing United States 
                    Retirement Plan Bonds...................         232
342             Offering of United States Savings Notes.....         243

[[Page 7]]

343             Regulations governing the offering of United 
                    States Mortgage Guaranty Insurance 
                    Company Tax and Loss Bonds..............         248
344             Regulations governing United States Treasury 
                    Certificates of Indebtedness, Treasury 
                    Notes, and Treasury Bonds--State and 
                    local government series.................         251
345             Regulations governing 5 percent Treasury 
                    Certificates of Indebtedness-- R.E.A. 
                    Series..................................         272
346             Regulations governing United States 
                    Individual Retirement Bonds.............         273
351             Offering of United States Savings Bonds, 
                    Series EE...............................         283
352             Offering of United States Savings Bonds, 
                    Series HH...............................         303
353             Regulations governing United States Savings 
                    Bonds, Series EE and HH.................         308
354             Regulations governing book-entry securities 
                    of the Student Loan Marketing 
                    Association (Sallie Mae)................         334
355             Regulations governing fiscal agency checks..         340
356             Sale and issue of marketable book-entry 
                    Treasury bills, notes, and bonds 
                    (Department of the Treasury Circular, 
                    Public Debt Series No. 1-93)............         342
357             Regulations governing book-entry Treasury 
                    bonds, notes and bills (Department of 
                    the Treasury Circular, Public Debt 
                    Series No. 2-86)........................         384
358             Regulations governing book-entry conversion 
                    of detached bearer coupons and bearer 
                    corpora.................................         419
359             Offering of United States Savings Bonds, 
                    Series I................................         422
360             Regulations governing United States Savings 
                    Bonds, Series I.........................         431
361             Claims pursuant to the Government Losses in 
                    Shipment Act............................         449
362             Declaration of valuables under the 
                    Government Losses in Shipment Act.......         452
370             Electronic transactions and funds transfers 
                    relating to United States securities....         453
375             Marketable treasury securities redemption 
                    operations..............................         460
391             Waiver of interest, administrative costs, 
                    and penalties...........................         463

[[Page 9]]





               SUBCHAPTER A--FINANCIAL MANAGEMENT SERVICE



PART 202--DEPOSITARIES AND FINANCIAL AGENTS OF THE GOVERNMENT 1--Table of Contents



---------------------------------------------------------------------------

    1  The regulations, which previously appeared in this part, 
governing payment of checks drawn on the United States Treasury now 
appear in revised form in part 240 of this chapter (Department Circular 
21 (Second Revision)).
---------------------------------------------------------------------------

Sec.
202.1  Scope of regulations.
202.2  Designations.
202.3  Authorization.
202.4  Agreement of deposit.
202.5  Previously designated depositaries.
202.6  Collateral security.
202.7  Maintenance of balances within authorizations.

    Authority: 12 U.S.C. 90; 12 U.S.C. 265-266; 12 U.S.C. 391; 12 U.S.C. 
1452(d); 12 U.S.C. 1464(k); 12 U.S.C. 1789a; 12 U.S.C. 2013; 12 U.S.C. 
2122; 12 U.S.C. 3101-3102; 31 U.S.C. 3303; 31 U.S.C. 3336.



Sec. 202.1  Scope of regulations.

    The regulations in this part govern the designation of Depositaries 
and Financial Agents of the Federal Government (hereinafter referred to 
as depositaries), and their authorization to accept deposits of public 
money and to perform other services as may be required of them. Public 
money includes, but is not limited to, revenue and funds of the United 
States, and any funds the deposit of which is subject to the control or 
regulation of the United States or any of its officers, agents, or 
employees. The designation and authorization of Treasury Tax and Loan 
depositaries for the receipt of deposits representing Federal taxes are 
governed by the regulations in part 203 of this chapter.

[62 FR 45520, Aug. 27, 1997]



Sec. 202.2  Designations.

    (a) Financial institutions of the following classes are designated 
as Depositaries and Financial Agents of the Government if they meet the 
eligibility requirements stated in paragraph (b) of this section:
    (1) Financial institutions insured by the Federal Deposit Insurance 
Corporation.
    (2) Credit unions insured by the National Credit Union 
Administration.
    (3) Banks, savings banks, savings and loan, building and loan, and 
homestead associations, credit unions created under the laws of any 
State, the deposits or accounts of which are insured by a State or 
agency thereof or by a corporation chartered by a State for the sole 
purpose of insuring deposits or accounts of such financial institutions, 
United States branches of foreign banking corporations authorized by the 
State in which they are located to transact commercial banking business, 
and Federal branches of foreign banking corporations, the establishment 
of which has been approved by the Comptroller of the Currency.
    (b) In order to be eligible for designation, a financial institution 
is required to possess, under its charter and the regulations issued by 
its chartering authority, either general or specific authority to 
perform the services outlined in Sec. 202.3(b). A financial institution 
is required also to possess the authority to pledge collateral to secure 
public funds.

[44 FR 53066, Sept. 11, 1979, as amended at 46 FR 28152, May 26, 1981; 
62 FR 45521, Aug. 27, 1997]



Sec. 202.3  Authorization.

    (a) To accept deposits covered by the appropriate Federal or State 
insurer. Every depositary is authorized to accept a deposit of public 
money in an official account, other than an account in the name of the 
United States Treasury, in which the maximum balance does not exceed the 
``Recognized Insurance Coverage.'' ``Recognized Insurance Coverage'' 
means the insurance provided by the Federal Deposit Insurance 
Corporation, the National Credit Union Administration, and by insurance 
organizations specifically qualified by the Secretary of the Treasury.

[[Page 10]]

    (b) To perform other services. (1) The Secretary of the Treasury may 
authorize a depositary to perform other services including, but not 
limited to:
    (i) The maintenance of official accounts in which balances will be 
in excess of the applicable Federal or State insurance coverage;
    (ii) The maintenance of accounts in the name of the United States 
Treasury;
    (iii) The acceptance of deposits for credit of the United States 
Treasury;
    (iv) The furnishing of bank drafts in exchange for collections.
    (2) To obtain authorization to perform services, a depositary must:
    (i) File with the Secretary of the Treasury an appropriate agreement 
and resolution of its board of directors authorizing the agreement (both 
on forms prescribed by the Financial Management Service and available 
from Federal Reserve Banks), and
    (ii) Pledge collateral security as provided for in Sec. 202.6.

[32 FR 14215, Oct. 13, 1967, as amended at 44 FR 53066, Sept. 11, 1979; 
49 FR 47001, Nov. 30, 1984; 62 FR 45521, Aug. 27, 1997]



Sec. 202.4  Agreement of deposit.

    A depositary which accepts a deposit under this part enters into an 
agreement of deposit with the Treasury Department. The terms of this 
agreement include:
    (a) All of the provisions of this part.
    (b) Any instructions issued pursuant to this part by the Treasury or 
by Federal Reserve Banks as Fiscal Agents of the United States or by any 
other Government agency.
    (c) The provisions prescribed in Executive Order 11246, entitled 
``Equal Employment Opportunity,'' as amended by Executive Orders 11375 
and 12086, and regulations issued thereunder at 41 CFR chapter 60, as 
amended.
    (d) 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) 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, 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 and Vietnam Era veterans.

[44 FR 53067, Sept. 11, 1979, as amended at 62 FR 45521, Aug. 27, 1997]



Sec. 202.5  Previously designated depositaries.

    A depositary previously designated will, by the acceptance or 
retention of deposits, be presumed to have assented to all the terms and 
provisions of this part and to the retention of collateral security 
theretofore pledged.

[32 FR 14215, Oct. 13, 1967]



Sec. 202.6  Collateral security.

    (a) Requirement. Prior to receiving deposits of public money, a 
depositary authorized to perform services under Sec. 202.3(b) must 
pledge collateral security in the amount required by the Secretary of 
the Treasury.
    (b) Acceptable security. Types and valuations of acceptable 
collateral security will be specified by the Secretary of the Treasury 
in Treasury procedural instructions.
    (c) Deposits of securities. Unless the Secretary of the Treasury 
provides otherwise, collateral security under this part must be 
deposited with the Federal Reserve Bank or Branch of the district in 
which the depositary is located (depositaries located in Puerto Rico and 
the Virgin Islands will be considered as being located in the New York 
Federal Reserve district), or with a custodian or custodians within the 
United States designated by the Federal Reserve Bank, under terms and 
conditions prescribed by the Federal Reserve Bank. Securities deposited 
with a Federal Reserve Bank must be accompanied by a letter stating 
specifically the purpose for which the securities are being deposited.
    (d) Assignment. A depository that pledges securities which are not 
negotiable without its endorsement or assignment may, in lieu of placing 
its unqualified endorsement on each security, furnish an appropriate 
resolution

[[Page 11]]

and irrevocable power of attorney authorizing the Federal Reserve Bank 
to assign the securities. The resolution and power of attorney shall 
conform to such terms and conditions as the Federal Reserve Banks shall 
prescribe.
    (e) Disposition of principal and interest payments of the pledged 
securities after a depositary is declared insolvent--(1) General. In the 
event of the depositary's insolvency or closure, or in the event of the 
appointment of a receiver, conservator, liquidator, or other similar 
officer to terminate its business, the depositary 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 
satisfy any claim of the United States, including those not arising out 
of the depositary relationship.
    (2) Payment procedures. (i) Subject to the waiver in paragraph 
(e)(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) shall immediately remit each 
payment of principal and/or interest received 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 paragraph (e)(2)(iii) of this section, 
each obligor on a security pledged by a depositary 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 involvency of a pledging depositary or, if 
earlier, upon notice by the Treasury of such termination. For purposes 
of this paragraph, a depositary is insolvent when, voluntarily or by 
action of competent authority, it is closed because of present or 
prospective 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]



Sec. 202.7  Maintenance of balances within authorizations.

    (a) Federal Government agencies shall contact the Department of the 
Treasury, Financial Management Service, before making deposits with a 
financial institution insured by a State or agency thereof or by a 
corporation chartered by a State for the sole purpose of insuring 
deposits or accounts. The contact should be directed to the Cash 
Management Policy and Planning Division, Federal Finance, Financial 
Management Service, Department of the Treasury, Washington, DC 20227.
    (b) Government agencies having control or jurisdiction over public 
money on deposit in accounts with depositaries are responsible for the 
maintenance of balances in such accounts within the limits of the 
authorizations specified by the Secretary of the Treasury.

[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--Table of Contents




                     Subpart A--General Information

Sec.
203.1  Scope.
203.2  Definitions.
203.3  Financial institution eligibility for designation as a Treasury 
          Tax and Loan depositary.
203.4  Designation of financial institutions as Treasury Tax and Loan 
          depositaries.
203.5  Obligations of the depositary.
203.6  Compensation for services.
203.7  Termination of agreement or change of election or option.
203.8  Application of part and procedural instructions.

[[Page 12]]

               Subpart B--Electronic Federal Tax Payments

203.9  Scope of the subpart.
203.10  Enrollment.
203.11  Electronic payment methods.
203.12  Future-day reporting and payment mechanisms.
203.13  Same-day reporting and payment mechanisms.
203.14  Electronic Federal Tax Payment System interest assessments.
203.15  Prohibited debits through the Automated Clearing House.
203.16  Appeal and dispute resolution.

                    Subpart C--Federal Tax Deposits.

203.17  Scope of the subpart.
203.18  Tax deposits using Federal Tax Deposit coupons.
203.19  Note option.
203.20  Remittance option.

 Subpart D--Investment Program and Collateral Security Requirements for 
                   Treasury Tax and Loan Depositaries

203.21  Scope of the subpart.
203.22  Sources of balances.
203.23  Note balance.
203.24  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: 63 FR 5650, Feb. 3, 1998, unless otherwise noted.



                     Subpart A--General Information



Sec. 203.1  Scope.

    The regulations in this part govern the processing of Federal tax 
payments by financial institutions and the Federal Reserve Banks (FRB) 
using electronic payment or paper methods; the designation of Treasury 
Tax and Loan (TT&L) depositaries; and the operation of the Department of 
the Treasury's (Treasury) investment program.



Sec. 203.2  Definitions.

    As used in this part:
    (a) Advice of credit means the Treasury form used in the Federal Tax 
Deposit system that is supplied to depositaries to summarize and report 
Federal tax deposits. The current form is Treasury Form 2284. Advice of 
credit information also may be delivered electronically.
    (b) Automated Clearing House (ACH) credit entry means a transaction 
originated by a financial institution in accordance with applicable ACH 
formats and applicable laws, regulations, and procedural instructions.
    (c) Automated Clearing House (ACH) debit entry means a transaction 
originated by a Treasury Financial Agent (TFA), in accordance with 
applicable ACH formats and applicable laws, regulations, and 
instructions.
    (d) Business day means any day on which the FRB of the district is 
open.
    (e) Direct Access transaction means same-day Federal tax payment 
information transmitted by a financial institution directly to the 
Electronic Tax Application at an FRB using the Fedline Taxpayer Deposit 
Application.
    (f) Direct investment means placement of Treasury funds with a 
depositary and a corresponding increase in a depositary's note balance.
    (g) Electronic Federal Tax Payment System (EFTPS) means the system 
through which taxpayers remit Federal tax payments electronically.
    (h) Electronic Tax Application (ETA) means a sub-system of EFTPS 
that receives, processes, and transmits same-day Federal tax payment 
information for taxpayers. ETA activity is comprised of Fedwire value 
transfers, Fedwire non-value transactions, and Direct Access 
transactions.
    (i) Electronic Tax Application (ETA) reference number means the 
unique number assigned to each ETA transaction by an FRB.
    (j) Federal funds rate means the Federal funds rate published weekly 
by the Board of Governors of the Federal Reserve System.
    (k) Federal Reserve account means an account with reserve or 
clearing balances held by a financial institution at an FRB.
    (l) Federal Reserve Bank of the district means the FRB that services 
the geographical area in which the financial institution is located, or 
such other FRB that may be designated in an FRB operating circular.
    (m) Federal Tax Deposit (FTD) means a tax deposit or payment made 
using an FTD coupon.
    (n) Federal Tax Deposit coupon (FTD coupon) means a paper form 
supplied to

[[Page 13]]

a taxpayer by the Treasury for use in the FTD system to accompany 
deposits of Federal taxes. The current paper form is Form 8109.
    (o) Federal Tax Deposit system (FTD system) means the paper-based 
system through which taxpayers remit Federal tax payments by presenting 
an FTD coupon and payment to a depositary or an FRB. The depositary 
prepares an advice of credit summarizing all FTDs.
    (p) Federal taxes means those Federal taxes or other payments 
specified by the Secretary of the Treasury as eligible for payment 
through the procedures prescribed in this part.
    (q) Fedwire means the funds transfer system owned and operated by 
the FRBs.
    (r) 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.
    (s) Fedwire value transfer means a Federal tax payment made by a 
financial institution using a Fedwire type 1000 message.
    (t) Financial institution means any bank, savings bank, savings and 
loan association, credit union, or similar institution.
    (u) Fiscal Agent means the Federal Reserve acting as agent for the 
Treasury.
    (v) Input Message Accountability Data (IMAD) means a unique number 
assigned to each Fedwire transaction by the financial institution 
sending the transaction to an FRB.
    (w) Note option means that program available to a TT&L depositary 
under which Treasury invests in obligations of the depositary. The 
amount of such investments will be evidenced by an open-ended interest-
bearing note balance maintained at the FRB of the district.
    (x) Procedural instructions means the procedures contained in the 
Treasury Financial Manual, Volume IV (IV TFM), other Treasury 
instructions issued through the TFAs, and FRB operating circulars issued 
consistent with this part.
    (y) Recognized insurance coverage means the insurance provided by 
the Federal Deposit Insurance Corporation, the National Credit Union 
Administration, and by insurance organizations specifically qualified by 
the Secretary.
    (z) Remittance option means that program available to a depositary 
that processes FTD payments, under which the amount of deposits credited 
by the depositary to the TT&L account will be withdrawn by the FRB for 
deposit to the Treasury General Account on the day that the FRB receives 
the advices of credit supporting such deposits.
    (aa) Same-day payment means the following ETA payment options:
    (1) Direct Access transaction;
    (2) Fedwire non-value transaction; and
    (3) Fedwire value transfer.
    (bb) Secretary means the Secretary of the Treasury, or the 
Secretary's delegate.
    (cc) Special direct investment means the placement of Treasury funds 
with a depositary and a corresponding increase in a depositary's note 
balance, where the investment specifically is identified as a ``special 
direct investment'' and may be secured by collateral retained in the 
possession of the depositary pursuant to the terms of 
Sec. 203.24(c)(2)(i).
    (dd) Tax due date means the day on which a tax payment is due to 
Treasury, as determined by statute and Internal Revenue Service (IRS) 
regulations.
    (ee) Transaction trace number means an identifying number assigned 
by the taxpayer's financial institution to each ACH credit transaction.
    (ff) Treasury Financial Agent (TFA) means a financial institution 
designated as an agent of Treasury for processing EFTPS enrollments, 
receiving EFTPS tax payment information, and originating ACH debit 
entries on behalf of Treasury as authorized by the taxpayer.
    (gg) Treasury General Account (TGA) means an account maintained in 
the name of the United States Treasury at an FRB.
    (hh) Treasury Tax and Loan (TT&L) account means the Treasury account 
maintained by a depositary in which funds are credited by the depositary 
after receiving and collateralizing FTDs.

[[Page 14]]

    (ii) Treasury Tax and Loan depositary (depositary) means a financial 
institution designated as a depositary by the FRB of the district for 
the purpose of maintaining a TT&L account and/or note balance.
    (jj) Treasury Tax and Loan (TT&L) Program means the program for 
collecting Federal taxes and investing the Government's excess operating 
funds.
    (kk) Treasury Tax and Loan (TT&L) rate of interest means the Federal 
funds rate less twenty-five basis points (i.e., \1/4\ of 1 percent).



Sec. 203.3  Financial institution eligibility for designation as a Treasury Tax and Loan depositary.

    (a) To be designated as a TT&L depositary, a financial institution 
shall be insured as a national banking association, state bank, savings 
bank, savings and loan, 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 shall possess the authority to pledge 
collateral to secure TT&L account balances and/or a note balance.
    (c) In order to be designated as a TT&L depositary for the purposes 
of processing tax deposits in the FTD system, a financial institution 
shall 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, note option depositaries shall possess either general or 
specific authority permitting the maintenance of a note balance, which 
is payable on demand without previous notice of intended withdrawal.



Sec. 203.4  Designation of financial institutions as Treasury Tax and Loan depositaries.

    (a) Parties to the agreement. To be designated as a TT&L depositary, 
a financial institution shall enter into a depositary agreement with 
Treasury's fiscal agent, the FRB. By entering into this agreement, the 
financial institution agrees to be bound by this part, and procedural 
instructions issued pursuant to this part.
    (b)(1) Application procedures. An eligible financial institution 
seeking designation as a depositary and, thereby, the authority to 
maintain a TT&L account and/or a note balance shall file with the FRB, 
Financial Management Service Form 458, ``Financial Institution Agreement 
and Application for Designation as a TT&L Depositary,'' and Financial 
Management Service Form 459, ``Resolution Authorizing the Financial 
Institution Agreement and Application for Designation as a TT&L 
Depositary,'' certified by its board of directors. Financial Management 
Service Forms 458 and 459 are available upon request from the FRB of the 
district.
    (2) Depositaries processing tax payments in the FTD system are 
required to elect either the remittance or the note option.
    (c) Designation. Each financial institution satisfying the 
eligibility requirements and the application procedures will receive 
from the FRB notification of its specific designation as a TT&L 
depositary. A financial institution is not authorized to maintain a TT&L 
account or note balance until it has been designated as a TT&L 
depositary by the FRB.



Sec. 203.5  Obligations of the depositary.

    A depositary shall:
    (a) Administer a note balance, if not participating in the FTD 
System.
    (b) Administer a TT&L account and, if applicable, a note balance, if 
participating in the FTD System.
    (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.

[[Page 15]]

    (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. 203.6  Compensation for services.

    Except as provided in the procedural instructions, Treasury will not 
compensate financial institutions for servicing and maintaining the TT&L 
account, or for processing tax payments through the EFTPS or the FTD 
system.



Sec. 203.7  Termination of agreement or change of election or option.

    (a) Termination by Treasury. The Secretary may terminate the 
agreement of a 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 
depositary may terminate its depositary agreement, or change its option 
or election, consistent with this part and the procedural instructions, 
by submitting notice to that effect in writing to the FRB effective at a 
prospective date set forth in the notice.



Sec. 203.8  Application of part and procedural instructions.

    The terms of this part and procedural instructions issued pursuant 
to this part shall be binding on financial institutions that process tax 
payments and/or maintain a note 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 by which financial institutions 
shall process Federal tax payment transactions electronically. A 
financial institution does not need to be designated as a TT&L 
depositary in order to process electronic Federal tax payments. In 
addition, a financial institution that does process electronic Federal 
tax payments under this subpart does not thereby become a Federal 
Government depositary and shall not advertise itself as one because of 
that fact.



Sec. 203.10  Enrollment.

    (a) General. Taxpayers shall complete an enrollment process with the 
TFA prior to making their first electronic Federal tax payment.
    (b) Enrollment forms. The TFA shall provide financial institutions 
and taxpayers with enrollment forms upon request. The taxpayer is 
responsible for completing the enrollment form, obtaining the 
verifications required on the form, and returning the enrollment form to 
the TFA.
    (c) Verification. If the taxpayer elects the ACH debit entry method 
of paying taxes, an authorized representative of the financial 
institution shall verify the accuracy of the financial institution 
routing number, taxpayer account number, and taxpayer account type at 
the request of the taxpayer.



Sec. 203.11  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. Any financial institution that is 
capable of originating and/or receiving transactions for these payment 
methods, by itself or through a correspondent financial institution, may 
do so on behalf of a taxpayer.
    (b) Conditions to making an electronic payment. Nothing contained in 
this part shall affect the authority of financial institutions to enter 
into contracts with their customers regarding the terms and conditions 
for processing payments, provided that such terms and conditions are not 
inconsistent with this subpart and applicable law governing the 
particular transaction type.
    (c) Payment of interest for time value of funds held. Treasury will 
not pay interest on any payments erroneously paid

[[Page 16]]

to Treasury and subsequently refunded to the financial institution.



Sec. 203.12  Future-day reporting and payment mechanisms.

    (a) General. A financial institution may receive an ACH debit entry, 
originated by the TFA at the direction of the taxpayer; or, a financial 
institution may originate an ACH credit entry, at the direction of the 
taxpayer. Taxpayers will be credited for the actual amount received by 
Treasury.
    (b) ACH debit. A financial institution receiving an ACH debit entry 
originated by the TFA shall, as applicable:
    (1) Timely verify the account number and account type contained in 
an ACH prenotification entry;
    (2) Timely and properly return a prenotification entry that contains 
an invalid account number or account type, or otherwise is erroneous or 
unprocessable;
    (3) Timely and accurately notify the TFA of incorrect information on 
entries received, using a Notification of Change entry; and
    (4) Timely and accurately return an entry not posted, including but 
not limited to, a return or a contested dishonored return for acceptable 
return reasons, as set forth in the procedural instructions.
    (c) ACH credit. A financial institution originating an ACH credit 
entry at the direction of a taxpayer shall:
    (1) At the request of the taxpayer, originate either an ACH 
prenotification containing the taxpayer's identification number or a 
zero dollar ACH entry with the appropriate addenda record. Additional 
format information is contained in the procedural instructions;
    (2) Format the ACH credit entry in the ACH format approved by 
Treasury for Federal tax payments;
    (3) Originate an ACH credit entry by the appropriate deadline, as 
specified by the FRB or Treasury, whichever is earlier, in order to meet 
the tax due date specified by the taxpayer; and
    (4) Provide the taxpayer, upon request, a transaction trace number, 
or some other method to trace the tax payment.
    (d) ACH credit reversals. Reversals may be initiated for a duplicate 
or erroneous file or entry. No advance approval from, or notification 
to, the IRS is required when originating an ACH credit reversal. 
Documentation of reversals shall be made available as set forth in the 
procedural instructions.



Sec. 203.13  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 of the 
district by the deadline established by the Treasury in the procedural 
instructions. Taxpayers will be credited for the actual amount received 
by Treasury.
    (b) Fedwire value transfer. To initiate a Fedwire value tax payment, 
the financial institution shall be a Fedwire participant and shall 
comply with the FRB's Fedwire format for tax payments. The taxpayer's 
financial institution shall provide the taxpayer, upon request, the IMAD 
and the ETA reference numbers for a Fedwire value transfer. The 
financial institution may obtain the ETA reference number for Fedwire 
value transfers from its FRB by supplying the related IMAD number. 
Fedwire value transfers settle immediately to the TGA and thus are not 
credited to a depositary's note balance.
    (c) Fedwire non-value transaction. By initiating a Fedwire non-value 
transaction, a financial institution authorizes the FRB of the district 
to debit its Federal Reserve account or, for a TT&L depositary, to debit 
the Federal Reserve account of the depositary or its designated 
correspondent financial institution, for the amount of the tax payment 
specified in the transaction. To initiate a Fedwire non-value 
transaction, the financial institution shall be a Fedwire participant 
and shall comply with the FRB's Fedwire format for tax payments. The 
taxpayer's financial institution shall provide the taxpayer, upon 
request, the IMAD and ETA reference numbers for the Fedwire non-value 
transaction. The financial institution may obtain the ETA reference 
number for Fedwire non-value transactions from its FRB by supplying the 
related IMAD number.

[[Page 17]]

    (1) For a note option depositary using a Fedwire non-value 
transaction, the tax payment amount will be credited to the depositary's 
note balance on the day of the transaction.
    (2) For a remittance option depositary using a Fedwire non-value 
transaction, the tax payment amount will be debited from the Federal 
Reserve account of the depositary or the depositary's designated 
correspondent and credited to the TGA on the day of the transaction.
    (3) For a non-TT&L depositary financial institution using a Fedwire 
non-value transaction, the tax payment amount will be debited from the 
financial institution's Federal Reserve account and credited to the TGA 
on the day of the transaction.
    (d) Direct Access transaction. By initiating a Direct Access 
transaction, a financial institution authorizes the FRB of the district 
to debit its Federal Reserve account or, for a TT&L depositary, to debit 
the Federal Reserve account of the depositary or its designated 
correspondent financial institution for the amount of the tax payment 
specified in the transaction. The taxpayer's financial institution shall 
provide the taxpayer, upon request, the ETA reference number for the 
Direct Access transaction.
    (1) For a note option depositary using a Direct Access transaction, 
the tax payment amount will be credited to the depositary's note balance 
on the day of the transaction.
    (2) For a remittance option depositary or a non-TT&L depositary 
financial institution using a Direct Access transaction, the tax payment 
amount will be debited from the Federal Reserve account of the financial 
institution or its designated correspondent financial institution, and 
credited to the TGA on the day of the transaction.
    (e) Cancellations and reversals. In addition to cancellations due to 
insufficient funds in the financial institution's Federal 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 the 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 deadline 
established by Treasury in the procedural instructions on the day the 
payment was made.
    (f) Other than as stated in paragraph (e) of this section, Treasury 
is not obligated to reverse all or any part of a payment.



Sec. 203.14  Electronic Federal Tax Payment System 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 tax payment instructions to the financial institution was timely and 
that the taxpayer satisfied the conditions imposed by the financial 
institution pursuant to Sec. 203.11(b). Treasury also may assess 
interest where a financial institution failed to respond to an ACH 
prenotification entry on an ACH debit as required in Sec. 203.12(b) or 
failed to originate an ACH prenotification or zero dollar entry on an 
ACH credit as described in Sec. 203.12(c) which then resulted in a late 
payment.
    (b) Calculation of interest assessment. Any interest assessed under 
this section will be at the TT&L rate. The interest will be assessed 
from the day the taxpayer specified that its payment should settle to 
the Treasury until the receipt of the payment by Treasury, 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

[[Page 18]]

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 by electronic payment methods under 
this subpart is deemed to authorize the FRB to debit its Federal Reserve 
account or the account of its designated correspondent financial 
institution for any interest assessed under this section. Upon the 
direction of Treasury, the FRB shall debit the Federal Reserve account 
of the financial institution or the account of its designated 
correspondent financial institution for the amount of the assessed 
interest.
    (d) Circumstances not subject to 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. 203.11(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. 203.16, that the taxpayer has not satisfied 
the conditions and that the financial institution has not contributed to 
the delay.
    (2) Treasury will not assess interest on a financial institution if 
the delay causing the interest assessment is due to the FRB or the TFA 
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. 203.16, that it did not cause or contribute to the 
delay.



Sec. 203.15  Prohibited debits through the Automated Clearing House.

    (a) General. The Treasury has instituted operational safeguards to 
scrutinize all entries that remove funds from the TGA. In the event 
funds are removed from the TGA without authority, this section sets 
forth the liability of financial institutions originating such entries. 
Accordingly, a financial institution shall not originate an ACH 
transaction to debit the TGA without the prior written permission of 
Treasury. Unauthorized entries under this section do not include 
reversal entries of previously initiated ACH credits authorized in 
Sec. 203.12(d).
    (b) Liability. A financial institution that originates an 
unauthorized ACH entry that debits the TGA shall be liable to Treasury 
for the amount of the transaction and shall be liable for interest 
charges as specified in paragraph (d) of this section.
    (c) Authorization to recover principal and assess interest charge. 
By initiating unauthorized debits to the TGA through the ACH, a 
financial institution is deemed to authorize the FRB to debit its 
Federal Reserve account or the account of its designated correspondent 
financial institution for any principal and, if applicable, an interest 
charge assessed by Treasury under this section.
    (d) Interest charge calculation. The interest charge shall be at a 
rate equal to the Federal funds rate plus two percent. The interest 
charge shall be assessed for each calendar day from the day the TGA was 
debited to the day the TGA is recredited with the full amount of 
principal due.



Sec. 203.16  Appeal and dispute resolution.

    (a) Contest. A financial institution may contest any interest 
assessed under Sec. 203.14, any principal or interest assessed under 
Sec. 203.15, or any late fees assessed under Sec. 203.20. The financial 
institution shall 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 FRB 
debits the reserve account of the financial institution under 
Secs. 203.14, 203.15, or 203.20. The Treasury officer or fiscal agent 
will: uphold the assessment, or reverse the assessment, or modify the 
assessment, or mandate other action.
    (b) Appeal. The financial institution may appeal the decision to 
Treasury as set forth in the procedural instructions. No further 
administrative review of the Treasury's decision is available under this 
Part.
    (c) Recoveries. In the event of an over or under recovery of either 
interest, principal, or late fees, Treasury will instruct the FRB to 
credit or debit the

[[Page 19]]

Federal Reserve account of the financial institution or its designated 
correspondent financial institution, as appropriate.



                     Subpart C--Federal Tax Deposits



Sec. 203.17  Scope of the subpart.

    This subpart applies to all depositaries that accept FTD coupons and 
governs the acceptance and processing of those coupons.



Sec. 203.18  Tax deposits using Federal Tax Deposit coupons.

    (a) FTD coupons. A depositary that accepts FTD coupons, through any 
of its offices that accept demand and/or savings deposits, shall:
    (1) Accept from a taxpayer, 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 
when accompanied by an FTD coupon on which the amount of the deposit has 
been properly entered in the space provided. A 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.
    (2) Issue a counter receipt when requested to do so by a taxpayer 
that makes an FTD deposit over the counter.
    (3) Place a stamp impression on the face of each FTD coupon in the 
space provided. The stamp shall reflect the date on which the tax 
deposit was received and the name and location of the depositary. The 
timeliness of the tax payment will be determined by reference to the 
date stamped by the depositary on the FTD coupon.
    (4) Credit, on the date of receipt, all FTD deposits to the TT&L 
account and administer that account pursuant to the provisions of this 
part.
    (5) Forward, each day, to the IRS Center servicing the geographical 
area in which the depositary is located, the FTD coupons for all FTD 
deposits received that day. The FTD coupons shall be accompanied by an 
advice of credit reflecting the total amount of all FTD coupons.
    (6) Establish an adequate record of all FTD deposits prior to 
transmittal to the IRS Center so that the depositary will be able to 
identify deposits in the event tax deposit coupons are lost in shipment. 
For tracking purposes, a record shall be made of each FTD deposit 
showing, at a minimum, the date of deposit, the taxpayer identification 
number, and the amount of the deposit. The depositary's copy of the 
advice of credit may be used to provide the necessary information if 
individual deposits are listed separately, showing date, taxpayer 
identification number, and amount.
    (7) Deliver its advices of credit to the FRB by the cutoff hour 
designated by the FRB for receipt of advices.
    (8) Not accept compensation from taxpayers for accepting FTDs and 
handling them as required by this section.
    (b) FTD deposits with Federal Reserve Banks. An FRB shall:
    (1) Accept an FTD directly from a taxpayer when such tax deposit is:
    (i) Mailed or delivered by a taxpayer; and
    (ii) Provided in the form of cash or a check or postal money order 
payable to the order of that FRB; and,
    (iii) Accompanied by an FTD coupon on which the amount of the tax 
deposit has been properly entered in the space provided.
    (2) Issue a counter receipt, when requested to do so by a taxpayer 
that makes an FTD over the counter; and,
    (3) Place, in the space provided on the face of each FTD coupon 
accepted directly from a taxpayer, a stamp impression reflecting the 
name of the FRB and the date on which the tax deposit will be credited 
to the TGA. Timeliness of the Federal tax payment will be determined by 
this date. However, if a deposit is mailed to an FRB, it shall be 
subject to the ``Timely mailing treated as timely filing and paying'' 
clause of the Internal Revenue Code, 26 U.S.C. 7502; and,
    (4) Credit the TGA with the amount of the tax payment;
    (i) On the date the payment is received, if payment is made in cash; 
or,
    (ii) On the date the proceeds of the tax payment are collected, if 
payment is made by postal money order or check.

[[Page 20]]



Sec. 203.19  Note option.

    (a) Late delivery of advices of credit. If an advice of credit does 
not arrive at the FRB before the designated cutoff hour for receipt of 
such advices, the FRB will post the funds to the note balance as of the 
next business day after the date on the advice of credit. This is the 
date on which funds will begin to earn interest for Treasury.
    (b) Transfer of funds from TT&L account to the note balance. For a 
depositary selecting the note option, funds equivalent to the amount of 
deposits credited by a depositary to the TT&L account shall be withdrawn 
by the depositary and credited to the note balance on the business day 
following the receipt of the tax payment.



Sec. 203.20  Remittance option.

    (a) FTD late fee. If an advice of credit does not arrive at the FRB 
before the designated cutoff hour for receipt of such advices, an FTD 
late fee in the form of interest at the TT&L rate will be assessed for 
each day's delay in receipt of such advice. Upon the direction of 
Treasury, the FRB shall debit the Federal Reserve account of the 
financial institution or the account of its designated correspondent 
financial institution for the amount of the late fee.
    (b) Withdrawals. For a depositary selecting the Remittance Option, 
the amount of deposits credited by a depositary to the TT&L account will 
be withdrawn upon receipt by the FRB of the advices of credit. The FRB 
will charge the depositary's Federal Reserve account or the account of 
the depositary's designated correspondent financial institution.



 Subpart D--Investment Program and Collateral Security Requirements for 
                   Treasury Tax and Loan Depositaries



Sec. 203.21  Scope of the subpart.

    This subpart provides rules for TT&L depositaries on crediting note 
balances under the various payment methods; debiting note balances; and 
pledging collateral security.



Sec. 203.22  Sources of balances.

    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 TT&L account pursuant to 
subpart C of this part;
    (b) EFTPS ACH credit and debit transactions, Fedwire non-value 
transactions, and Direct Access transactions pursuant to subpart B of 
this part; and
    (c) Direct investments and special direct investments pursuant to 
subpart D of this part.



Sec. 203.23  Note balance.

    (a) Additions. Treasury will invest funds in obligations of 
depositaries selecting the note option. Such obligations shall be in the 
form of open-ended, interest-bearing notes; and additions and reductions 
will be reflected on the books of the FRB of the district.
    (1) FTD system. A depositary processing tax deposits using the FTD 
system and electing the note option shall debit the TT&L account and 
credit its note balance as stated in Sec. 203.19(b).
    (2) EFTPS--(i) ACH debit and ACH credit. A note option depositary 
processing EFTPS ACH debit entries and/or ACH credit entries shall 
credit its note balance for the value of the transactions on the date 
that an exchange of funds is reflected on the books of the Federal 
Reserve Bank of the district. Financial institutions may refer to the 
procedural instructions for information on how to ascertain the amount 
of the credit to the note balance.
    (ii) Fedwire non-value and Direct Access. A note option depositary 
processing Fedwire non-value and/or Direct Access transactions pursuant 
to subpart B of this part shall credit its note balance and debit its 
customer's account for the value of the transactions on the date ETA 
receives and processes the transactions.
    (b) Other additions. Other funds from Treasury may be offered from 
time to time to certain note option depositaries through direct 
investments, special direct investments, or other investment programs.
    (c) Note balance withdrawals. The amount of the note balance shall 
be

[[Page 21]]

payable on demand without prior notice. Calls for payment on the note 
will be by direction of the Secretary through the FRBs. On behalf of 
Treasury, the FRB shall charge the reserve account of the depositary or 
the depositary's designated correspondent on the day specified in the 
call for payment.
    (d) Interest. A note shall bear interest at the TT&L rate. Such 
interest is payable by a charge to the Federal Reserve account of the 
depositary or its designated correspondent in the manner prescribed in 
the procedural instructions.
    (e) Maximum balance--(1) Note option depositaries. A depositary 
selecting the note option shall establish a maximum balance for its note 
by providing notice to that effect in writing to the FRB of the 
district. The maximum balance is the amount of funds for which a note 
option depositary is willing to provide collateral in accordance with 
Sec. 203.24(c)(1). The depositary shall provide the advance notice 
required in the procedural instructions before reducing the established 
maximum balance unless it is a reduction resulting from a collateral re-
evaluation as determined by the depositary's FRB. That portion of any 
advice of credit or EFTPS tax payment, which, when posted at the FRB, 
would cause the note balance to exceed the maximum balance amount 
specified by the depositary, will be withdrawn by the FRB that day.
    (2) Direct investment depositaries. A note option depositary that 
participates in direct investment shall set a maximum balance for direct 
investment purposes which is higher than its peak balance normally 
generated by the depositary's advices of credit and EFTPS tax payment 
inflow. The direct investment note option depositary shall provide the 
advance notice required in the procedural instructions before reducing 
the established maximum balance.
    (3) Special direct investment depositaries. Special direct 
investments, while credited to the note balance, shall not be considered 
in setting the amount of the maximum balance or in determining the 
amounts to be withdrawn where a depositary's maximum balance is 
exceeded.



Sec. 203.24  Collateral security requirements.

    Financial institutions that process EFTPS tax payments, but are not 
TT&L depositaries, have no collateral requirements under this part. 
Financial institutions that are note option depositaries or remittance 
option depositaries have collateral security requirements, as follows:
    (a) Note option--(1) FTD deposits and EFTPS tax payments. A 
depositary shall pledge collateral security in accordance with the 
requirements of paragraphs (c)(1), (d), and (e) of this section in an 
amount that is sufficient to cover the pre-established maximum balance 
for the note, and, if applicable, the closing balance in the TT&L 
account which exceeds recognized insurance coverage. Depositaries shall 
pledge collateral for the full amount of the maximum balance at the time 
the maximum balance is established. If the depositary maintains a TT&L 
account, the depositary shall pledge collateral security before 
crediting deposits to the TT&L account.
    (2) Direct investments. A note option depositary that participates 
in direct investment is not required to pledge collateral continuously 
in the amount of the pre-established maximum balance. However, each note 
option depositary participating in direct investment shall pledge, no 
later than the day the direct investment is placed, the additional 
collateral in accordance with paragraphs (c)(1), (d), and (e) of this 
section to cover the total note balance including those funds received 
through direct investment. If a direct investment depositary has a 
history of frequent collateral deficiencies, it shall fully 
collateralize its maximum balance at all times.
    (3) Special direct investments. Before special direct investments 
are credited to a depositary's note balance, the note option depositary 
shall pledge collateral security, in accordance with the requirements of 
paragraphs (c)(2) and (e) of this section, to cover 100 percent of the 
amount of the special direct investments to be received.
    (b) Remittance option. Prior to crediting FTD deposits to the TT&L 
account, a remittance option depositary

[[Page 22]]

shall pledge collateral security in accordance with the requirements of 
paragraph (c)(1), (d), and (e) of this section in an amount which is 
sufficient to cover the balance in the TT&L account at the close of 
business each day, less recognized insurance coverage.
    (c) Deposits of securities. (1) Collateral security required under 
paragraphs (a)(1), (2), and (b) of this section shall be deposited with 
the FRB of the district, or with a custodian or custodians within the 
United States designated by the FRB, under terms and conditions 
prescribed by the FRB.
    (2)(i) Collateral security required under paragraph (a)(3) of this 
section shall be pledged under a written security agreement on a form 
provided by the FRB of the district. The collateral security pledged to 
satisfy the requirements of paragraph (a)(3) of this section may remain 
in the pledging depositary's possession and the fact that it has been 
pledged shall be evidenced by advices of custody to be incorporated by 
reference in the written security agreement. The written security 
agreement and all advices of custody covering collateral security 
pledged under that agreement shall be provided by the depositary to the 
FRB of the district. Collateral security pledged under the agreement 
shall not be substituted for or released without the advance approval of 
the FRB of the district, and any collateral security subject to the 
security agreement shall remain so subject until an approved 
substitution is made. No substitution or release shall be approved until 
an advice of custody containing the description required by the written 
security agreement is received by the FRB of the district.
    (ii) Treasury's security interest in collateral security pledged by 
a depositary in accordance with paragraph (c)(2)(i) of this section to 
secure special direct investments is perfected without Treasury taking 
possession of the collateral security for a period not to exceed 21 
calendar days from the day of the depositary's receipt of the special 
direct investment.
    (d) Acceptable securities. Unless otherwise specified by the 
Secretary, collateral security pledged under this section may be 
transferable securities, owned by the depositary free and clear of all 
liens, charges, or claims, of any of the classes listed in the 
procedural instructions. Collateral values will be assigned by the FRB 
of the district.
    (e) Assignment of securities. A TT&L depositary that pledges 
acceptable securities which are not negotiable without its endorsement 
or assignment may furnish, in lieu of placing its unqualified 
endorsement on each security, an appropriate resolution and irrevocable 
power of attorney authorizing the FRB to assign the securities. The 
resolution and power of attorney shall conform to such terms and 
conditions as the FRB shall prescribe.
    (f) Effecting payments of principal and interest on securities 
pledged as collateral--(1) General. If 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/or if applicable, its note balance; or otherwise 
violates or fails to perform any of the terms of this part, or fails to 
pay when due amounts owed to the United States or the United States 
Treasury; or if the depositary is closed for business by regulatory 
action or by proper corporate action, or in the event that a receiver, 
conservator, liquidator or any other officer is appointed; then the 
Treasury, without notice or demand, may sell, or otherwise collect the 
proceeds of all or part of the collateral, including additions and 
substitutions; and apply the proceeds, to satisfy any claims of the 
United States against the depositary. All principal and interest 
payments on any security pledged to protect the note balance (if 
applicable) and/or the TT&L account (if applicable), 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 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) shall immediately remit each 
payment of principal and/or interest received by it with respect to 
collateral pledged pursuant to this section to the

[[Page 23]]

FRB of the district, as fiscal agent of the United States, and in any 
event shall so remit 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 the Treasury is entitled to any payment 
associated with that pledged security, shall make each payment of 
principal and/or interest due with respect to such security directly to 
the FRB of the district, 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 Sec. 203.7; and also, 
those circumstances identified in paragraph (f)(1) which may lead to the 
collection of the proceeds of collateral or the waiver is otherwise 
terminated by Treasury.



PART 204 [RESERVED]--Table of Contents




PART 205--RULES AND PROCEDURES FOR FUNDS TRANSFERS--Table of Contents




Sec.
205.1  Purpose.
205.2  Scope of part.
205.3  Definitions.

  Subpart A--Negotiation of Intergovernmental Agreements for Financing 
 Federal Assistance Programs--Interest Liabilities on Intergovernmental 
                             Funds Transfers

205.4  Scope of subpart.
205.5  [Reserved]
205.6  Funding techniques.
205.7  Requesting and transferring funds.
205.8  Clearance patterns.
205.9  Treasury-State agreements.
205.10  Funding of indirect costs and administrative cost grants.
205.11  Federal interest liabilities.
205.12  State interest liabilities.
205.13  Interest calculation.
205.14  Direct costs of implementation.
205.15  Annual reports.
205.16  Interest payment.
205.17  Compliance and oversight.
205.18  Appeals and dispute resolution.

Appendix A to Subpart A to Part 205--Definition of Major Federal 
          Assistance Program

 Subpart B--Potential Liabilities on Intergovernmental Funds Transfers 
  Included in the Catalog of Federal Domestic Assistance but Otherwise 
                    Generally Excluded From Subpart A

205.19  Scope of subpart.
205.20  Cash advances.
205.21  Federal agency oversight responsibilities.
205.22  State noncompliance.
205.23  Failure to make funds available.

Subpart C [Reserved]

    Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3335, 6501, 6503.

    Source: 57 FR 60676, Dec. 21, 1992, unless otherwise noted.



Sec. 205.1  Purpose.

    Subparts A and B of this part implement the Cash Management 
Improvement Act and prescribe rules and procedures for the transfer of 
funds between the Federal Government and the States for Federal grant 
and other programs. Subpart C of this part is reserved and, if issued, 
may implement other authorities and govern transactions outside the 
scope of subparts A and B.



Sec. 205.2  Scope of part.

    (a) Subparts A and B apply to programs listed in the Catalog of 
Federal Domestic Assistance, Pursuant to chapter 61 of title 31, United 
States Code.
    (b) This part does not generally apply to direct loan programs.
    (c) This part does not apply to payments made to States acting as 
vendors on Federal contracts, which are subject to the Prompt Payment 
Act of 1982, as amended, 31 U.S.C. 3901 et seq., Office of Management 
and Budget (OMB) Circular A-125 ``Prompt Payment,'' and 48 CFR part 32.
    (d) This part does not apply to the Tennessee Valley Authority (TVA) 
or programs administered by the TVA.



Sec. 205.3  Definitions.

    For the purpose of this part:
    Administrative cost grant means a grant exclusively for 
administrative expenses under a program with separate grant awards for 
benefit payments and administrative expenses.

[[Page 24]]

    Auditable means the sources of data and information for a 
calculation are readily available, fully documented, and verifiable, 
such that the calculation can be replicated and proven to comply with 
all pertinent standards.
    Authorized State official means a person with the authority under 
the laws of a State to make commitments on behalf of the State for the 
purposes of this regulation, or that person's official designee as 
certified in writing.
    Check means a negotiable demand draft or warrant.
    Clearance pattern means a frequency distribution showing the 
proportion of a total amount disbursed that is debited against the 
payor's bank account each day after the disbursement.
    Current project cost means a cost for which the liability has been 
recorded on or after the day on which a State last requested funds for 
the project.
    Day means a calendar day unless otherwise specified.
    Disburse means to issue a check or initiate an electronic funds 
transfer payment.
    Discretionary grant project means a project for which a Federal 
agency is statutorily authorized to exercise judgment in awarding a 
grant and in selecting a grantee, generally through a competitive 
process.
    Drawdown means a process whereby a State requests and receives 
Federal funds.
    Electronic funds transfer (EFT) means, in the context of Federal 
payments to States, the delivery of funds through wire transfer or the 
Automated Clearing House.
    Equivalent rate means auction average equivalent yield, also known 
as the auction average investment rate of 13-week Treasury bills.
    Federal agency means an executive agency as defined by section 102 
of title 31, United States Code, exclusive of the TVA.
    Federal-State agreement means an agreement between a State and a 
Federal program agency specifying terms and conditions for carrying out 
a program or group of programs, but does not mean a Treasury-State 
Agreement described in Sec. 205.9.
    Fiscal year means, unless otherwise indicated, a State's budget year 
ending in the specified calendar year.
    Issue checks means to release or distribute checks to the payees.
    Major Federal assistance program is defined in appendix A to subpart 
A of this part.
    Obligational authority means the existence of a definite commitment 
on the part of the Federal Government to provide appropriated funds to a 
State to carry out specified programs, whether the commitment is 
executed before or after a State pays out funds for program purposes. 
This term means that an obligation to a State has been executed and does 
not refer to the amount of budgetary resources available.
    Pay out means to debit the payor's bank account.
    Pay out funds for program purposes means, in the context of State 
payments, to debit a State account for the purpose of making a payment 
to:
    (1) A person or entity that is not considered part of the State 
pursuant to the definition of ``State'' in this section, or
    (2) A State entity for the procurement of goods or services for the 
direct benefit or use of the payor State entity or the Federal 
Government.
    Program means the range of activities encompassed under, and 
classified by, a Catalog of Federal Domestic Assistance number (CFDA ).
    Refund means a recovery of funds previously paid out for program 
purposes.
    Related banking costs means stand-alone, non-credit services which 
are considered necessary and/or customary for sustaining an account in a 
financial institution, whether in commercial financial institutions or 
State Treasurer accounts. Investment service fees are not related 
banking costs.
    Request for funds means a solicitation for funds that is completed 
and submitted in accordance with Federal agency guidelines.
    Secretary means the Secretary of the United States Department of the 
Treasury. The Financial Management Service (FMS) is the Secretary's 
representative in all matters concerning this part, unless otherwise 
specified.

[[Page 25]]

    State means a State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Mariana Islands, American Samoa, Guam, the Virgin Islands, and an 
agency, instrumentality, or fiscal agent of a State so defined, but does 
not mean a local government or an Indian tribal government.
    (1) A State agency or instrumentality is any organization of the 
primary government of the State financial reporting entity, as defined 
by Generally Accepted Accounting Principles, excluding institutions of 
higher education, hospitals, and nonprofit organizations.
    (2) A fiscal agent of a State is an entity that pays, collects, or 
holds Federal funds on behalf of the State in furtherance of a Federal 
program, excluding private nonprofit community organizations.
    Trust fund for which the Secretary is the trustee means a trust fund 
administered by the Secretary.

[57 FR 60676, Dec. 21, 1992, as amended at 59 FR 28262, June 1, 1994]



  Subpart A--Negotiation of Intergovernmental Agreements for Financing 
 Federal Assistance Programs--Interest Liabilities on Intergovernmental 
                             Funds Transfers



Sec. 205.4  Scope of subpart.

    (a) Initial programs. From the later of July 1, 1993, or the first 
day of a State's 1994 fiscal year, to the end of a State's 1994 fiscal 
year, this subpart applies, at a minimum, to the following programs, 
provided they meet the threshold for major Federal assistance programs 
in the State:

Alcohol and Drug Abuse and Mental Health Services Block Grant (CFDA 
    93.992);
Chapter 1 Programs--Local Educational Agencies (CFDA 84.010);
Child Support Enforcement (CFDA 93.023);
Family Support Payments to States (CFDA 93.020);
Foster Care--Title IV-E (CFDA 93.658);
Highway Planning and Construction (CFDA 20.205);
Job Opportunities and Basic Skills Training (CFDA 93.021)
Job Training Partnership Act (CFDA 17.250);
Low-Income Home Energy Assistance (CFDA 93.028);
Medical Assistance Program (CFDA 93.778);
National School Lunch Program (CFDA 10.555);
Nutrition Assistance for Puerto Rico (CFDA 10.566).
Pell Grant Program (CFDA 84.063);
Rehabilitation Services--Basic Support (CFDA 84.126);
Social Services Block Grant (CFDA 93.667);
Special Education--State Grants (CFDA 84.027);
Special Supplemental Food Program for Women, Infants, and Children (CFDA 
    10.557);
State Administration Matching Grants--Food Stamp Program (CFDA 10.561);
Supplemental Security Income (CFDA 93.807);
Unemployment Insurance (CFDA 17.225);

    (b) Threshold of materiality. From the later of July 1, 1994, or the 
beginning of a State's 1995 fiscal year, and thereafter, this subpart 
applies, at a minimum, to all programs that meet the threshold for major 
Federal assistance programs in a State.
    (c) Determining major Federal assistance programs. Unless otherwise 
specified in a Treasury-State Agreement, major Federal assistance 
programs will be determined from the most recent Single Audit data 
available from the U.S. Bureau of the Census and, if necessary, other 
data from the most recent fiscal year for which funding can be 
documented.
    (d) Covering additional programs. A State and the FMS may agree, in 
a Treasury-State Agreement, to cover additional programs under this 
subpart. However, the FMS has unilateral authority to require a State 
and a Federal agency to cover additional programs under this subpart if 
a State or a Federal agency fails to comply with subpart B of this part, 
as set forth in Secs. 205.22 and 205.23.

[[Page 26]]

    (e) Programs not covered by this subpart. Programs in the Catalog of 
Federal Domestic Assistance that are not covered by this subpart are 
subject to subpart B of this part.
    (f) Grace period for colleges and universities. Unless otherwise 
specified in a Treasury-State Agreement, this subpart does not apply to 
a State institution of higher education prior to a State's 1995 fiscal 
year, notwithstanding any other provision of this section.

[57 FR 60676, Dec. 21, 1992, as amended at 59 FR 51855, Oct. 13, 1994]



Sec. 205.5  [Reserved]



Sec. 205.6  Funding techniques.

    (a) Zero balance accounting. Zero balance accounting is a method of 
transferring Federal funds to a State based on the actual amount of 
funds that are paid out by the State each day after a disbursement. 
Neither the Federal Government nor a State will incur an interest 
liability when this funding technique is properly applied.
    (b) Estimated clearance. Estimated clearance is a method of 
transferring Federal funds to a State based on the estimated amount of 
funds that are paid out by the State each day after a disbursement. 
Neither the Federal Government nor a State will incur an interest 
liability when this funding technique is properly applied.

    Example: A State mails $1 million in checks to benefit recipients 
under a Federally funded program. The State has developed the following 
clearance pattern for the program, based on when checks historically 
have been presented for payment:

------------------------------------------------------------------------
                                                              Percentage
                            Day                               of dollars
                                                               paid out
------------------------------------------------------------------------
0 (checks mailed)..........................................            0
1..........................................................            0
2..........................................................            0
3..........................................................            0
4..........................................................           40
5..........................................................           30
6..........................................................           15
7..........................................................           10
8..........................................................            5
------------------------------------------------------------------------


On Day 3, the State requests 40 percent of the funds disbursed, or 
$400,000, and the Federal agency deposits funds in the State account on 
Day 4 to coincide with the expected presentment of 40 percent of the 
total disbursement. On Day 4, the State requests 30 percent of the funds 
to pay for checks presented on Day 5, and so on. Furthermore, if the 
State draws down $400,000 to pay for checks presented on Day 4, neither 
the State nor the Federal Government will incur an interest liability if 
the amount of checks actually presented is more or less than $400,000. 
Over the long term, the amounts drawn down and the amounts of checks 
presented for payment will converge to the historical clearance pattern.

    (c) Pre-issuance funding. Pre-issuance funding is a method of 
transferring Federal funds to a State prior to the day the State issues 
checks or initiates EFT payments. When this funding technique is 
applied, a State will incur an interest liability to the Federal 
Government from the day Federal funds are credited to a State account to 
the day the State pays out the funds for programs purposes.

    Example: Three business days before a State issues $1 million in 
checks, it requests $1 million from a Federal agency, which deposits the 
funds in a State account the next day. The State has developed the 
following clearance pattern, based on when the State's checks 
historically have been presented for payment:

------------------------------------------------------------------------
                                                              Percent of
                            Day                                dollars
                                                               paid out
------------------------------------------------------------------------
0 (funds deposited)........................................            0
1..........................................................            0
2 (checks issued)..........................................            0
3..........................................................            0
4..........................................................            0
5..........................................................           40
6..........................................................           30
7..........................................................           15
8..........................................................           10
9..........................................................            5
------------------------------------------------------------------------


The State will owe the Federal Government 5 days of interest on 40 
percent of the funds, or $400,000, since that amount will be paid out 
for checks presented 5 days after Federal funds are deposited in a State 
account. The State will owe 6 days of interest on 30 percent of the 
funds, or $300,000, 7 days of interest on 15 percent of the funds, and 
so on.

    (d) Average clearance. Average clearance is a method of transferring 
funds to a State based on the dollar-weighted average number of days 
required for funds to be paid out by the State after a disbursement. 
Neither the Federal Government nor a State will incur an interest 
liability when this funding technique is properly applied.


[[Page 27]]


    Example: A State mails $1 million in checks to contractors for a 
Federally funded program. The State has developed the following 
clearance pattern, based on when checks historically have been presented 
for payment, and has determined the average day of clearance, weighted 
by dollar amount, to be 5 days after checks are issued:

------------------------------------------------------------------------
                                                    Percent
                                                      of     Factor (day
                       Day                          dollars       x
                                                   paid out  percentage)
------------------------------------------------------------------------
0 (checks issued)................................         0
1................................................         0
2................................................         0
3................................................         0
4................................................        40        1.60
5................................................        30        1.50
6................................................        15        0.90
7................................................        10        0.70
8................................................         5        0.40
Average day of clearance.........................  ........        5.10
------------------------------------------------------------------------


The State requests $1 million on day 4 and receives that amount on day 
5, which is the dollar-weighted average number of days required for 
checks to be presented at the State's bank, and neither the State nor 
the Federal Government incurs an interest liability.

    (1) In determining a dollar-weighted average day of clearance, 
fractions of days are rounded to the nearest whole number.
    (2) The standards and maintenance requirements for clearance 
patterns, as set forth in Sec. 205.8, apply for average day of clearance 
calculations.
    (e) Reimbursable funding. Reimbursable funding is a method of 
transferring Federal funds to a State after the State has paid out its 
own funds for program purposes. After June 30, 1994, reimbursable 
funding is prohibited, except where mandated by Federal law.



Sec. 205.7  Requesting and transferring funds.

    (a) Electronic funds transfer. To the maximum extent practicable, a 
Federal agency shall use EFT for transfers of funds to a State.
    (b) Minimizing the time between transfer and payment. A State and a 
Federal agency shall minimize the time elapsing between the transfer of 
funds from the United States Treasury and the pay out of funds for 
program purposes by a State, whether the transfer occurs before or after 
the pay out.
    (c) Procedures for funding techniques. Unless otherwise specified in 
a Treasury-State Agreement, a State and a Federal agency shall adhere to 
the following procedures for each funding technique:
    (1) Zero balance accounting. A State shall request funds the same 
day it pays out funds for program purposes, and a Federal agency shall 
deposit funds in a State account the same day it receives a request for 
funds.
    (2) Estimated clearance. A State shall request funds 1 business day 
prior to the day it expects to pay out funds, in accordance with a 
clearance pattern, and a Federal agency shall deposit funds in a State 
account the next business day after receiving a request for funds.
    (3) Average clearance. A State shall request funds 1 business day 
prior to the dollar-weighted average number of days required for funds 
to be paid out after a disbursement, and a Federal agency shall deposit 
funds in a State account the next business day after receiving a request 
for funds.
    (4) Pre-issuance funding. A State shall request funds not more than 
3 business days prior to the day on which it makes a disbursement, and a 
Federal agency shall deposit funds in a State account the next business 
day after receiving a request for funds.
    (5) Reimbursable funding. A State shall request funds only after it 
has paid out its own funds for programs purposes, and a Federal agency 
shall deposit funds in a State account the next business day after 
receiving a request for funds.
    (d) Limiting the amount transferred. Consistent with a funding 
technique and with funds transfer procedures in a Treasury-State 
Agreement, a State and a Federal agency shall limit the amount of funds 
transferred to a State to the minimum required to meet a State's actual, 
immediate cash needs.
    (e) Frequency of requests for funds. A Federal agency shall allow a 
State to submit requests for funds, or bills, as often as daily. 
However, this requirement shall not be construed to change Federal 
agency guidelines defining a properly completed request for funds.
    (f) Prohibition of reimbursable funding requirements. A Federal 
agency may not require a State to use reimbursable

[[Page 28]]

funding, unless mandated by Federal law.



Sec. 205.8  Clearance patterns.

    (a) Use and basis of development. When required by a funding 
technique, a clearance pattern will be used to schedule the transfer of 
funds to a State and to support the calculation of interest. A State 
may:
    (1) Develop a separate clearance pattern for an individual program; 
or
    (2) Develop a composite clearance pattern for a logical group of 
programs that have the same disbursement method and that reasonably can 
be expected to have comparable clearance activity. A composite clearance 
pattern for a group of programs must be applied separately to each 
program in the group when scheduling funds transfers or calculating 
interest; or
    (3) Develop a clearance pattern on another basis that is agreed upon 
by the FMS.
    (b) Standards for clearance patterns. A State shall ensure that a 
clearance pattern accurately represents the flow of Federal funds and 
that a clearance pattern reflects seasonal or other periodic variations 
in clearance activity. A State shall ensure that a clearance pattern is 
auditable.
    (c) Maintaining clearance patterns. (1) If a State has actual or 
constructive knowledge, at any time, that a clearance pattern does not 
correspond to a program's clearance activity, or if a program undergoes 
operational changes that may affect clearance activity, the State shall:
    (i) Immediately notify the FMS in writing of the program requiring a 
new clearance pattern, and
    (ii) Develop a new clearance pattern and certify that it corresponds 
to a program's clearance activity.
    (2) If a Federal agency has actual or constructive knowledge, at any 
time, that a State's clearance pattern does not correspond to a 
program's clearance activity, the agency shall notify the FMS in writing 
of the State and the program. The FMS shall immediately notify the State 
of the programs, and the State shall either:
    (i) Develop a new clearance pattern and certify that it corresponds 
to a program's clearance activity, or
    (ii) Re-certify the accuracy of the existing clearance pattern.
    (d) Certification for accuracy. An authorized State official shall 
certify that a clearance pattern corresponds to a program's clearance 
activity. If a State develops a clearance pattern for a program or a 
group of programs, as set forth in paragraphs (a)(1) and (a)(2) of this 
section, an authorized State official shall re-certify the accuracy of 
the clearance pattern at least every 5 years. If a State develops a 
clearance pattern on another basis, as set forth in paragraph (a)(3) of 
this section, the FMS may prescribe requirements for re-certifying the 
accuracy of the clearance pattern.



Sec. 205.9  Treasury-State agreements.

    (a) Purpose. A State may enter into a Treasury-State Agreement with 
the FMS to set forth terms and conditions for implementing this subpart.
    (b) Components. A Treasury-State Agreement pursuant to this subpart 
must include, but will not be limited to, the following:
    (1) Programs. Consistent with Sec. 205.4, a Treasury-State Agreement 
must indicate the programs subject to this subpart.
    (2) Funding techniques. A Treasury-State Agreement must indicate the 
funding techniques to be applied to the programs subject to this 
subpart, in accordance with the following:
    (i) Zero Balance Accounting, Estimated Clearance, and Pre-Issuance 
Funding are techniques available for selection by a State, subject to 
the approval of the FMS.
    (ii) A State may request approval to use the Average Clearance 
funding technique, but must provide the FMS with adequate justification 
for its use in lieu of Estimated Clearance.
    (iii) Reimbursable funding is available for selection by a State, 
subject to the approval of the FMS, only for a program for which the 
State used reimbursable funding prior to the later of July 1, 1993, or 
the first day of a State's 1994 fiscal year. However, reimbursable 
funding is not available for selection by a State for the programs 
listed in Sec. 205.4(a).

[[Page 29]]

    (iv) A State and the FMS may negotiate the use of other mutually 
agreed upon funds transfer procedures.
    (v) A State may apply more than one funding technique or funds 
transfer procedure to a program with multiple cash flows.
    (3) Interest calculation method. Consistent with Sec. 205.13, a 
Treasury-State Agreement must indicate the method a State will use to 
calculate and document interest liabilities pursuant to this subpart.
    (4) Clearance pattern method. Consistent with Sec. 205.8, a 
Treasury-State Agreement must indicate the method and standards a State 
will use to develop and maintain clearance patterns pursuant to this 
subpart.
    (5) Direct costs. Consistent with Sec. 205.14, a Treasury-State 
Agreement must specify the types of direct costs a State expects to 
incur.
    (6) Reverse flow programs. Consistent with Secs. 205.8 and 205.13, 
with respect to programs for which the Federal Government makes payments 
on behalf of a State, a Treasury-State Agreement must indicate the 
methods a Federal agency will use to calculate and document interest 
liabilities and to develop and maintain clearance patterns pursuant to 
this subpart.
    (c) Consultation with Federal agencies. The FMS will consult with 
Federal program agencies as necessary and appropriate when negotiating a 
Treasury-State Agreement.
    (d) Amendment. A Treasury-State Agreement may be amended by the 
mutual written consent of the State and the FMS.
    (e) Five-year expiration. A Treasury-State Agreement expires if it 
is not amended for 5 years.
    (f) Default provisions for a State without a Treasury-State 
Agreement. With respect to a State that does not have a Treasury-State 
Agreement in effect after the later of June 30, 1993, or the last day of 
the State's 1993 fiscal year, the following apply:
    (1) The FMS shall prescribe funds transfer procedures to be used by 
the State and the Federal agency in implementing this subpart, 
consistent with Federal and State law.
    (2) The FMS shall prescribe the method for calculating interest 
liabilities pursuant to this subpart.



Sec. 205.10  Funding of indirect costs and administrative cost grants.

    (a) A State and the FMS may agree, in a Treasury-State Agreement, to 
the following funding conventions for indirect costs and administrative 
cost grants:
    (1) The State will draw down a prorated amount of an administrative 
cost grant on the date of the State payday. For example, the State would 
draw one-third of a quarterly administrative cost grant if payroll is 
monthly, or one-sixth of a quarterly administrative cost grant if 
payroll is semi-monthly.
    (2) If an indirect cost rate is applied to a program, the State will 
include a proportionate share of the indirect cost allowance in each 
drawdown by applying the indirect cost rate to the appropriate direct 
costs of each drawdown.
    (3) If costs must be allocated to various programs pursuant to a 
labor distribution or other system under an approved cost allocation 
plan, the State will draw down funds to meet cash outlay requirements 
based on the most recent, certified cost allocations, with subsequent 
adjustments pursuant to the actual allocation of costs.
    (b) A State and the FMS may agree, in a Treasury-State Agreement, 
that no interest liabilities will be incurred or calculated for indirect 
costs and administrative cost grants, notwithstanding any other 
provision of this subpart.



Sec. 205.11  Federal interest liabilities.

    (a) General. The Federal Government will incur an interest liability 
to a State if the State pays out its own funds for program purposes with 
valid obligational authority under Federal law, Federal regulation, or 
Federal-State agreement. A Federal interest liability will accrue from 
the day a State pays out its own funds for program purposes to the day 
Federal funds are credited to a State account.
    (b) Late appropriations. If a State pays out its own funds for 
program purposes due to delay in passage of a Federal appropriations 
act, the Federal Government will incur an interest liability if

[[Page 30]]

an appropriations act, as enacted, covers the period of the State's 
expenditure and permits payment for expenses already incurred by the 
State.
    (c) Lack of obligational authority other than occurring through late 
appropriations. If a State pays out its own funds for program purposes 
without obligational authority, the Federal Government will incur an 
interest liability if the lack of obligational authority is not the 
result of limitation, reduction, or termination of the program and where 
obligational authority is subsequently established to permit payment for 
the State's expenditure.
    (d) Federal Highway Trust Fund. The following applies to programs 
and projects funded out of the Federal Highway Trust Fund, 
notwithstanding any other provision of this section:
    (1) If a State does not request funds at least weekly for current 
project costs, a Federal interest liability will not accrue prior to the 
day a State submits a request for funds.
    (2) If a State pays out its own funds in the absence of a project 
agreement or in excess of the Federal obligation in a project agreement, 
the Federal Government will not incur an interest liability.
    (e) Discretionary grant project approval. If a State pays out its 
own funds prior to the earlier of:
    (1) The day a Federal agency officially notifies the State in 
writing that a discretionary grant project has been approved, or
    (2) The date that a Federal agency is otherwise obligated in law to 
pay the discretionary grant project to the State, the Federal Government 
will not incur an interest liability, notwithstanding any other 
provision of this section.
    (f) Authorizations and appropriations for future years. If a State 
pays out its own funds prior to the availability of Federal funds that 
have been authorized or appropriated for a future Federal fiscal year, 
the Federal Government will not incur an interest liability, 
notwithstanding any other provision of this section.
    (g) Reverse flow programs. With respect to programs for which the 
Federal Government makes payments on behalf of a State, such as 
Supplemental Security Income, the Federal Government will incur an 
interest liability if State funds are in a Federal Government account 
prior to the day a Federal agency pays out funds for program purposes. A 
Federal interest liability will accrue from the day State funds are 
credited to the Federal Government's account to the day the Federal 
agency pays out the State funds for program purposes.



Sec. 205.12  State interest liabilities.

    (a) General. A State will incur an interest liability to the Federal 
Government if Federal funds are in a State account prior to the day the 
State pays out funds for program purposes. A State interest liability 
will accrue from the day Federal funds are credited to a State account 
to the day the State pays out the Federal funds for program purposes.
    (b) Refunds. A State will incur an interest liability to the Federal 
Government on a refund transaction of Federal funds. A State interest 
liability will accrue from the day the refund is credited to a State 
account to the day the refund is either paid out for program purposes or 
credited to a Federal Government account. However, a State may adopt a 
transaction threshold not exceeding $10,000, below which the State will 
not incur an interest liability on a refund transaction.
    (c) Reverse flow programs. With respect to programs for which the 
Federal Government makes payments on behalf of a State, such as 
Supplemental Security Income, a State will incur an interest liability 
to the Federal Government if a Federal agency pays out Federal funds for 
program purposes on behalf of the State. A State interest liability will 
accrue from the day the Federal agency pays out Federal funds for 
program purposes to the day State funds are credited to the Federal 
Government's account.
    (d) Exception. Notwithstanding any other provision in this section, 
a State will not incur an interest liability to the Federal Government 
if Federal law requires that the interest a State earns on Federal funds 
must be retained by the State or used for program purposes. This 
exception shall not be construed

[[Page 31]]

to exempt a program from any other provision of this subpart.



Sec. 205.13  Interest calculation.

    (a) State responsibilities. A State shall calculate Federal interest 
liabilities and State interest liabilities for each program subject to 
this subpart, except as provided for in paragraph (b) of this section.
    (b) Reverse flow programs. A Federal agency shall calculate Federal 
interest liabilities and State interest liabilities for a program 
subject to this subpart for which the Federal agency makes payments on 
behalf of a State, such as Supplemental Security Income.
    (c) Start date. Interest liabilities begin accruing the later of 
July 1, 1993, or the first day of a State's 1994 fiscal year.
    (d) Interest rate. The interest rate for all interest liabilities 
pursuant to this subpart is the annualized rate equal to the average 
equivalent yields of 13-week Treasury Bills auctioned during a State's 
fiscal year, except as provided for in paragraph (i) of this section. 
The FMS will provide this rate to each State.
    (e) Interest calculation method and standards. A State shall 
calculate and report interest liabilities on the basis of its fiscal 
year. A State shall ensure that its interest calculations are auditable. 
As set forth in Sec. 205.9, a Treasury-State Agreement must include the 
method a State will use to calculate and document interest liabilities 
pursuant to this subpart.
    (f) Statistical sampling. If a State uses statistical sampling to 
calculate interest, the State must randomly sample transactions for each 
program subject to this subpart to ensure, at a minimum, a 95 percent 
confidence interval subject to a .3 dollar-weighted day bound of error 
estimate.
    (g) Transactions prior to a State's 1994 fiscal year. A State shall 
not include in an interest calculation a transaction in which either the 
transfer of funds to the State or the pay out of funds for program 
purposes by the State occurs prior to the later of July 1, 1993, or the 
first day of the State's 1994 fiscal year.
    (h) Funds withdrawn from a State account in the Unemployment Trust 
Fund (UTF). A State shall account for the actual interest earnings and 
the related banking costs attributable to funds withdrawn from the 
State's account in the UTF.
    (1) If funds withdrawn from the several accounts in the UTF are 
commingled in the State's Unemployment Insurance benefit payment 
account, the funds withdrawn from the State's account must be allocated 
a pro rata share of the actual interest earnings and related banking 
costs of the benefit payment account. Funds withdrawn from the State's 
account in the UTF that are included in investment pools must be 
allocated a pro rata share of interest earnings of the investment pool.
    (2) Notwithstanding any other provision of this subpart, a State's 
interest liability on funds withdrawn from its account in the UTF 
consists of the actual interest earnings less the related banking costs 
of such funds, and shall be deposited in the State's account in the UTF.
    (3) This paragraph (h) does not apply to funds withdrawn from the 
Federal Employees Compensation Account and the Extended Unemployment 
Compensation Account in the UTF.



Sec. 205.14  Direct costs of implementation.

    (a) Definition. Direct costs of implementing this subpart are those 
costs necessary for the development and maintenance of clearance 
patterns and those costs necessary to perform the actual calculation of 
interest liabilities. Direct costs do not include expenses incurred for 
upgrading or modernizing of accounting systems.
    (b) Reimbursement of direct costs. A State will be compensated 
annually for the direct costs of implementing this subpart, subject to 
the following conditions and limitations.
    (1) Treasury-State Agreement. A State must have a Treasury-State 
Agreement with the FMS, as set forth in Sec. 205.9.
    (2) Direct cost claim. A State must submit a claim for direct costs 
with its Annual Report, as set forth in Sec. 205.15(c).
    (3) Documentation. A State must maintain documentation to 
substantiate its claim for direct costs.

[[Page 32]]

    (4) Eligibility of costs. Direct costs in excess of $50,000 in any 
year are not eligible for reimbursement, unless a State can justify to 
the FMS that it would be unable to develop clearance patterns or perform 
the actual calculation of interest without incurring such costs.
    (5) Costs incurred in prior years. Direct costs incurred prior to a 
State's most recently completed fiscal year are not eligible for 
reimbursement, excepting costs incurred prior to the first day of a 
State's 1994 fiscal year and claimed for reimbursement with the State's 
first Annual Report submitted pursuant to this subpart.
    (6) Costs incurred prior to July 22, 1991. Direct costs incurred 
prior to July 22, 1991, are not eligible for reimbursement, unless a 
State makes separate application for such costs, with adequate 
justification and documentation.
    (7) Review by the FMS. The FMS will review all direct cost claims 
for reasonableness. Unreasonable cost claims, as determined by the FMS, 
will not be reimbursed, notwithstanding any other provision of this 
section.
    (8) Method of reimbursement. The FMS will effect direct cost 
reimbursement by reducing the State interest liability and adjusting the 
Federal interest liability for each State, to the extent allowed by the 
following limitations:
    (i) Interest liabilities for programs funded out of trust funds for 
which the Secretary is trustee may not be reduced or adjusted; and
    (ii) The aggregate Federal interest liability for all States may not 
increase.
    (c) Application of cost principles. A State shall not include direct 
costs of implementing this subpart, as defined in paragraph (a) of this 
section, in the development of its Statewide cost allocation plan, as 
provided for in OMB Circular A-87. All other costs incurred by a State 
to implement this subpart are subject to the procedures and principles 
of OMB Circular A-87.
    (d) Sunset review. By July 1, 1996, the FMS will review the policies 
in this section to determine their effectiveness.



Sec. 205.15  Annual reports.

    (a) A State shall submit an Annual Report to the FMS by December 31 
accounting for the interest liabilities of the State's most recently 
completed fiscal year. The format of the Annual Report will be 
prescribed by the FMS and will include, at a minimum, the following:
    (1) The Federal interest liability for each program subject to this 
subpart;
    (2) The State interest liability for each program subject to this 
subpart, with the State interest liability on refunds for each program 
reported separately;
    (3) The total Federal interest liability for all programs subject to 
this subpart;
    (4) The total State interest liability for all programs subject to 
this subpart;
    (5) The net total interest owed by the State or the Federal 
Government;
    (6) For information purposes, not for the calculation of interest, 
the actual interest earnings on and the related banking costs for funds 
drawn from the State's account in the UTF.
    (b) A State shall submit its Annual Report both in hard copy and 
either on computer diskette or by other electronic means prescribed by 
the FMS.
    (c) A State may submit as part of its Annual Report a claim for 
reimbursement of the direct costs of implementing this subpart, in 
accordance with Sec. 205.14. An authorized State official shall certify 
the accuracy of a State's direct cost claim.
    (d) An authorized State official shall certify the accuracy of a 
State's Annual Report.
    (e) Reverse flow programs. With respect to a program for which the 
Federal Government makes payments on behalf of a State, a Federal agency 
shall provide an interest report to a State by December 1 for the 
State's most recently completed fiscal year. The interest report will 
include the State interest liability and the Federal interest liability 
for the program, including the Federal interest liability on refund 
transactions of $10,000 or more. The Federal agency shall certify the 
accuracy of the interest report. A State shall incorporate the interest 
report in its Annual Report.
    (f) The FMS will distribute Annual Reports to Federal agencies.

[[Page 33]]



Sec. 205.16  Interest payment.

    (a) Adjusted interest liabilities. The FMS will adjust a State's 
total interest liability and the Federal Government's total interest 
liability to a State to effect direct cost reimbursement, as set forth 
in Sec. 205.14(b)(8).
    (b) Net interest payment. The adjusted total State interest 
liability and the adjusted total Federal interest liability for each 
State will be offset to determine the net interest payable to or from a 
State. The payment of net interest to or from a State for its most 
recently completed fiscal year will occur no later than March 1.
    (c) Disputed amounts. If the amount of interest payable is disputed 
according to the provisions of Sec. 205.18, payment must occur for any 
undisputed portions. The interest in dispute must be paid within 14 days 
of receipt of the decision by the Assistant Commissioner, Federal 
Finance, as set forth in Sec. 205.18.



Sec. 205.17  Compliance and oversight.

    (a) State coordinator. A State shall designate an official 
representative with the statutory or administrative authority to 
coordinate all interaction with the Federal Government concerning this 
subpart, and shall notify the FMS of the representative's name and title 
in writing.
    (b) Federal agency coordinator. A Federal Agency shall designate an 
official representative to coordinate all interaction with the FMS and 
the States concerning this subpart, and shall notify the FMS of the 
representative's name and title in writing.
    (c) Recordkeeping. A State shall maintain records supporting 
interest calculations, clearance patterns, direct costs, and other 
functions directly pertinent to the implementation and administration of 
this subpart.
    (d) Record retention. A State shall retain the records related to 
implementation of this subpart of each fiscal year for 3 years from the 
date the State submits its Annual Report, or until any dispute or action 
involving the records and documents is completed, whichever is later.
    (e) Availability of records. The FMS, the Comptroller General, and a 
Federal agency shall have the right of access to all records for the 
purpose of verifying interest calculations, clearance patterns, direct 
cost claims, and the State's accounting for Federal funds.
    (f) Records for reverse flow programs. With respect to programs for 
which the Federal Government makes payment on behalf of a State, a 
Federal agency shall maintain records supporting interest calculations 
and clearance patterns. A Federal agency shall retain such records for 3 
years from the date the Federal agency submits its interest calculations 
to a State, as set forth in Sec. 205.15(e), or until any dispute or 
action involving the records is completed, whichever is later. The FMS, 
the Comptroller General, and a State shall have the right of access to 
all records for the purpose of verifying interest calculations, 
clearance patterns, and the Federal agency's accounting for State funds.
    (g) State audits. A State's implementation of this subpart is 
subject to audit in accordance with chapter 75 of title 31, United 
States Code, ``Requirements for Single Audits.''
    (h) Federal agency compliance reviews. A Federal agency's 
implementation of this subpart is subject to review pursuant to 
procedural instructions issued by the FMS.
    (i) Reviewing Annual Reports. The FMS will distribute Annual Reports 
to Federal agencies, as set forth in Sec. 205.15(f). Upon request by the 
FMS, a Federal agency shall review a State's Annual Report for accuracy 
and reasonableness and shall report its findings to the FMS.
    (j) Federal agency noncompliance. If a Federal agency egregiously or 
repeatedly causes Federal interest liabilities or fails to comply with 
this subpart, the FMS may collect a charge from the Federal agency in an 
amount the FMS determines to be the cost to the general fund of the 
Treasury caused by such noncompliance, in accordance with the following:
    (1) The FMS will issue a Notice of Assessment to the Federal agency, 
indicating the nature of the noncompliance, the amount of the charge, 
the manner in which it was calculated, and the right to file an appeal.
    (2) A charge for noncompliance, to the maximum extent practicable, 
will be paid out of appropriations available

[[Page 34]]

for the Federal agency's operations and will not be paid from amounts 
available for funding the programs of the Federal agency.
    (3) If a Federal agency does not pay a charge for noncompliance 
within 45 days after receiving a Notice of Assessment, the FMS will 
debit the appropriate Federal agency account.
    (4) A Federal interest liability resulting from circumstances beyond 
the control of a Federal agency does not constitute noncompliance.
    (k) State noncompliance. If a State materially fails to comply with 
this subpart, the FMS may take one or more of the following actions, as 
appropriate in the circumstances:
    (1) Request a Federal agency or the General Accounting Office to 
conduct an audit of the State to determine interest owed to the Federal 
Government, and implement procedures to recover such interest; or
    (2) Deny the reimbursement of all or a part of the State's direct 
cost claim; or
    (3) Take other remedies legally available.
    (l) Failure to request funds. If a State repeatedly or deliberately 
fails to request funds in accordance with the procedures established for 
its funding techniques, as set forth in Sec. 205.7 or in a Treasury-
State Agreement, the FMS may deny the State payment or credit for any 
resultant Federal interest liability, notwithstanding any other 
provision of this part.



Sec. 205.18  Appeals and dispute resolution.

    (a) Appeal by a Federal agency. A Federal agency may appeal any 
charge assessed by the FMS for noncompliance by submitting an appeal in 
writing to the Assistant Commissioner, Federal Finance (hereinafter 
Assistant Commissioner), of the FMS, within 45 days of the date of the 
Notice of Assessment. The appeal shall include a concise factual 
statement of the conditions leading to the Notice of Assessment, the 
basis of the appeal, and the action requested by the agency. In the 
event of an appeal, the charge imposed under the Notice of Assessment 
will be deferred pending the results of the appeal.
    (1) Appeal review process. The Assistant Commissioner will review 
the Notice of Assessment, any documentation supporting the Notice, and 
the written appeal from the agency. If based on this review, the 
Assistant Commissioner finds that additional information is required, 
the Assistant Commissioner may request to meet with the agency, as well 
as other parties selected by the Assistant Commissioner, as part of the 
review process.
    (2) Decision. The Assistant Commissioner will issue a written 
decision within 30 days of receipt of the appeal. The Assistant 
Commissioner may unilaterally extend this period for an additional 30 
days if required. The decision of the Assistant Commissioner whether to 
uphold the Notice of Assessment, to overturn the Notice, or to mandate 
some other action will be stated in the written decision. Other actions 
mandated may include a reduced charge, a deferral of the charge, an 
alternate solution to cash management improvement, or any combination 
thereof. The basis of the decision, the amount of the charge and the 
effective date of the charge will be stated in the written decision. The 
effective date of the charge may be retroactive to the date indicated in 
the Notice of Assessment.
    (b) Resolution of disputes. If a dispute arises from the 
implementation or administration of this subpart, the following 
resolution mechanism is available:
    (1) The aggrieved party may submit a written appeal to the Assistant 
Commissioner. The aggrieved party shall concurrently serve a copy of the 
written appeal to the other concerned parties.
    (2) Within 30 days of the submission of the written appeal, the 
aggrieved party shall submit to the Assistant Commissioner a written 
statement not exceeding 15 pages, with supporting documentation in 
appendices, that articulates the dispute, the aggrieved party's 
position, and the relief sought. The aggrieved party shall concurrently 
serve its statement upon the other concerned parties.
    (3) Within 30 days of receipt of the aggrieved party's statement, 
the responding party may submit a response statement not exceeding 15 
pages, with

[[Page 35]]

supporting documentation in appendices, to the Assistant Commissioner. 
The responding party shall concurrently serve its response statement to 
the other concerned parties.
    (4) The Assistant Commissioner will issue a written decision within 
30 days after the period for the submission of the response statement. 
The Assistant Commissioner may unilaterally extend the deadline for 
issuing a decision by 30 days if required. The Assistant Commissioner's 
decision shall be the final agency action on the part of the FMS for the 
purposes of judicial review procedures under the Administrative 
Procedures Act, 5 U.S.C. 701-706, unless either party invokes the 
provisions of the Administrative Dispute Resolution Act of 1990, 5 
U.S.C. 581-593 (ADRA), in accordance with the following.
    (i) Either party may seek to invoke the assistance of a neutral 
party appointed under the provisions of the ADRA within 30 days of 
receipt of the Assistant Commissioner written decision. The party 
invoking the ADRA shall notify both the Assistant Commissioner and the 
responding party in writing. With the written mutual consent of the 
parties and the Assistant Commissioner, a neutral party appointed under 
the provisions of the ADRA may assist in resolving the dispute through 
the use of alternate means of dispute resolution as defined in the ADRA.
    (ii) If the party invoking the ADRA is unable to reach a 
satisfactory resolution of the problem using the ADRA, the Assistant 
Commissioner's decision shall be the final agency action on the part of 
the FMS for purposes of the judicial review procedures under the 
Administrative Procedure Act, 5 U.S.C. 701-706.

[57 FR 60676, Dec. 21, 1992; 58 FR 4460, Jan. 14, 1993]

    Appendix A to Subpart A to Part 205--Definition of Major Federal 
                           Assistance Program

    Beginning with State fiscal year 2000, ``Major Federal Assistance 
Program'' for State governments is defined by the following criteria:

----------------------------------------------------------------------------------------------------------------
    Total expenditure of Federal financial
         assistance for all programs            Major Federal assistance program means any program that exceeds
----------------------------------------------------------------------------------------------------------------
Between $300,000 and $100 million inclusive..  $300,000 or 3 percent of such total expenditures.
Over $100 million but less than or equal to    $3 million or 0.30 percent of such total expenditures.
 $1 billion.
Over $1 billion but less than or equal to $2   $4 million or 0.30 percent of such total expenditures.
 billion.
Over $2 billion but less than or equal to $3   $7 million or 0.30 percent of such total expenditures.
 billion.
Over $3 billion but less than or equal to $4   $10 million or 0.30 percent of such total expenditures.
 billion.
Over $4 billion but less than or equal to $5   $13 million or 0.30 percent of such total expenditures.
 billion.
Over $5 billion but less than or equal to $6   $16 million or 0.30 percent of such total expenditures.
 billion.
Over $6 billion but less than or equal to $7   $19 million or 0.30 percent of such total expenditures.
 billion.
Over $7 billion but less than or equal to $10  $20 million or 0.30 percent of such total expenditures.
 billion.
Over $10 billion.............................  $30 million or 0.15 percent of such total expenditures.
----------------------------------------------------------------------------------------------------------------

[64 FR 24243, May 5, 1999]



 Subpart B--Potential Liabilities on Intergovernmental Funds Transfers 
  Included in the Catalog of Federal Domestic Assistance but Otherwise 
                    Generally Excluded From Subpart A



Sec. 205.19  Scope of subpart.

    This subpart applies to programs in the Catalog of Federal Domestic 
Assistance that are not subject to subpart A.



Sec. 205.20  Cash advances.

    (a) Cash advances to a State shall be limited to the minimum amounts 
needed and shall be timed to be in accord only with the actual, 
immediate cash requirements of the State in carrying out a program or 
project. The timing and amount of cash advances shall be as close as is 
administratively feasible to the actual cash outlay by the State for 
direct program costs and the proportionate share of any allowable 
indirect costs.

[[Page 36]]

    (b) Neither a State nor the Federal Government will incur an 
interest liability on the transfer of funds for a program subject to 
this Subpart.



Sec. 205.21  Federal agency oversight responsibilities.

    (a) A Federal agency shall review the practices of States as 
necessary to ensure compliance with this Subpart. A Federal agency shall 
notify the FMS if a State demonstrates an unwillingness or inability to 
comply with this Subpart.
    (b) A Federal agency shall formulate procedural instructions 
specifying the methods for carrying out the responsibilities of this 
section.



Sec. 205.22  State noncompliance.

    If a State demonstrates an unwillingness or inability to comply with 
this Subpart, the FMS may require the State and a Federal agency to 
cover additional programs under subpart A of this part, notwithstanding 
any other provision of this part.



Sec. 205.23  Failure to make funds available.

    Consistent with program purposes and regulations, if a Federal 
agency demonstrates an unwillingness or inability to make Federal funds 
available to a State as needed to carry out a program, the FMS may 
require the State and the Federal agency to cover additional programs 
under subpart A of this part, notwithstanding any other provision of 
this part.

Subpart C [Reserved]



PART 206--MANAGEMENT OF FEDERAL AGENCY RECEIPTS, DISBURSEMENTS, AND OPERATION OF THE CASH MANAGEMENT IMPROVEMENTS FUND--Table of Contents




Sec.
206.1  Scope and application.
206.2  Definitions.
206.3  Billing policy and procedures.
206.4  Collection and payment mechanisms.
206.5  Collection and deposit procedure exceptions.
206.6  Cash management planning and review.
206.7  Compliance.
206.8  Appeals.
206.9  Charges.
206.10  Operation of and payments from the Cash Management Improvements 
          Fund.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3301, 3302, 3321, 3327, 
3328, 3332, 3335, 3720, and 6503.

    Source: 59 FR 4538, Jan. 31, 1994, unless otherwise noted.



Sec. 206.1  Scope and application.

    (a) This subpart applies to all Government departments and agencies 
in the executive branch (except the Tennessee Valley Authority) and all 
monies collected and disbursed by these departments and agencies. This 
subpart does not apply to interagency transfers of funds, except that 
agencies are to use the Treasury's On-Line Payment and Collection (OPAC) 
system for interagency payments between executive agencies, when cost-
effective.
    (b) Policies and guidelines are prescribed for promoting efficient, 
effective cash management through improved billing, collection, deposit, 
and payment of funds. These objectives seek to improve funds 
availability and the efficiency and effectiveness with which funds are 
transferred.
    (c) Authority to implement this regulation has been delegated within 
the Department of the Treasury (hereinafter, ``Treasury'') to the 
Commissioner (hereinafter, ``the Commissioner'') of the Financial 
Management Service (hereinafter, ``the Service).'' The Service maintains 
the final authority as granted under the Deficit Reduction Act of 1984 
to specify use of a particular method or mechanism of collection and 
deposit and to recover costs that result from noncompliance. Authority 
is also granted to the Service, under the Cash Management Improvement 
Act of 1990, as amended by the Cash Management Improvement Act 
Amendments of 1992, to provide for the timely disbursement of funds. An 
agency will require the collection or disbursement of funds by the 
agency via EFT as a provision of new contractual agreements or renewal 
of existing contracts that impact agency collection or payment 
mechanisms.



Sec. 206.2  Definitions.

    For the purpose of this part, the following definitions apply:

[[Page 37]]

    Agency means any department, instrumentality, office, commission, 
board, service, Government corporation, or other establishment in the 
executive branch, except the Tennessee Valley Authority.
    Billing means any of a variety of means by which the Government 
places a demand for payment against an entity that is indebted to the 
Government. The term encompasses invoices, notices, initial demand 
letters, and other forms of notification.
    Cash management means practices and techniques designed to 
accelerate and control collections, ensure prompt deposit of receipts, 
improve control over disbursement methods, and eliminate idle cash 
balances. ``Cash Management Review Process'' means periodic examinations 
of collection and disbursement cash flows to ensure that the most 
effective mechanisms are used to process the funds.
    Collection means the transfer of monies from a source outside the 
Federal Government to an agency or to a financial institution acting as 
an agent of the Government.
    Collection mechanism means any one of a number of tools or systems 
by which monies are transferred to the Government from a source outside 
the Government.
    Cutoff time means a time predesignated by a financial institution 
beyond which transactions presented or actions requested will be 
considered the next banking day's business.
    Day means a calendar day unless otherwise specified.
    Deposit means as a noun, money that is being or has been presented 
for credit to the Treasury. Deposits can be made by an agency or 
directly by the remitter. All such transfers are effected through a 
Federal Reserve Bank or other financial institution. As a verb, deposit 
means the act of presenting monies for credit to the Treasury by an 
official of an agency.
    Depositary means a bank or other financial institution that has been 
authorized by the Treasury to receive monies for credit to the Treasury.
    Disburse means the initiation of an Electronic Funds Transfer (EFT) 
transaction or other methods of drawing funds from accounts maintained 
by the Government.
    Electronic funds transfer (EFT) means any transfer of funds, other 
than a transaction originated by cash, check or similar paper 
instrument, that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape, for the purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit an account. The 
term includes, but is not limited to, Fed Wire transfers, Automated 
Clearing House (ACH) transfers, transfers made at automatic teller 
machines (ATM) and Point-of-Sale (POS) terminals (to include use of the 
Government small purchase card), and other means of credit card 
transactions.
    Fund means the Cash Management Improvements Fund.
    Monies (or ``receipts'') means EFT transactions, currency, 
negotiable instruments, and/or demand deposits owed to or collected by 
an agency.
    Next-day deposit means a deposit made before the cutoff time on the 
day following the day on which the funds were received by an agency. For 
example, if an agency receives funds for deposit at 3 p.m. on Monday and 
transmits the deposits to the depositary by 2 p.m. on Tuesday (the 
depositary's next cutoff time), then next-day deposit requirements are 
met.
    Payment means a sum of money transferred to a recipient in 
satisfaction of an obligation. A payment includes any Federal Government 
benefit or nonbenefit payment.
    (1) A benefit payment is a disbursement for a Federal Government 
entitlement program or annuity. Benefit payments may be one-time or 
recurring payments including, but not limited to, payments for Social 
Security, Supplemental Security Income, Black Lung, Civil Service 
Retirement, Railroad Retirement Board Retirement/Annuity, Department of 
Veterans Affairs Compensation/Pension, Central Intelligence Agency 
Annuity, Military Retirement Annuity, Coast Guard Retirement, and 
Worker's Compensation.
    (2) A nonbenefit payment is a Federal Government disbursement other 
than a benefit payment. Nonbenefit payments

[[Page 38]]

may be one-time or recurring payments including, but not limited to, 
payments for vendors, Internal Revenue Service tax refunds, Federal 
salaries and allotments therefrom, grants, travel disbursements and 
reimbursements, loans, principal and/or interest related to U.S. savings 
bonds, notes, and other savings-type securities, and payments of service 
fees to organizations qualified to issue and/or redeem savings bonds.
    Point-of-sale (POS) terminal means an automated credit card or debit 
card transaction device.
    Presumed EFT means that agencies will presume that new payment 
recipients will elect EFT as the means of payment delivery. Enrollment 
forms for use in establishing routine payments will be designed with 
this approach in mind, to obtain the required written consent of the 
recipient.
    Recipient means a person, corporation, or other public or private 
entity receiving benefit or nonbenefit payments from the Government.
    Same-day deposit means a deposit made before the cutoff time on the 
day on which the funds were received by an agency. For example, if an 
agency receives funds for deposit at 10 a.m. on Monday and transmits the 
deposits by 2 p.m. on Monday (the depositary's cutoff time), then a 
same-day deposit has been achieved.
    Service means the Financial Management Service, Department of the 
Treasury.
    Treasury Financial Manual (TFM) means the manual issued by the 
Service containing procedures to be observed by all Government 
departments and agencies in relation to central accounting, financial 
reporting, and other Governmentwide fiscal responsibilities of the 
Department of the Treasury. Volume I, Chapter 6-8000 (I TFM 6-8000) 
contains agency cash management procedures to be followed pertaining to 
these regulations.

Copies of the TFM are available free to Government agencies. Others who 
are interested in ordering a copy may call (202) 208-1819 or write the 
Directives Management Branch, Financial Management Service, Department 
of the Treasury, Liberty Center (UCP-741), Washington, DC 20227 for 
further information.



Sec. 206.3  Billing policy and procedures.

    The billing process is considered an integral part of an effective 
cash management collection program. In those situations where bills are 
required and the failure to bill would affect the cash flow, bills will 
be prepared and transmitted within 5 business days after goods have been 
shipped or released, services have been rendered, or payment is 
otherwise due. An agency may prepare and transmit bills later than the 
5-day timeframe if it can demonstrate that it is cost-effective to do 
so. In addition, the bill must include the terms and dates of payments, 
and late payment provisions, if applicable. Terms and dates of payments 
will be consistent with industry practices. I TFM 6-8000 describes 
detailed billing policies, procedures, and industry standards for 
agencies.



Sec. 206.4  Collection and payment mechanisms.

    (a) All funds are to be collected and disbursed by EFT when cost-
effective, practicable, and consistent with current statutory authority.
    (b) Collections and payments will be made by EFT when cost- 
effective, practicable, and consistent with current statutory authority. 
When consistent with these criteria, specific cash flows will utilize 
EFT as follows:
    (1) Fees/fines. EFT will be adopted as the presumed method of 
collecting fees and fines, especially when these collection cash flows 
are recurring or of large dollar amounts.
    (2) Tax collections. EFT will be adopted as the primary method for 
collecting taxes. EFT mechanisms may include ACH credit or debit cards.
    (3) Salary payment. Presumed EFT will be adopted as the method for 
paying employees, and entrance enrollment forms for establishing regular 
payments will be designed to use this approach.
    (4) Vendor and miscellaneous payments. Each department and agency 
will exercise its authority under the Federal Acquisition Regulation to 
require that all contractors are paid by EFT, unless a determination is 
made that it is not

[[Page 39]]

in the best interest of the Federal Government to do so. EFT will be 
adopted as the standard method of payment for all Federal program 
payments originated by agencies or their agents.
    (5) Benefit payments. EFT will be presented to new beneficiaries as 
the presumed method for receiving benefits. EFT payment methods, such as 
Electronic Benefit Transfer, will be adopted and implemented to make EFT 
accessible to all benefit recipients.
    (c)(1) Selection of the best collection and payment mechanism is a 
joint responsibility of an agency and the Service. An agency has 
responsibility for conducting cash management reviews; gathering volume 
and dollar data relative to the operation of the systems; and funding 
any implementation and operational costs above those normally funded by 
Treasury. The Service is the required approval authority when an agency 
desires to convert from one collection mechanism to another. The 
Service's written approval is required prior to an agency entering into 
new contractual agreements or renewing existing contracts for agency 
collections or payments systems. Agencies will follow guidelines for the 
cost-effective usage of collection and payment mechanisms, published in 
the TFM, Volume I, Part 6-8000, in their selection and recommendation to 
the Service of an appropriate funds transfer mechanism. The agency will 
provide the Service with a recommended mechanism for any new or modified 
cash flows. The Service will review the recommendations, approve a 
mechanism, and assist with implementation.
    (2) If an agency proposes a collection or payment mechanism other 
than EFT, it may be required to provide a cost-benefit analysis to 
justify its use. Cost/benefit analyses must include, at a minimum, known 
or estimated agency personnel costs, costs of procurement, recurring 
operational costs, equipment and system implementation and maintenance 
costs, costs to payment recipients, and costs to remitters. Agencies 
should consult with Treasury to determine the need to include interest 
costs associated with float in their computations of benefits and costs.
    (d) An agency will require the collection of funds by the agency to 
be made via EFT and the disbursement of funds by the agency to be made 
via EFT as a provision of new contractual agreements or renewal of 
existing contracts that impact agency collection or payment mechanisms, 
when cost-effective, practicable, and consistent with current statutory 
authority.



Sec. 206.5  Collection and deposit procedure exceptions.

    (a) The following collection and deposit timeframe requirements are 
to be followed in exception cases where EFT mechanisms are not utilized:
    (1) An agency will achieve same-day deposit of monies. Where same 
day deposit is not cost-effective or is impracticable, next day deposit 
of monies must be achieved except in those cases covered by I TFM 6-
8000.
    (2) Deposits will be made at a time of the day prior to the 
depositary's specified cutoff time, but as late as possible in order to 
maximize daily deposit amounts.
    (3) When cost-beneficial to the Government, an agency may make 
multiple deposits.
    (b) Any additional exceptions to the above policies are listed in I 
TFM 6-8000.



Sec. 206.6  Cash management planning and review.

    (a) An agency shall periodically perform cash management reviews to 
identify areas needing improvement.
    (b) As part of its cash management review process, an agency is 
expected to document cash flows in order to provide an overview of its 
cash management activities and to identify areas that will yield savings 
after cash management initiatives are implemented. The Service will 
evaluate an agency's EFT policy and application, to include mitigating 
circumstances that may prevent the use of EFT, as part of the cash 
management reviews.
    (c) An agency's cash management reviews will provide the basis for 
identification of improvements and preparation of cash flow reports for 
submission to the Service as prescribed by I TFM 6-8000. That Chapter 
provides requirements for an agency in performing

[[Page 40]]

periodic cash management reviews, identifying improvements, and 
preparing cash flow reports. In addition, the Chapter describes the 
timing and content of periodic reports that must be submitted by an 
agency to the Service on progress made in implementing cash management 
initiatives and associated savings.
    (d) The Service will periodically review an agency's cash management 
program to ensure that adequate progress is being made to improve 
overall cash management at an agency. As part of its oversight 
authority, the Service may visit an agency and review all or specific 
cash management activities of an agency. An agency will be notified in 
advance of the Service's review and will be required to provide the 
Service with documentation of the agency cash management review within 
the timeframes required by I TFM 6-8000.



Sec. 206.7  Compliance.

    (a) The Service will monitor agency cash management performance. 
Part of the monitoring process will include establishing implementation 
end dates for conversion to, or expansion of, EFT mechanisms, as well as 
the identification of mitigating circumstances that may prevent the use 
of EFT.
    (b) In cases where an agency fails to meet a scheduled date within 
its control, or where an agency converts to a less cost-effective 
transfer mechanism without prior, written Service approval as determined 
in accordance with Sec. 206.4(c), the Service will send a formal Notice 
of Deficiency to an agency's designated cash management official. A 
separate Notice will be sent for each initiative.
    (1) Collections cash flows. For collections cash flows, the Notice 
of Deficiency will include the nature of the deficiency, the amount of 
the proposed charge, the method of calculation, the right to file an 
appeal, and the date the charge will be imposed in the absence of an 
appeal. The amount of the charge will be equal to the cost of such 
noncompliance to the Treasury's General Fund.
    (2) Payments cash flows. [Reserved]



Sec. 206.8  Appeals.

    (a) An agency that chooses to file an appeal must submit the appeal 
in writing to the Commissioner within 45 days of the date of the Notice 
of Deficiency. In the event of an appeal, the charge imposed under 
Notice of Deficiency will be deferred pending the results of the appeal. 
If an appeal is not submitted (i.e., received by the Commissioner) 
within 45 days, the amount indicated in the Notice of Deficiency will be 
charged per Sec. 206.9(a).
    (b) The appeal will contain the elements and follow the submission 
procedures specified in I TFM 6-8000. The appeal will include the 
background leading to the Notice of Deficiency, the basis of the appeal, 
and the action requested by an agency. An agency should state its 
disagreements with the Notice of Deficiency which may include cost-
benefit factors, the amount of the charge, and other items.
    (c) An agency must state what action it requests in its appeal. An 
agency may request that the Notice of Deficiency be completely 
overturned for cost-benefit or other considerations. Alternatively, an 
agency may request a reduced charge, deferral of the charge, an 
alternative solution to cash management improvement, or a combination of 
these actions.
    (d) Appeals Board. The Commissioner will refer the appeal to an 
Appeals Board. The Appeals Board will consist of three members--two 
permanent members and one temporary member. The permanent members will 
be the Deputy Chief Financial Officer, Department of the Treasury, and 
the Assistant Commissioner, Federal Finance, of the Service. The 
temporary board member will be a cash management official from an agency 
other than the agency appealing the Notice of Deficiency. The Board will 
be convened on an as-needed basis. The order of agency assignment to the 
Board will be published by Treasury in Volume I, Chapter 6-8000 of the 
TFM. The Deputy Chief Financial Officer, Department of the Treasury, the 
Assistant Commissioner, Federal Finance, and the designated agency cash 
management official may delegate their responsibility to a staff 
subordinate having sufficient

[[Page 41]]

experience in cash management matters. The Assistant Commissioner's 
designee may be from any area other than that which issued the Notice of 
Deficiency.
    (e) Appeal review process. The Appeals Board will review the Notice 
of Deficiency, any additional information submitted by the Service, and 
the written appeal from an agency. Based on this review, the Board may 
decide additional investigation is required. The Board may request an 
agency and/or the Service to meet with the Board as part of the review 
process.
    (f) Appeal finding. A written majority decision will be rendered by 
the Appeals Board within 30 days of receipt of the appeal. The Board may 
extend this period for an additional period, not to exceed 30 days, if 
required. The Appeals Board will notify the Commissioner and the agency 
of the decision. The decision of the Board whether to uphold the Notice 
of Deficiency, to overturn the Notice of Deficiency, or to mandate some 
other action will be stated in the finding. Other action mandated may 
include a reduced charge, a deferral of the charge, an alternate 
solution to cash management improvement, or a combination of these 
actions. The basis of the decision, the amount of the charge, and the 
effective date of the charge will be stated in the finding. The 
effective date of the charge may be retroactive to the date indicated in 
the Notice of Deficiency.
    (g) Any terms related to charge deferral shall be stated; the 
Service and an agency will be required to submit evidence of compliance 
to such terms at a future specified date. At this future time, the 
Appeals Board will review the evidence of compliance. Based on this 
evidence, the Board will decide whether to impose a charge.



Sec. 206.9  Charges.

    (a) Within 30 days of the effective date of the charge or the 
appeals decision, an agency must submit appropriate accounting 
information to the Service's Assistant Commissioner, Federal Finance. 
The charge will be calculated following procedures outlined in I TFM 6-
8000, and will be assessed for each month that noncompliance continues.
    (b) Collection noncompliance. In the case of cash management 
collection noncompliance, an agency will absorb the charge from amounts 
appropriated or otherwise made available to carry out the program to 
which the collections relate. Charges collected from an executive agency 
in the case of cash management collection noncompliance will be 
deposited in the Cash Management Improvements Fund as outlined in 
Sec. 206.10.
    (c) Payment noncompliance. [Reserved]
    (d) If an agency does not voluntarily pay the charge assessed under 
Sec. 206.9(a), the Service will debit the appropriate account 
automatically. By failing to pay voluntarily the charges as required by 
the Deficit Reduction Act of 1984, an agency will be deemed to authorize 
the automatic debit to its account.
    (e) The Commissioner will formally terminate the charge when the 
Commissioner has determined that an agency has complied. In addition, on 
an annual basis, the Commissioner will review an agency's performance 
and calculation of the charge, and will notify an agency in writing of 
any changes to the amount being charged.



Sec. 206.10  Operation of and payments from the Cash Management Improvements Fund.

    (a) The Cash Management Improvements Fund (Fund) will be operated as 
a revolving fund by the Service. Charges assessed under Sec. 206.9(a) 
for cash management collection noncompliance will be deposited into the 
Fund according to the Deficit Reduction Act of 1984. The Service will 
also disburse any payments from the Fund based on projects selected by a 
project selection and approval committee.
    (b) Committee composition. The committee will consist of three 
members--two permanent members and one temporary member. The permanent 
members will be the Commissioner and the Assistant Commissioner, Federal 
Finance, of the Service. The temporary committee member will be a cash 
management official from an agency other than an agency being considered 
for funds. The order of agency assignment to the Committee will be 
published in a TFM Bulletin, when funds are first deposited to the Fund. 
Decisions of the

[[Page 42]]

project selection and approval committee cannot be appealed. Agencies 
will be notified of any available amounts in the Fund and requirements 
to apply for such monies through a TFM bulletin.
    (c) As provided by 31 U.S.C. 3720, sums in the Fund will be 
available without fiscal year limitation for the payment of expenses 
incurred in developing improved methods of collection and deposit and 
the expenses incurred in carrying out collections and deposits using 
such methods, including the costs of personal services and the costs of 
the lease or purchase of equipment and operating facilities.
    (d) In addition to all reports required by law and regulation, for 
each fiscal year during which there is a balance in Fund, the Service 
will prepare and publish, by the 60th day following the close of the 
fiscal year, a full report on payments, receipts, disbursements, 
balances of the Fund, and full disclosure on projects financed by the 
Fund.



PART 208--MANAGEMENT OF FEDERAL AGENCY DISBURSEMENTS--Table of Contents




Sec.
208.1  Scope and application.
208.2  Definitions.
208.3  Payment by electronic funds transfer.
208.4  Waivers.
208.5  Availability of the ETASM.
208.6  General account requirements.
208.7  Agency responsibilities.
208.8  Recipient responsibilities.
208.9  Compliance.
208.10  Reservation of rights.

Appendix A to Part 208--Model Disclosure for Use Until ETASM 
          Becomes Available
Appendix B to Part 208--Model Disclosure for Use After ETASM 
          Becomes Available

    Authority: 5 U.S.C. 301; 12 U.S.C. 90, 265, 266, 1767, 1789a; 31 
U.S.C. 321, 3122, 3301, 3302, 3303, 3321, 3325, 3327, 3328, 3332, 3335, 
3336, 6503; Pub. L. 104-208, 110 Stat. 3009.

    Source: 63 FR 51502, Sept. 25, 1998, unless otherwise noted.



Sec. 208.1  Scope and application.

    This part applies to all Federal payments made by an agency and, 
except as specified in Sec. 208.4, requires such payments to be made by 
electronic funds transfer. This part does not apply to payments under 
the Internal Revenue Code of 1986 (26 U.S.C.).



Sec. 208.2  Definitions.

    (a) Agency means any department, agency, or instrumentality of the 
United States Government, or a corporation owned or controlled by the 
Government of the United States.
    (b) Authorized payment agent means any individual or entity that is 
appointed or otherwise selected as a representative payee or fiduciary, 
under regulations of the Social Security Administration, the Department 
of Veterans Affairs, the Railroad Retirement Board, or other agency 
making Federal payments, to act on behalf of an individual entitled to a 
Federal payment.
    (c) Disbursement means, in the context of electronic benefits 
transfer, the performance of the following duties by a Financial Agent 
acting as agent of the United States:
    (1) The establishment of an account for the recipient that meets the 
requirements of the Federal Deposit Insurance Corporation or the 
National Credit Union Administration Board for deposit or share 
insurance;
    (2) The maintenance of such an account;
    (3) The receipt of Federal payments through the Automated Clearing 
House system or other electronic means and crediting of Federal payments 
to the account; and (4) The provision of access to funds in the account 
on the terms specified by Treasury.
    (d) Electronic benefits transfer (EBT) means the provision of 
Federal benefit, wage, salary, and retirement payments electronically, 
through disbursement by a financial institution acting as a Financial 
Agent. For purposes of this part, EBT includes disbursement through an 
ETASM and through a Federal/State EBT program.
    (e) Electronic funds transfer means any transfer of funds, other 
than a transaction originated by cash, check, or similar paper 
instrument, that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape, for the purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit an account. The 
term includes, but is not limited to, Automated Clearing House 
transfers,

[[Page 43]]

Fedwire transfers, and transfers made at automated teller machines and 
point-of-sale terminals. For purposes of this part only, the term 
electronic funds transfer includes a credit card transaction.
    (f) ETASM means the Treasury-designated electronic 
transfer account made available by a Federally-insured financial 
institution acting as a Financial Agent in accordance with Sec. 208.5 of 
this part.
    (g) Federal payment means any payment made by an agency.
    (1) The term includes, but is not limited to:
    (i) Federal wage, salary, and retirement payments;
    (ii) Vendor and expense reimbursement payments;
    (iii) Benefit payments; and
    (iv) Miscellaneous payments including, but not limited to: 
interagency payments; grants; loans; fees; principal, interest, and 
other payments related to U.S. marketable and nonmarketable securities; 
overpayment reimbursements; and payments under Federal insurance or 
guarantee programs for loans.
    (2) For purposes of this part only, the term ``Federal payment'' 
does not apply to payments under the Internal Revenue Code of 1986 (26 
U.S.C.).
    (h) Federal/State EBT program means any program that provides access 
to Federal benefit, wage, salary, and retirement payments and to State-
administered benefits through a single delivery system and in which 
Treasury designates a Financial Agent to disburse the Federal payments.
    (i) Federally-insured financial institution means any financial 
institution, the deposits of which are insured by the Federal Deposit 
Insurance Corporation under 12 U.S.C. Chapter 16 or, in the case of a 
credit union, the member accounts of which are insured by the National 
Credit Union Share Insurance Fund under 12 U.S.C. Chapter 14, Subchapter 
II.
    (j) Financial Agent means a financial institution that has been 
designated by Treasury as a Financial Agent for the provision of EBT 
services under any provision of Federal law, including 12 U.S.C. 90, 
265, 266, 1767, and 1789a, and 31 U.S.C. 3122 and 3303, as amended by 
the Omnibus Consolidated Appropriations Act, 1997, Section 664, Public 
Law 104-208.
    (k) Financial institution means:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (6) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    (l) Individual means a natural person.
    (m) Recipient means an individual, corporation, or other public or 
private entity that is authorized to receive a Federal payment from an 
agency.
    (n) Secretary means Secretary of the Treasury.
    (o) Treasury means the United States Department of the Treasury.

[[Page 44]]



Sec. 208.3  Payment by electronic funds transfer.

    Subject to Sec. 208.4, and notwithstanding any other provision of 
law, effective January 2, 1999, all Federal payments made by an agency 
shall be made by electronic funds transfer.



Sec. 208.4  Waivers.

    Payment by electronic funds transfer is not required in the 
following cases:
    (a) Where an individual determines, in his or her sole discretion, 
that payment by electronic funds transfer would impose a hardship due to 
a physical or mental disability or a geographic, language, or literacy 
barrier, or would impose a financial hardship. In addition, the 
requirement to receive payment by electronic funds transfer is 
automatically waived for all individuals who do not have an account with 
a financial institution and who are eligible to open an ETASM 
under Sec. 208.5, until such date as the Secretary determines that the 
ETASM is available;
    (b) Where the political, financial, or communications infrastructure 
in a foreign country does not support payment by electronic funds 
transfer;
    (c) Where the payment is to a recipient within an area designated by 
the President or an authorized agency administrator as a disaster area. 
This waiver is limited to payments made within 120 days after the 
disaster is declared;
    (d) Where either:
    (1) A military operation is designated by the Secretary of Defense 
in which uniformed services undertake military actions against an enemy, 
or
    (2) A call or order to, or retention on, active duty of members of 
the uniformed services is made during a war or national emergency 
declared by the President or Congress;
    (e) Where a threat may be posed to national security, the life or 
physical safety of any individual may be endangered, or a law 
enforcement action may be compromised;
    (f) Where the agency does not expect to make more than one payment 
to the same recipient within a one-year period, i.e., the payment is 
non-recurring, and the cost of making the payment via electronic funds 
transfer exceeds the cost of making the payment by check; and
    (g) Where an agency's need for goods and services is of such unusual 
and compelling urgency that the Government would be seriously injured 
unless payment is made by a method other than electronic funds transfer; 
or, where there is only one source for goods or services and the 
Government would be seriously injured unless payment is made by a method 
other than electronic funds transfer.



Sec. 208.5  Availability of the ETA SM.

    An individual who receives a Federal benefit, wage, salary, or 
retirement payment shall be eligible to open an ETA SM at any 
Federally-insured financial institution that offers ETAs SM. 
Any Federally-insured financial institution shall be eligible, but not 
required, to offer ETAs SM as Treasury's Financial Agent. A 
Federally-insured financial institution that elects to offer ETAs 
SM shall, upon entering into an ETA SM Financial 
Agency Agreement with the Treasury, be designated as Treasury's 
Financial Agent for the offering of the account pursuant to Public Law 
104-208. Treasury shall make publicly available required attributes for 
ETAs SM and any ETA SM offered by a Federally-
insured financial institution shall comply with such requirements. The 
offering of an ETA SM shall constitute the provision of EBT 
services within the meaning of Public Law 104-208.



Sec. 208.6  General account requirements.

    (a) All Federal payments made by electronic funds transfer, 
including those made through an ETA SM, shall be deposited 
into an account at a financial institution. For all payments other than 
vendor payments, the account at the financial institution shall be in 
the name of the recipient, except as provided in paragraph (b) of this 
section.
    (b)(1) Where an authorized payment agent has been selected, the 
Federal payment shall be deposited into an account titled in accordance 
with the regulations governing the authorized payment agent.
    (2) Where a Federal payment is to be deposited into an investment 
account

[[Page 45]]

established through a securities broker or dealer registered with the 
Securities and Exchange Commission under the Securities Exchange Act of 
1934, or an investment account established through an investment company 
registered under the Investment Company Act of 1940 or its transfer 
agent, such payment may be deposited into an account designated by such 
broker or dealer, investment company, or transfer agent.



Sec. 208.7  Agency responsibilities.

    (a) An agency shall disclose to each individual who is eligible to 
receive a Federal benefit, wage, salary, or retirement payment and who 
is not already receiving payment by electronic funds transfer the 
individual's rights and obligations under Secs. 208.3, 208.4(a) and 
208.5 of this part, unless payment by electronic funds transfer is not 
required pursuant to any provision of subsections (b) through (g) of 
Sec. 208.4.
    (1) Prior to the date the ETA SM becomes available, the 
disclosure shall be in a form substantially similar to the model 
disclosure set forth in appendix A of this part.
    (2) On and after the date the ETA SM becomes available, 
the disclosure shall be in a form substantially similar to the model 
disclosure set forth in appendix B of this part.
    (b) An agency shall put into place procedures that allow recipients 
to indicate that the recipient elects to have payment deposited by 
electronic funds transfer to an account held by the recipient at a 
financial institution. In addition, an agency may put into place 
procedures to request that individuals who are invoking a hardship 
waiver under Sec. 208.4(a) indicate, in writing or orally, that a 
hardship waiver has been invoked. However, an agency may not delay or 
withhold payment if a recipient does not respond to such a request.



Sec. 208.8  Recipient responsibilities.

    Each recipient who is required to receive payment by electronic 
funds transfer and who has an account with a financial institution must, 
within the time frame specified by the agency making the payment, 
designate a financial institution through which the payment may be made 
and provide the agency with the information requested by the agency in 
order to effect payment by electronic funds transfer.



Sec. 208.9  Compliance.

    (a) Treasury will monitor agencies' compliance with this part. 
Treasury may require agencies to provide information about their 
progress in converting payments to electronic funds transfer.
    (b) If an agency fails to make payment by electronic funds transfer, 
as prescribed under this part, Treasury may assess a charge to the 
agency pursuant to 31 U.S.C. 3335.



Sec. 208.10  Reservation of rights.

    The Secretary reserves the right, in the Secretary's discretion, to 
waive any provision(s) of this regulation in any case or class of cases.

Appendix A to Part 208--Model Disclosure for Use Until ETA SM 
                            Becomes Available

    The Debt Collection Improvement Act of 1996 requires that most 
Federal payments be made by electronic funds transfer after January 2, 
1999.
    If you are currently receiving your Federal payment by check or you 
have just become eligible to begin receiving a Federal payment, you have 
several choices:
    (1) Receive your payment by Direct Deposit through the financial 
institution of your choice.
    The Government makes payments electronically through a program 
called Direct Deposit. Direct Deposit is a safe, convenient, and 
reliable way to receive your Federal payment through a financial 
institution. (A financial institution can be a bank, credit union, 
savings bank, or thrift.) Many financial institutions offer basic, low-
cost accounts in addition to full-service checking or savings accounts.
    (2) Do nothing now and wait for a basic, low-cost account, called an 
ETA SM, to become available.
    If you do not have an account with a financial institution, you do 
not need to do anything now. In the future a low-cost account, called an 
ETA SM, will be available at many financial institutions. 
Like Direct Deposit, the ETA SM (which stands for electronic 
transfer account) is a safe, convenient, and reliable way to receive 
your Federal payment through a financial institution. You are eligible 
to open this account, at a low monthly fee, if you receive a Federal 
benefit, wage, salary, or retirement payment. [Agency name] will contact 
you and let you know

[[Page 46]]

when the ETA SM is available and which financial institutions 
in your area offer the account.
    (3) Continue to receive a check.
    If receiving your payment electronically would cause you a hardship 
because you have a physical or mental disability, or because of a 
geographic, language, or literacy barrier, you may receive your payment 
by check. In addition, if receiving your payment electronically would 
cause you a financial hardship because it would cost you more than 
receiving your payment by check, you may receive your payment by check.
    Please call [agency name] at [agency customer service number] if you 
would like more information on Direct Deposit, the ETA SM, or 
hardship waivers.

Appendix B to Part 208--Model Disclosure for Use After ETA SM 
                            Becomes Available

    The Debt Collection Improvement Act of 1996 requires that most 
Federal payments be made by electronic funds transfer after January 2, 
1999.
    If you are currently receiving your Federal payment by check or you 
have just become eligible to begin receiving a Federal payment, you have 
several choices:
    (1) Receive your payment by Direct Deposit through the financial 
institution of your choice.
    The Government makes payments electronically through a program 
called Direct Deposit. Direct Deposit is a safe, convenient, and 
reliable way to receive your Federal payment through a financial 
institution. (A financial institution can be a bank, credit union, 
savings bank, or thrift.) Many financial institutions offer basic, low-
cost accounts in addition to full-service checking or savings accounts.
    (2) Receive your payment through a basic, low-cost account called an 
ETA SM.
    If you receive a Federal benefit, wage, salary, or retirement 
payment, you are eligible to open an ETA SM. This account is 
available for a low monthly fee at many financial institutions. Like 
Direct Deposit, the ETA SM (which stands for electronic 
transfer account) is a safe, convenient, and reliable way to receive 
your Federal payment through a financial institution. Please call the 
customer service number listed below to find out which financial 
institutions in your area offer the ETA SM.
    (3) Continue to receive a check.
    If receiving your payment electronically would cause you a hardship 
because you have a physical or mental disability, or because of a 
geographic, language, or literacy barrier, you may receive your payment 
by check. In addition, if receiving your payment electronically would 
cause you a financial hardship because it would cost you more than 
receiving your payment by check, you may receive your payment by check.
    Please call [agency name] at [agency customer service number] if you 
would like more information on Direct Deposit, the ETA SM, or 
hardship waivers.



PART 210--FEDERAL GOVERNMENT PARTICIPATION IN THE AUTOMATED CLEARING HOUSE--Table of Contents




Sec.
210.1  Scope; relation to other regulations.
210.2  Definitions.
210.3  Governing law.

                           Subpart A--General

210.4  Authorizations and revocations of authorizations.
210.5  Account requirements for Federal payments.
210.6  Agencies.
210.7  Federal Reserve Banks.
210.8  Financial institutions.

               Subpart B--Reclamation of Benefit Payments

210.9  Parties to the reclamation.
210.10  RDFI liability.
210.11  Limited liability.
210.12  RDFI's rights of recovery.
210.13  Notice to account owners.
210.14  Erroneous death information.

    Authority: 5 U.S.C. 5525; 12 U.S.C. 391; 31 U.S.C. 321, 3301, 3302, 
3321, 3332, 3335, and 3720.

    Source: 64 FR 17487, Apr. 9, 1999, unless otherwise noted.



Sec. 210.1  Scope; relation to other regulations.

    This part governs all entries and entry data originated or received 
by an agency through the Automated Clearing House (ACH) network, except 
as provided in paragraphs (a) and (b) of this section. This part also 
governs reclamations of benefit payments.
    (a) Federal tax payments received by the Federal Government through 
the ACH system that are governed by part 203 of this title shall not be 
subject to any provision of this part that is inconsistent with part 
203.
    (b) ACH credit or debit entries for the purchase of, or payment of 
principal and interest on, United States securities that are governed by 
part 370 of this title shall not be subject to any provision of this 
part that is inconsistent with part 370.

[[Page 47]]



Sec. 210.2  Definitions.

    For purposes of this part, the following definitions apply. Any term 
that is not defined in this part shall have the meaning set forth in the 
ACH Rules.
    (a) ACH Rules means the Operating Rules and the Operating Guidelines 
published by NACHA--The Electronic Payments Association (NACHA), a 
national association of regional member clearing house associations, ACH 
Operators and participating financial institutions located in the United 
States.
    (b) Actual or constructive knowledge, when used in reference to an 
RDFI's knowledge of the death or legal incapacity of a recipient or 
death of a beneficiary, means that the RDFI received information, by 
whatever means, of the death or incapacity and has had a reasonable 
opportunity to act on such information or that the RDFI would have 
learned of the death or incapacity if it had followed commercially 
reasonable business practices.
    (c) Agency means any department, agency, or instrumentality of the 
United States Government, or a corporation owned or controlled by the 
Government of the United States. The term agency does not include a 
Federal Reserve Bank.
    (d) Applicable ACH Rules means the ACH Rules with an effective date 
on or before September 15, 2000, as published in Parts I, II, and IV of 
the ``2000 ACH Rules: A Complete Guide to Rules & Regulations Governing 
the ACH Network,'' except:
    (1) ACH Rule 1.1 (limiting the applicability of the ACH Rules to 
members of an ACH association);
    (2) ACH Rule 1.2.2 (governing claims for compensation);
    (3) ACH Rule 1.2.4; 2.2.1.10; Appendix Eight and Appendix Eleven 
(governing the enforcement of the ACH Rules, including self-audit 
requirements);
    (4) ACH Rules 2.2.1.8; 2.6; and 4.7 (governing the reclamation of 
benefit payments);
    (5) ACH Rule 8.3 and Appendix Two (requiring that a credit entry be 
originated no more than two banking days before the settlement date of 
the entry--see definition of ``Effective Entry Date'' in Appendix Two).
    (e) Authorized payment agent means any individual or entity that is 
appointed or otherwise selected as a representative payee or fiduciary, 
under regulations of the Social Security Administration, the Department 
of Veterans Affairs, the Railroad Retirement Board, or other agency 
making Federal payments, to act on behalf of an individual entitled to a 
Federal payment.
    (f) Automated Clearing House or ACH means a funds transfer system 
governed by the ACH Rules which provides for the interbank clearing of 
electronic entries for participating financial institutions.
    (g) Beneficiary means a natural person other than a recipient who is 
entitled to receive the benefit of all or part of a benefit payment.
    (h) Benefit payment is a payment for a Federal entitlement program 
or for an annuity, including, but not limited to, payments for Social 
Security, Supplemental Security Income, Black Lung, Civil Service 
Retirement, Railroad Retirement annuity and Railroad Unemployment and 
Sickness benefits, Department of Veterans Affairs Compensation and 
Pension, and Worker's Compensation.
    (i) Federal payment means any payment made by an agency. The term 
includes, but is not limited to:
    (1) Federal wage, salary, and retirement payments;
    (2) Vendor and expense reimbursement payments;
    (3) Benefit payments; and
    (4) Miscellaneous payments including, but not limited to, 
interagency payments; grants; loans; fees; principal, interest, and 
other payments related to United States marketable and nonmarketable 
securities; overpayment reimbursements; and payments under Federal 
insurance or guarantee programs for loans.
    (j)(1) Financial institution means:
    (i) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to apply to 
become an insured bank under section 5 of such Act (12 U.S.C. 1815);
    (ii) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
apply to

[[Page 48]]

become an insured bank under section 5 of such Act (12 U.S.C. 1815);
    (iii) Any savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
apply to become an insured bank under section 5 of such Act (12 U.S.C. 
1815);
    (iv) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to apply to become an insured credit union pursuant to section 
201 of such Act (12 U.S.C. 1781);
    (v) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution as defined in such Act (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (vi) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    (2) In this part, a financial institution may be referred to as an 
Originating Depository Financial Institution (ODFI) if it transmits 
entries to its ACH Operator for transmittal to a Receiving Depository 
Financial Institution (RDFI), or it may be referred to as an RDFI if it 
receives entries from its ACH Operator for debit or credit to the 
accounts of its customers.
    (k) Government entry means an ACH credit or debit entry or entry 
data originated or received by an agency.
    (l) Green Book means the manual issued by the Service which provides 
financial institutions with procedures and guidelines for processing 
Government entries.
    (m) Notice of reclamation means notice sent by electronic, paper, or 
other means by the Federal Government to an RDFI which identifies the 
benefit payments that should have been returned by the RDFI because of 
the death or legal incapacity of a recipient or death of a beneficiary.
    (n) Outstanding total means the sum of all benefit payments received 
by an RDFI from an agency after the death or legal incapacity of a 
recipient or the death of a beneficiary, minus any amount returned to, 
or recovered by, the Federal Government.
    (o) Recipient means a natural person, corporation, or other public 
or private entity that is authorized to receive a Federal payment from 
an agency.
    (p) Service means the Financial Management Service, Department of 
the Treasury.
    (q) Treasury means the United States Department of the Treasury.
    (r) Treasury Financial Manual means the manual issued by the Service 
containing procedures to be observed by all agencies and Federal Reserve 
Banks with respect to central accounting, financial reporting, and other 
Federal Government-wide fiscal responsibilities of the Treasury.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000]



Sec. 210.3  Governing law.

    (a) Federal law. The rights and obligations of the United States and 
the Federal Reserve Banks with respect to all Government entries, and 
the rights of any person or recipient against the United States and the 
Federal Reserve Banks in connection with any Government entry, are 
governed by this part, which has the force and effect of Federal law.
    (b) Incorporation by reference--applicable ACH Rules. (1) This part 
incorporates by reference the applicable ACH Rules, including rule 
changes with an effective date on or before September 15, 2000, as 
published in Parts I, II, and IV of the ``2000 ACH Rules: A Complete 
Guide to Rules & Regulations Governing the ACH Network.'' The Director 
of the Federal Register approves this incorporation by reference in 
accordance with 5 U.S.C. 552(a) and 1 CFR Part 51. Copies of the ``2000 
ACH Rules'' are available from NACHA--The Electronic Payments 
Association, 13665 Dulles Technology Drive, Suite 300, Herndon, Virginia 
20171. Copies also are available for public inspection at the Office of 
the Federal Register, 800 North Capitol Street, NW., Suite 700, 
Washington, D.C.
    (2) Any amendment to the applicable ACH Rules that takes effect 
after September 15, 2000, shall not apply to Government entries unless 
the Service expressly accepts such amendment by

[[Page 49]]

publishing notice of acceptance of the amendment to this part in the 
Federal Register. An amendment to the ACH Rules that is accepted by the 
Service shall apply to Government entries on the effective date of the 
rulemaking specified by the Service in the Federal Register document 
expressly accepting such amendment.
    (c) Application of this part. Any person or entity that originates 
or receives a Government entry agrees to be bound by this part and to 
comply with all instructions and procedures issued by the Service under 
this part, including the Treasury Financial Manual and the Green Book. 
The Treasury Financial Manual is available for downloading at the 
Service's web site at http://www.fms.treas.gov/ or by calling (202) 874-
9940 or writing the Directives Management Branch, Financial Management 
Service, Department of the Treasury, 3700 East West Highway, Room 500C, 
Hyattsville, MD 20782. The Green Book is available for downloading at 
the Service's web site at http://www.fms.treas.gov/fmsnews.html or by 
calling (202) 874-6540 or writing the Product Promotion Division, 
Financial Management Service, Department of the Treasury, 401 14th 
Street, SW., Room 309, Washington, DC 20227.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000]



                           Subpart A--General



Sec. 210.4  Authorizations and revocations of authorizations.

    (a) Requirements for authorization. Each debit and credit entry 
subject to this part shall be authorized in accordance with the 
applicable ACH Rules and the following additional requirements:
    (1) The agency or the RDFI that accepts the recipient's 
authorization shall verify the identity of the recipient and, in the 
case of a written authorization requiring the recipient's signature, the 
validity of the recipient's signature.
    (2) Unless authorized in writing, or similarly authenticated, by an 
agency, no person or entity shall initiate or transmit a debit entry to 
that agency, other than a reversal of a credit entry previously sent to 
the agency.
    (b) Terms of authorizations. By executing an authorization for an 
agency to initiate entries, a recipient agrees:
    (1) To the provisions of this part;
    (2) To provide accurate information;
    (3) To verify the recipient's identity to the satisfaction of the 
RDFI or agency, whichever has accepted the authorization;
    (4) That any new authorization inconsistent with a previous 
authorization shall supersede the previous authorization; and
    (5) That the Federal Government may reverse any duplicate or 
erroneous entry or file as provided in Sec. 210.6(f) of this part.
    (c) Termination and revocation of authorizations. An authorization 
shall remain valid until it is terminated or revoked by:
    (1) With respect to a recipient of benefit payments, a change in the 
recipient's ownership of the deposit account as reflected in the deposit 
account records, including the removal of the name of the recipient, the 
addition of a power of attorney, or any action which alters the interest 
of the recipient;
    (2) The death or legal incapacity of a recipient of benefit payments 
or the death of a beneficiary;
    (3) The closing of the recipient's account at the RDFI by the 
recipient or by the RDFI. With respect to a recipient of benefit 
payments, if an RDFI closes an account to which benefit payments 
currently are being sent, it shall provide 30 calendar days written 
notice to the recipient prior to closing the account, except in cases of 
fraud; or
    (4) The RDFI's insolvency, closure by any state or Federal 
regulatory authority or by corporate action, or the appointment of a 
receiver, conservator, or liquidator for the RDFI. In any such event, 
the authorization shall remain valid if a successor is named. The 
Federal Government may temporarily transfer authorizations to a 
consenting RDFI. The transfer is valid until either a new authorization 
is executed by the recipient, or 120 calendar days have elapsed since 
the insolvency, closure, or appointment, whichever occurs first.

[[Page 50]]



Sec. 210.5  Account requirements for Federal payments.

    (a) Notwithstanding ACH Rules 2.1.2, 4.1.3, and Appendix Two, 
section 2.2 (listing general ledger and loan accounts as permissible 
transaction codes), an ACH credit entry representing a Federal payment 
other than a vendor payment shall be deposited into a deposit account at 
a financial institution. For all payments other than vendor payments, 
the account at the financial institution shall be in the name of the 
recipient, except as provided in paragraph (b) of this section.
    (b)(1) Where an authorized payment agent has been selected, the 
Federal payment shall be deposited into an account titled in accordance 
with the regulations governing the authorized payment agent.
    (2) Where a Federal payment is to be deposited into an investment 
account established through a securities broker or dealer registered 
with the Securities and Exchange Commission under the Securities 
Exchange Act of 1934, or an investment account established through an 
investment company registered under the Investment Company Act of 1940 
or its transfer agent, such payment may be deposited into an account 
designated by such broker or dealer, investment company, or transfer 
agent.
    (3) The Secretary of the Treasury may waive the requirements of 
paragraph (a) of this section in any case or class of cases.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000]



Sec. 210.6  Agencies.

    Notwithstanding ACH Rules 2.2.3, 2.4.5, 2.5.2, 4.2, and 7.7.2, 
agencies shall be subject to the obligations and liabilities set forth 
in this section in connection with Government entries.
    (a) Receiving entries. An agency may receive ACH debit or credit 
entries only with the prior written authorization of the Service.
    (b) Liability to a recipient. An agency will be liable to the 
recipient for any loss sustained by the recipient as a result of the 
agency's failure to originate a credit or debit entry in accordance with 
this part. The agency's liability shall be limited to the amount of the 
entry(ies).
    (c) Liability to an originator. An agency will be liable to an 
originator or an ODFI for any loss sustained by the originator or ODFI 
as a result of the agency's failure to credit an ACH entry to the 
agency's account in accordance with this part. The agency's liability 
shall be limited to the amount of the entry(ies).
    (d) Liability to an RDFI or ACH association. Except as otherwise 
provided in this part, an agency will be liable to an RDFI for losses 
sustained in processing duplicate or erroneous credit and debit entries 
originated by the agency. An agency's liability shall be limited to the 
amount of the entry(ies), and shall be reduced by the amount of the loss 
resulting from the failure of the RDFI to exercise due diligence and 
follow standard commercial practices in processing the entry(ies). This 
section does not apply to credits received by an RDFI after the death or 
legal incapacity of a recipient of benefit payments or the death of a 
beneficiary as governed by Subpart B of this part. An agency shall not 
be liable to any ACH association.
    (e) Acquittance of the agency. The final crediting of the amount of 
an entry to a recipient's account shall constitute full acquittance of 
the Federal Government.
    (f) Reversals. An agency may reverse any duplicate or erroneous 
entry, and the Federal Government may reverse any duplicate or erroneous 
file. In initiating a reversal, an agency shall certify to the Service 
that the reversal complies with applicable law related to the recovery 
of the underlying payment. An agency that reverses an entry shall 
indemnify the RDFI as provided in the applicable ACH Rules, but the 
agency's liability shall be limited to the amount of the entry. If the 
Federal Government reverses a file, the Federal Government shall 
indemnify the RDFI as provided in the applicable ACH Rules, but the 
extent of such liability shall be limited to the amount of the

[[Page 51]]

entries comprising the duplicate or erroneous file. Reversals under this 
section shall comply with the time limitations set forth in the 
applicable ACH Rules.



Sec. 210.7  Federal Reserve Banks.

    (a) Fiscal Agents. Each Federal Reserve Bank serves as Fiscal Agent 
of the Treasury in carrying out its duties as the Federal Government's 
ACH Operator under this part. As Fiscal Agent, each Federal Reserve Bank 
shall be responsible only to the Treasury and not to any other party for 
any loss resulting from the Federal Reserve Bank's action, 
notwithstanding Section 11.5 and Article 8 of the ACH Rules. Each 
Federal Reserve Bank may issue operating circulars not inconsistent with 
this part which shall be binding on financial institutions.
    (b) Routing numbers. All routing numbers issued by a Federal Reserve 
Bank to an agency require the prior approval of the Service.



Sec. 210.8  Financial institutions.

    (a) Status as a Treasury depositary. The origination or receipt of 
an entry subject to this part does not render a financial institution a 
Treasury depositary. A financial institution shall not advertise itself 
as a Treasury depositary on such basis.
    (b) Liability. Notwithstanding ACH Rules 2.2.3, 2.4.5, 2.5.2, 4.2, 
and 7.7.2, if the Federal Government sustains a loss as a result of a 
financial institution's failure to handle an entry in accordance with 
this part, the financial institution shall be liable to the Federal 
Government for the loss, up to the amount of the entry, except as 
otherwise provided in this section. A financial institution shall not be 
liable to any third party for any loss or damage resulting directly or 
indirectly from an agency's error or omission in originating an entry. 
Nothing in this section shall affect any obligation or liability of a 
financial institution under Regulation E, 12 CFR part 205, or the 
Electronic Funds Transfer Act, 12 U.S.C. 1693 et seq.
    (1) An ODFI that transmits a debit entry to an agency without the 
prior written or similarly authenticated authorization of the agency, 
shall be liable to the Federal Government for the amount of the 
transaction, plus interest. The Service may collect such funds using 
procedures established in the applicable ACH Rules or by instructing a 
Federal Reserve Bank to debit the ODFI's account at the Federal Reserve 
Bank or the account of its designated correspondent. The interest charge 
shall be at a rate equal to the Federal funds rate plus two percent, and 
shall be assessed for each calendar day, from the day the Treasury 
General Account (TGA) was debited to the day the TGA is recredited with 
the full amount due.
    (2) An RDFI that accepts an authorization in violation of 
Sec. 210.4(a) shall be liable to the Federal Government for all credits 
or debits made in reliance on the authorization. An RDFI that transmits 
to an agency an authorization containing an incorrect account number 
shall be liable to the Federal Government for any resulting loss, up to 
the amount of the payment(s) made on the basis of the incorrect number. 
If an agency determines, after appropriate investigation, that a loss 
has occurred because an RDFI transmitted an authorization or 
notification of change containing an incorrect account number, the 
agency may instruct the Service to direct a Federal Reserve Bank to 
debit the RDFI's account for the amount of the payment(s) made on the 
basis of the incorrect number. The agency shall notify the RDFI of the 
results of its investigation and provide the RDFI with a reasonable 
opportunity to respond before initiating such a debit.
    (c) Acquittance of the financial institution. The final crediting of 
the correct amount of an entry received and processed by the Federal 
Reserve Bank and posted to the TGA shall constitute full acquittance of 
the ODFI and the originator for the amount of the entry. Full 
acquittance shall not occur if the entries do not balance, are 
incomplete, are incorrect, or are incapable of being processed. In the 
case of funds collected by an agency through origination of a debit 
entry, full acquittance shall not occur until the underlying payment 
becomes final.

[[Page 52]]



               Subpart B--Reclamation of Benefit Payments



Sec. 210.9  Parties to the reclamation.

    (a) Agreement of RDFI. An RDFI's acceptance of a benefit payment 
pursuant to this part shall constitute its agreement to this subpart. By 
accepting a benefit payment subject to this part, the RDFI authorizes 
the debiting of the Federal Reserve Bank account utilized by the RDFI in 
accordance with the provisions of Sec. 210.10(e).
    (b) The Federal Government. In processing reclamations pursuant to 
this subpart, the Service shall act pursuant to the direction of the 
agency that certified the benefit payment(s) being reclaimed.



Sec. 210.10  RDFI liability.

    (a) Full liability. An RDFI shall be liable to the Federal 
Government for the total amount of all benefit payments received after 
the death or legal incapacity of a recipient or the death of a 
beneficiary unless the RDFI has the right to limit its liability under 
Sec. 210.11 of this part. An RDFI shall return any benefit payments 
received after the RDFI learns of the death or legal incapacity of a 
recipient or the death of a beneficiary, regardless of the manner in 
which the RDFI discovers such information. If the RDFI learns of the 
death or legal incapacity of a recipient or death of a beneficiary from 
a source other than notice from the agency, the RDFI shall immediately 
notify the agency of the death or incapacity.
    (b) Notice of reclamation. Upon receipt of a notice of reclamation, 
an RDFI shall provide the information required by the notice of 
reclamation and return the amount specified in the notice of reclamation 
in a timely manner.
    (c) Exception to liability rule. An RDFI shall not be liable for 
post-death benefit payments sent to a recipient acting as a 
representative payee or fiduciary on behalf of a beneficiary, if the 
beneficiary was deceased at the time the authorization was executed and 
the RDFI did not have actual or constructive knowledge of the death of 
the beneficiary.
    (d) Time limits. An agency that initiates a reclamation must do so 
within 120 calendar days after the date that the agency receives notice 
of the death or legal incapacity of a recipient or death of a 
beneficiary. An agency shall not reclaim any post-death or post-
incapacity payment(s) made more than six years prior to the most recent 
payment made by the agency to the recipient's account; provided, 
however, that if the account balance at the time the RDFI receives the 
notice of reclamation exceeds the total amount of all post-death or 
post-incapacity payments made by the agency during such six-year period, 
this limitation shall not apply and the RDFI shall be liable for the 
total amount of all payments made, up to the amount in the account at 
the time the RDFI receives the notice of reclamation and has had a 
reasonable opportunity (not to exceed one business day) to act on the 
notice.
    (e) Debit of RDFI's account. If an RDFI does not return the full 
amount of the outstanding total or any other amount for which the RDFI 
is liable under this subpart in a timely manner, the Federal Government 
will collect the amount outstanding by instructing the appropriate 
Federal Reserve Bank to debit the account utilized by the RDFI. The 
Federal Reserve Bank will provide advice of the debit to the RDFI.



Sec. 210.11  Limited liability.

    (a) Right to limit its liability. If an RDFI does not have actual or 
constructive knowledge of the death or legal incapacity of a recipient 
or the death of a beneficiary at the time it receives one or more 
benefit payments on behalf of the recipient, the RDFI's liability to the 
agency for those payments shall be limited to:
    (1) An amount equal to: (i) The amount in the account at the time 
the RDFI receives the notice of reclamation and has had a reasonable 
opportunity (not to exceed one business day) to act on the notice, plus 
any additional benefit payments made to the account by the agency before 
the RDFI responds in full to the notice of reclamation, or
    (ii) The outstanding total, whichever is less; plus
    (2) If the agency is unable to collect the entire outstanding total, 
an additional amount equal to:

[[Page 53]]

    (i) The benefit payments received by the RDFI from the agency within 
45 days after the death or legal incapacity of the recipient or death of 
the beneficiary, or
    (ii) The balance of the outstanding total, whichever is less.
    (b) Qualification for limited liability. In order to limit its 
liability as provided in this section, an RDFI shall:
    (1) Certify that at the time the benefit payments were credited to 
or withdrawn from the account, the RDFI had no actual or constructive 
knowledge of the death or legal incapacity of the recipient or death of 
the beneficiary;
    (2) Certify the date the RDFI first had actual or constructive 
knowledge of the death or legal incapacity of the recipient or death of 
the beneficiary, regardless of how and where such information was 
obtained;
    (3)(i) Provide the name, address, and any other relevant information 
of the following person(s):
    (A) Co-owner(s) of the recipient's account;
    (B) Other person(s) authorized to withdraw funds from the 
recipient's account; and
    (C) Person(s) who withdrew funds from the recipient's account after 
the death or legal incapacity of the recipient or death of the 
beneficiary.
    (ii) If persons are not identified for any of these subcategories, 
the RDFI must certify that no such information is available and why no 
such information is available; and
    (4) Fully and accurately complete all certifications on the notice 
of reclamation and comply with the requirements of this part.
    (c) Payment of limited liability amount. If the RDFI qualifies for 
limited liability under this subpart, it shall immediately return to the 
Federal Government the amount specified in Sec. 210.11(a)(1). The agency 
will then attempt to collect the amount of the outstanding total not 
returned by the RDFI. If the agency is unable to collect that amount, 
the Federal Government will instruct the appropriate Federal Reserve 
Bank to debit the account utilized by the RDFI at that Federal Reserve 
Bank for the amount specified in Sec. 210.11(a)(2).
    (d) Violation of subpart B. An RDFI that fails to comply with any 
provision of this subpart in a timely and accurate manner, including but 
not limited to the certification requirements at Sec. 210.11(b) and the 
notice requirements at Sec. 210.13, shall be liable to the Federal 
Government for any loss resulting from its act or omission. Any such 
liability shall be in addition to the amount(s) for which the RDFI is 
liable under Sec. 210.10 or Sec. 210.11, as applicable.



Sec. 210.12  RDFI's rights of recovery.

    (a) Matters between the RDFI and its customer. This subpart does not 
authorize or direct an RDFI to debit or otherwise affect the account of 
a recipient. Nothing in this subpart shall be construed to affect the 
right an RDFI has under state law or the RDFI's contract with a 
recipient to recover any amount from the recipient's account.
    (b) Liability unaffected. The liability of the RDFI under this 
subpart is not affected by actions taken by the RDFI to recover any 
portion of the outstanding total from any party.



Sec. 210.13  Notice to account owners.

    Provision of notice by RDFI. Upon receipt by an RDFI of a notice of 
reclamation, the RDFI immediately shall mail to the last known address 
of the account owner(s) or otherwise provide to the account owner(s) a 
copy of any notice required by the Service to be provided to account 
owners as specified in the Green Book. Proof that this notice was sent 
may be required by the Service.



Sec. 210.14  Erroneous death information.

    (a) Notification of error to the agency. If, after the RDFI responds 
fully to the notice of reclamation, the RDFI learns that the recipient 
or beneficiary is not dead or legally incapacitated or that the date of 
death is incorrect, the RDFI shall inform the agency that certified the 
underlying payment(s) and direct the Service to reclaim the funds in 
dispute.
    (b) Resolution of dispute. The agency that certified the underlying 
payment(s) and directed the Service to reclaim the funds will attempt to 
resolve the dispute with the RDFI in a timely manner. If the agency 
determines that

[[Page 54]]

the reclamation was improper, in whole or in part, the agency shall 
notify the RDFI and shall return the amount of the improperly reclaimed 
funds to the RDFI. Upon certification by the agency of an improper 
reclamation, the Service may instruct the appropriate Federal Reserve 
Bank to credit the account utilized by the RDFI at the Federal Reserve 
Bank in the amount of the improperly reclaimed funds.



PART 211--DELIVERY OF CHECKS AND WARRANTS TO ADDRESSES OUTSIDE THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS--Table of Contents




Sec.
211.1  Withholding delivery of checks.
211.2  Claims for the release of withheld checks or for the proceeds 
          thereof.
211.3  Exceptions.
211.4  Implementing instructions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321 and 3329.



Sec. 211.1  Withholding delivery of checks.

    (a) It is hereby determined that postal, transportation or banking 
facilities in general or local conditions in the Republic of Cuba, 
Democratic Kampuchea, and the Democratic People's Republic of Korea 
(North Korea) are such that there is not a reasonable assurance that a 
payee in those areas will actually receive checks or warrants drawn 
against funds of the United States, or agencies or instrumentalities 
thereof, and be able to negotiate the same for full value.
    (b) A check or warrant intended for delivery in any of the areas 
named in paragraph (a) of this section shall be withheld unless the 
check or warrant is specifically released by the Secretary of the 
Treasury.
    (c) Before a check or warrant drawn against funds blocked pursuant 
to the provisions of Executive Order No. 8389 (3 CFR, 1943 Cum. Supp.), 
as amended, and which remain blocked under the proviso clause of General 
License No. 101 of the Foreign Funds Control Regulations (31 CFR 
520.101) may be released, it will be necessary for a license authorizing 
the release to be issued by the Department of the Treasury, Office of 
Foreign Assets Control, pursuant to E.O. 8389, as amended. In this 
regard, attention is also directed to the following regulations issued 
by the Secretary of the Treasury:
    (1) The Foreign Assets Control Regulations issued on December 17, 
1950 (31 CFR part 500), pursuant to Executive Order 9193 (3 CFR, 1943 
Cum. Supp.), which prohibit transactions involving payments to nationals 
of the Democratic People's Republic of Korea (North Korea), the 
Socialist Republic of Vietnam, and Democratic Kampuchea, except to the 
extent that any such payments have been authorized by appropriate 
license,
    (2) The Cuban Assets Control Regulations issued on July 8, 1963 (31 
CFR part 515), pursuant to the same authority, which prohibit similar 
transactions with nationals of Cuba unless licensed, and
    (3) The Iranian Assets Control Regulations issued on November 14, 
1979 (31 CFR part 535), as amended on April 17, 1980, pursuant to 
Executive Orders 12170 and 12211, which prohibit transactions in 
property of the Iranian Government or its instrumentalities and 
transfers of funds to persons in Iran, except as authorized by 
appropriate license.
    (d) Powers of attorney for the receipt or collection of checks or 
warrants or for the proceeds of checks or warrants included within the 
determination of the Secretary of the Treasury set forth in paragraph 
(a) of this section will not be recognized.

[41 FR 15847, Apr. 15, 1976, as amended at 44 FR 51568, Sept. 4, 1979; 
45 FR 47678, July 16, 1980; 61 FR 41739, Aug. 12, 1996]



Sec. 211.2  Claims for the release of withheld checks or for the proceeds thereof.

    Claims for the release of checks or warrants withheld from delivery 
or for the proceeds thereof, shall be filed with the administrative 
agency which would have originally authorized such issuance, e.g., 
claims arising out of checks or warrants representing payments under 
laws administered by the Department of Veterans Affairs shall be filed 
with the Secretary of Veterans Affairs, Department of Veterans Affairs, 
Washington, DC 20420.

[61 FR 41739, Aug. 12, 1996]

[[Page 55]]



Sec. 211.3  Exceptions.

    The regulations of this part do not apply to payments to foreign 
governments, nor to checks or warrants issued in payment of salaries or 
wages, or for goods or services purchased by the Government of the 
United States in foreign countries, unless such payments are subject to 
the Foreign Funds Control Regulations (31 CFR part 520), the Foreign 
Assets Control Regulations (31 CFR part 500), the Cuban Assets Control 
Regulations (31 CFR part 515), or the Iranian Assets Control Regulations 
(31 CFR part 535).

[45 FR 47678, July 16, 1980]



Sec. 211.4  Implementing instructions.

    Implementing instructions will be issued in Part IV, ``Disbursing,'' 
of the Treasury Fiscal Requirements Manual for Guidance of Departments 
and Agencies.

[41 FR 15847, Apr. 15, 1976]



PART 215--WITHHOLDING OF DISTRICT OF COLUMBIA, STATE, CITY AND COUNTY INCOME OR EMPLOYMENT TAXES BY FEDERAL AGENCIES--Table of Contents




                     Subpart A--General Information

Sec.
215.1  Scope of part.
215.2  Definitions.

                          Subpart B--Procedures

215.3  Relationship of Standard Agreement to existing agreements.
215.4  Procedures for entering into a Standard Agreement.
215.5  Procedures for an agreement other than a Standard Agreement.

                      Subpart C--Standard Agreement

215.6  In general.
215.7  Parties.
215.8  Compliance by agencies.
215.9  Withholding certificates.
215.10  Change of legal residence by members of the Armed Forces.
215.11  Agency withholding procedures.
215.12  Miscellaneous provisions.
215.13  Supersession, amendment and termination provisions.

    Authority: 5 U.S.C. 5516, 5517, and 5520 and section 4 of Executive 
Order 11997, June 22, 1977 (42 FR 31759).

    Source: 42 FR 33731, July 1, 1977, unless otherwise noted.



                     Subpart A--General Information



Sec. 215.1  Scope of part.

    This part relates to agreements between the Secretary of the 
Treasury and States (including the District of Columbia), cities or 
counties for withholding of State, city or county income or employment 
taxes from the compensation of civilian Federal employees, and for the 
withholding of State income taxes from the compensation of members of 
the Armed Forces. Subpart A contains general information and 
definitions. Subpart B prescribes the procedures to be followed in 
entering into an agreement for the withholding of State, city or county 
income or employment taxes. Subpart C is the Standard Agreement which 
the Secretary will enter into with any State, city or county which 
qualifies to have tax withheld. Requests for deviations from this 
Standard Agreement will be agreed to by the Secretary only if the State, 
city or county's unique circumstances require it.



Sec. 215.2  Definitions.

    As used in this part:
    (a) Agency means each of the executive agencies and military 
departments (as defined in 5 U.S.C. 105 and 102, respectively) and the 
United States Postal Service; and in addition, for city or county 
withholding purposes only, all elements of the judicial branch.
    (b) City means any unit of general local government.
    (1) Which:
    (A) Is classified as a municipality by the United States Bureau of 
the Census, or
    (B) Is a town or township which, in the determination of the 
Secretary of the Treasury,
    (i) Possesses powers and performs functions comparable to those 
associated with municipalities,
    (ii) Is closely settled, and
    (iii) Contains within its boundaries no incorporated places as 
defined by the United States Bureau of the Census; and
    (2) Within the political boundaries of which five hundred or more 
persons are

[[Page 56]]

regularly employed by all agencies of the Federal Government.
    (c) City income or employment taxes means any form of tax for which, 
under a city ordinance:
    (1) Collection is provided by imposing on employers generally the 
duty of withholding sums from the pay of employees and making returns of 
the sums to a designated city officer, department, or instrumentality; 
and
    (2) The duty to withhold generally is imposed on the payment of 
compensation earned within the jurisdiction of the city in the case of 
employees whose regular place of employment is within such jurisdiction. 
Whether the tax is described as an income, wage, payroll, earnings, 
occupational license, or otherwise, is immaterial.
    (d) Compensation as applied to employees of an agency and members of 
the Armed Forces means wages as defined in 26 U.S.C. 3401(a) and 
regulations issued thereunder.
    (e) County means any unit of local general Government which is 
classified as a county by the Bureau of the Census and within the 
political boundaries of which 500 or more persons are regularly employed 
by all agencies of the Federal Government.
    (f) County income or employment taxes means any form of tax for 
which, under a county ordinance:
    (1) Collection is provided by imposing on employers generally the 
duty of withholding sums from the pay of employees and making returns of 
the sums to a designated county officer, department, or instrumentality; 
and
    (2) The duty to withhold generally is imposed on the payment of 
compensation earned within the jurisdiction of the country in the case 
of employees whose regular place of employment is within such 
jurisdiction. Whether the tax is described as an income, wage, payroll, 
earnings, occupational license, or otherwise, is immaterial.
    (g) District of Columbia income tax means the income tax imposed 
under 47 District of Columbia Code, chapter 15, subchapter II.
    (h)(1) Employees for the purpose of State income tax withholding, 
means all employees of an agency, other than members of the armed 
forces. For city and county income or employment tax withholding, it 
means:
    (i) Employees of an agency;
    (ii) Members of the National Guard, participating in exercises or 
performing duty under 32 U.S.C. 502; or
    (iii) Members of the Ready Reserve, participating in scheduled 
drills or training periods, or serving on active duty for training under 
10 U.S.C. 270(a).


The term does not include retired personnel, pensioners, annuitants, or 
similar beneficiaries of the Federal Government, who are not performing 
active civilian service or persons receiving remuneration for services 
on a contract-fee basis.
    (2) Employees for purposes of District of Columbia income tax 
withholding, means employees as defined in 47 District of Columbia Code 
1551c(z).
    (i) Members of the Armed Forces means all individuals in active duty 
status (as defined in 10 U.S.C. 101(22)) in regular and reserve 
components of the Army, Navy, Air Force, Marine Corps, and Coast Guard, 
including members of the National Guard while participating in exercises 
or performing duty under 32 U.S.C. 502, and members of the Ready Reserve 
while participating in scheduled drills or training periods or serving 
on active duty for training under 10 U.S.C. 270(a).
    (j) Ordinance means an ordinance, order, resolution, or similar 
instrument which is duly adopted and approved by a city or county in 
accordance with the constitution and statutes of the state in which it 
is located and which has the force of law within such city or county.
    (k) Regular place of Federal employment means the official duty 
station, or other place, where an employee actually and normally (i.e., 
other than in a travel or temporary duty status) performs services, 
irrespective of residence.
    (l) Secretary means Secretary of the Treasury and Fiscal Assistant 
Secretary or his designee.
    (m) State means a State of the United States or the District of 
Columbia, unless otherwise specified.
    (n) State income tax means any form of tax for which, under a State 
status:
    (1) Collection is provided, either by imposing on employers 
generally the

[[Page 57]]

duty of withholding sums from the compensation of employees and making 
returns of such sums to the State or by granting to employers generally 
the authority to withhold sums from the compensation of employees, if 
any employee voluntarily elects to have such sums withheld; and
    (2) The duty to withhold generally is imposed, or the authority to 
withhold generally is granted, with respect to the compensation of 
employees who are residents of such State.

[42 FR 33731, July 1, 1977, as amended at 55 FR 3590, Feb. 2, 1990; 55 
FR 7494, Mar. 2, 1990]



                          Subpart B--Procedures



Sec. 215.3  Relationship of Standard Agreement to existing agreements.

    (a) Subpart C of this part is the Standard Agreement which the 
Secretary will enter into with a State, city or county. This Standard 
Agreement replaces all prior agreements between the Secretary and the 
State or city covering the withholding of income or employment taxes 
from the compensation of Federal employees. The Standard Agreement is 
essentially the same as the prior agreements. A State of city which 
currently is a party to an agreement with the Secretary covering the 
withholding of income or employment taxes from the compensation of 
Federal employees does not need to apply for a new agreement under this 
part. A State or city currently a party to an agreement will be presumed 
to have consented to be bound by the terms of the Standard Agreement 
(subpart C). If a State or city, which is currently a party, does not 
want to be bound by the Standard Agreement, it shall notify the Fiscal 
Assistant Secretary, Department of the Treasury, Washington, DC 20220, 
in writing over the signature of an officer authorized to bind 
contractually the State or city within 90 days of the effective date of 
this part. The procedures of Sec. 215.5 shall be followed by a State or 
city which proposes to be bound by an agreement other than the Standard 
Agreement.
    (b) The effective date for the replacement of existing State or city 
Standard Agreements by the Standard Agreement appearing as subpart C of 
this part is the effective date of this part. For current other-than-
Standard-Agreements, it is 120 days after the effective date of this 
part unless an earlier effective date is specifically agreed to or a new 
agreement which is other than the Standard Agreement of subpart C, is 
entered into as provided in this subpart.



Sec. 215.4  Procedures for entering into a Standard Agreement.

    (a) A State, city or county which does not have an existing 
agreement and wishes to enter into a Standard Agreement shall indicate 
in a letter its agreement to be bound by the provisions of subpart C. 
The letter shall be addressed to the Fiscal Assistant Secretary, 
Department of the Treasury, Washington, DC 20220, and be signed by an 
officer authorized to bind contractually the State, city or county. 
Copies of all applicable State laws, city or county ordinances and 
implementing regulations, instructions, and forms shall be enclosed. The 
letter shall also indicate the title and address of the official whom 
Federal agencies may contact to obtain forms and other information 
necessary to implement withholding.
    (b) Within 120 days of the receipt of the letter from the State, 
city or county official, the Fiscal Assistant Secretary will, by letter, 
notify the State, city or county:
    (1) That the Standard Agreement has been entered into as of the date 
of the Fiscal Assistant Secretary's letter, or
    (2) That an agreement cannot be entered into with the State, city or 
county and the reasons for that determination.

The withholding of the State, city or county income or employment tax 
shall commence within 90 days after the effective date of the agreement.



Sec. 215.5  Procedures for an agreement other than a Standard Agreement.

    (a) If a State, city or county proposes an agreement which varies 
from the Standard Agreement, the State, city or county shall follow the 
procedure in Sec. 215.4(a), except that its letter shall indicate which 
provisions of the Standard Agreement are not acceptable and

[[Page 58]]

the basis therefor, and propose substitute provisions.
    (b) Within 60 days of the receipt of the letter from the State, city 
or county official, the Fiscal Assistant Secretary will notify the 
State, city or county which substitute provisions may be included in the 
agreement. The State, city or county shall, by letter, notify the Fiscal 
Assistant Secretary if it accepts such an agreement. When accepted by 
the State, city or county the effective date of that agreement shall be 
the date such acceptance letter is received by the Fiscal Assistant 
Secretary. The withholding of the State, city or county income or 
employment tax shall commence within 90 days after the effective date of 
the agreement.



                      Subpart C--Standard Agreement



Sec. 215.6  In general.

    This subpart is the text of the Standard Agreement between the 
Secretary and the State, city or county. The terms used in this 
agreement are defined in Sec. 215.2 of this part.



Sec. 215.7  Parties.

    The parties to this agreement are the Secretary and the State, city 
or county which has entered into this agreement pursuant to 5 U.S.C. 
5516, 5517, or 5520 and Executive Order 11997 (June 22, 1977).



Sec. 215.8  Compliance by agencies.

    (a) In the case of an agreement with a State, the head of each 
agency is required to withhold State income taxes from the compensation 
of:
    (1) Employees of such agency who are subject to such taxes and whose 
regular place of Federal employment is within the State, and
    (2) Members of the Armed Forces who are subject to such taxes and 
who are legal residents of the State.

The foregoing is also applicable with respect to a State whose statutes 
permit but do not require withholding by employers, provided the 
employee voluntarily elects to have such tax withheld.
    (b) In the case of an agreement with a city or county, the head of 
each agency is required to withhold city or county income or employment 
taxes from the compensation of any employee of the agency who is subject 
to the tax, and
    (1) Whose regular place of Federal employment is within the city or 
county, or
    (2) Is a resident of the city or county.
    (c) In withholding taxes, the head of each agency, except as 
otherwise provided in this agreement, shall comply with the withholding 
provisions of the State, city or county income or employment tax 
statute, regulations, procedural instructions and reciprocal agreements 
related thereto.

(Pub. L. 95-365, 92 Stat. 599 (5 U.S.C. 5520))

[42 FR 33731, July 1, 1977, as amended at 44 FR 4670, Jan. 23, 1979]



Sec. 215.9  Withholding certificates.

    Each agency may require employees or members of the Armed Forces 
under its jurisdiction to complete a withholding certificate in order to 
calculate the amount to be withheld. The agency shall use the 
withholding certificate which the State, city or county has prescribed. 
Where the State, city or county has not prescribed a certificate, the 
agency may use a certificate approved by the Department of the Treasury. 
The agency may rely on the information in the certificate. Copies of 
completed certificates shall be provided to the taxing authority by 
agencies upon request.



Sec. 215.10  Change of legal residence by members of the Armed Forces.

    (a) In determining the legal residence of a member of the Armed 
Forces for tax withholding purposes, the head of an agency at all times 
may rely on the agency's current records, which may include a 
certificate of legal residence. The form of the certificate of legal 
residence shall be approved by the Department of the Treasury. A change 
of legal residence of a member of the Armed Forces shall become 
effective for tax withholding purposes only after a member of the Armed 
Forces completes a certificate indicating a new legal residence and 
delivers it to the agency.

[[Page 59]]

    (b) Heads of agencies shall notify the State of prior legal 
residence of the member of the Armed Forces involved on a monthly basis 
concerning the change of the member's legal residence. The notification 
shall include the name, social security number, current mailing address 
and the new legal residence of such member of the Armed Forces. The 
effective date of the change in legal residence shall also be included 
in the notification.



Sec. 215.11  Agency withholding procedures.

    (a) State income tax shall be withheld only on the entire 
compensation of Federal employees and members of the Armed Forces. 
Nonresident employees, who under the State income tax law are required 
to allocate at least three-fourths of their compensation to the State, 
shall be subject to withholding on their entire compensation. 
Nonresident employees, who under the State income tax law are required 
to allocate less than three-fourths of their compensation to the State, 
may elect to:
    (1) Have State income tax withheld on their entire compensation, or
    (2) Have no income tax withheld on their compensation.
    (b) In calculating the amount to be withheld from an employee's or a 
member's compensation, each agency shall use the method prescribed by 
the State income tax statute or city or county ordinance or a method 
which produces approximately the tax required to be withheld:
    (1) By the State income tax statute from the compensation of each 
employee or member of the Armed Forces subject to such income tax, or
    (2) By the city or county ordinance from the compensation of each 
employee subject to such income or employment tax.
    (c) Where it is the practice of a Federal agency under Federal tax 
withholding procedure to make returns and payment of the tax on an 
estimated basis, subject to later adjustment based on audited figures, 
this practice may be applied with respect to the State, city of county 
income or employment tax where the agency has made appropriate 
arrangements with the State, city or county income tax authorities.
    (d) Copies of Federal Form W-2, ``Wage and Tax Statement'', may be 
used for reporting withheld taxes to the State, city or county.
    (e) Withholding shall not be required on wages earned but unpaid at 
the date of an employee's or member's death.
    (f) Withholding of District of Columbia income tax shall not apply 
to pay of employees who are not residents of the District of Columbia as 
defined in 47 District of Columbia Code, chapter 15, subchapter II.



Sec. 215.12  Miscellaneous provisions.

    Nothing in this agreement shall be deemed:
    (a) To require collection by agencies of the United States of 
delinquent tax liabilities of Federal employees or members of the Armed 
Forces, or
    (b) To consent to the application of any provision of law of the 
State, city or county which has the effect of:
    (1) Imposing more burdensome requirements upon the United States 
than it imposes on other employers, or
    (2) Subjecting the United States or any of its officers or employees 
to any penalty or liability, or
    (c) To consent to procedures for withholding, filing of returns, and 
payment of the withheld taxes to a State, city or county that do not 
conform to the usual fiscal practices of agencies, or
    (d) To permit withholding of a city or county tax from the pay of a 
Federal employee who is not a resident of, or whose regular place of 
Federal employment is not within, the State in which the city or county 
is located, unless the employee consents to the withholding, or
    (e) To permit the withholding of city or county income or employment 
taxes from the pay of members of the Armed Forces of the United States, 
or
    (f) To allow agencies to accept compensation from a State, city or 
county for services performed in withholding of State or city or county 
income or employment taxes.

(Pub. L. 95-365, 92 Stat. 599 (5 U.S.C. 5520))

[42 FR 33731, July 1, 1977, as amended at 44 FR 4670, Jan. 23, 1979]

[[Page 60]]



Sec. 215.13  Supersession, amendment and termination provisions.

    (a) This agreement supersedes any prior agreement between the 
Secretary of the Treasury and a State or city pursuant to 5 U.S.C. 5516, 
5517, or 5520.
    (b) This agreement shall be subject to any amendment of 5 U.S.C. 
5516, 5517, 5520 or Executive Order 11997, and any rules and regulations 
issued prusuant to them and amendments thereto.
    (c) This agreement may be terminated as to a specific State or city 
or county which is a party to this agreement by providing written notice 
to that effect to the Secretary at least 90 days prior to the proposed 
termination.



PART 223--SURETY COMPANIES DOING BUSINESS WITH THE UNITED STATES--Table of Contents




Sec.
223.1  Certificate of authority.
223.2  Application for certificate of authority.
223.3  Issuance of certificates of authority.
223.4  Deposits.
223.5  Business.
223.6  Requirements applicable to surety companies.
223.7  Investment of capital and assets.
223.8  Financial reports.
223.9  Valuation of assets and liabilities.
223.10  Limitation of risk.
223.11  Limitation of risk: Protective methods.
223.12  Recognition as reinsurer.
223.13  Full penalty of the obligation regarded as the liability; 
          exceptions.
223.14  Schedules of single risks.
223.15  Paid up capital and surplus for Treasury rating purposes; how 
          determined.
223.16  List of certificate holding companies.
223.17  Revocation.
223.18  Performance of agency obligations.
223.19  Informal hearing on agency complaints.
223.20  Final decisions.
223.21  Reinstatement.
223.22  Fees for services of the Treasury Department.

    Authority: 80 Stat. 379; 5 U.S.C. 301; 6 U.S.C. 8.



Sec. 223.1  Certificate of authority.

    The regulations in this part will govern the issuance by the 
Secretary of the Treasury of certificates of authority to bonding 
companies to do business with the United States as sureties on, or 
reinsurers of, recognizances, stipulations, bonds, and undertakings, 
hereinafter sometimes called obligations, under the provisions of the 
Act of July 30, 1947 (61 Stat. 646, as amended; 6 U.S.C. 6-13), and the 
acceptance of such obligations from such companies so long as they 
continue to hold said certificates of authority.

[28 FR 1039, Feb. 2, 1963, as amended at 40 FR 6499, Feb. 12, 1975; 40 
FR 8335, Feb. 27, 1975]



Sec. 223.2  Application for certificate of authority.

    Every company wishing to apply for a certificate of authority shall 
address the Assistant Commissioner, Comptroller, Financial Management 
Service, U.S. Department of Treasury, Washington, DC 20226, who will 
notify the company of the data which the Secretary of the Treasury 
determines from time to time to be necessary to make application. In 
accord with 6 U.S.C. 8 the data will include a copy of the applicant's 
charter or articles of incorporation and a statement, signed and sworn 
to by its president and secretary, showing its assets and liabilities. A 
fee shall be transmitted with the application in accordance with the 
provisions of Sec. 223.22(a)(i).

[34 FR 20188, Dec. 24, 1969, as amended at 37 FR 1232, Jan. 27, 1972; 40 
FR 6499, Feb. 12, 1975; 43 FR 12678, Mar. 27, 1978; 49 FR 47002, Nov. 
30, 1984]



Sec. 223.3  Issuance of certificates of authority.

    (a) If, from the evidence submitted in the manner and form herein 
required, subject to the guidelines referred to in Sec. 223.9 the 
Secretary of the Treasury shall be satisfied that such company has 
authority under its charter or articles of incorporation to do the 
business provided for by the Act referred to in Sec. 223.1, and if the 
Secretary of the Treasury shall be satisfied from such company's 
financial statement and from any further evidence or information he may 
require, and from such examination of the company, at its own expense, 
as he may cause to be made, that such company has a capital fully paid 
up in cash of not less than $250,000, is solvent and financially and 
otherwise qualified to do the business provided for in said Act, and is 
able to keep and perform its contracts, he will,

[[Page 61]]

subject to the further conditions herein contained, issue a certificate 
of authority to such company, under the seal of the Treasury Department, 
to qualify as surety on obligations permitted or required by the laws of 
the United States to be given with one or more sureties, for a term 
expiring on the last day of June next following. The certificate of 
authority shall be renewed annually on the first day of July, so long as 
the company remains qualified under the law and the regulations in this 
part, and transmits to the Assistant Commissioner, Comptroller by March 
1 each year the fee in accordance with the provisions of 
Sec. 223.22(a)(3).
    (b) If a company meets the requirements for a certificate of 
authority as an acceptable surety on Federal bonds in all respects 
except that it is a United States branch of a company not incorporated 
under the laws of the United States or of any State, or it is limited by 
its articles of incorporation or corporate charter to reinsure business 
only, it may be issued a certificate of authority as a reinsuring 
company on Federal bonds. The fees for initial application and renewal 
of a certificate as a reinsuring company shall be the same as the fees 
for a certificate of authority as an acceptable surety on Federal bonds.

[33 FR 8390, June 6, 1968, as amended at 34 FR 20188, Dec. 24, 1969; 37 
FR 1232, Jan. 27, 1972; 40 FR 6499 Feb. 12, 1975; 40 FR 8335, Feb. 27, 
1975; 42 FR 8637, Feb. 11, 1977; 43 FR 12678, Mar. 27, 1978; 43 FR 
39089, Sept. 1, 1978; 49 FR 47002, Nov. 30, 1984]



Sec. 223.4  Deposits.

    No such company will be granted authority to do business under the 
provisions of the act referred to in Sec. 223.1 unless it shall have and 
maintain on deposit with the Insurance Commissioner. or other proper 
financial officer, of the State in which it is incorporated, or of any 
other State of the United States, for the protection of claimants, 
including all its policyholders in the United States, legal investments 
having a current market value of not less than $100,000.

[36 FR 9630, May 27, 1971]



Sec. 223.5  Business.

    (a) The company must engage in the business of suretyship whether or 
not also making contracts in other classes of insurance, but shall not 
be engaged in any type or class of business not authorized by its 
charter or the laws of the State in which the company is incorporated. 
It must be the intention of the company to engage actively in the 
execution of surety bonds in favor of the United States.
    (b) No bond is acceptable if it has been executed (signed and/or 
otherwise validated) by a company or its agent in a State where it has 
not obtained that State's license to do surety business. Although a 
company must be licensed in the State or other area in which it executes 
a bond, it need not be licensed in the State or other area in which the 
principal resides or where the contract is to be performed. The term 
other area includes the Canal Zone, District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands.

[40 FR 6499, Feb. 12, 1975]



Sec. 223.6  Requirements applicable to surety companies.

    Every company now or hereafter authorized to do business under the 
act of Congress referred to in Sec. 223.1 shall be subject to the 
regulations contained in this part.

[38 FR 22779, Aug. 24, 1973]



Sec. 223.7  Investment of capital and assets.

    The cash capital and other funds of every such company must be 
safely invested in accordance with the laws of the State in which it is 
incorporated and will be valued on the basis set forth in Sec. 223.9. 
The Secretary of the Treasury will periodically issue instructions for 
the guidance of companies with respect to investments and other matters. 
These guidelines may be updated from time to time to meet changing 
conditions in the industry.

[42 FR 8637, Feb. 11, 1977]



Sec. 223.8  Financial reports.

    (a) Every such company will be required to file with the Assistant 
Commissioner, Comptroller on or before the

[[Page 62]]

last day of January of each year, a statement of its financial condition 
made up as of the close of the preceding calendar year upon the annual 
statement blank adopted by the National Association of Insurance 
Commissioners, signed and sworn to by its president and secretary.

On or before the last days of April, July and October of each year, 
every such company shall file a financial statement with the Assistant 
Commissioner, Comptroller as of the last day of the preceding month. A 
form is prescribed by the Treasury for this purpose. The quarterly 
statement form of the National Association of Insurance Commissioners 
when modified to conform to the Treasury's requirements, may be 
substituted for the Treasury's form. The quarterly statement will be 
signed and sworn to by the company's president and secretary or their 
authorized designees.
    (b) Every such company shall furnish such other exhibits or 
information, and in such manner as the Secretary of the Treasury may at 
any time require.

[10 FR 2348, Mar. 1, 1945, as amended at 42 FR 8637, Feb. 11, 1977; 49 
FR 47002, Nov. 30, 1984]



Sec. 223.9  Valuation of assets and liabilities.

    In determining the financial condition of every such company, its 
assets and liabilities will be computed in accordance with the 
guidelines contained in the Treasury's current Annual Letter to 
Executive Heads of Surety Companies. However, the Secretary of the 
Treasury may value the assets and liabilities of such companies in his 
discretion. Credit will be allowed for reinsurance in all classes of 
risks if the reinsuring company holds a certificate of authority from 
the Secretary of the Treasury, or has been recognized as an admitted 
reinsurer in accord with Sec. 223.12.

[42 FR 8637, Feb. 11, 1977]



Sec. 223.10  Limitation of risk.

    Except as provided in Sec. 223.11, no company holding a certificate 
of authority shall underwrite any risk on any bond or policy on behalf 
of any individual, firm, association, or corporation, whether or not the 
United States is interested as a party thereto, the amount of which is 
greater than 10 percent of the paid-up capital and surplus of such 
company, as determined by the Secretary of the Treasury. That figure is 
hereinafter referred to as the underwriting limitation.

[34 FR 20188, Dec. 24, 1969]



Sec. 223.11  Limitation of risk: Protective methods.

    The limitation of risk prescribed in Sec. 223.10 may be complied 
with by the following methods:
    (a) Coinsurance. Two or more companies may underwrite a risk on any 
bond or policy, the amount of which does not exceed their aggregate 
underwriting limitations. Each company shall limit its liability upon 
the face of the bond or policy, to a definite specified amount which 
shall be within its underwriting limitation.
    (b) Reinsurance. (1) In respect to bonds running to the United 
States, liability in excess of the underwriting limitation shall be 
reinsured within 45 days from the date of execution and delivery of the 
bond with one or more companies holding a certificate of authority from 
the Secretary of the Treasury. Such reinsurance shall not be in excess 
of the underwriting limitation of the reinsuring company. Where 
reinsurance is contemplated, Federal agencies may accept a bond from the 
direct writing company in satisfaction of the total bond requirement 
even though it may exceed the direct writing company's underwriting 
limitation. Within the 45 day period, the direct writing company shall 
furnish to the Federal agency any necessary reinsurance agreements. 
However, a Federal agency may, at its discretion, require that 
reinsurance be obtained within a lesser period than 45 days, and may 
require completely executed reinsurance agreements in hand before making 
a final determination that any bond is acceptable. Reinsurance may 
protect bonds required to be furnished to the United States by the 
Miller Act (40 U.S.C. 270a through 270d) covering contracts for the 
construction, alteration, or repair of any public building or public 
work of the United States, as well as other types of Federal bonds. Use 
of reinsurance or coinsurance to protect

[[Page 63]]

such bonds is at the discretion of the direct writing company. 
Reinsurance shall be executed on reinsurance agreement forms (Standard 
Form 273 for Miller Act Performance bonds (formerly form No. TFS 6317), 
Standard Form 274 for Miller Act Payment bonds (formerly form No. TFS 
6318), and Standard Form 275 for other types of Federal bonds (formerly 
form No. TFS 6319)). Federal bond-approving officers may obtain the 
forms by submitting a requisition in FEDSTRIP/MILSTRIP format to the 
General Services Administration regional office providing support to the 
requesting Government organization. In addition, the forms are available 
to authorized sureties and reinsurers from the Superintendent of 
Documents, Government Printing Office, Stop: SSMC, Washington, DC 20402.
    (2) In respect to risks covered by bonds or policies not running to 
the United States, liability in excess of the underwriting limitation 
shall be reinsured within 45 days from the date of execution and 
delivery of the bond or policy with:
    (i) One or more companies holding a certificate of authority from 
the Secretary of the Treasury as an acceptable surety on Federal bonds 
or one or more companies holding a certificate of authority as an 
acceptable reinsuring company on such bonds, or
    (ii) One or more companies recognized as an admitted reinsurer in 
accord with Sec. 223.12, or
    (iii) A pool, association, etc., to the extent that it is composed 
of such companies, or
    (iv) An instrumentality or agency of the United States which is 
permitted by Federal law or regulation to execute reinsurance contracts.
    (3) No certificate-holding company may cede to a reinsuring company 
recognized under Sec. 223.12 any risk in excess of 10 percent of the 
latter company's paid-up capital and surplus.
    (c) Other methods. In respect to all risks other than Miller Act 
performance and payment bonds running to the United States, which must 
be coinsured or reinsured in accord with paragraph (a) or (b)(1) of this 
section respectively, the excess liability may otherwise be protected:
    (1) By the deposit with the company in pledge, or by conveyance to 
it in trust for its protection, of assets admitted by the Treasury the 
current market value of which is at least equal to the liability in 
excess of its underwriting limitation, or
    (2) If such obligation was incurred on behalf of or on account of a 
fiduciary holding property in a trust capacity, by a joint control 
agreement which provides that the whole or a sufficient portion of the 
property so held may not be disposed of or pledged in any way without 
the consent of the insuring company.

[34 FR 20188, Dec. 24, 1969, as amended at 40 FR 6499, Feb. 12, 1975; 41 
FR 10605, Mar. 12, 1976; 42 FR 8637, Feb. 11, 1977; 43 FR 39089, Sept. 
1, 1978]



Sec. 223.12  Recognition as reinsurer.

    (a) Application by U.S. company. Any company organized under the 
laws of the United States or of any State thereof, wishing to apply for 
recognition as an admitted reinsurer (except on excess risks running to 
the United States) of surety companies doing business with the United 
States, shall file the following data with the Assistant Comptroller for 
Auditing and shall transmit therewith the fee in accordance with the 
provisions of Sec. 223.22(a)(2):
    (1) A certified copy of its charter or articles of incorporation, 
and
    (2) A certified copy of a license from any State in which it has 
been authorized to do business, and
    (3) A copy of the latest available report of its examination by a 
State Insurance Department, and
    (4) A statement of its financial condition, as of the close of the 
preceding calendar year, on the annual statement form of the National 
Association of Insurance Commissioners, signed and sworn to by two 
qualified officers of the company, showing that it has a capital stock 
paid up in cash of not less than $250,000, in the case of a stock 
insurance company, or has net assets of not less than $500,000 over and 
above all liabilities, in the case of a mutual insurance company, and
    (5) Such other evidence as the Secretary of the Treasury may 
determine necessary to establish that it is solvent

[[Page 64]]

and able to keep and perform its contracts.
    (b) Application by a U.S. branch. A U.S. branch of an alien company 
applying for such recognition shall file the following data with the 
Assistant Commissioner, Comptroller and shall transmit therewith the fee 
in accordance with the provisions of Sec. 223.22(a)(2):
    (1) The submissions listed in paragraphs (a) (1) through (5) of this 
section, except that the financial statement of such branch shall show 
that it has net assets of not less than $250,000 over and above all 
liabilities, and
    (2) Evidence satisfactory to the Secretary of the Treasury to 
establish that it has on deposit in the United States not less than 
$250,000 available to its policyholders and creditors in the United 
States.
    (c) Financial reports. Each company recognized as an admitted 
reinsurer shall file with the Assistant Commissioner, Comptroller on or 
before the first day of March of each year its financial statement and 
such additional evidence as the Secretary of the Treasury determines 
necessary to establish that the requirements of this section are being 
met. A fee shall be transmitted with the foregoing data, in accordance 
with the provisions of Sec. 223.22(a)(4).

[34 FR 20189, Dec. 24, 1969, as amended at 37 FR 1232, Jan. 27, 1972; 40 
FR 6499, Feb. 12, 1975; 43 FR 12678, Mar. 27, 1978; 49 FR 47002, Nov. 
30, 1984]



Sec. 223.13  Full penalty of the obligation regarded as the liability; exceptions.

    In determining the limitation prescribed in this part, the full 
penalty of the obligation will be regarded as the liability, and no 
offset will be allowed on account of any estimate of risk which is less 
than such full penalty, except in the following cases:
    (a) Appeal bonds; in which case the liability will be regarded as 
the amount of the judgment appealed from, plus 10 percent of said amount 
to cover interest and costs.
    (b) Bonds of executors, administrators, trustees, guardians, and 
other fiduciaries, where the penalty of the bond or other obligation is 
fixed in excess of the estimated value of the estate; in which cases the 
estimated value of the estate, upon which the penalty of the bond was 
fixed, will be regarded as the liability.
    (c) Credit will also be allowed for indemnifying agreements executed 
by sole heirs or beneficiaries of an estate releasing the surety from 
liability.
    (d) Contract bonds given in excess of the amount of the contract; in 
which cases the amount of the contract will be regarded as the 
liability.
    (e) Bonds for banks or trust companies as principals, conditioned to 
repay moneys on deposit, whereby any law or decree of a court, the 
amount to be deposited shall be less than the penalty of the bond; in 
which cases the maximum amount on deposit at any one time will be 
regarded as the liability.

[Dept. Circ. 297, July 5, 1922]



Sec. 223.14  Schedules of single risks.

    During the months of January, April, July, and October of each year 
every company will be required to report to the Secretary of the 
Treasury every obligation which it has assumed during the 3 months 
immediately preceding, the penal sum of which is greater than 10 percent 
of its paid up capital and surplus, together with a full statement of 
the facts which tend to bring it within the provisions of this part, on 
a form suitable for the purpose.

[Dept. Circ. 297, July 5, 1922]



Sec. 223.15  Paid up capital and surplus for Treasury rating purposes; how determined.

    The amount of paid up capital and surplus of any such company shall 
be determined on an insurance accounting basis under the regulations in 
this part, from the company's financial statements and other 
information, or by such examination of the company at its own expense as 
the Secretary of the Treasury may deem necessary or proper.

[42 FR 8637, Feb. 11, 1977]

[[Page 65]]



Sec. 223.16  List of certificate holding companies.

    A list of qualified companies is published annually as of July 1 in 
Department Circular No. 570, Companies Holding Certificates of Authority 
as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring 
Companies, with information as to underwriting limitations, areas in 
which licensed to transact surety business and other details. If the 
Secretary of the Treasury shall take any exceptions to the annual 
financial statement submitted by a company, he shall, before issuing 
Department Circular 570, give a company due notice of such exceptions. 
Copies of the Circular are available from the Assistant Commissioner, 
Comptroller upon request. Selection of a particular qualified company 
from among all companies holding certificates of authority is 
discretionary with the principal required to furnish bond.

[34 FR 20189, Dec. 24, 1969, as amended at 40 FR 6499, Feb. 12, 1975; 42 
FR 8637, Feb. 11, 1977; 49 FR 47002, Nov. 30, 1984]



Sec. 223.17  Revocation.

    Whenever it appears that a company is not complying with the 
requirements of 6 U.S.C. 6-13 and of the regulations in this part, the 
Secretary of the Treasury will:
    (a) In all cases notify the company of the facts or conduct which 
indicate such failure, and provide opportunity to the company to 
respond, and
    (b) In those cases where the public interest in the constant 
financial stability of such a company allows, also provide opportunity 
to the company to demonstrate or achieve compliance with those 
requirements. The Secretary shall revoke a company's certificate of 
authority with advice to it if:
    (1) The company does not respond satisfactorily to his notification 
of noncompliance, or
    (2) The company, provided an opportunity to demonstrate or achieve 
compliance, fails to do so.

[34 FR 20189, Dec. 24, 1969. Redesignated at 38 FR 22779, Aug. 24, 1973, 
as amended at 42 FR 8637, Feb. 11, 1977]



Sec. 223.18  Performance of agency obligations.

    (a) Every company shall promptly honor its bonds naming the United 
States or one of its agencies or instrumentalities as obligee. If an 
agency's demand upon a company on behalf of the agency or laborers, 
materialmen, or suppliers (on payment bonds), for payment of a claim 
against it is not settled to the agency's satisfaction, and the agency's 
review of the situation thereafter establishes that the default is clear 
and the company's refusal to pay is not based on adequate grounds, the 
agency may make a report to the Secretary of the Treasury, including a 
copy of the subject bond, the basis for the claim against the company, a 
chronological resume of efforts to obtain payment, a statement of all 
reasons offered for non-payment, and a statement of the agency's views 
on the matter.
    (b) On receipt of such report from the Federal agency the Secretary 
will, if the circumstances warrant, notify the company concerned that 
the agency report may demonstrate that the company is not keeping and 
performing its contracts and that, in the absence of satisfactory 
explanation, the company's default may preclude the renewal of the 
company's certificate of authority, or warrant prompt revocation of the 
existing certificate. This notice will provide opportunity to the 
company to demonstrate its qualification for a continuance of the 
certificate of authority.

[34 FR 20189, Dec. 24, 1969. Redesignated at 38 FR 22779, Aug. 24, 1973, 
as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.19  Informal hearing on agency complaints.

    (a) Request for informal hearing. If a company determines that the 
opportunity to make known its views, as provided for under 
Sec. 223.18(b), is inadequate, it may, within 20 business days of the 
date of the notice required by Sec. 223.18(b), request, in writing, that 
the Secretary of the Treasury convene an informal hearing.
    (b) Purpose. As soon as possible after a written request for an 
informal hearing is received, the Secretary of the Treasury shall 
convene an informal

[[Page 66]]

hearing, at such time and place as he deems appropriate, for the purpose 
of determining whether revocation of the company's certificate of 
authority is justified.
    (c) Notice. The company shall be advised, in writing, of the time 
and place of the informal hearing and shall be directed to bring all 
documents, records and other information as it may find necessary and 
relevant to substantiate its refusal to settle the claims made against 
it by the Federal agency making the report under Sec. 223.18(a).
    (d) Conduct of hearings. The hearing shall be conducted by a hearing 
officer appointed by the Secretary. The company may be represented by 
counsel and shall have a fair opportunity to present any relevant 
material and to examine the agency's evidence. Formal rules of evidence 
will not apply at the informal hearing.
    (e) Report. Within 30 days after the informal hearing, the hearing 
officer shall make a written report to the Secretary setting forth his 
findings, the basis for his findings, and his recommendations. A copy of 
the report shall be sent to the company.

[38 FR 22779, Aug. 24, 1973]



Sec. 223.20  Final decisions.

    If, after review of the case file, it is the judgment of the 
Secretary that the complaint was unfounded, the Secretary shall dismiss 
the complaint by the Federal agency concerned and shall so notify the 
company. If, however, it is the judgment of the Secretary that the 
company has not fulfilled its obligations to the complainant agency, he 
shall notify the company of the facts or conduct which indicate such 
failure and allow the company 20 business days from the date of such 
notification to demonstrate or achieve compliance. If no showing of 
compliance is made within the period allowed, the Secretary shall either 
preclude renewal of a company's certificate of authority or revoke it 
without further notice.

[38 FR 22779, Aug. 24, 1973, as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.21  Reinstatement.

    If, after one year from the date of the expiration or the revocation 
of the certificate of authority, under Sec. 223.20 a company can show 
that the basis for the non-renewal or revocation has been eliminated and 
that it can comply with the requirements of 6 U.S.C. 6-13 and the 
regulations in this part, a new certificate of authority shall be issued 
without prejudice.

[38 FR 22779, Aug. 24, 1973, as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.22  Fees for services of the Treasury Department.

    (a) Fees shall be imposed an collected, for the services listed in 
paragraphs (a) (1) through (4) of this section which are performed by 
the Treasury Department, regardless of whether the action requested is 
granted or denied. The payee of the check or other instrument shall be 
the Financial Management Service, Treasury Department. The amount of the 
fee will be based on which of the following categories of service is 
requested:
    (1) Examination of a company's application for a certificate of 
authority as an acceptable surety on Federal bonds or for a certificate 
of authority as an acceptable reinsuring company on such bonds (see 
Sec. 223.2);
    (2) Examination of a company's application for recognition as an 
admitted reinsurer (except on excess risks running to the United States) 
of surety companies doing business with the United States (see 
Sec. 223.12(a) and (b));
    (3) Determination of a company's continuing qualifications for 
annual renewal of its certificate of authority (see Sec. 223.3); or
    (4) Determination of a company's continuing qualifications for 
annual renewal of its authority as an admitted reinsurer (see 
Sec. 223.12(c)).
    (b) In a given year a uniform fee will be collected from every 
company requesting a particular category of service, e.g., determination 
of a company's continuing qualifications for annual renewal of its 
certificate of authority. However, the Treasury Department reserves the 
right to redetermine the amounts of fees annually. Fees are determined 
in accordance with Office of Management and Budget Circular A-25, as 
amended.

[[Page 67]]

    (c) Specific fee information may be obtained from the Assistant 
Commissioner, Comptroller at the address shown in Sec. 223.2. In 
addition, a notice of the amount of a fee referred to in Sec. 223.22(a) 
(1) through (4) will be published in the Federal Register as each change 
in such fee is made.

[43 FR 12678, Mar. 27, 1978, as amended at 49 FR 47001 and 47002, Nov. 
30, 1984]



PART 224--FEDERAL PROCESS AGENTS OF SURETY COMPANIES--Table of Contents




Sec.
224.1  Statutory provision.
224.2  Appointment of process agents.
224.3  Powers of attorney appointing process agents; with whom filed.
224.4  Power of attorney; form.
224.5  Process agents; termination of authority.
224.6  United States district courts; location of divisional offices.

    Authority: 31 U.S.C. 9306.



Sec. 224.1  Statutory provision.

    The rules and regulations in this part are prescribed for carrying 
into effect 31 U.S.C. 9306.

[61 FR 26840, May 29, 1996]



Sec. 224.2  Appointment of process agents.

    (a) Generally. Companies should especially note that the law 
prohibits the doing of business under the provisions of this act beyond 
the State under whose laws it was incorporated and in which its 
principal office is located until an agent is appointed to accept 
Federal process on behalf of the company. An agent for the service of 
Federal process should be appointed:
    (1) In the district where the principal resides;
    (2) In the district where the obligation is to be undertaken and 
performed; and
    (3) Also in the District of Columbia where the bond is returnable 
and filed.

The appointment of process agents pursuant to a local State statute is 
not compliance with the Federal law. Although one and the same agent may 
serve under both the State and Federal appointments, he must, 
nevertheless, be especially designated to accept Federal process. It 
should also be noted that the agent so designated must reside within the 
jurisdiction of the court for the judicial district wherein such 
suretyship is to be undertaken, and must be citizen of the State, 
Territory, or District of Columbia in which such court is held. 
Consequently an agent residing in the northern district of New York 
could not at the same time serve as the company's Federal process agent 
for the southern district of that State.
    (b) Agent required in District of Columbia. Every company must, 
immediately upon receipt of its initial authority from the Secretary of 
the Treasury, appoint a suitable person resident in the District of 
Columbia on whom may be served all lawful process issued by the Federal 
Courts in said district. This appointment is required whether or not the 
company contemplates the writing of bonds in favor of the United States 
to be undertaken within the District of Columbia.
    (c) Agent not required in State of incorporation where principal 
office is located. The law does not require the appointment of Federal 
process agents for the State under whose laws the company is 
incorporated, and in which its principal office is located.

[17 FR 2605, Mar. 26, 1952]



Sec. 224.3  Powers of attorney appointing process agents; with whom filed.

    The clerk of the United States district court at the main office in 
each judicial district must be furnished with a sufficient number of 
authenticated copies of the power of attorney appointing an agent for 
the service of process to enable him to file a copy in his office, and 
at each other place where a divisional office of the court is located 
within the judicial district for which the process agent has been 
appointed. Such copies may be authenticated at the home office of the 
company by its officers duly authorized, and sworn to before an officer 
legally authorized to administer oaths. Where the charter of bylaws of 
the corporation do not confer authority on its executive officers to 
give such powers of attorney the authenticated copy filed with the clerk 
of the court must be accompanied by a certified copy of the resolution 
duly adopted by its board of

[[Page 68]]

directors or other governing body showing that the officer making the 
appointment had authority to do so.

[17 FR 2606, Mar. 26, 1952]



Sec. 224.4  Power of attorney; form.

    In making such appointments a power of attorney should be used 
substantially in the following form:

    Know all men by these presents, that the ________________a 
corporation existing under and by virtue of the laws of the State of 
________________ and having its principal office at ____________, 
desiring to comply with section 9306 of Title 31, United States Code, 
hereby constitutes and appoints __________, of ________________, its 
true and lawful attorney and agent in and for the __________ judicial 
district of ______________, upon whom all lawful process in any action 
or proceeding against the company in said district may be served in like 
manner and with the same effect as if the company existed therein, and 
who is authorized to enter an appearance in its behalf.
    In witness whereof the said company, pursuant to proper authority of 
its board of directors or other governing body, has caused these 
presents to be subscribed by its ____________ president and its 
corporate seal to be affixed hereto this ______ day of __________, a.d. 
19--
    [Corporate Seal] __________________________
                                                              President,
State of __________________
    County of ____________________, ss:
    On this ____________ day of ____________, a.d. 19--, before me 
appeared ____________________, president of the ____________________ 
Company, with whom I am personally acquainted, who being duly sworn, 
says that he is ____________________ president of the 
____________________ Company; that he knows the corporate seal of the 
company; that the seal affixed to the foregoing instrument is such 
corporate seal; that it was affixed by order of the board of directors 
or other governing body of said company, and that he signed said 
instrument as ______________ president of said company by like 
authority.
    [Notarial Seal]

[Dept. Cir. Ltr. 4, Nov. 15, 1930, as amended at 49 FR 14340, Apr. 11, 
1984]



Sec. 224.5  Process agents; termination of authority.

    Whenever the authority of a process agent is terminated by reason of 
revocation, disability, removal from the district, or any other cause, 
it shall be the duty of the company to immediately make a new 
appointment.

[40 FR 51194, Nov. 4, 1975. Redesignated at 61 FR 26840, May 29, 1996]



Sec. 224.6  United States district courts; location of divisional offices.

    A list of the divisional offices of the court in each judicial 
district where powers of attorney should be filed may be obtained from 
the Surety Bond Branch, Financial Management Service, Department of the 
Treasury, 3700 East-West Highway, Room 6F04, Hyattsville, MD 20782.

[61 FR 26840, May 29, 1996]



Part 225--ACCEPTANCE OF BONDS SECURED BY GOVERNMENT OBLIGATIONS IN LIEU OF BONDS WITH SURETIES--Table of Contents




Sec.
225.1  Scope.
225.2  Definitions.
225.3  Pledge of Government obligations in lieu of a bond with surety or 
          sureties.
225.4  Pledge of book-entry Government obligations.
225.5  Pledge of definitive Government obligations.
225.6  Payment of interest.
225.7  Custodian duties and responsibilities.
225.8  Bond official duties and responsibilities.
225.9  Return of Government obligations to obligor.
225.10  Other agency practices and authorities.
225.11  Courts.

    Authority: 12 U.S.C. 391; 31 U.S.C. 321; 31 U.S.C. 9301; 31 U.S.C. 
9303.

    Source: 64 FR 4763, Jan. 29, 1999, unless otherwise noted.



Sec. 225.1  Scope.

    The regulation in this part applies to Government agencies accepting 
bonds secured by Government obligations in lieu of bonds with sureties. 
The Financial Management Service (FMS) is the representative of the 
Secretary of the Treasury (Secretary) in all matters concerning this 
part unless otherwise specified. The Commissioner of the FMS may issue 
procedural instructions implementing this regulation.

[[Page 69]]



Sec. 225.2  Definitions.

    For purposes of this part:
    Agency means a department, agency, or instrumentality of the United 
States Government.
    Authenticate instructions means to verify that the instructions 
received are from a bond official.
    Bearer means that ownership of a Government obligation is not 
recorded. Title to such an obligation passes by delivery without 
endorsement and without notice. A bearer obligation is payable on its 
face to the holder at either maturity or call.
    Bond means an executed written instrument, which guarantees the 
fulfillment of an obligation to the United States and sets forth the 
terms, conditions, and stipulations of the obligation.
    Bond official means an agency official having authority under 
Federal law or regulation to approve a bond with surety or sureties and 
to approve a bond secured by Government obligations.
    Book-entry means that the issuance and maintenance of a Government 
obligation is represented by an accounting entry or electronic record 
and not by a certificate.
    Custodian means a Federal Reserve Bank or an entity within the 
United States designated by such Federal Reserve Bank under terms and 
conditions prescribed by such Federal Reserve Bank, a depositary 
specifically designated by the Secretary of the Treasury for purposes of 
this part, or such other entities as the Secretary of the Treasury may 
designate for purposes of this part.
    Definitive means that a Government obligation is issued in engraved 
or printed form.
    Depositary includes, but is not limited to:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (6) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    Federal Reserve means a Federal Reserve Bank and its branches.
    Government obligation means a public debt obligation of the United 
States Government and an obligation whose principal and interest is 
unconditionally guaranteed by the United States Government.
    Obligor includes, but is not limited to, an individual, a trust, an 
estate, a partnership, a corporation, and a sole proprietor.
    Officer authorized to certify assignment means the individual 
identified as a certifying individual at part 306, subpart F of this 
title.
    Person means an individual, a trust, an estate, a partnership, and a 
corporation.
    Pledge means a transfer of security interest in a Government 
obligation to a bond official's agency as collateral in lieu of a bond 
with a surety or sureties.
    Procedural instructions means the Treasury Financial Manual, as 
amended, published by the Financial Management Service.
    Registered means that ownership of a definitive Government 
obligation is listed in the issuer's records, and that the obligation is 
payable at maturity

[[Page 70]]

or call to the person in whose name the obligation is inscribed or to 
that person's assignee.
    Secretary means the Secretary of the Treasury.



Sec. 225.3  Pledge of Government obligations in lieu of a bond with surety or sureties.

    (a) General. An obligor required by Federal law or regulation to 
furnish a bond with surety or sureties may give in lieu thereof to a 
bond official any security acceptable under 31 U.S.C. 9301, as amended. 
The Secretary will designate classes of Government obligations 
acceptable under this part.
    (b) Bond. The bond, at a minimum, shall irrevocably authorize the 
bond official to collect, sell, assign, or transfer such Government 
obligations and any interest retained therefrom in the event of the 
obligor's default in performing any of the terms, conditions, or 
stipulations of such bond. Unless otherwise provided by law, the bond 
shall authorize the bond official to apply the proceeds from the sale, 
assignment, or transfer of such Government obligations, in whole or in 
part, to satisfy any costs incurred by the United States related to the 
default, and to apply any excess proceeds to satisfy any other claim of 
the United States against the obligor. The bond shall not include any 
obligations on custodians which are inconsistent with, or in addition 
to, the obligations in this part. The bond will provide that the bond 
official may retain any interest accruing upon any Government 
obligations, or direct that such interest be retained by the custodian.
    (c) Amount of Government obligations. The obligor shall pledge to 
the bond official Government obligations valued as required by 31 U.S.C. 
9303, as amended.
    (d) Avoiding frequent substitutions. To avoid the frequent 
substitution of Government obligations, the bond official may reject 
Government obligations which mature, or are redeemable, within one year 
from the date they are pledged to the bond official.
    (e) [Reserved]



Sec. 225.4  Pledge of book-entry Government obligations.

    (a) General. Except as otherwise provided by the Secretary in 
procedural instructions, an obligor, or a depositary acting as agent or 
sub-agent for the obligor, or the bond official, shall arrange a pledge 
pursuant to the prior agreement and approval of the bond official, of 
book-entry Government obligations. The Government obligations must be 
transferred to an account for the benefit of the bond official. The 
custodian holding the Government obligations is not required to 
establish that the agreement and approval of the bond official has been 
obtained prior to such a transfer.
    (b) Receipt. Upon the transfer of Government obligations to an 
account for the benefit of the bond official, the custodian will 
promptly issue a receipt or an activity statement, or both, to the bond 
official and to the obligor or a depositary acting as agent or sub-agent 
for the obligor.
    (c) Effect of the transfer. Book-entry Government obligations 
credited to an account for the benefit of the bond official shall have 
the effect as provided in part 357 of this title, or in other applicable 
regulations.



Sec. 225.5  Pledge of definitive Government obligations.

    (a) Type and assignment. Definitive Government obligations may be in 
bearer or registered form, and shall be owned by the obligor.
    (1) Bearer Government obligations. The obligor shall pledge bearer 
Government obligations to the bond official with all unmatured interest 
coupons attached.
    (2) Registered Government obligations; assignment. The obligor shall 
pledge registered Government obligations in the obligor's name to the 
bond official by assignment in accordance with subpart F of part 306 of 
this title and other codified procedures for issuers that apply to 
assignment of the registered Government obligations, except that, when 
so authorized under such procedures, all assignments shall be made in 
blank.
    (b) Delivery to bond official; receipt. All deliveries of definitive 
Government obligations from the obligor to the bond official under this 
part shall be made

[[Page 71]]

at the risk and expense of the obligor. Upon receipt of definitive 
Government obligations, the bond official will issue the obligor a 
receipt.
    (c) Risk of loss; safekeeping. All definitive Government obligations 
held by the bond official will be held at the risk of the bond official. 
The bond official will keep safe all definitive Government obligations 
and may place them with a custodian.
    (d) Delivery to custodian; receipt. If the bond official is in 
receipt of definitive Government obligations, and then places those 
obligations with a custodian, the expense and risk of loss in delivery 
will rest with the bond official. Upon the placement of definitive 
Government obligations with a custodian, the custodian will issue the 
bond official a receipt. All definitive Government obligations held by 
the custodian will be held at the risk of the custodian.
    (e) Conversion to book-entry. (1) Treasury bonds, notes, 
certificates of indebtedness, or bills deposited with a Federal Reserve 
Bank under this part may be converted into book-entry Treasury 
obligations in accordance with part 306 of this title, and the pertinent 
provisions of that part shall apply to such Treasury obligations.
    (2) When converting definitive Government obligations to book-entry 
form, a Federal Reserve Bank will act pursuant to, and in accordance 
with, book-entry procedures for issuers that apply to the definitive 
Government obligations pledged to the bond official's agency, including 
those set forth in part 306 of this title.



Sec. 225.6  Payment of interest.

    (a) General. Except as otherwise provided in this section and 
Sec. 225.7(b), interest accruing upon Government obligations pledged to 
a bond official's agency in accordance with this part will be remitted 
to the obligor or a depositary acting as agent or sub-agent for the 
obligor.
    (b) Default. If the bond official determines that the obligor has 
defaulted, the bond official will retain any interest accruing upon 
Government obligations pledged to the bond official's agency or direct 
the custodian, in accordance with this part, to retain such interest. 
Unless otherwise provided by law, such interest will be available to 
satisfy any costs incurred by the United States related to the default, 
and any excess proceeds will be available to satisfy any other claim of 
the United States against the obligor.



Sec. 225.7  Custodian duties and responsibilities.

    (a) General. A custodian shall authenticate instructions received 
from a bond official and shall act in accordance with such authenticated 
instructions. The custodian assumes no liability and is without 
liability of any kind for acting in accordance with such authenticated 
instructions, except for the custodian's failure to exercise ordinary 
care. By providing a bond secured by Government obligations in lieu of a 
bond with surety or sureties, an obligor agrees not to hold either the 
custodian or the Secretary liable or responsible for the actions or 
inactions of a bond official or for carrying out a bond official's 
authenticated instructions.
    (b) Interest. Absent authenticated instructions from the bond 
official to retain interest, interest received by the custodian on 
Government obligations pledged to the bond official's agency in 
accordance with this part will be remitted in the regular course of 
business to the obligor or to a depositary acting as agent or sub-agent 
for the obligor.
    (c) Principal. Absent authenticated instructions from the bond 
official to retain the proceeds of matured Government obligations, a 
custodian will release to the obligor proceeds from matured Government 
obligations only if the obligor has deposited Government obligations 
acceptable under 31 U.S.C. 9301, as amended, in substitution for those 
which have matured.
    (d) Liquidation of Government obligations. A custodian will collect, 
sell, assign, or transfer Government obligations, including any interest 
therefrom, only in accordance with a bond official's authenticated 
instructions.
    (e) Application of proceeds of liquidated Government obligations. A 
custodian will apply the proceeds from the collection, sale, assignment, 
or transfer of Government obligations only in accordance

[[Page 72]]

with a bond official's authenticated instructions.



Sec. 225.8  Bond official duties and responsibilities.

    The bond official's duties and responsibilities are as follows:
    (a) Approving the bond secured by Government obligations after 
determining its sufficiency;
    (b) Verifying ownership of any registered definitive Government 
obligations given, and ensuring that those Government obligations are 
properly assigned;
    (c) Approving establishment of a book-entry account for the benefit 
of the bond official;
    (d) Providing the custodian, when appropriate, with clear and 
concise instructions;
    (e) Taking all reasonable and appropriate steps to ensure that all 
procedures or transactions conform with the provisions of this part; and
    (f) Notifying the Secretary of the Treasury, or his designee, upon 
an obligor's default, and, unless otherwise provided by law, applying 
any part of the proceeds in excess of the amount required to assure 
payment of any costs incurred by the United States related to the 
default to satisfy any claim of the United States against the obligor.



Sec. 225.9  Return of Government obligations to obligor.

    (a) General. Except as provided in paragraph (b) of this section or 
as otherwise provided in this part, the bond official will return the 
Government obligations, and any interest retained therefrom, to the 
obligor, without written application from the obligor, when the bond 
official determines that the Government obligations are no longer 
required under the terms of the bond.
    (b) Miller Act payment bonds. The bond official will not return 
Government obligations to an obligor who has furnished to the bond 
official a payment bond if:
    (1) A person, who supplied the obligor with labor or materials and 
whom the obligor has not paid, files with the United States Government 
the application and affidavit provided for in the Miller Act (Act), as 
amended (40 U.S.C. 270a-270d), and the time provided in the Act for the 
person to commence suit against the obligor on the payment bond has not 
expired; or
    (2) A person commences a suit against the obligor within the time 
provided for in the Act, in which case the bond official will hold the 
Government obligations subject to the order of the court having 
jurisdiction of the suit; or
    (3) The bond official has actual knowledge of a claim against the 
obligor on the basis of the payment bond, in which case the bond 
official may return the Government obligations to the obligor when the 
bond official deems it appropriate.
    (c) Claim of the United States unaffected. Nothing in this section 
shall affect or impair the priority of any claim of the United States 
against Government obligations, or any right or remedy granted by the 
Miller Act or by this part to the United States in the event of an 
obligor's default on any term, condition, or stipulation of a bond.
    (d) Return of definitive Government obligations; risk of loss. 
Definitive Government obligations to be returned to the obligor will be 
forwarded at the obligor's risk and expense, either by the bond 
official, or by a custodian upon receipt of a bond official's 
authenticated instructions.



Sec. 225.10  Other agency practices and authorities.

    (a) Agency practices. Nothing in this part shall be construed as 
modifying the existing practices or duties of agencies in handling 
bonds, except to the extent made necessary under the terms of this part 
by reason of the acceptance of bonds secured by Government obligations.
    (b) Agency authorities. Nothing contained in this part shall affect 
the authority of agencies to receive Government obligations for security 
in cases authorized by other provisions of law.



Sec. 225.11  Courts.

    Nothing contained in this part shall affect the authority of a court 
over a Government obligation given as security in a civil action.

[[Page 73]]



PART 226--RECOGNITION OF INSURANCE COVERING TREASURY TAX AND LOAN DEPOSITARIES--Table of Contents




Sec.
226.1  Scope.
226.2  General.
226.3  Application--termination.
226.4  Adequacy of security--how computed.
226.5  Examinations.
226.6  Financial reports.
226.7  Effective date.

    Authority: Secs. 2 and 3, Pub. L. 95-147. 91 Stat. 1227 (31 U.S.C. 
1038).

    Source: 43 FR 18972, May 2, 1978, unless otherwise noted.



Sec. 226.1  Scope.

    The regulations in this part apply to insurance covering public 
money of the United States held by banks, savings banks, savings and 
loan associations, building and loan associations, homestead 
associations, or credit unions designated as Treasury tax and loan 
depositaries under 31 CFR part 203. Approval of the adequacy of the 
insurance coverage provided to Treasury tax and loan funds shall be 
governed by the regulations contained herein, which will be supplemented 
by guidelines issued by the Treasury and updated from time to time to 
meet changing conditions in the industry.



Sec. 226.2  General.

    (a) Deposit or account insurance provided by the Federal Deposit 
Insurance Corporation, the Federal Savings and Loan Insurance 
Corporation, and the National Credit Union Share Insurance Fund, is 
hereby recognized. Deposits or accounts which are insured by a State or 
agency thereof, or by a corporation chartered by a State for the sole 
purpose of insuring deposits or accounts of financial institutions 
eligible to be Treasury tax and loan depositaries (hereinafter referred 
to as Insurance Arrangement), shall be approved as provided herein. Such 
approval constitutes recognition for the purpose of reducing the amount 
of collateral required of a tax and loan depositary by the amount of 
recognized insurance coverage pursuant to 31 CFR 203.15.
    (b) Generally, these regulations and their associated guidelines 
require that an organization providing insurance maintain a corpus of 
sufficient value and liquidity, and/or that it have sufficient State 
borrowing authority, in relation to its liabilities and total insured 
savings (or deposits) to provide adequate security to the Government's 
deposits and that adequate monitoring of the financial condition of the 
insured institutions is conducted.



Sec. 226.3  Application--termination.

    (a) Every Insurance Organization applying for recognition as a 
qualified insurer of financial institutions designated as Treasury tax 
and loan depositaries shall address a written request to the Assistant 
Commissioner, Comptroller, Financial Management Service, Department of 
the Treasury, Washington, DC 20226, who will notify the applicant of the 
data which is necessary to make application. If the Secretary of the 
Treasury is satisfied that:
    (1) One or more institutions insured by the applicant otherwise meet 
the Secretary's requirements for designation as a Treasury tax and loan 
depositary or Federal tax depositary,
    (2) The insurance provided by the applicant covers public money of 
the United States, and
    (3) The insurance coverage provided affords adequate security to the 
Government's deposits, the Secretary shall recognize the applicant as a 
qualified insurer of financial institutions designated as Treasury tax 
and loan depositaries.
    (b) If and when the Secretary of the Treasury determines that a 
qualified insurance organization's financial condition is such that it 
no longer provides adequate security or that it is not complying with 
the regulations of this part, the Secretary will notify the Insurance 
Organization of the facts or conduct which cause him to make such 
determination, and in those cases where the safety of the Government's 
funds allows, provide the Insurance Organization with an opportunity to 
correct the deficiency. When any deficiency has not been corrected to 
his satisfaction or, where the safety of Government funds makes 
immediate revocation imperative, the Secretary will revoke the 
recognition previously granted.

[[Page 74]]

    Note: For a delegation of authority to perform the functions 
described in Secs. 226.3 and 226.4, see 44 FR 19406 of the Federal 
Register of April 3, 1979.

[43 FR 18972, May 2, 1978, as amended at 44 FR 19406, Apr. 3, 1979; 49 
FR 47002, Nov. 30, 1984]



Sec. 226.4  Adequacy of security--how computed.

    (a) In qualifying Insurance Organizations, the Treasury will use a 
ratio (equity (net worth) of the insurance organization divided by 
insured accounts or deposits) to determine if the security is adequate. 
The ratio will be computed as determined by the Treasury, and is 
required to equal 0.0045 or greater for an Insurance Organization to be 
recognized (i.e., net worth is required to equal 0.45 of 1 percent of 
insured accounts or deposits).
    (b) If, in the judgment of the Secretary of the Treasury, any of the 
Insurance Organization's assets which cannot be liquidated promptly or 
are subject to restriction, encumbrance, or discredit, all or part of 
the value of such assets may be deducted from equity in making the 
computation. The Secretary of the Treasury may value the assets and 
liabilities in his discretion.
    (c) An Insurance Organization's unqualified borrowing authority from 
its sponsoring State will be added to its equity in making the 
computation because such authority is equivalent to additional 
capitalization. An Insurance Organization's commercial borrowing 
authority and its reinsurance will be disregarded in making the 
computation, because these are not adequate substitutes for 
undercapitalization.
    Note: For a delegation of authority to perform the functions 
described in Secs. 226.3 and 226.4, see 44 FR 19406 of the Federal 
Register of April 3, 1979.

[43 FR 18972, May 2, 1978, as amended at 44 FR 19406, Apr. 3, 1979]



Sec. 226.5  Examinations.

    (a) Examinations by State regulatory authorities or audits by CPA 
firms of Insurance Organizations shall be performed in accordance with, 
and at intervals prescribed by, State regulatory procedures. Copies of 
the reports shall be submitted to the Treasury.
    (b) Examinations by State regulatory authorities or audits by CPA 
firms of insured financial institutions shall be performed in accordance 
with, and at intervals prescribed by, State regulatory procedures. In 
addition, an adequate monitoring system shall be employed to detect 
those institutions with financial problems.



Sec. 226.6  Financial reports.

    Financial reports of Insurance Organizations shall be submitted to 
the Treasury at the same intervals they are submitted to State 
regulatory authorities. However, they need not be submitted more 
frequently than quarterly but, as a minimum, shall be submitted 
annually. The Treasury may prescribe the format of such reports.



Sec. 226.7  Effective date.

    The provisions of this part become effective November 2, 1978.

[43 FR 47506, Oct. 16, 1978]



PART 235--ISSUANCE OF SETTLEMENT CHECKS FOR FORGED CHECKS DRAWN ON DESIGNATED DEPOSITARIES--Table of Contents




Sec.
235.1  Scope of regulations.
235.2  Definition.
235.3  Settlement of claims.
235.4  Check Forgery Insurance Fund.
235.5  Reclamation amounts.
235.6  Implementing instructions.

    Authority: 31 U.S.C. 3343.

    Source: 40 FR 6785, Feb. 14, 1975, unless otherwise noted.



Sec. 235.1  Scope of regulations.

    This part governs the issuance of settlement checks for checks drawn 
on designated depositaries of the United States by accountable officers 
of the United States, that have been negotiated and paid on a forged or 
unauthorized indorsement.

[40 FR 6785, Feb. 14, 1975, as amended at 54 FR 35642, Aug. 29, 1989]



Sec. 235.2  Definition.

    Accountable Officers of the United States, as used in these 
regulations, means disbursing officers authorized by

[[Page 75]]

the Secretary of the Treasury to maintain official accounts of the 
United States in depositary banks located in the United States, its 
territories, and foreign countries, and to draw checks thereon in 
dollars or in foreign currencies.



Sec. 235.3  Settlement of claims.

    Upon receipt of a claim by a payee or special indorsee on a check 
determined to have been paid on a forged indorsement under conditions 
satisfying the provisions set forth in 31 U.S.C. 3343, accountable 
officers of the United States, with respect to a check drawn on 
designated depositaries of the United States, in dollars or in foreign 
currency, shall cause to be issued a settlement check in the appropriate 
currency to the payee or special indorsee.

[40 FR 6785, Feb. 14, 1975, as amended at 49 FR 47001, 47002, Nov. 30, 
1984; 54 FR 35642, Aug. 29, 1989]



Sec. 235.4  Check Forgery Insurance Fund.

    The Check Forgery Insurance Fund, established pursuant to 31 U.S.C. 
3343, shall be available for use by the Commissioner, Financial 
Management Service, and accountable officers of the United States for 
the purpose of providing funding for settlements made to a payee or 
special indorsee pursuant to these regulations.

[40 FR 6785, Feb. 14, 1975, as amended at 49 FR 47001, 47002, Nov. 30, 
1984]



Sec. 235.5  Reclamation amounts.

    Amounts received by way of reclamation on forged checks shall be 
deposited to the credit of the Check Forgery Insurance Fund or to the 
appropriate foreign currency fund or other account charged for the 
settlement payment.



Sec. 235.6  Implementing instructions.

    Procedural instructions implementing these regulations will be 
issued by the Commissioner of the Financial Management Service in volume 
I, part 4 of the Treasury Financial Manual.

[54 FR 35642, Aug. 29, 1989]



PART 240--INDORSEMENT AND PAYMENT OF CHECKS DRAWN ON THE UNITED STATES TREASURY--Table of Contents




                           General Provisions

Sec.
240.1  Scope of regulations.
240.2  Definitions.
240.3  Limitations on payment.
240.4  Cancellation and distribution of proceeds of checks.
240.5  Guaranty of indorsements.
240.6  Reclamation of amounts of paid checks.
240.7  Demand and protest.
240.8  Offset.
240.9  Processing of checks.
240.10  Release of original checks.

                          Indorsement of Checks

240.11  Indorsement by payees.
240.12  Checks issued to incompetent payees.
240.13  Checks issued to deceased payees.
240.14  Checks issued to minor payees in certain cases.
240.15  Powers of attorney.

Appendix A to Part 240--Standard Forms for Power of Attorney and Their 
          Application

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3328; 31 U.S.C. 
3331; 31 U.S.C. 3343; 31 U.S.C. 3711; 31 U.S.C. 3716; 31 U.S.C. 3717; 
332 U.S. 234 (1947); 318 U.S. 363 (1943).

    Source: 54 FR 35642, Aug. 29, 1989, unless otherwise noted.

                           General Provisions



Sec. 240.1  Scope of regulations.

    The regulations in this part prescribe the requirements for 
indorsement and the conditions for payment of checks drawn on the United 
States Treasury. These regulations also establish procedures for 
collection of amounts due the United States Treasury because of payments 
on checks bearing forged or other unauthorized indorsements or other 
material defects or alterations.



Sec. 240.2  Definitions.

    (a) Certifying agency means an agency for whom a Treasury disbursing 
officer or a non-Treasury disbursing officer makes payment in accordance 
with 31 U.S.C. 3325. The responsibilities of a certifying official are 
set forth at 31 U.S.C. 3528.
    (b) Check or Checks means a check or checks drawn on the United 
States Treasury.

[[Page 76]]

    (c) Check payment means the amount paid to a presenting bank in 
accordance with Sec. 240.9(a)(3) of this part.
    (d) Commissioner means the Commissioner of the Financial Management 
Service, Department of the Treasury, 401 14th Street SW., Washington, DC 
20227.
    (e) Days means calendar days.
    (f) Financial institution means any bank, savings bank, savings and 
loan association, Federal or State chartered credit union, or similar 
institution.
    (g) Item means a reference in a monthly interest billing statement 
to a check for the amount of which Treasury has demanded refund from a 
presenting bank.
    (h) Monthly interest billing statement means a statement prepared by 
Treasury and sent to a presenting bank which includes the following 
information regarding each outstanding demand for refund:
    (1) The reclamation date;
    (2) The reclamation number;
    (3) Check identifying information; and
    (4) The balance due, including interest.
    (i) Person or persons means an individual or individuals, or an 
institution or institutions including all forms of financial 
institutions.
    (j) Presenting bank means:
    (1) A financial institution which, either directly or through a 
correspondent banking relationship, presents checks to and receives 
provisional credit from a Federal Reserve Bank; or
    (2) A depositary which is authorized to charge checks directly to 
the General Account of the United States Treasury and present them to 
Treasury for payment through a designated Federal Reserve Bank.
    (k) Protest means a presenting bank's written statement and any 
supporting documentation tending to prove that it is not liable for 
refund of the reclamation balance.
    (l) Reclamation means a demand by Treasury for refund of the amount 
of a check payment.
    (m) Reclamation date means the date on which a demand for refund was 
prepared. Normally, demands are sent to presenting banks within two 
working days of the reclamation date.
    (n) Treasury means the United States Treasury.
    (o) U.S. securities means securities of the United States and 
securities of Federal agencies and wholly or partially government-owned 
corporations for which the Treasury acts as the transfer agent.
    (p) Unauthorized indorsement means:
    (1) An indorsement made by a person other than the payee, except as 
authorized by and in accordance with Sec. 204.5 and Secs. 240.11 through 
240.15;
    (2) An indorsement by a financial institution under circumstances in 
which the financial institution breaches the guaranty required of it by 
31 CFR 209.9(a) (See, 31 CFR 209.8); or
    (3) A missing indorsement where the depositary bank had no authority 
to supply the indorsement.



Sec. 240.3  Limitations on payment.

    (a) As a general rule,
    (1) The Commissioner shall not be required to pay a Treasury check 
issued on or after October 1, 1989 unless it is negotiated to a 
financial institution within 12 months after the date on which the check 
was issued; and
    (2) The Commissioner shall not be required to pay a Treasury check 
issued before October 1, 1989 unless it is negotiated to a financial 
institution no later than October 1, 1990.
    (b) All checks drawn on the United States Treasury and issued on or 
after October 1, 1989 shall bear a legend, stating ``Void After One 
Year.'' The legend is notice to payees and indorsers of a general 
limitation on the payment of Treasury checks. The legend, or the 
inadvertent lack thereof, does not limit, or otherwise affect, the 
rights of the Commissioner under the law.
    (c) The Treasury shall have the usual right of a drawee to examine 
checks presented for payment and refuse payment of any checks. The 
Treasury shall have a reasonable time to make such examination.
    (d) Checks shall be deemed to be paid by the United States Treasury 
only after first examination has been fully completed.
    (e) If the Treasury is on notice of a question of law or fact about 
whether a

[[Page 77]]

Treasury check is properly payable when the check is presented for 
payment, the Commissioner may defer payment until the Comptroller 
General settles the question.



Sec. 240.4  Cancellation and distribution of proceeds of checks.

    (a) Checks issued on or after October 1, 1989. (1) Any check issued 
on or after October 1, 1989 that has not been paid and remains 
outstanding for more than 12 months shall be cancelled by the 
Commissioner.
    (2) The proceeds from checks cancelled pursuant to paragraph (a) of 
this section shall be returned to the agency which authorized the 
issuance of the check and credited to the appropriation or fund account 
initially charged for the payment.
    (3) Beginning January 1, 1991, and monthly thereafter, the 
Commissioner shall provide to each agency that authorizes the issuance 
of Treasury checks a list of those checks issued for such agency which 
were cancelled during the preceding month pursuant to paragraph (a) of 
this section.
    (b) Checks issued before October 1, 1989. (1) Any check issued 
before October 1, 1989 that has not been paid and remains outstanding 
for more than 12 months shall be cancelled by the Commissioner no later 
than April 1, 1991.
    (2) The proceeds from checks cancelled pursuant to paragraph (b) of 
this section shall be applied as required by 31 U.S.C. 3334.



Sec. 240.5  Guaranty of indorsements.

    The presenting bank and the indorsers of a check presented to the 
Treasury for payment are deemed to guarantee to the Treasury that all 
prior indorsements are genuine, whether or not an express guaranty is 
placed on the check. When the first indorsement has been made by one 
other than the payee personally, the presenting bank and the indorsers 
are deemed to guarantee the Treasury, in addition to other warranties, 
that the person who so indorsed had unqualified capacity and authority 
to indorse the check on behalf of the payee.



Sec. 240.6  Reclamation of amounts of paid checks.

    (a) If, after a check has been paid by Treasury, it is found to:
    (1) Bear a forged or unauthorized indorsement; or
    (2) Contain any other material defect or alteration which was not 
discovered upon first examination, then, upon demand by the Treasury in 
accordance with the procedures specified in Sec. 240.7 of this part, the 
presenting bank or other indorser shall refund the amount of the check 
payment.
    (b) Interest on any unpaid item shall commence to accrue on the 
sixty-first day after the reclamation date. Interest shall be calculated 
at the rate set from time to time for purposes of 31 U.S.C. 323. 
Interest shall continue to accrue until the amount demanded is paid or 
the reclamation is abandoned by Treasury.
    (c) In addition to its right to recover interest, Treasury shall 
have the right to recover such other applicable charges (e.g., 
administrative collection costs, late payment penalties) as may be 
authorized or required by law.
    (d) If the Treasury determines that a check has been paid over a 
forged or unauthorized indorsement, the Commissioner may reclaim the 
amount of the check from the presenting bank or any other indorser that 
breached its guarantee of indorsement prior to:
    (1) The end of the one-year period beginning on the date of payment; 
or
    (2) The expiration of the 180-day period beginning on the close of 
the period described in paragraph (d)(1) of this section if a timely 
claim under 31 U.S.C. 3702 is presented to the agency which authorized 
the issuance of the check.



Sec. 240.7  Demand and protest.

    (a) For all reclamations an initial demand for refund of the amount 
of a check payment will be made by sending a ``Request for Refund 
(Reclamation),'' to the presenting bank or any other indorser. This 
Request shall advise the presenting bank of the amount demanded and the 
reason for the demand. Treasury will make follow-up demands by including 
each unpaid item on at least three monthly interest billing statements 
sent to the presenting

[[Page 78]]

bank. Monthly interest billing statements will identify any unpaid 
reclamation demands and will also show the amount of any accrued 
interest for each outstanding reclamation. Any discrepancies should be 
brought to Treasury's attention immediately at the address listed in 
paragraph (b) of this section. Monthly interest billing statements will 
contain or be accompanied by notice to the bank:
    (1) That Treasury intends to collect the debt through administrative 
offset if the reclamation is not paid within 120 days of the reclamation 
date;
    (2) That the bank has an opportunity to inspect and copy Treasury's 
records with respect to the reclamation;
    (3) That the bank may, by filing a protest, request Treasury to 
review its decision that the bank is liable for the reclamation; and
    (4) That the bank has an opportunity to enter into a written 
agreement with Treasury for the repayment of the amount of the 
reclamation. A request for a payment agreement must be accompanied by 
proof that satisfies the Treasury that the requesting bank is unable to 
repay the entire amount owed at the time that it is due.
    (b) Requests for an appointment to inspect and copy Treasury's 
records with respect to a reclamation and requests to enter into 
repayment agreements should be sent in writing to: Department of the 
Treasury, Financial Management Service, Operations Division, Reclamation 
Branch, Room 700-D, 3700 East-West Highway, Hyattsville, MD 20782.
    (c)(1) If a presenting bank wishes to contest its liability for the 
principal amount demanded, it shall send a protest, i.e., a written 
statement and copies of all documentary evidence (e.g., affidavits, 
account agreements, signature cards) and other written information 
raising a question of law or fact which, if resolved in the bank's 
favor, would show that the bank is not liable, to: Department of the 
Treasury, Financial Management Service, Operations Division, Reclamation 
Branch Room 700-D, 3700 East-West Highway, Hyattsville, MD 20782.

The Director, Operations Division, who has supervisory authority over 
the Reclamation Branch, or his authorized subordinate, shall consider 
and decide any protest properly submitted under this paragraph. Neither 
the Director, Operations Division, nor any of his subordinates, shall 
have any involvement in the process of making findings or demands under 
Sec. 240.6(a). In order to be considered, and to be timely, a protest 
must be received not later than 90 days after the reclamation date. 
Treasury will refrain from collection in accordance with Sec. 240.8 
while a timely protest is being considered. Unresolved protested items 
will be appropriately annotated on the monthly interest billing 
statement.
    (2) If Treasury accepts the protest, the presenting bank shall be 
notified in writing that efforts to collect the item and any accrued 
interest have been abandoned.
    (3) If the evidence sent by the presenting bank does not satisfy 
Treasury that refund of the amount demanded is not required under 
Sec. 240.6(a), Treasury will notify the presenting bank in writing of 
its decision that the bank is liable for the amount demanded and the 
reasons for its decision. If the presenting bank fails to send the 
amount demanded within 30 days of the date of Treasury's decision, 
Treasury shall proceed to collect the amount owed in accordance with 
Sec. 240.8, provided that no offset shall be taken sooner than 120 days 
after the reclamation date.
    (4) If an item, and/or accrued interest relating to that item 
remains unpaid for 90 days after the reclamation date and if there is no 
unresolved protest associated with the item, the monthly interest 
billing statement will be annotated with a notice that the presenting 
bank has until the next billing date to make payment on the item or be 
subject to offset thereon.



Sec. 240.8  Offset.

    (a) If an item, and/or accrued interest relating to that item, 
remains unpaid for 120 days after the reclamation date and the 
presenting bank has been sent at least one monthly interest billing 
statement informing it that Treasury intends to collect that item by 
offset, Treasury may refer the matter to any Federal agency and request 
that agency to offset the indebtedness and other applicable charges 
against amounts

[[Page 79]]

otherwise owed by the Federal agency to the presenting bank. Monthly 
interest billing statements will be annotated to identify those specific 
items that are to be referred to an agency for offset.
    (b) If a bank wishes to make payment on an item referred to an 
agency for offset, it should contact Treasury at the address listed in 
Sec. 240.7(b) to reduce the possibility of a double collection. If an 
agency to which an indebtedness is referred in accordance with this 
paragraph is unable to effect offset in whole or in part, Treasury may 
then refer the debt to any other agency and request offset in accordance 
with this paragraph. Treasury designates each agency acting under this 
paragraph as its designee for the sole purpose of effecting offset. No 
such designee shall be liable to any party for any loss resulting from 
its action under this paragraph.
    (c) If Treasury is unable to collect an amount owed by use of the 
offset described in paragraph (a) of this section, Treasury shall take 
such action against the presenting bank as may be necessary to protect 
the interests of the United States, including referral to the Department 
of Justice.
    (d) If Treasury effects offset under this section and it is later 
determined that the presenting bank paid the amount of the reclamation 
and accrued interest thereon, or that a presenting bank which had timely 
filed a protest was not liable for the amount of the reclamation, 
Treasury shall promptly refund to the presenting bank the amount of its 
payment.



Sec. 240.9  Processing of checks.

    (a) Federal Reserve Banks. (1) Federal Reserve Banks shall cash 
checks for Government disbursing officers when such checks are drawn by 
the disbursing officers to their own order. Payment of such checks shall 
not be refused except for alteration or counterfeiting of the check, or 
forged signature of the drawer.
    (2) Federal Reserve Banks shall not be expected to cash Government 
checks presented directly to them by the general public.
    (3) As a depository of public funds, each Federal Reserve Bank 
shall:
    (i) Receive checks from its member banks, nonmember clearing banks, 
or other depositors, when indorsed by such banks or depositors who 
guarantee all prior indorsements thereon;
    (ii) Give immediate credit therefore in accordance with their 
current Time Schedules and charge the amount of the checks cashed or 
otherwise received to the account of the Treasury, subject to 
examination and payment by the United States Treasury;
    (iii) Forward payment records and copies of checks to Treasury; and
    (iv) Release the original checks to a designated Federal Records 
Center upon notification from Treasury. The Treasury shall return to the 
forwarding Federal Reserve Bank a photocopy of any check the payment of 
which is refused upon first examination. Federal Reserve Banks shall 
give immediate credit therefor in the United States Treasury's account, 
thereby reversing the previous charge to the account for such check. The 
Treasury authorizes each Federal Reserve Bank to release the original 
check to the endorser when payment is refused in accordance with 
Sec. 240.3(a).
    (b) Depositaries outside of the mainland of the United States. Banks 
outside of the mainland of the United States designated as depositaries 
of public money and permitted to charge checks to the General Account of 
the United States Treasury shall be governed by the operating 
instructions contained in the letter of authorization to them from 
Treasury and shall assume the obligations of presenting banks set forth 
in Secs. 240.5 and 240.6. Checks charged to the General Account of the 
United States Treasury along with the supporting credit voucher shall be 
shipped to the Federal Reserve Bank of Richmond. The Treasury shall 
return to the presenting depositary bank a photocopy of any check the 
payment of which is refused upon first examination. The depositary bank 
shall give immediate credit therefor in the General Account of the 
United States Treasury, thereby reversing the previous charge to the 
Account for such check. Treasury authorizes the Federal Reserve Bank of 
Richmond to return to the presenting depositary bank the original check

[[Page 80]]

when payment is refused in accordance with Sec. 240.3(a).



Sec. 240.10  Release of original checks.

    An original check may be released to a responsible indorser upon 
receipt of a properly authorized request showing the reason it is 
required and that the request is in conformity with all applicable law 
including the Privacy Act.

                          Indorsement of Checks



Sec. 240.11  Indorsement by payees.

    (a) General requirements. Checks shall be indorsed by the payee or 
payees named, or by another on behalf of such payees as set forth in 
this part.
    (b) Checks indorsed by the payee or payees named. When a check is 
indorsed by the payee or payees named, the forms of indorsement shall 
conform to those recognized by general principles of law and commercial 
usage for negotiation, transfer or collection of negotiable instruments.
    (c) Checks indorsed by another on behalf of the named payee or 
payees--(1) Acceptable indorsement. The only acceptable indorsement of a 
check by another on behalf of the named payee or payees (except when a 
check is indorsed by a financial institution under the payee's or 
payees' authorization) is one which indicates that the person indorsing 
is doing so on behalf of the named payee or payees. Such an acceptable 
indorsement shall include the signature of the indorser and sufficient 
wording to indicate that the indorser is indorsing on behalf of the 
named payee or payees, pursuant to authority expressly conferred by or 
under law or other regulation. An example would be: ``John Jones by Mary 
Jones.'' This example states the minimum indication acceptable. However, 
Secs. 240.12(a)(1), 240.13(a)(1), and 240.15(d) specify the addition of 
an indication in specified situations of the actual capacity in which 
the person other than the named payee is indorsing. Checks indorsed 
``for collection'' or ``for deposit only to the credit of the within 
named payee or payees,'' are acceptable without any signature. However, 
in the absence of a signature, the presenting bank will be deemed to 
guarantee its good title to such checks to all subsequent indorsers and 
to Treasury.
    (2) Unacceptable indorsement. The indorsement by another on behalf 
of the named payee or payees, which consists of the name(s) of the 
payee(s), whether as purported signature(s) or otherwise, and not the 
signature of the person other than named payee or payees indorsing the 
check, regardless of the relationship between the indorser and the named 
payee or payees, will be rebuttably presumed to be a forgery and is 
unacceptable. The indorsement by a person who purports to indorse for 
the named payee(s) with an indorsement consisting of the name(s) of the 
payee(s), whether as purported signature(s) or otherwise, and the 
indorsing person's signature and no indication of the indorsing person's 
representative capacity, will create a rebuttable presumption that the 
indorsing person was not authorized to indorse for the named payee(s). 
In these circumstances it is the responsibility of the individual or 
institution accepting a check from a person other than the named 
payee(s) to determine that such person is authorized and has the 
capacity to indorse and negotiate the check. Evidence of the basis for 
such a determination may be required by the Treasury in the event of a 
dispute.
    (d) Indorsement of checks by a financial institution under the 
payee's authorization. When a check is credited by a financial 
institution to the payee's account under the payee's or payees' 
authorization, the financial institution may use an indorsement 
substantially as follows: ``Credit to the account of the within-named 
payee in accordance with the payee's or payees' instructions. XYZ.'' A 
financial institution using this form of indorsement will be deemed to 
guarantee to all subsequent indorsers and to the Treasury that it is 
acting as an attorney-in-fact for the payee or payees, under the payee's 
or payees' authorization, and that this authority is currently in force 
and has neither lapsed nor been revoked either in fact or by the death 
or incapacity of the payee or payees.
    (e) Indorsement of checks drawn in favor of financial institutions. 
All checks

[[Page 81]]

drawn in favor of financial institutions, for credit to the accounts of 
persons designated payment so to be made, shall be indorsed in the name 
of the financial institutions as payee in the usual manner. Financial 
institutions receiving and indorsing such checks shall comply fully with 
part 209 of this chapter.
    (f) Social Security benefit checks issued jointly to individuals of 
the same family. A social security benefit check issued jointly to 2 or 
more individuals of the same family shall, upon the death of 1 of the 
joint payees prior to the negotiation of such check, be returned to the 
Social Security District Office or the Treasury Regional Financial 
Center. Payment of the check to the surviving payee or payees may be 
authorized by placing on the face of the check a stamped legend signed 
by an official of the Social Security Administration or the Treasury 
Regional Financial Center, redesignating such survivor or survivors as 
the payee or payees of the check. A check bearing such stamped legend, 
signed as herein prescribed, may be indorsed and negotiated by the 
person or persons named as if such check originally had been drawn 
payable to such person or persons.



Sec. 240.12  Checks issued to incompetent payees.

    (a) Classes of checks which may be indorsed by guardian or 
fiduciary. Where the payee of a check of any class listed in 
Sec. 240.13(a) has been declared incompetent:
    (1) If a check is indorsed by a legal guardian or other fiduciary, 
such legal guardian or fiduciary shall include, as a part of the 
indorsement, an indication of the capacity in which the legal guardian 
or fiduciary is indorsing. An example would be: ``John Jones by Mary 
Jones, guardian of John Jones.'' When a check indorsed in this fashion 
is presented for payment by a bank, it will be paid by the Treasury 
without submission to the Treasury of documentary proof of the authority 
of the guardian or other fiduciary, with the understanding that evidence 
of such claimed authority to indorse may be required by the Treasury in 
the event of a dispute.
    (2) If a guardian has not been or will not be appointed, and if the 
check:
    (i) Was issued in payment of goods and services, tax refunds or 
redemption of currency, it shall be forwarded for advice to the 
certifying agency; or
    (ii) Was issued in payment of principal or interest on U.S. 
securities, it shall be forwarded to the Bureau of the Public Debt, 
Division of Securities Accounts, Accounts Maintenance Branch, 
Washington, DC 20239.
    (b) Classes of checks which may not be indorsed by guardian or 
fiduciary. Where the payee of a check of any other class has been 
declared incompetent, the check shall not be indorsed by a guardian or 
other fiduciary. The check shall be returned to the Government agency 
which certified the payment, with information as to the incompetency of 
the payee and submission of documentary evidence showing the appointment 
of the guardian or other explanation in order that a replacement check, 
and others to be issued subsequently, may be drawn in favor of the 
guardian.

[54 FR 35642, Aug. 29, 1989, as amended at 54 FR 46728, Nov. 7, 1989]



Sec. 240.13  Checks issued to deceased payees.

    (a)(1) Classes of checks which may be indorsed by an executor or 
administrator. Checks issued for the classes of payments indicated 
below, the right to which under law does not terminate with the death of 
the payee, when indorsed by an executor or administrator, shall include, 
as part of the indorsement, an indication of the capacity in which the 
executor or administrator is indorsing. An example would be: ``John 
Jones by Mary Jones, executor of the estate of John Jones.'' Such 
checks, when presented for payment by a bank, will be paid by the 
Treasury without the submission of documentary proof of the authority of 
the executor or administrator, with the understanding that evidence of 
such claimed authority to indorse may be required by the Treasury in the 
event of a dispute. The classes of payments to which this subsection 
refers are:
    (i) Payments for the redemption of currencies or for principal or 
interest on U.S. securities;
    (ii) Payments for tax refunds; and

[[Page 82]]

    (iii) Payments for goods and services.
    (2) If an executor has not been appointed, persons claiming as 
owners shall return the checks for appropriate handling to the 
Government agency that certified the payment. If there is doubt as to 
whether the proceeds of the check or checks pass to the estate of the 
deceased payee, the checks shall be handled in accordance with paragraph 
(b) of this section.
    (b) Classes of checks which may not be indorsed by an executor or 
administrator. Checks issued for classes of payment other than those 
specified in paragraph (a) of this section may not be negotiated after 
the death of the payee, but must be returned to the Government agency 
that certified the payment for determination whether, under applicable 
laws, payment is due and to whom it may be made.



Sec. 240.14  Checks issued to minor payees in certain cases.

    Checks issued to minors in payment of principal or interest on U.S. 
securities may be indorsed by either parent with whom the minor resides, 
or, if the minor does not reside with either parent, by the person who 
furnishes his chief support. The parent or other person indorsing in 
behalf of the minor shall present with the check his signed statement 
giving the minor's age, stating that the payee either resides with the 
parent or receives his chief support from the person indorsing in his 
behalf, and that the proceeds of the checks will be used for the minor's 
benefit.



Sec. 240.15  Powers of attorney.

    (a) Specific powers of attorney. Any check may be negotiated under a 
specific power of attorney executed after the issuance of the check and 
describing it in full.
    (b) General powers of attorney. Checks issued for the following 
classes of payments may be negotiated under a general power of attorney 
in favor of an individual, financial institution or other entity:
    (1) Payments for the redemption of currencies or for principal or 
interest on U.S. securities.
    (2) Payments for tax refunds, but subject to the limitations 
concerning the mailing of Internal Revenue refund checks contained in 26 
CFR 601.506(b).
    (3) Payments for goods and services.
    (c) Special powers of attorney. Under discussions of the Comptroller 
General of the United States, classes of checks other than those 
specified in paragraph (b) of this section may be negotiated under a 
special power of attorney which names a financial institution as 
attorney-in-fact, and recites that it is not given to carry into effect 
an assignment of the right to receive payment, either to the attorney-
in-fact or to any other person.
    (d) Proof of authority. Checks indorsed by an attorney-in-fact shall 
include, as part of the indorsement, an indication of the capacity in 
which the attorney-in-fact is indorsing. An example would be: ``John 
Jones by Paul Smith, attorney-in-fact for John Jones.'' Such checks when 
presented for payment by a bank, will be paid by the Treasury without 
the submission of documentary proof of the claimed authority, with the 
understanding that evidence of such claimed authority to indorse may be 
required by the Treasury in the event of a dispute.
    (e) Revocation of powers of attorney. Powers of attorney are revoked 
by the death of the grantor and may also be revoked by notice from the 
grantor to the parties known, or reasonably expected, to be acting on 
the power of attorney. Notice of revocation to the Treasury will not 
ordinarily serve to revoke the power.
    (f) Acknowledgment of powers of attorney. Where desirable or where 
required by foreign, state or local law, powers of attorney shall be 
acknowledged before a notary public or other officer authorized by law 
to administer oaths generally.
    (g) Seal or certificate of attesting officers. Where acknowledgment 
of powers of attorney is desirable or required pursuant to paragraph (f) 
of this section, seals of attesting officers shall be impressed or 
stamped upon the power of attorney form, or the power of attorney shall 
be accompanied by a certificate from an appropriate official showing 
that the officer was in commission on the date of acknowledgment.
    (h) Forms. Power of attorney forms issued under this part are listed 
in the

[[Page 83]]

appendix to this part. They may be obtained from the Financial 
Management Service, Property and Supply Section, Ardmore East Business 
Center, 3361-L 75th Avenue, Landover, MD 20785.

 Appendix A to Part 240--Standard Forms for Power of Attorney and Their 
                               Application

    Standard Form 231. A general power of attorney on this form may be 
executed by an individual, firm, or sole owner, for checks drawn on the 
United States Treasury, in payment: (1) For redemption of currencies or 
for principal or interest on U.S. securities, (2) for tax refunds, and 
(3) for goods and services.
    Standard Form 232. A specific power of attorney on this form, which 
must be executed after the issuance of the check, describing the check 
in full, may be used to authorize the indorsement of any class of check 
drawn on the United States Treasury.
    Standard Form 233. A special power of attorney on this form naming a 
financial organization as attorney-in-fact and reciting that it is not 
given to carry into effect an assignment of the right to receive 
payment, either to the attorney-in-fact or to any other person, may be 
used for classes of payments other than those shown under Standard Form 
231.
    Standard Form 234-5. A general power of attorney may be executed by 
a corporation for the classes of payment listed under Standard Form 231.
    Standard Form 236-7. A specific power of attorney may be executed on 
this form by a corporation to cover a specific check for any class of 
payment.



PART 245--CLAIMS ON ACCOUNT OF TREASURY CHECKS--Table of Contents




Sec.
245.1  Introductory.
245.2  Definitions.
245.3  Time limit for check claims.
245.4  Advice of nonreceipt or loss.
245.5  Recertification of payment.
245.6  Claim by an indorser.
245.7  Check status inquiry.
245.8  Receipt or recovery of original check.
245.9  Procedural instructions.
245.10  Performance of functions of the Commissioner.

    Authority: R.S. 3646, as amended; 31 U.S.C. 3328; 31 U.S.C. 3331.

    Source: 54 FR 35647, Aug. 29, 1989, unless otherwise noted.



Sec. 245.1  Introductory.

    This part governs the issuance of replacement checks for checks 
drawn on the United States Treasury, when
    (a) The original check has been lost, stolen, destroyed or mutilated 
or defaced to such an extent that it is rendered non-negotiable;
    (b) The original check has been negotiated and paid on a forged or 
unauthorized indorsement, and
    (c) The original check has been cancelled pursuant to Sec. 204.4 of 
this chapter.



Sec. 245.2  Definitions.

    For purposes of this part:
    (a) Agency means each authority of the United States for which the 
Treasury of the United States issues checks or for which checks drawn on 
the Treasury of the United States are issued.
    (b) Check means a check drawn on the United States Treasury.
    (c) Certifying Agency means an agency for whom a Treasury disbursing 
officer or a non-Treasury disbursing officer makes payment in accordance 
with 31 U.S.C. 3325. The responsibilities of a certifying official are 
set forth at 31 U.S.C. 3528.
    (d) Commissioner means the Commissioner of the Financial Management 
Service, Department of the Treasury, 401 14th Street, SW., Washington, 
DC 20227.
    (e) Person means an individual, a partnership, a corporation, a 
labor organization, a government or a subdivision or instrumentality 
thereof, and any other entity to which a check may be issued.
    (f) Replacement check means a check issued pursuant to the 
recertification of payment by a certifying official.
    (g) Secretary means the Secretary of the Treasury.



Sec. 245.3  Time limit for check claims.

    (a) Any claim on account of a Treasury check must be presented to 
the agency that authorized the issuance of such check within one year 
after the date of issuance of the check or within one year after October 
1, 1989, whichever is later.

[[Page 84]]

    (b) Any claim by an indorser under Sec. 245.6 will be considered 
timely if presented to the Commissioner within one year after the date 
of issuance of the check or within one year after October 1, 1989, 
whichever is later.
    (c) Nothing in this subsection affects the underlying obligation of 
the United States, or any agency thereof, for which a Treasury check was 
issued.



Sec. 245.4  Advice of nonreceipt or loss.

    (a) In the event of the nonreceipt, loss or destruction of a check 
drawn on the United States Treasury, or the mutilation or defacement of 
such a check to an exent which renders it nonnegotiable, the claimant 
should immediately notify the agency that authorized the issuance of 
such check, describing the check, stating the purpose for which it was 
issued and giving, if possible, its date, amount, Treasury symbol and 
number.
    (b) In cases involving mutiliated or defaced checks, the claimant 
should enclose the mutilated or defaced check with his communication to 
the agency.



Sec. 245.5  Recertification of payment.

    Upon receipt of a claim concerning the nonreceipt, loss, 
destruction, mutilation or defacement of a check, or the cancellation of 
a check pursuant to Sec. 240.4 of this chapter, the certifying agency 
may certify a new payment.



Sec. 245.6  Claim by an indorser.

    When one or more Treasury checks are lost, stolen or destroyed in a 
single incident while in the possession of a person to whom the checks 
have been negotiated by the payee, and if the checks have not been paid, 
the Commissioner may issue a replacement check to the person to whom the 
checks had been negotiated.



Sec. 245.7  Check status inquiry.

    The Commissioner will provide the status and a copy of the check if 
available, upon request, to the agency which authorized the issuance of 
the check.



Sec. 245.8  Receipt or recovery of original check.

    (a) If the original check is received or recovered by the claimant 
after he has requested the agency to issue a replacement check, but 
before a replacement check has been received, he should immediately 
advise the agency and hold such check until receipt of instructions with 
respect to the negotiability of such check.
    (b) If the original check is received or recovered by the claimant 
after a replacement check has been received by him, the original shall 
not be cashed, but shall be forwarded immediately to the agency that 
authorized the issuance of such check. Under no circumstances should 
both the original and replacement checks be cashed.



Sec. 245.9  Procedural instructions.

    The Commissioner of the Financial Management Service may issue 
procedural instructions, implementing these regulations, in Volume I, 
Part 4 of the Treasury Financial Manual.



Sec. 245.10  Performance of functions of the Commissioner.

    The Commissioner of the Financial Management Services may authorize 
any officer of the Treasury Department to perform any of his functions 
under this part and to redelegate such authority within such limits as 
the Commissioner may prescribe.

(Approved by the Office of Management and Budget under control number 
1510-0058)



PART 248--ISSUE OF SUBSTITUTES OF LOST, STOLEN, DESTROYED, MUTILATED AND DEFACED CHECKS OF THE UNITED STATES DRAWN ON ACCOUNTS MAINTAINED IN DEPOSITARY BANKS IN 
FOREIGN COUNTRIES OR UNITED STATES TERRITORIES OR POSSESSIONS--Table of Contents




Sec.
248.1  Introductory.

                         Delegation of Authority

248.2  Delegation of authority to issue substitute checks.

                     Action To Be Taken By Claimants

248.3  Advice of nonreceipt or loss.
248.4  Undertaking of indemnity.
248.5  Exception to requirement of undertaking of indemnity Form 2244.
248.6  Recovery of original check.
248.7  Claims requiring settlement action.

[[Page 85]]

248.8  Inquiries.
248.9  Amendments and waivers.

    Authority: 31 U.S.C. 3331.

    Source: 25 FR 10869, Nov. 16, 1960, unless otherwise noted. 
Redesignated at 39 FR 20969, June 17, 1974.



Sec. 248.1  Introductory.

    This part governs the issuance of substitutes for checks of the 
United States drawn on United States dollar or foreign currency 
accounts, maintained with designated depositaries in foreign countries 
or territories or possessions of the United States. Checks of the United 
States drawn on such depositaries are hereafter referred to as 
``depositary checks.''

[54 FR 35647, Aug. 29, 1989]

                         Delegation of Authority



Sec. 248.2  Delegation of authority to issue substitute checks.

    Pursuant to authority contained in section 3646 of the Revised 
Statutes, as amended, and subject to such procedural requirements as may 
be prescribed by the Treasury Department, there is hereby delegated to 
heads of departments and agencies whose disbursing officers issue 
depositary checks, authority to authorize officers or employees of their 
respective departments or agencies to issue substitutes of such checks, 
prior to the close of the fiscal year next following the fiscal year in 
which the checks are issued, and to receive and approve undertakings to 
indemnify the United States in such cases. The Commissioner of the 
Financial Management Service, Treasury Department, is hereby delegated 
authority to issue substitutes of depositary checks drawn by the 
Director, Operations Group, Treasury Department, or by officers 
disbursing under delegation from the Director, Operations Group, and to 
receive and approve undertakings of indemnity in such cases. The 
authority delegated to the Commissioner of the Financial Management 
Service may be redelegated by him to such disbursing officers.

[39 FR 20969, June 17, 1974, as amended at 49 FR 47001, 47002, Nov. 30, 
1984]

                     Action To Be Taken by Claimants



Sec. 248.3  Advice of nonreceipt or loss.

    The payee or owner of a depositary check which is not received, or 
which has been lost, stolen, destroyed or mutilated or defaced to such 
an extent that it is rendered non-negotiable, should immediately notify 
the disbursing officer who issued such check or the administrative 
agency exercising jurisdiction over such disbursing officer, over his 
signature and current address, giving information as to the 
circumstances of the loss, theft or destruction of the check and whether 
it was endorsed, and also requesting that payment of the check be 
stopped. A claimant who is one other than the payee of the check, should 
present a statement in support of his ownership of the check. If the 
check has been mutilated or defaced, it should be forwarded to the 
issuing disbursing officer with request for the issuance of a 
substitute.



Sec. 248.4  Undertaking of indemnity.

    (a) If the check is found to be outstanding and unpaid and it 
appears that the proceeds are due the claimant, the disbursing officer 
will request the claimant to execute an undertaking of indemnity, Form 
2244, in a penal sum equal to the amount of the check (or checks).
    (b) Except in the circumstances set forth below, a corporate surety 
authorized by the Secretary of the Treasury to act as an acceptable 
surety on bonds in favor of the United States or two responsible 
individual sureties will be required on the undertaking of indemnity. It 
will be the responsibility of the claimant in a foreign country to 
secure a certification as to the financial sufficiency of the individual 
sureties executed by one of the persons listed in, and in the manner 
prescribed by, the instruction appearing under the Certificate as to 
Sureties on the face of Form 2244.
    (c) Where the amount of the original check (or checks) is $200 or 
less, or the equivalent in foreign currency, one financially responsible 
individual surety may be accepted.
    (d) Unless it is determined that the requirement of sureties is 
essential in

[[Page 86]]

the public interest, sureties will not be required under the following 
circumstances:
    (1) If the officer authorized to issue a substitute check is 
satisfied that the loss, theft, destruction, mutilation or defacement of 
the original check occurred without fault of the owner or holder and 
while the check was in the custody or control of the United States or of 
a person duly authorized as an agent of the United States when 
performing services in connection with an official function of the 
United States;
    (2) If substantially the entire check is presented and surrendered 
by the owner or holder and the disbursing officer is satisfied as to the 
identity of the check presented and that any missing portions are not 
sufficient to form the basis of a valid claim against the United States;
    (3) If the owner or holder is the United States or an officer or 
employee thereof in his official capacity, a State, the District of 
Columbia, a territory or possession of the United States, a municipal 
corporation or political subdivision of any of the foregoing, a 
corporation the entire capital of which is owned by the United States, a 
foreign government or agency thereof, a foreign central bank, or a 
Federal Reserve Bank.



Sec. 248.5  Exception to requirement of undertaking of indemnity Form 2244.

    Notwithstanding the provisions of Sec. 248.4, if in any case 
involving a financially responsible claimant it is impracticable to 
obtain the execution of Standard Form 2244, with or without sureties, 
the officer or employee responsible for handling the claim, in his 
discretion, may accept an undertaking of indemnity in the form of a 
written statement or letter, substantially as follows:
In consideration of the issuance of a substitute check in lieu of_______
                                                     (Check description)

and the payment of the substitute check, the undersigned undertakes and 
agrees to save harmless and indemnify the United States of America, its 
officers and agents, of and from any and all liability, loss, expense, 
claim, and demand whatsoever, arising in any manner by reason of or on 
account of said original check (or checks) or the stoppage or payment 
thereof, or the issue or payment of the substitute check (or checks), to 
replace the same.


The undertaking of indemnity should be appropriately witnessed, and if 
it is executed on behalf of a corporation or other business 
organization, the individual executing the same should furnish proof of 
this authority to so act. In appropriate cases, a foreign language 
translation of the foregoing letter of indemnity may be accepted.

[25 FR 10869, Nov. 16, 1960. Redesignated at 39 FR 20969, June 17, 1974, 
as amended at 54 FR 35648, Aug. 29, 1989]



Sec. 248.6  Recovery of original check.

    (a) If the claimant recovers an original check after he has 
furnished advice of non-receipt but before receipt of a substitute 
check, he should immediately notify the disbursing officer or agency 
concerned and hold the check until receipt of advice from the disbursing 
officer or agency concerned regarding the negotiability of such original 
check.
    (b) In the event the substitute check has been received prior to the 
recovery of the original check, the original check should be returned 
immediately to the disbursing officer.
    (c) Under no circumstances should the claimant attempt to cash both 
the original and substitute check.



Sec. 248.7  Claims requiring settlement action.

    There are certain types of claims on which the disbursing officer 
will not be authorized to take final action. These include:
    (a) Claims on original checks which have been outstanding more than 
one full fiscal year following the fiscal year in which the checks were 
issued, and
    (b) Claims involving doubtful questions of law and fact.

In such cases the disbursing officer will obtain information and 
supporting papers, including an undertaking of indemnity, from the 
claimant and transmit such data to the Claims Division, General 
Accounting Office, for settlement action.

[[Page 87]]



Sec. 248.8  Inquiries.

    Claimants should direct any inquiries regarding the application of 
these regulations to the department or agency or disbursing officer 
concerned.



Sec. 248.9  Amendments and waivers.

    The Treasury Department may waive, withdraw or amend at any time or 
from time to time any or all of the foregoing regulations.



PART 250--PAYMENT ON ACCOUNT OF AWARDS OF THE FOREIGN CLAIMS SETTLEMENT COMMISSION OF THE UNITED STATES--Table of Contents




Sec.
250.1  Scope of regulations.
250.2  Forms.
250.3  Voucher applications.
250.4  Payment on awards.
250.5  Manner of payment.
250.6  Powers of attorney.
250.7  Additional evidence.

    Authority: Sec. 7, 64 Stat. 16, sec. 310, 69 Stat. 573, sec. 413, 72 
Stat. 530, sec. 213, 76 Stat. 1111; 22 U.S.C. 1626, 1641i, 1642l, 50 
U.S.C. App. 2017l.



Sec. 250.1  Scope of regulations.

    The regulations in this part govern payment by the Department of the 
Treasury on awards made and certified to the Secretary of the Treasury 
by the Foreign Claims Settlement Commission under the International 
Claims Settlement Act of 1949, as amended (22 U.S.C. 1621 et seq.), and 
Title II of the War Claims Act of 1948 (50 U.S.C. App. 2017 et seq.).

[34 FR 1897, Feb. 8, 1969]



Sec. 250.2  Forms.

    The forms referred to in Secs. 250.3 and 250.4 shall be used in 
connection with the payment of awards hereunder. Voucher applications 
for all payments will be mailed to awardees by the Financial Management 
Service, Treasury Department, Hyattsville, MD 20782, without request 
therefor by awardees.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]



Sec. 250.3  Voucher applications.

    (a) Execution of voucher by person named. No payment of any part of 
the amount due on account of an award will be made unless a voucher 
application therefor properly executed (preferably in ink or indelible 
pencil) is received by the Treasury Department. A voucher application 
for each payment on account of an award must be signed by each person 
whose name appears on such voucher application as payee exactly as his 
name appears thereon, with the following two exceptions:
    (1) If only the name of the payee, and not his identity, has 
changed, the payee shall sign the voucher application with his changed 
name and return it to the Financial Management Service, Treasury 
Department, Hyattsville, MD 20782; the voucher application shall be 
accompanied by an explanatory affidavit and appropriate supporting 
documents, e.g., a copy of a marriage certificate or court order of 
change of name.
    (2) If the identity of the payee has changed, paragraph (b) of this 
section shall apply. A signature by mark (X) must be witnessed by two 
persons; the signature and address of each must appear on the voucher 
application. In the case of a corporation the voucher application must 
be signed by an appropriate officer thereof having authority to do so, 
whose authority to sign on behalf of the corporation must be duly 
certified to thereon over the seal of the corporation.
    (b) Execution of voucher by other person. If the person named in the 
voucher application as payee is no longer the proper person to receive 
the payment by reason of assignment, incompetency or death, or of 
termination of a partnership or corporation named, the voucher shall be 
executed by the person entitled to payment as provided in Sec. 250.4 and 
returned to the Credit Accounting Branch with the relevant information 
and the appropriate supporting documents required by that section.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]

[[Page 88]]



Sec. 250.4  Payment on awards.

    Payment will be made only to the person or persons on behalf of whom 
the award is made, except in the following circumstances:
    (a) If such person is incompetent, payment will be made to his 
guardian, committee, or other equivalent legal representative. The law 
of the residence of the incompetent will determine whether the legal 
representative must be court appointed. If court appointment is 
required, the legal representative shall submit a certificate of the 
clerk of the appointing court, under its seal, dated within 6 months of 
the date of the voucher application for payment, showing that his 
appointment is in full force and effect. If court appointment is not 
required, the legal representative shall submit a notarized statement 
showing:
    (1) His relationship to the incompetent;
    (2) The name and address of the person having care and custody of 
the incompetent;
    (3) That any money received will be applied to the use and benefit 
of the incompetent, and
    (4) That there was no appointment of a guardian or committee.
    (b) If such person is deceased, payment will be made to his legal 
representative.
    (1) If any payment to be made is not over $1,000 and there is no 
qualified executor or administrator, the legal representative will be 
the person found by the Comptroller General to be entitled thereto, 
without the necessity of compliance with the requirements of law with 
respect to the administration of estates, upon execution and submission 
of Standard Form No. 1055 to the Financial Management Service for 
transmittal to the Comptroller General. That form is available from the 
Credit Accounting Branch.
    (2) In all other cases, the term legal representative shall include 
court-appointed or statutory administrators or executors, and successors 
in interest of the decedent, e.g., his legatees or heirs as determined 
by an appropriate court or by the law of his residence. If 
administration of the decedent's estate is closed, the legal 
representative shall submit a copy of the appropriate court's final 
order of distribution or other pertinent order, identifying the 
distributees and their addresses. If administration continues and the 
legal representative is court-appointed, he shall submit a certificate 
of the clerk of the appointing court, under its seal, dated within 6 
months of the date of the voucher application for payment, showing that 
such appointment is in full force and effect. If the legal 
representative is not court-appointed, he shall submit evidence 
sufficient to prove his interest and authority to apply for payment. If 
that evidence is a copy of the decedent's will, it shall show on its 
face or by attachments thereto that it has been offered for probate, and 
that the appropriate court has affixed its seal and attached its 
certification of authenticity that the will is in fact the decedent's 
last will and testament.
    (c)-(d) [Reserved]
    (e) In the case of a partnership or corporation, the existence of 
which has been terminated, if a receiver or trustee has been duly 
appointed by a court of competent jurisdiction in the United States and 
has not been discharged prior to the date of payment, payment will be 
made to such receiver or trustee in accordance with the order of the 
court. In the event a receiver or trustee duly appointed by a court of 
competent jurisdiction in the United States makes an assignment of the 
claim or any part thereof with respect to which an award is made, or 
makes an assignment of such award or any part thereof, payment will be 
made to the assignee as his interest may appear. In the latter 
circumstance, certified copies of the court orders showing the authority 
of the receiver or trustee to make the assignment shall be submitted 
with the assignment. No particular form of assignment is prescribed, but 
the original assignment must be submitted to, and will be retained by 
the Treasury Department.
    (f) In the case of a partnership or corporation, the existence of 
which has been terminated, if no receiver or trustee has been duly 
appointed by a court of competent jurisdiction in the United States, or 
if such a receiver or trustee has been discharged prior to the date of 
payment without having

[[Page 89]]

made an assignment, payment may be made to the person or persons found 
by the Comptroller General of the United States to be entitled thereto. 
In this circumstance, the person or persons claiming payment shall 
submit to the Financial Management Service, Treasury Department, 
Hyattsville, MD 20782, such documentary evidence as is appropriate to 
show his or their right to the payment.
    (g) In the case of an assignment of an award or any part thereof 
which is made in writing and duly acknowledged and filed after such 
award is certified to the Secretary of the Treasury, payment may in the 
discretion of the Secretary of the Treasury be made to the assignee as 
his interest may appear. No particular form of assignment is prescribed, 
but the original assignment must be submitted to, and will be retained 
by the Treasury Department.

[31 FR 9418, July 9, 1966, as amended at 34 FR 1897, Feb. 8, 1969; 49 FR 
47001, Nov. 30, 1984; 58 FR 4578, Jan. 15, 1993]



Sec. 250.5  Manner of payment.

    Payment will be made by check drawn on the United States Treasury. 
Checks will be mailed to the payee at the address indicated on the 
voucher application, unless subsequent to the issue of the voucher 
application the Treasury Department receives a written request from the 
payee to deliver the check to him at some other address. Where the award 
has been entered in favor of more than one person, only one check will 
be drawn in making payment unless the payees specify the share of each 
and request separate checks.

[31 FR 9418, July 9, 1966]



Sec. 250.6  Powers of attorney.

    No power of attorney to sign a voucher application will be 
recognized but a power of attorney executed subsequent to the 
certification of an award to the Secretary of the Treasury to receive, 
endorse and collect a check given in payment on an award may be 
recognized. An appropriate form for such a power of attorney may be 
obtained from the Financial Management Service, Treasury Department, 
Hyattsville, MD 20782.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]



Sec. 250.7  Additional evidence.

    The Secretary of the Treasury or the Comptroller General of the 
United States may in any case require such additional information and 
evidence as may be deemed necessary.

[31 FR 9418, July 9, 1966]



PART 256--PAYMENTS UNDER JUDGMENTS AND PRIVATE RELIEF ACTS--Table of Contents




Sec.
256.1  Judgments against the United States.
256.2  Payment of sums appropriated in private relief acts.

    Authority: 5 U.S.C. 301, 552.



Sec. 256.1  Judgments against the United States.

    (a) Persons securing money judgments against the United States, in 
excess of $100,000 in any one case, in the Court of Claims are required, 
in order to secure payment, to file original transcripts of such 
judgments with the Secretary of the Treasury for certification to the 
Congress for appropriation. Following receipt of an application on the 
part of the claimant for payment of the amount appropriated by the 
Congress, the General Accounting Office transmits a certificate of 
settlement to the Treasury Department. Payment is then made to the 
claimant by check drawn in the Treasury Department by the Field 
Operations Group, Financial Management Service. A similar procedure 
applies with respect to such judgments obtained in the Federal district 
courts, except that papers pertaining to such judgments are filed with 
the Secretary of the Treasury by the Department of Justice instead of by 
the claimant.
    (b) A procedure similar to that outlined in paragraph (a) of this 
section is followed with respect to judgments not in excess of $100,000 
in any one case except that the necessary documents are filed with the 
General Accounting Office and no action is taken by the

[[Page 90]]

Treasury Department prior to the receipt of a certificate of settlement 
from the General Accounting Office. After receipt of a certificate of 
settlement a check payable from a permanent appropriation established 
for the payment of such judgments is drawn in the Treasury Department by 
the Field Operations Group, Financial Management Service and mailed to 
the claimant in accordance with the terms of the certificate of 
settlement.

[23 FR 10184, Dec. 24, 1958. Redesignated at 32 FR 9562, July 1, 1967, 
as amended at 49 FR 47002, Nov. 30, 1984]



Sec. 256.2  Payment of sums appropriated in private relief acts.

    Persons entitled to payment of sums appropriated in private relief 
acts should make application for payment to the Treasury Department, 
Financial Management Service, Washington, DC 20226. Upon receipt of an 
application, bearing the signature and mailing address of the 
beneficiary, the Treasury Department will effect payment.

[29 FR 13164, Sept. 23, 1964. Redesignated at 32 FR 9562, July 1, 1967, 
as amended at 49 FR 47001, Nov. 30, 1984]



PART 270--AVAILABILITY OF RECORDS--Table of Contents




Sec.
270.1  Rules governing availability of information.
270.2  Materials available for inspection and copying.
270.3  Requests for identifiable records.
270.4  Fees for services.

    Authority: 5 U.S.C. 552.

    Source: 58 FR 25943, Apr. 29, 1993, unless otherwise noted.



Sec. 270.1  Rules governing availability of information.

    The records of the Financial Management Service required by 5 U.S.C. 
552 to be made available to the public shall be made available in 
accordance with the definitions, procedures and other provisions of the 
regulations on the Disclosure of Records of the Office of the Secretary 
and of other bureaus and offices of the Department issued under 5 U.S.C. 
552 and published as part 1 of title 31 of the Code of Federal 
Regulations, except as provided in these regulations.



Sec. 270.2  Materials available for inspection and copying.

    (a) Materials available. The materials in the Financial Management 
Service which are required by 5 U.S.C. 552(a)(2) to be made available 
for public inspection and copying are the following:
    (1) Final opinions, as well as orders, made in the adjudication of 
cases. These will include final dispositions of claims on Government 
checks which are of a precedential nature. Generally, however, the 
Financial Management Service does not issue orders in the adjudication 
of cases.
    (2) Statements of policy and interpretations which have been adopted 
by the Service and are not published in the Federal Register.
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public. These materials include sections of the 
Treasury Financial Manual and such Department Circulars applicable to 
Financial Management Service operations, that have been determined by 
the agency to affect a member of the public, and have not been 
incorporated into that manual or published as parts of title 31 of the 
Code of Federal Regulations.
    (4) Current indices for the foregoing materials.
    (b) Location. The materials listed in paragraph (a) of this section 
issued on or after the effective date of these regulations are available 
for inspection and copying during office hours in the public reading 
room of the Treasury Department, 15th Street and Pennsylvania Avenue, 
NW., Washington, DC 20220. Materials issued prior thereto are available 
in the public reading room to the extent feasible. If not so available, 
they may be requested as identifiable records.



Sec. 270.3  Requests for identifiable records.

    (a) Procedure. A written request for an identifiable record shall be 
addressed to: Freedom of Information Disclosure Officer, Financial 
Management Service, 401 14th Street, SW., Washington, DC 20227.

[[Page 91]]

    (b) Determination of request. Determination as to the disclosure of 
a record request shall be made, subject to appeal to the Commissioner of 
the Financial Management Service, by the head of the division in which 
the record belongs and by the Disclosure Officer of the agency. The 
decision of the Commissioner shall constitute final agency action, 
unless the Commissioner refers the appeal to the Fiscal Assistant 
Secretary, in which case the decision of the Fiscal Assistant Secretary 
shall constitute final agency action.



Sec. 270.4  Fees for services.

    Fees for services performed by the Financial Management Service will 
be imposed and collected as set forth in part 1 of title 31 of the Code 
of Federal Regulations.



PART 281--FOREIGN EXCHANGE OPERATIONS--Table of Contents




Sec.
281.1  Authority.
281.2  [Reserved]
281.3  Collections.
281.4  Guaranty funds.
281.5  Depositaries.
281.6  Withdrawals from Treasury accounts.
281.7  Limitations.
281.8  Reporting and accounting.
281.9  General provisions.

    Authority: Sec. 114, 64 Stat. 836, sec. 613, 75 Stat. 443; 31 U.S.C. 
66b, 22 U.S.C. 2363, E.O. 10488, 18 FR 5699, 3 CFR, 1949-1953 Comp., p. 
972, E.O. 10900, 26 FR 143, 3 CFR, 1959-1963 Comp., p. 429.

    Source: 26 FR 10054, Oct. 26, 1961, unless otherwise noted.



Sec. 281.1  Authority.

    By virtue of the authority vested in the Secretary of the Treasury 
by section 114 of the Budget and Accounting Procedures Act of 1950, 64 
Stat. 836, 31 U.S.C. 66b; section 613 of the Act of September 4, 1961, 
75 Stat. 443; Executive Order No. 10488, 18 FR 5699, 3 CFR 1949-1953 
Comp.; and Executive Order No. 10900, 26 FR 143, the following 
regulations are prescribed for administration of the purchase custody, 
deposit, transfer, sale and reporting of foreign exchange (including 
credits and currencies) by executive departments and agencies 
(hereinafter referred to as agencies).



Sec. 281.2  [Reserved]



Sec. 281.3  Collections.

    Foreign exchange collected by agencies shall be delivered promptly 
into the custody of accountable officers for credit to accounts of the 
Secretary of the Treasury (hereinafter referred to as the Secretary) 
unless otherwise directed by the Secretary. The term ``collections,'' 
for the purpose of these regulations in this part, does not include 
foreign exchange acquired by the United States by purchase with dollars. 
The accountable officer shall maintain records, showing the collections, 
by source, and indicating the miscellaneous receipt accounts or other 
accounts in the Treasury to be credited with dollar proceeds from sale 
of the foreign exchange, and such further classifications as may be 
needed to indicate exchange which can be used only for restricted 
purposes. Accountable officers shall be advised by the collecting 
agencies of the source of collections and any restrictions on the use of 
the foreign exchange in order that the foregoing records may be 
maintained.



Sec. 281.4  Guaranty funds.

    The regulations in this part are applicable to all foreign exchange 
acquired by the United States under guaranty provisions of section 1011 
of the United States Information and Educational Exchange Act of 1948, 
as amended (22 U.S.C. 1442), except that receipts of such foreign 
exchange shall be deposited in the foreign exchange accounts of the 
United States Treasury referred to in Sec. 281.5(c).



Sec. 281.5  Depositaries.

    (a) Except as provided in paragraph (b) of this section, foreign 
exchange which is held by accountable officers for account of the 
Secretary and foreign exchange acquired by accountable officers by 
purchase or otherwise, which is not immediately disbursed but is held by 
such officers for their own

[[Page 92]]

account or for the account of any agency, shall be maintained only in 
depositaries designated by the Secretary. Unless otherwise directed by 
the Secretary, accountable officers are not required to have separate 
depositary accounts for foreign exchange held for the Secretary's 
account.
    (b) Accountable officers may carry foreign exchange as cash outside 
depositaries only pursuant to authority granted in accordance with 
Treasury Department Circular No. 1030 dated July 24, 1959, as amended.
    (c) Deposits in and withdrawals from foreign exchange accounts 
maintained with depositaries in the name of the United States Treasury 
will be made only as directed by the Secretary.



Sec. 281.6  Withdrawals from Treasury accounts.

    Foreign exchange shall be withdrawn from accounts of the Secretary 
on the books of accountable officers or from the foreign exchange 
accounts carried with depositaries in the name of the United States 
Treasury, only for the purpose of sale for dollars or transfer to 
agencies for authorized purposes, without reimbursement to the Treasury, 
as provided by or pursuant to law. Such transfers, as well as transfers 
between foreign exchange accounts of the Secretary and between foreign 
exchange accounts in the name of the United States Treasury, shall be 
made only by direction of the Secretary. An agency requiring foreign 
exchange from the Treasury Department shall make request of the 
Secretary, indicating the amount of exchange required, in units of 
foreign currency, and the name and location of the accountable officer 
to receive the exchange. To the extent practicable and desirable, 
standing authorizations will be given for withdrawals from accounts of 
the Secretary. The following conditions apply to the sale of foreign 
exchange and to the requisition of foreign exchange without dollar 
payment:
    (a) Sales. With respect to the sale of foreign exchange held in 
accounts of the Secretary, the payment in dollars shall be calculated at 
the rate of exchange that would otherwise be available to the United 
States for the acquisition of the foreign exchange for its official 
disbursements unless otherwise determined by the Treasury Department in 
consultation with the agencies concerned. When the rate that would 
otherwise be available to the United States is not readily 
ascertainable, the Treasury Department shall be consulted. The dollar 
proceeds realized from the sale of exchange shall be credited to the 
appropriate receipt, appropriation or refund account on the books of the 
Treasury. The dollar payment for foreign exchange purchased shall not be 
charged as an appropriation expenditure until the foreign exchange is 
disbursed.
    (b) Transfers without reimbursement. When foreign exchange is to be 
obtained from the Treasury Department without payment of dollars, the 
agency concerned shall furnish written certification that the exchange 
may be used without reimbursement to the Treasury, citing the relevant 
legal authority. In cases where international agreements or Bureau of 
the Budget allocations specify the programs for which foreign exchange 
may be used, the Secretary may transfer exchange to agencies without 
requiring a certification.

[26 FR 10054, Oct. 26, 1961, as amended at 29 FR 11497, Aug. 11, 1964]



Sec. 281.7  Limitations.

    The following limitations apply to the purchase and holding of 
foreign exchange:
    (a) Unless otherwise authorized by the Secretary, no agency or 
accountable officer shall purchase, or direct the purchase of, foreign 
exchange from any source outside the Government of the United States, 
except when exchange for the purpose intended is not available for 
purchase from within the Government.
    (b) All foreign exchange acquired by agencies by transfer from the 
Treasury Department, without payment of dollars, for the purpose of 
making authorized expenditures, shall be placed with accountable 
officers for account of the agencies concerned.
    (c) Unless otherwise authorized by the Secretary, no accountable 
officer shall purchase foreign exchange which, together with the balance 
on hand at

[[Page 93]]

the time of purchase, would exceed estimated requirements for a thirty-
day period.
    (d) To the maximum extent possible, foreign exchange accounts which 
are earmarked for specific programs shall be maintained on an unfunded 
basis. Each agency responsible for administering international 
agreements pertaining to the use of foreign exchange held in funded 
accounts shall review the agreement and other considerations relevant to 
each such account at least annually to determine if the account can be 
placed on an unfunded basis, and shall initiate appropriate action to 
accomplish the objective of minimizing the number of funded program 
accounts and the amounts therein. The resulting determinations and the 
status of actions undertaken shall be furnished in writing to the 
Treasury Department within 60 days from the date of this regulation and 
each time thereafter that there is a change of status of a particular 
account, or as requested by the Treasury Department. Exchange which 
becomes eligible for removal from a funded status either as a result of 
the foregoing determinations, or because of the expiration of the period 
of availability for restricted use under the terms of international 
agreements, or for other reasons, shall be released promptly by the 
program agency for transfer to a nonrestricted Treasury sales account.

[26 FR 10054, Oct. 26, 1961, as amended at 29 FR 11497, Aug. 11, 1964]



Sec. 281.8  Reporting and accounting.

    The Treasury Department will maintain a system of central accounting 
and reporting for the purpose of providing information on foreign 
exchange operations to the President, the Congress, and the public. The 
Treasury Department will also prescribe rules to enhance consistency in 
reporting of foreign exchange operations by all agencies. Agencies shall 
furnish such reports and information as may be required for the 
administration of the provisions of this circular.



Sec. 281.9  General provisions.

    (a) Nothing contained in this part shall be construed as having the 
effect of superseding or amending the provisions of any regulations 
issued or approved by the Secretary pursuant to the Act of December 23, 
1944, as amended (67 Stat. 61).
    (b) The Secretary may waive, withdraw, or amend at any time or from 
time to time any or all of the provisions of the regulations of this 
part.
    (c) Implementing regulations within the framework of this circular 
will be issued by the Fiscal Assistant Secretary of the Treasury. All 
communications pertaining to the administration of the provisions of 
this part shall be directed to the Fiscal Assistant Secretary.



PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION IMPROVEMENT ACT OF 1996--Table of Contents




                  Subpart A--Disbursing Official Offset

Sec.
285.1  Collection of past-due support by administrative offset.
285.2  Offset of tax refund payments to collect past-due, legally 
          enforceable nontax debt.
285.3  Offset of tax refund payments to collect past-due support.
285.4  Offset of Federal benefit payments to collect past-due, legally 
          enforceable nontax debt.
285.7  Salary offset.
285.8  Offset of tax refund payments to collect state income tax 
          obligations.

                Subpart B--Authorities Other Than Offset

285.11  Administrative wage garnishment.
285.12  Transfer of debts to Treasury for collection.
285.13  Barring delinquent debtors from obtaining Federal loans or loan 
          insurance or guarantees.

    Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716, 3720A, 
3720B, 3720D; E.O. 13019; 3 CFR, 1996 Comp., p. 216.

    Source: 62 FR 34179, June 25, 1997, unless otherwise noted.



                  Subpart A--Disbursing Official Offset



Sec. 285.1  Collection of past-due support by administrative offset.

    (a) Definitions. For purposes of this section:

[[Page 94]]

    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a debt.
    Debt as used in this section is synonymous with the term past-due 
support.
    Disbursing official includes an official who has authority to 
disburse public money pursuant to 31 U.S.C. 3321 or another Federal law.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury. FMS is the designee of the Secretary of the 
Treasury for all matters concerning this section, unless otherwise 
specified.
    HHS means the Department of Health and Human Services, Office of 
Child Support Enforcement.
    Past-due support means the amount of support determined under a 
court order, or an order of an administrative procedure established 
under State law, for support and maintenance of a child, or of a child 
and the parent with whom the child is living, which has not been paid. 
The term child as used in this definition is not limited to minor 
children.
    Past-due support being enforced by the State means there has been an 
assignment of the support rights to the State, or the State making the 
request for offset is providing services to individuals pursuant to 42 
U.S.C. 654(5) (section 454(5) of the Social Security Act), or the State 
is enforcing support pursuant to a cooperative agreement with or by an 
Indian tribal government.
    State means the several States of the United States. The term State 
also includes the District of Columbia, American Samoa, Guam, the United 
States Virgin Islands, the Commonwealth of the Northern Mariana Islands, 
and the Commonwealth of Puerto Rico.
    Secretary means the Secretary of the Treasury.
    (b) General rule. FMS may enter into a reciprocal agreement with a 
State for the collection of past-due support being enforced by the State 
by administrative offset from certain Federal payments. Upon 
notification of past-due support either directly from a State which has 
entered into such an agreement or from HHS, disbursing officials of FMS 
or any other disbursing official of the United States shall offset 
Federal payments which are subject to offset under this section, to 
collect past-due support. The amount offset, minus the offset fee, shall 
be forwarded to the State to be distributed in accordance with 
applicable laws and procedures.
    (c) Agreements. FMS may enter into reciprocal agreements with States 
for disbursing officials of FMS and any other Federal disbursing 
official to offset certain Federal payments to collect past-due support 
being enforced by the State. The agreement shall contain any 
requirements which FMS considers appropriate to facilitate the offset 
and prevent duplicative efforts and shall require States to prescribe 
procedures governing the collection of past-due support by Federal 
administrative offset. For purposes of this section, reciprocal means of 
mutual benefit. An agreement between FMS and a State to collect past-due 
support by offsetting Federal payments will be considered of mutual 
benefit and it is not required that States conduct administrative 
offsets to collect debts owed to the Federal Government. States which 
have entered into an agreement with FMS pursuant to this section may 
thereafter request, in the manner prescribed herein, that an offset be 
performed. Such requests shall be made by the appropriate State 
disbursing official which, for purposes of this section, means an 
appropriate official of the State agency which administers or supervises 
the administration of the State plan under Title IV-D of the Social 
Security Act.
    (d) Notification to FMS of past-due support. (1) States notifying 
FMS of past-due support must do so in the manner and format prescribed 
by FMS. States notifying HHS of past-due support must do so in the 
manner and format prescribed by HHS. HHS shall notify FMS of all past-
due support referred to HHS by States for collection by administrative 
offset provided that the requirements of paragraphs (d)(3) and (h) of 
this section have been met.
    (2) When a State has knowledge that past-due support is being 
enforced by

[[Page 95]]

more than one State, the State notifying FMS or HHS of the past-due 
support must inform any other State involved in enforcing the past-due 
support when it refers the debt for offset and when it receives the 
offset amount.
    (3) The notification of past-due support must be accompanied by a 
certification that the debt is past-due, legally enforceable, and that 
the State has complied with all the requirements as set forth in 
paragraph (h) of this section and with any requirements imposed by State 
law or procedure. For debts so certified, the Secretary may waive 
sections 552a (o) and (p) of Title 5, United States Code, where 
applicable, in accordance with the Secretary's authority under 31 U.S.C. 
3716(f).
    (4) FMS may reject a notification of past-due support which does not 
comply with the requirements of this section. The State will be notified 
of the rejection along with the reason for the rejection.
    (e) Minimum amount of past-due support. FMS will reject a 
notification of past-due support where the past-due support owed is less 
than $25.00. This amount may be adjusted from time to time by FMS to 
ensure that the cost of collection does not exceed the debt.
    (f) Limitations. Debts properly submitted to FMS for administrative 
offset will remain subject to collection by administrative offset until 
withdrawn by the State provided the debt remains past-due and legally 
enforceable.
    (g) Notification of changes in status of debt. The State notifying 
FMS or HHS of past-due support shall, in the manner and in the time 
frames provided by FMS or HHS, notify FMS or HHS of deletions or 
decreases in the amount of a debt referred for collection by 
administrative offset. The State may notify FMS or HHS of any increases 
in the amount of a debt referred for collection by administrative offset 
provided the State has complied with the requirements of paragraph (h) 
of this section with regard to those amounts.
    (h) Advance notification of intent to collect by administrative 
offset. (1) The State, or FMS or HHS on behalf of the State, if the 
State requests and FMS or HHS agrees, shall send a written notification, 
at least 30 days in advance of referral of the debt for offset, to the 
individual owing past-due support, informing the individual that the 
State intends to refer the debt for collection by administrative offset 
against Federal payments. The notice must also inform the individual of:
    (i) The nature and amount of the debt; and
    (ii) The right to an administrative review by the State referring 
the debt or, upon the request of the individual, by the State with the 
order upon which the referral was based, of the determination of the 
State with respect to the debt and of the procedures and time frames 
established by the State for such reviews.
    (2) Prior to referring a debt to FMS for collection by 
administrative offset, States must provide individuals with a reasonable 
opportunity to exercise the rights enumerated in paragraph (h)(1) of 
this section in accordance with procedures prescribed by the State.
    (i) Payments subject to offset. Federal payments subject to offset 
under this section include all Federal payments except:
    (1) Payments due to an individual under
    (i) Title IV of the Higher Education Act of 1965;
    (ii) The Social Security Act;
    (iii) Part B of the Black Lung Benefits Act;
    (iv) Any law administered by the Railroad Retirement Board;
    (2) Payments which the Secretary determines are exempt from offset 
in accordance with paragraph (k) of this section;
    (3) Payments from which collection of past-due support by 
administrative offset is expressly prohibited by law;
    (4) Payments made under the Internal Revenue Code of 1986 (except 
that tax refund payments are subject to offset under separate 
authority); and
    (5) Payments made under the tariff laws of the United States.
    (j) Special provisions applicable to Federal salary payments. (1) 
Unless a lower maximum offset limitation is provided by applicable State 
law, the maximum part of a Federal salary payment per pay period subject 
to offset to collect past-due support shall not exceed those amounts set 
forth at section 1673(b)(2)

[[Page 96]]

(A) and (B) of Title 15, United States Code, as follows:
    (i) Fifty (50%) percent of the debtor's aggregate disposable 
earnings for any pay period, where the debtor asserts by affidavit, or 
by other acceptable evidence, that he/she is supporting a spouse and/or 
dependent child, other than the former spouse and/or child for whom 
support is being collected, except that an additional five (5%) percent 
will apply if it appears that such earnings are to enforce past-due 
support for a period which is twelve (12) weeks or more prior to the pay 
period to which the offset applies. A debtor shall be considered to be 
supporting a spouse and/or dependent child only if the debtor provides 
over half of the spouse's and/or dependent child's support.
    (ii) Sixty (60%) percent of the debtor's aggregate disposable 
earnings for any pay period where the debtor fails to assert by 
affidavit or establish by other acceptable evidence that he/she is 
supporting a spouse and/or dependent child, other than a former spouse 
and/or child for whom support is being collected, except that an 
additional five (5%) percent will apply if it appears that such earnings 
are to enforce past-due support for a period which is twelve (12) weeks 
or more prior to the pay period to which the offset applies.
    (2) The maximum allowable offset amount shall be reduced by the 
amount of any deductions in pay resulting from a garnishment order for 
support. Nothing in this rule is intended to alter rules applicable to 
processing garnishment orders for child support and/or alimony.
    (3) Federal salary payments subject to offset for the collection of 
past-due support include current basic pay, special pay, incentive pay, 
retainer pay, overtime, or in the case of an employee not entitled to 
basic pay, other authorized pay. Aggregate disposable earnings for 
purposes of determining the maximum amounts which may be offset under 
paragraph (j)(1) of this section is Federal salary pay remaining after 
the deduction of:
    (i) Any amount required by law to be withheld;
    (ii) Amounts properly withheld for Federal, State or local income 
tax purposes;
    (iii) Amounts deducted as health insurance premiums;
    (iv) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage; and
    (v) Amounts deducted as normal life insurance premiums not including 
amounts deducted for supplementary coverage.
    (4) At least 30 days in advance of offset, the disbursing official 
shall send written notice to the debtor of the maximum offset 
limitations described in paragraph (j)(1) of this section. The notice 
shall include a request that the debtor submit supporting affidavits or 
other documentation necessary to determine the applicable offset 
percentage limitation. The notice shall also inform the debtor of the 
percentage that will be deducted if he/she fails to submit the requested 
documentation.
    (5) At the time the past-due support debt is submitted for offset, 
the State shall advise FMS or HHS if the maximum amount of a Federal 
salary payment that may be offset is less than the amount described 
under this paragraph.
    (k) Payments exempt from administrative offset to collect past-due 
support being enforced by a State. The Secretary will exempt from 
administrative offset under this part payments made under means-tested 
programs when requested by the head of the Federal agency which 
administers the program. For purposes of this section, means-tested 
programs are programs for which eligibility is based on a determination 
that income and/or assets of the beneficiary are inadequate to provide 
the beneficiary with an adequate standard of living without program 
assistance. The Secretary may exempt from administrative offset under 
this section any other class or type of payment upon the written request 
of the head of the agency which authorizes the payments. In determining 
whether or not to grant such exemptions, the Secretary shall give due 
consideration to whether administrative offset would tend to interfere 
substantially with or defeat the

[[Page 97]]

purposes of the payment agency's program.
    (l) Fees. A fee which FMS has determined to be sufficient to 
reimburse FMS for the full cost of the offset procedure, shall be 
deducted from each offset amount. FMS will notify the States, annually 
and in advance, of the amount of the fee to be charged for each offset.
    (m) Offsetting payments--(1) Conducting the offset. Disbursing 
officials of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other Government corporation, 
any disbursing official of the United States designated by the 
Secretary, or any disbursing official of an executive department or 
agency that disburses Federal payments shall offset payments subject to 
offset under this section to satisfy, in whole or part, a debt owed by 
the payee. Disbursing officials shall compare payment certification 
records with records of debts submitted to FMS for collection by 
administrative offset. A match will occur when the taxpayer identifying 
number and name control of a payment record are the same as the taxpayer 
identifying number and name control of a debt record. The taxpayer 
identifying number for an individual is the individual's social security 
number. When a match occurs and all other requirements for offset have 
been met, the disbursing official shall offset the payment to satisfy, 
in whole or part, the debt. Any amounts not offset shall be paid to the 
payee. The amount that can be offset from a single payment is the lesser 
of the amount of the debt (including interest, penalties, and 
administrative costs); the amount of the payment; or the amount of the 
payment available for offset if a statute or regulation prohibits offset 
of the entire amount. Debts remain subject to collection by offset until 
paid in full.
    (2) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (l) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment has been made to HHS or any State, FMS will 
notify HHS or the appropriate State that an erroneous offset payment has 
been made. FMS may deduct the amount of the erroneous offset payment 
from amounts payable to HHS or the State, as the case may be. 
Alternatively, upon FMS' request, the State shall return promptly to the 
affected payee or FMS an amount equal to the amount of the erroneous 
payment (unless the State previously has paid such amounts, or any 
portion of such amounts, to the affected payee). HHS and States shall 
notify FMS any time HHS or a State returns an erroneous offset payment 
to an affected payee. FMS and HHS, or the appropriate State, will adjust 
their debtor records accordingly.
    (n) Administrative offset priorities. When a payee/debtor owes more 
than one debt which has been referred to FMS for collection by 
administrative offset, any offset by a disbursing official will be 
applied first to past-due support assigned to a State and will be 
applied to any other past-due support after any other reductions allowed 
by law.
    (o) Notification of offset. (1) Disbursing officials of FMS or any 
other disbursing official which conducts an offset will notify the payee 
in writing of the occurrence of the offset to satisfy past-due support. 
The notice shall inform the payee of the type and amount of the payment 
that was offset; the identity of the State which requested the offset; 
and a contact point within the State that will handle concerns regarding 
the offset. Disbursing officials shall not be liable for failure to 
provide this notice.
    (2) Disbursing officials of FMS or any other disbursing official 
which conducts an offset under this section will share with HHS, upon 
request by the Secretary of HHS, information contained in payment 
certification records of persons who are delinquent in child support 
obligations that would assist in the collection of such debts. When no 
offset is conducted, disbursing officials of FMS or any other disbursing 
official, will provide such information to HHS to the extent such 
information is available from offset activities conducted by FMS and 
other disbursing officials.

[[Page 98]]

    (p) Liability of disbursing officials and payment agencies. Neither 
the disbursing official nor the agency authorizing the payment shall be 
liable for the amount of the administrative offset on the basis that the 
underlying obligation, represented by the payment before the 
administrative offset was taken, was not satisfied. Disbursing officials 
will notify the agency authorizing the payment that the offset has 
occurred so that the agency authorizing the payment may direct any 
inquiries concerning the offset to the appropriate State.

[62 FR 36210, July 7, 1997, as amended at 63 FR 46145, Aug. 28, 1998]



Sec. 285.2  Offset of tax refund payments to collect past-due, legally enforceable nontax debt.

    (a) Definitions. For purposes of this section:
    Creditor agency means a Federal agency owed a claim that seeks to 
collect that claim through tax refund offset.
    Debt or claim refers to an amount of money, funds, or property which 
has been determined by an agency official to be due the United States 
from any person, organization, or entity, except another Federal agency. 
For the purposes of this section, the terms ``claim'' and ``debt'' are 
synonymous and interchangeable and includes debt administered by a third 
party acting as an agent for the Federal Government.
    Debtor means a person who owes a debt or claim. The term ``person'' 
includes any individual, organization or entity, except another Federal 
agency.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any tax on the part of the person who 
made the overpayment.
    (b) General rule. (1) A Federal agency (as defined in 26 U.S.C. 
6402(g)) that is owed by a person a past-due, legally enforceable nontax 
debt shall notify FMS of the amount of such debt for collection by tax 
refund offset. However, any agency subject to section 9 of the Act of 
May 18, 1933 (16 U.S.C. 831h) owed such a debt may, but is not required 
to, notify FMS of the amount of such debt for collection by tax refund 
offset.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name (or derivation of the name, known as a ``name control'') of a 
payment certification record are the same as the taxpayer identifying 
number and name control of a debtor record. When a match occurs and all 
other requirements for tax refund offset have been met, FMS will reduce 
the amount of any tax refund payment payable to a debtor by the amount 
of any past-due, legally enforceable debt owed by the debtor. Any 
amounts not offset will be paid to the payee(s) listed in the payment 
certification record.
    (3) This section does not apply to any debt or claim arising under 
the Internal Revenue Code.
    (4)(i) This section applies to Federal Old Age, Survivors and 
Disability Insurance (OASDI) overpayments provided the requirements of 
31 U.S.C. 3720A(f)(1) and (2) are met with respect to such overpayments.
    (ii) For purposes of this section, OASDI overpayment means any 
overpayment of benefits made to an individual under title II of the 
Social Security Act (42 U.S.C. 401 et seq.).
    (5) A creditor agency is not precluded from using debt collection 
procedures, such as wage garnishment, to collect debts that have been 
submitted to FMS for purposes of offset under this part. Such debt 
collection procedures may be used separately or in conjunction with 
offset collection procedures.
    (c) Regulations. Prior to submitting debts to FMS for collection by 
tax refund offset, Federal agencies shall promulgate temporary or final 
regulations

[[Page 99]]

under 31 U.S.C. 3716 and 31 U.S.C. 3720A, governing the agencies' 
authority to collect debts by administrative offset, in general, and 
offset of tax refund payments, in particular.
    (d) Agency certification and referral of debt--(1) Past-due, legally 
enforceable debt eligible for tax refund offset. For purposes of this 
section, when a Federal agency refers a past-due, legally enforceable 
debt to FMS for tax refund offset, the agency will certify to FMS that:
    (i) The debt is past-due and legally enforceable in the amount 
submitted to FMS and that the agency will ensure that collections are 
properly credited to the debt;
    (ii) Except in the case of a judgment debt or as otherwise allowed 
by law, the debt is referred for offset within ten years after the 
agency's right of action accrues;
    (iii) The creditor agency has made reasonable efforts to obtain 
payment of the debt in that the agency has:
    (A) Submitted the debt to FMS for collection by administrative 
offset and complied with the provisions of 31 U.S.C. 3716(a) and related 
regulations, to the extent that collection of the debt by administrative 
offset is not prohibited by statute;
    (B) Notified, or has made a reasonable attempt to notify, the debtor 
that the debt is past-due, and unless repaid within 60 days after the 
date of the notice, will be referred to FMS for tax refund offset;
    (C) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past-due or legally enforceable, considered 
any evidence presented by the debtor, and determined that the debt is 
past-due and legally enforceable; and
    (D) Provided the debtor with an opportunity to make a written 
agreement to repay the amount of the debt;
    (iv) The debt is at least $25; and
    (v) In the case of an OASDI overpayment--
    (A) The individual is not currently entitled to monthly insurance 
benefits under title II of the Social Security Act (42 U.S.C. 401 et 
seq.);
    (B) The notice describes conditions under which the Commissioner of 
Social Security is required to waive recovery of the overpayment, as 
provided under 42 U.S.C. 404(b); and
    (C) If the debtor files a request for a waiver under 42 U.S.C. 
404(b) within the 60-day notice period, the agency has considered the 
debtor's request.
    (2) Pre-offset notice and consideration of evidence for past-due, 
legally enforceable debt. (i) For purposes of paragraph (d)(1)(iii)(B) 
of this section, a creditor agency has made a reasonable attempt to 
notify the debtor if the agency uses the current address information 
contained in the agency's records related to the debt. Agencies may, but 
are not required to, obtain address information from the IRS pursuant to 
26 U.S.C. 6103(m)(2), (4), or (5).
    (ii) For purposes of paragraph (d)(1)(iii)(C) of this section, if 
the evidence presented by the debtor is considered by an agent of the 
creditor agency, or other entities or persons acting on the agency's 
behalf, the debtor must be accorded at least 30 days from the date the 
agent or other entity or person determines that all or part of the debt 
is past-due and legally enforceable to request review by an officer or 
employee of the agency of any unresolved dispute. The agency must then 
notify the debtor of its decision.
    (3) Referral of past-due, legally enforceable debt. A Federal agency 
will submit past-due, legally enforceable debt information for tax 
refund offset to FMS in the time and manner prescribed by FMS. For each 
debt, the creditor agency will include the following information:
    (i) The name and taxpayer identifying number (as defined in 26 
U.S.C. 6109) of the debtor who is responsible for the debt;
    (ii) The amount of such past-due and legally enforceable debt;
    (iii) The date on which the debt became past-due;
    (iv) The designation of the Federal agency or subagency referring 
the debt; and
    (v) In the case of an OASDI overpayment, a certification by the 
Commissioner of Social Security designating whether the amount payable 
to the agency is to be deposited in either the

[[Page 100]]

Federal Old-Age and Survivors Insurance Trust Fund or the Federal 
Disability Insurance Trust Fund, but not both.
    (4) Correcting and updating referral. If, after referring a past-
due, legally enforceable debt to FMS as provided in paragraph (d)(3) of 
this section, a creditor agency determines that an error has been made 
with respect to the information transmitted to FMS, or if an agency 
receives a payment or credits a payment to the account of a debtor 
referred to FMS for offset, or if the debt amount is otherwise 
incorrect, the agency shall promptly notify FMS and make the appropriate 
correction of the agency's records. Creditor agencies will provide 
certification as required under paragraph (d)(1) of this section for any 
increases to amounts owed.
    (5) FMS may reject a certification which does not comply with the 
requirements of paragraph (d)(1) of this section. Upon notification of 
the rejection and the reason for the rejection, a creditor agency may 
resubmit the debt with a corrected certification.
    (e) Priorities for offset. (1) A tax refund payment shall be reduced 
first by the amount of any past-due support assigned to a State under 
section 402(a)(26) or section 471(a)(17) of the Social Security Act (42 
U.S.C. 602(a)(26) or 42 U.S.C. 671(a)(17)) which is to be offset under 
26 U.S.C. 6402(c), 42 U.S.C. 664 and the regulations thereunder; second, 
by the amount of any past-due, legally enforceable debt owed to a 
Federal agency which is to be offset under 26 U.S.C. 6402(d), 31 U.S.C. 
3720A and this section; and third, by the amount of any qualifying past-
due support not assigned to a State which is to be offset under 26 
U.S.C. 6402(c), 42 U.S.C. 664 and the regulations thereunder.
    (2) If a debtor owes more than one past-due, legally enforceable 
debt to a Federal agency or agencies, the tax refund payment shall be 
credited against the debts in the order in which the debts accrued. A 
debt shall be considered to have accrued at the time at which the agency 
determines that the debt became past due.
    (3) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), and (d) shall occur prior to crediting the overpayment to 
any future liability for an internal revenue tax. Any amount remaining 
after tax refund offset under 26 U.S.C. 6402 (a), (c), and (d) shall be 
refunded to the taxpayer, or applied to estimated tax, if elected by the 
taxpayer pursuant to IRS regulations.
    (f) Post-offset notice to the debtor, the creditor agency, and the 
IRS. (1)(i) FMS will notify the payee(s) to whom the tax refund payment 
is due, in writing of:
    (A) The amount and date of the offset to satisfy a past-due, legally 
enforceable nontax debt;
    (B) The creditor agency to which this amount has been paid or 
credited; and
    (C) A contact point within the creditor agency that will handle 
concerns or questions regarding the offset.
    (ii) The notice in paragraph (f)(1)(i) of this section will also 
advise any non-debtor spouse who may have filed a joint tax return with 
the debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund. See paragraph (g) of 
this section.
    (2) FMS will advise each creditor agency of the names, mailing 
addresses, and identifying numbers of the debtors from whom amounts of 
past-due, legally enforceable debt were collected and of the amounts 
collected from each debtor for that agency. FMS will not advise the 
creditor agency of the source of payment from which such amounts were 
collected. If a payment from which an amount of past-due, legally 
enforceable debt is to be withheld is payable to two individual payees, 
FMS will notify the creditor agency and furnish the name and address of 
each payee to whom the payment was payable.
    (3) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts of past-
due, legally enforceable debt were collected and the amounts collected 
from each debtor.
    (g) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due, legally enforceable debt takes appropriate action to secure 
his or her proper share of a tax refund from which an offset was

[[Page 101]]

made, the IRS will pay the person his or her share of the refund and 
request that FMS deduct that amount from amounts payable to the creditor 
agency. FMS and the creditor agency will adjust their debtor records 
accordingly.
    (h) Disposition of amounts collected. FMS will transmit amounts 
collected for past-due, legally enforceable debts, less fees charged 
under paragraph (i) of this section, to the creditor agency's account. 
If an erroneous payment is made to any agency, FMS will notify the 
creditor agency that an erroneous payment has been made. The agency 
shall pay promptly to FMS an amount equal to the amount of the erroneous 
payment (without regard to whether any other amounts payable to such 
agency have been paid).
    (i) Fees. The creditor agency will reimburse FMS and the IRS for the 
full cost of administering the tax refund offset program. FMS will 
deduct the fees from amounts collected prior to disposition and transmit 
a portion of the fees deducted to reimburse the IRS for its share of the 
cost of administering the tax refund offset program. To the extent 
allowed by law, creditor agencies may add the offset fees to the debt.
    (j) Review of tax refund offsets. Any reduction of a taxpayer's 
refund made pursuant to 26 U.S.C. 6402(d) shall not be subject to review 
by any court of the United States or by the Secretary of the Treasury, 
FMS or IRS in an administrative proceeding. No action brought against 
the United States to recover the amount of this reduction shall be 
considered to be a suit for refund of tax. Any legal, equitable, or 
administrative action by any person seeking to recover the amount of the 
reduction of the overpayment must be taken against the Federal creditor 
agency to which the amount of the reduction was paid. Any action which 
is otherwise available with respect to recoveries of overpayments of 
benefits under 42 U.S.C. 404 must be taken against the Commissioner of 
Social Security.
    (k) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program are restricted by 26 U.S.C. 6103. Generally, agencies 
will not receive confidential tax information from FMS. To the extent 
such information is received, agencies are subject to the safeguard, 
recordkeeping, and reporting requirements of 26 U.S.C. 6103(p)(4) and 
the regulations thereunder. The agency shall inform its officers and 
employees who access or use confidential tax information of the 
restrictions and penalties under the Internal Revenue Code for misuse of 
confidential tax information.
    (l) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 after January 1, 1998.



Sec. 285.3  Offset of tax refund payments to collect past-due support.

    (a) Definitions. For purposes of this section:
    Debt as used in this section is synonymous with the term past-due 
support unless otherwise indicated.
    Debtor as used in this section means a person who owes past-due 
support.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    HHS means the Department of Health and Human Services, Office of 
Child Support Enforcement.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Past-due support means the amount of support, determined under a 
court order, or an order of an administrative process established under 
State law, for support and maintenance of a child, or of a child and the 
parent with whom the child is living, which has not been paid, as 
defined in 42 U.S.C. 664(c).
    Qualified child means a child:
    (i) Who is a minor, or
    (ii) Who, while a minor, was determined to be disabled under 
subchapters II or XVI, Chapter 7, Title 42, United States Code, and for 
whom an order of support is in force.
    State means the several States of the United States. The term 
``State'' also includes the District of Columbia, American Samoa, Guam, 
the United States Virgin Islands, the Commonwealth of the Northern 
Mariana Islands, and the Commonwealth of Puerto Rico.

[[Page 102]]

    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any Federal tax on the part of the 
person who made the overpayment.
    (b) General rule. (1) Past-due support will be collected by tax 
refund offset upon notification to FMS in accordance with 26 U.S.C. 
6402(c), 42 U.S.C. 664 and this section. Collection by offset under 26 
U.S.C. 6402(c) is a collection procedure separate from the collection 
procedures provided by 26 U.S.C. 6305 and 26 CFR 301.6305-1, relating to 
the assessment and collection of certain child and spousal support 
liabilities. Tax refund offset may be used separately or in conjunction 
with the collection procedures provided in 26 U.S.C. 6305, as well as 
other collection procedures.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name of a payment certification record are the same as the taxpayer 
identifying number and name of a delinquent debtor record. When a match 
occurs and all other requirements for tax refund offset have been met, 
FMS will reduce the amount of any tax refund payment payable to a debtor 
by the amount of any past-due support debt owed by the debtor. Any 
amounts not offset will be paid to the payee(s) listed in the payment 
certification record.
    (c) Notification of past-due support--(1) Past-due support eligible 
for tax refund offset. Past-due support qualifies for tax refund offset 
if:
    (i)(A) There has been an assignment of the support obligation to a 
State and the amount of past-due support is not less than $25.00, or 
such higher amount as HHS rules may allow, whichever is greater; or
    (B) A State agency is providing support collection services under 42 
U.S.C. 654(4), the amount of past-due support is not less than $500.00, 
and the past-due support is owed to or on behalf of a qualified child 
(or a qualified child and the parent with whom the child is living if 
the same support order includes support for the child and the parent); 
and
    (ii) A notification of liability for past-due support has been 
received by FMS as prescribed by paragraphs (c)(2) or (c)(3) of this 
section.
    (2) Notification of liability for past-due support and transmission 
of information to FMS by HHS. States notifying HHS of past-due support 
shall do so in the manner and format prescribed by HHS. The notification 
of liability shall be accompanied by a certification that the State has 
complied with the requirements contained in paragraph (c)(4) of this 
section and with any requirements applicable to the offset of Federal 
tax refunds to collect past-due support imposed by State law or 
procedures. HHS shall consolidate and transmit to FMS the information 
contained in the notifications of liability for past-due support 
submitted by the States provided that the State has certified that the 
requirements of paragraph (c)(4) of this section have been met.
    (3) Notification of liability for past-due support transmitted 
directly to FMS by States. States must notify HHS of past-due support in 
accordance with the provisions of paragraph (c)(2) of this section 
unless HHS rules authorize notification to FMS directly. If authorized 
by HHS rules, States may notify FMS directly of past-due support. States 
notifying FMS directly of past-due support shall do so in the manner and 
format prescribed by FMS. The notification of liability shall be 
accompanied by a certification that the State has complied with the 
requirements contained in paragraph (c)(4) of this section and with any 
requirements applicable to the offset of Federal tax refunds to collect 
past-due support imposed by State law or procedures. FMS may reject a 
notification of past-due support which does not comply with the 
requirements of this section. Upon notification of the rejection and the

[[Page 103]]

reason for rejection, the State may resubmit a corrected notification.
    (4) Advance notification to debtor of intent to collect by tax 
refund offset. The State, or HHS if the State requests and HHS agrees, 
is required to provide a written notification to the debtor, pursuant to 
the provisions of 42 U.S.C. 664(a)(3) and 45 CFR 303.72(e), informing 
the debtor that the State intends to refer the debt for collection by 
tax refund offset. The notice also shall:
    (i) Instruct the debtor of the steps which may be taken to contest 
the State's determination that past-due support is owed or the amount of 
the past-due support;
    (ii) Advise any non-debtor who may file a joint tax return with the 
debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund; and
    (iii) In cases when a debt is being enforced by more than one State, 
advise the debtor of his or her opportunities to request a review with 
the State enforcing collection or the State issuing the support order as 
prescribed by the provisions of 45 CFR 303.72(g).
    (5) Correcting and updating notification. The State shall, in the 
manner and in the time frames provided by FMS or HHS, notify FMS or HHS 
of any deletion or net decrease in the amount of past-due support 
referred to FMS, or HHS as the case may be, for collection by tax refund 
offset. The State may notify FMS or HHS of any increases in the amount 
of the debt referred to FMS for collection by tax refund offset provided 
that the State has complied with the requirements of paragraph (c)(4) of 
this section with regard to those debts.
    (6) Collection of past-due support enforced by multiple States. When 
a State has knowledge that the debt is being enforced by more than one 
State, the State notifying FMS, or HHS as the case may be, of the debt 
shall inform any such other State involved in enforcing the debt when it 
receives the offset amount.
    (d) Priorities for offset. (1) As provided in 26 U.S.C. 6402 as 
amended, a tax refund payment shall be reduced in the following order of 
priority:
    (i) First by the amount of any past-due support assigned to a State 
(welfare cases) which is to be offset under 26 U.S.C. 6402(c), 42 U.S.C. 
664 and this section;
    (ii) Second, by the amount of any past-due, legally enforceable debt 
owed to a Federal agency which is to be offset under 26 U.S.C. 6402(d), 
31 U.S.C. 3720A and Sec. 285.2 of this part;
    (iii) Third, by the amount of any qualifying past-due support not 
assigned to a State (non-welfare cases) which is to be offset under 26 
U.S.C. 6402(c), 42 U.S.C. 664 and this section; and
    (iv) Fourth, by the amount of any past-due, legally enforceable 
State income tax obligation which is to be offset under 26 U.S.C. 
6402(e).
    (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), (d), and (e) shall occur prior to crediting the 
overpayment to any future liability for an internal revenue tax. Any 
amount remaining after tax refund offset under 26 U.S.C. 6402(a), (c), 
(d), and (e) shall be refunded to the taxpayer, or applied to estimated 
tax, if elected by the taxpayer pursuant to IRS regulations.
    (e) Post-offset notice. (1)(i) FMS shall notify the debtor in 
writing of:
    (A) The amount and date of the offset to satisfy past-due support;
    (B) The State to which this amount has been paid or credited; and
    (C) A contact point within the State that will handle concerns or 
questions regarding the offset.
    (ii) The notice in paragraph (e)(1)(i) of this section also will 
advise any non-debtor who may have filed a joint tax return with the 
debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund. See paragraph (f) of 
this section.
    (2) FMS will advise HHS of the names, mailing addresses, and 
identifying numbers of the debtors from whom amounts of past-due support 
were collected, of the amounts collected from each debtor through tax 
refund offset, the names of any non-debtor spouses who may have filed a 
joint return with the debtor, and of the State on whose behalf each 
collection was made. Alternatively, FMS will provide such information to 
each State that refers debts directly to FMS. FMS

[[Page 104]]

will inform HHS and each State that the payment source is a tax refund 
payment.
    (3) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts owed for 
past-due support were collected from tax refund offsets and the amounts 
collected from each debtor.
    (4) At such time and in such manner as FMS and HHS agree, but no 
less than annually, FMS will advise HHS of the States which have 
furnished notices of past-due support, the number of cases in each State 
with respect to which such notices have been furnished, the amount of 
past-due support sought to be collected by each State, and the amount of 
such tax refund offset collections actually made in the case of each 
State. As FMS and HHS may agree, FMS may provide additional offset-
related information about States which have furnished notices of past-
due support.
    (f) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due support takes appropriate action to secure his or her proper 
share of a tax refund from which an offset was made, the IRS will pay 
the person his or her share of the refund and request that FMS deduct 
that amount from amounts payable to HHS or the State, as the case may 
be. FMS and HHS, or the appropriate State, will adjust their debtor 
records accordingly.
    (g) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (h) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment is made to HHS or any State, FMS will notify 
HHS or the appropriate State that an erroneous offset payment has been 
made. FMS may deduct the amount of the erroneous offset payment from 
amounts payable to HHS or the State, as the case may be. Alternatively, 
upon FMS' request, the State shall return promptly to the affected 
taxpayer or FMS an amount equal to the amount of the erroneous payment 
(unless the State previously has paid such amounts, or any portion of 
such amounts, to the affected taxpayer). HHS and States shall notify FMS 
any time HHS or a State returns an erroneous offset payment to an 
affected taxpayer. FMS and HHS, or the appropriate State, will adjust 
their debtor records accordingly.
    (h) Fees. The State will pay a fee to FMS for the full cost of 
administering the tax refund offset program. The fee (not to exceed $25 
per case submitted) will be established annually in such amount as FMS 
and HHS agree to be sufficient to reimburse FMS for the full cost of the 
offset procedure. FMS will deduct the fees from amounts collected prior 
to disposition and transmit a portion of the fees deducted to reimburse 
the IRS for its share of the cost of administering the tax refund offset 
program. Fees will be charged only for actual tax refund offsets 
completed.
    (i) Review of tax refund offsets. In accordance with 26 U.S.C. 
6402(f), any reduction of a taxpayer's refund made pursuant to 26 U.S.C. 
6402(c), (d), or (e) shall not be subject to review by any court of the 
United States or by the Secretary of the Treasury, FMS or IRS in an 
administrative proceeding. No action brought against the United States 
to recover the amount of this reduction shall be considered to be a suit 
for refund of tax.
    (j) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program is permitted to the extent necessary in establishing 
appropriate agency records, locating any person with respect to whom a 
reduction under 26 U.S.C. 6402(c) is sought for purposes of collecting 
the debt, and in the defense of any litigation or administrative 
procedure ensuing from a reduction made under section 6402(c).
    (k) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 after January 1, 1999.

[63 FR 72094, Dec. 30, 1998]



Sec. 285.4  Offset of Federal benefit payments to collect past-due, legally enforceable nontax debt.

    (a) Scope. (1) This section sets forth special rules applicable to 
the offset of Federal benefit payments payable to an individual under 
the Social Security

[[Page 105]]

Act (other than Supplemental Security Income (SSI) payments), part B of 
the Black Lung Benefits Act, or any law administered by the Railroad 
Retirement Board (other than payments that such Board determines to be 
tier 2 benefits) to collect delinquent nontax debt owed to the United 
States.
    (2) As used in this section, benefit payments ``due to'' an 
individual, ``payable to'' an individual, and/or benefit payments 
``received by'' an individual, refer to those benefit payments expected 
to be paid to an individual before any amounts are offset to satisfy the 
payee's delinquent debt owed to the United States. Nothing in these 
phrases, similar phrases, or this section is intended to imply or confer 
any new or additional rights or benefits on an individual with respect 
to his or her entitlement to benefit payments. The Financial Management 
Service (FMS), the Social Security Administration, the Railroad 
Retirement Board, and other payment agencies are not liable for the 
amount offset from an individual's benefit payment on the basis that the 
underlying obligation, represented by the payment before the offset was 
taken, was not satisfied. See 31 U.S.C. 3716(c)(2)(A).
    (b) Definitions. As used in this section:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a State government) to, or held by the United States for, a 
person to satisfy a debt.
    Agency or Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, or 
legislative branch of the Federal Government, including government 
corporations.
    Covered benefit payment means a Federal benefit payment payable to 
an individual under the Social Security Act (other than SSI payments), 
part B of the Black Lung Benefits Act, or any law administered by the 
Railroad Retirement Board (other than payments that such Board 
determines to be tier 2 benefits). The amount of the covered benefit 
payment payable to a debtor for purposes of this section will be the 
amount after reduction or deduction required under the laws authorizing 
the program. Reductions to recover benefit overpayments are excluded 
from the covered benefit payment when calculating amounts available for 
offset.
    Creditor agency means a Federal agency owed a debt that seeks to 
collect that debt through administrative offset.
    Debt or claim means an amount of money, funds, or property which has 
been determined by an agency official to be due the United States from 
any person, organization, or entity except another Federal agency. Debt 
or claim does not include a debt or claim arising under the Internal 
Revenue Code of 1986 or the tariff laws of the United States.
    Debtor means a person who owes a debt. The term ``person'' includes 
any individual, organization or entity, except another Federal agency.
    Disbursing official means an official who has authority to disburse 
public money pursuant to 31 U.S.C. 3321 or another law, including an 
official of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other government corporation, 
or any official of the United States designated by the Secretary of the 
Treasury to disburse public money.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Monthly covered benefit payment means a covered benefit payment 
payable to a payee on a recurring basis at monthly intervals that is not 
expressly limited in duration, at the time the first payment is made, to 
a period of less than 12 months.
    Payee means a person who is due a payment from a disbursing 
official. For purposes of this section, a ``payee'' is a person who is 
entitled to the benefit of all or part of a payment from a disbursing 
official.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number generally is 
the individual's social security number.

[[Page 106]]

    (c) Administrative offset, generally. Disbursing officials shall 
offset payments to satisfy, in whole or in part, debts owed by the 
payee. Disbursing officials shall compare payment records with records 
of debts submitted to FMS for collection by administrative offset. A 
match will occur when the taxpayer identifying number and name of the 
payee (as defined in paragraph (b) of this section) on a payment record 
are the same as the taxpayer identifying number and name of the debtor 
on a debt record. When a match occurs and all other requirements for 
offset have been met, the disbursing official shall offset the payment 
to satisfy, in whole or in part, the debt. Any amounts not offset shall 
be paid to the payee. Covered benefit payments, i.e., payments made to 
individuals under the Social Security Act (other than Supplemental 
Security Income (SSI) payments), part B of the Black Lung Benefits Act, 
or any law administered by the Railroad Retirement Board (RRB) (other 
than tier 2 benefit payments) are among the types of payments which may 
be offset to collect debts owed to the United States. Offset of covered 
benefit payments are subject to the limitations contained in this 
section. Offsets of covered benefit payments will occur only if the name 
and taxpayer identifying number of the person who is entitled to the 
benefit of all or a part of the payment matches the name and taxpayer 
identifying number of the debtor.
    (d) Submission of debts to FMS for collection by administrative 
offset. Creditor agencies must notify FMS of all past-due, legally 
enforceable debt delinquent for more than 180 days for purposes of 
collection by administrative offset. Creditor agencies may notify FMS of 
all debt delinquent for less than 180 days for purposes of collection by 
administrative offset. Prior to such notification, creditor agencies 
must certify to FMS that the debt is past-due, legally enforceable, and 
that the creditor agency has provided the debtor with notice and an 
opportunity for a review in accordance with the provisions of 31 U.S.C. 
3716(a) and other applicable law.
    (e) Offset amount. (1) The amount offset from a monthly covered 
benefit payment shall be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs;
    (ii) An amount equal to 15% of the monthly covered benefit payment; 
or
    (iii) The amount, if any, by which the monthly covered benefit 
payment exceeds $750.
    (2) A debtor shall not receive a refund of any amounts offset if the 
debtor's monthly covered benefit payments are reduced, suspended, 
terminated, or otherwise not received for a period of 12 months.
    (3) Examples. (i) A debtor receives monthly Social Security benefits 
of $850. The amount offset is the lesser of $127.50 (15% of $850) or 
$100 (the amount by which $850 exceeds $750). In this example, the 
amount offset is $100 (assuming the debt is $100 or more).
    (ii) A debtor receives monthly Social Security benefits of $1250. 
The amount offset is the lesser of $187.50 (15% of $1250) or $500 (the 
amount by which $1250 exceeds $750). In this example, the amount offset 
is $187.50 (assuming the debt is $187.50 or more).
    (iii) A debtor receives monthly Social Security payments of $650. No 
amount will be offset because $650 is less than $750.
    (f) Notification of offset. (1) Before offsetting a covered benefit 
payment, the disbursing official will notify the payee in writing of the 
date offset will commence. The notice shall inform the payee of the type 
of payment that will be offset; the identity of the creditor agency 
which requested the offset; and a contact point within the creditor 
agency that will handle concerns regarding the offset.
    (2) The disbursing official conducting the offset will notify the 
payee in writing of the occurrence of the offset to satisfy, in whole or 
in part, a delinquent debt owed to the United States. The notice shall 
inform the payee of the type and amount of the payment that was offset; 
the identity of the creditor agency which requested the offset; and a 
contact point within the creditor agency that will handle concerns 
regarding the offset.

[[Page 107]]

    (3) Non-receipt by the debtor of the notices described in paragraphs 
(f)(1) and (f)(2) of this section shall not impair the legality of the 
administrative offset.
    (g) Fees. A fee which FMS has determined to be sufficient to cover 
the full cost of the offset procedure, shall be deducted from each 
offset amount. Creditor agencies may add this fee to the debt if not 
otherwise prohibited by law.
    (h) Disposition of amounts collected. The disbursing official 
conducting the offset will transmit amounts collected for debts, less 
fees charged under paragraph (g) of this section, to the appropriate 
creditor agency. If an erroneous offset payment is made to a creditor 
agency, the disbursing official will notify the creditor agency that an 
erroneous offset payment has been made. The disbursing official may 
deduct the amount of the erroneous offset payment from future amounts 
payable to the creditor agency. Alternatively, upon the disbursing 
official's request, the creditor agency shall return promptly to the 
disbursing official or the affected payee an amount equal to the amount 
of the erroneous payment. The disbursing official and the creditor 
agency shall adjust the debtor records appropriately.

[63 FR 44988, Aug. 21, 1998]



Sec. 285.7  Salary offset.

    (a) Purpose and scope. (1) This section establishes procedures for 
the offset of Federal salary payments, through FMS' administrative 
offset program, to collect delinquent debts owed to the Federal 
Government. This process is known as salary offset. Rules issued by the 
Office of Personnel Management contain the requirements Federal agencies 
must follow prior to conducting salary offset and the procedures for 
requesting offsets directly from a paying agency. See 5 CFR 550.1101 
through 550.1108.
    (2) This section implements the requirement under 5 U.S.C. 
5514(a)(1) that all Federal agencies, using a process known as 
centralized salary offset computer matching, identify Federal employees 
who owe delinquent nontax debt to the United States. Centralized salary 
offset computer matching is the computerized comparison of delinquent 
debt records with records of Federal employees. The purpose of 
centralized salary offset computer matching is to identify those debtors 
whose Federal salaries should be offset to collect delinquent debts owed 
to the Federal Government.
    (3) This section specifies the delinquent debt records and Federal 
employee records that must be included in the salary offset matching 
process. For purposes of this section, delinquent debt records consist 
of the debt information submitted to the Financial Management Service 
for purposes of administrative offset as required under 31 U.S.C. 
3716(c)(6). Agencies that submit their debt to FMS for purposes of 
administrative offset are not required to submit duplicate information 
for purposes of centralized salary offset computer matching under 5 
U.S.C. 5514 and this section.
    (4) This section establishes an interagency consortium to implement 
centralized salary offset computer matching on a government-wide basis 
as required under 5 U.S.C. 5514(a)(1). Federal employee records consist 
of records of Federal salary payments disbursed by members of the 
consortium.
    (5) The receipt of collections from salary offsets does not preclude 
a creditor agency from pursuing other debt collection remedies, 
including the offset of other Federal payments to satisfy delinquent 
nontax debt owed to the United States. A creditor agency should pursue, 
when deemed appropriate by such agency, such debt collection remedies 
separately or in conjunction with salary offset.
    (b) Definitions. For purposes of this section:
    Administrative offset means withholding funds payable by the United 
States to, or held by the United States for, a person to satisfy a debt 
owed by the payee.
    Agency means a department, agency or subagency, court, court 
administrative office, or instrumentality in the executive, judicial, or 
legislative branch of the Federal government, including government 
corporations.
    Centralized salary offset computer matching means the computerized 
comparison of Federal employee records

[[Page 108]]

with delinquent debt records to identify Federal employees who owe such 
debts.
    Creditor agency means any agency that is owed a debt.
    Debt means any amount of money, funds, or property that has been 
determined by an appropriate official of the Federal government to be 
owed to the United States by a person, including debt administered by a 
third party acting as an agent for the Federal Government. For purposes 
of this section, the term ``debt'' does not include debts arising under 
the Internal Revenue Code of 1986 (26 U.S.C.).
    Delinquent debt record means information about a past-due, legally 
enforceable debt, submitted by a creditor agency to FMS for purposes of 
administrative offset (including salary offset) in accordance with the 
provisions of 31 U.S.C. 3716 and applicable regulations. Debt 
information includes the amount and type of debt and the debtor's name, 
address, and taxpayer identifying number.
    Disbursing official means an officer or employee designated to 
disburse Federal salary payments. This section applies to all disbursing 
officials of Federal salary payments, including but not limited to, 
disbursing officials of the Department of the Treasury, the Department 
of Defense, the United States Postal Service, any government 
corporation, and any disbursing official of the United States designated 
by the Secretary.
    Disposable pay has the same meaning as that term is defined in 5 CFR 
550.1103.
    Federal employee means a current employee of an agency, including a 
current member of the Armed Forces or a Reserve of the Armed Forces 
(Reserves), employees of the United States Postal Service, and seasonal 
and temporary employees.
    Federal employee records means records of Federal salary payments 
that a paying agency has certified to a disbursing official for 
disbursement.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Paying agency means the agency that employs the Federal employee who 
owes the debt and authorizes the payment of his or her current pay. A 
paying agency also includes an agency that performs payroll services on 
behalf of the employing agency.
    Salary offset means administrative offset to collect a debt owed by 
a Federal employee from the current pay account of the employee.
    Secretary means the Secretary of the Treasury or his or her 
delegate.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number is the 
individual's social security number.
    (c) Establishment of the consortium. As required by the provisions 
of 5 U.S.C. 5514(a)(1), by issuance of this section, the Secretary 
establishes an interagency consortium to implement centralized salary 
offset computer matching. The consortium initially includes all agencies 
that disburse Federal salary payments, including but not limited to, 
FMS, the Department of Defense, the United States Postal Service, 
government corporations, and agencies with Treasury-designated 
disbursing officials. The membership of the consortium may be changed at 
the discretion of the Secretary, and the Secretary will be responsible 
for the ongoing coordination of the activities of the consortium.
    (d) Creditor agency participation. (1) As required under 5 U.S.C. 
5514(a)(1), creditor agencies shall participate at least annually in 
centralized salary offset computer matching. To meet this requirement, 
creditor agencies shall notify FMS of all past-due, legally enforceable 
debts delinquent for more than 180 days for purposes of administrative 
offset, as required under 31 U.S.C. 3716(c)(6). Additionally, creditor 
agencies may notify FMS of past-due, legally enforceable debts 
delinquent for less than 180 days for purposes of administrative offset.
    (2) Prior to submitting debts to FMS for purposes of administrative 
offset (including salary offset) and centralized salary offset computer 
matching, Federal agencies shall prescribe regulations in accordance 
with the requirements of 31 U.S.C. 3716 (administrative offset) and 5 
U.S.C. 5514 (salary offset).

[[Page 109]]

    (3) Prior to submitting a debt to FMS for purposes of collection by 
administrative offset, including salary offset, creditor agencies shall 
provide written certification to FMS that:
    (i) The debt is past-due and legally enforceable in the amount 
submitted to FMS and that the creditor agency will ensure that 
collections (other than collections through offset) are properly 
credited to the debt;
    (ii) Except in the case of a judgment debt or as otherwise allowed 
by law, the debt is referred for offset within ten years after the 
agency's right of action accrues;
    (iii) The creditor agency has complied with the provisions of 31 
U.S.C. 3716 (administrative offset) and related regulations including, 
but not limited to, the provisions requiring that the creditor agency 
provide the debtor with applicable notices and opportunities for a 
review of the debt; and
    (iv) The creditor agency has complied with the provisions of 5 
U.S.C. 5514 (salary offset) and related regulations including, but not 
limited to, the provisions requiring that the creditor agency provide 
the debtor with applicable notices and opportunities for a hearing.
    (4) FMS may waive the certification requirement set forth in 
paragraph (d)(3)(iv) of this section as a prerequisite to submitting the 
debt to FMS. If FMS waives the certification requirement, before an 
offset occurs, the creditor agency shall provide the Federal employee 
with the notices and opportunities for a hearing as required by 5 U.S.C. 
5514 and applicable regulations, and shall certify to FMS that the 
requirements of 5 U.S.C. 5514 and applicable regulations have been met.
    (5) The creditor agency shall notify FMS immediately of any payments 
credited by the creditor agency to the debtor's account, other than 
credits for amounts collected by offset, after submission of the debt to 
FMS. The creditor agency also shall notify FMS immediately of any change 
in the status of the legal enforceability of the debt, for example, if 
the creditor agency receives notice that the debtor has filed for 
bankruptcy protection.
    (e) Centralized salary offset computer match. (1) Delinquent debt 
records will be compared with Federal employee records maintained by 
members of the consortium or paying agencies. The records will be 
compared to identify Federal employees who owe delinquent debts for 
purposes of collecting the debt by administrative offset. A match will 
occur when the taxpayer identifying number and name of a Federal 
employee are the same as the taxpayer identifying number and name of a 
debtor.
    (2) As authorized by the provisions of 31 U.S.C. 3716(f), FMS, under 
a delegation of authority from the Secretary, has waived certain 
requirements of the Computer Matching and Privacy Protection Act of 
1988, 5 U.S.C. 552a, as amended, for administrative offset, including 
salary offset, upon written certification by the head of the creditor 
agency that the requirements of 31 U.S.C. 3716(a) have been met. 
Specifically, FMS has waived the requirements for a computer matching 
agreement contained in 5 U.S.C. 552a(o) and for post-match notice and 
verification contained in 5 U.S.C. 552a(p). The creditor agency will 
provide certification in accordance with the provisions of paragraph 
(d)(3)(iii) of this section.
    (f) Salary offset. When a match occurs and all other requirements 
for offset have been met, as required by the provisions of 31 U.S.C. 
3716(c) the disbursing official shall offset the Federal employee's 
salary payment to satisfy, in whole or part, the debt owed by the 
employee. Alternatively, the paying agency, on behalf of the disbursing 
official, may deduct the amount of the offset from an employee's 
disposable pay before the employee's salary payment is certified to a 
disbursing official for disbursement.
    (g) Offset amount. (1) The amount offset from a salary payment under 
this section shall be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs; or
    (ii) An amount up to 15% of the debtor's disposable pay.
    (2) Alternatively, the amount offset may be an amount agreed upon, 
in writing, by the debtor and the creditor agency.
    (3) Offsets will continue until the debt, including any interest, 
penalties, and costs, is paid in full or otherwise

[[Page 110]]

resolved to the satisfaction of the creditor agency.
    (h) Priorities. (1) A levy pursuant to the Internal Revenue Code of 
1986 shall take precedence over other deductions under this section.
    (2) When a salary payment may be reduced to collect more than one 
debt, amounts offset under this section will be applied to a debt only 
after amounts offset have been applied to satisfy past due child support 
debts assigned to a State pursuant to 402(a)(26) or section 471(a)(17) 
of the Social Security Act.
    (i) Notice. (1) Before offsetting a salary payment, the disbursing 
official, or the paying agency on behalf of the disbursing official, 
shall notify the Federal employee in writing of the date deductions from 
salary will commence and of the amount of such deductions.
    (2)(i) When an offset occurs under this section, the disbursing 
official, or the paying agency on behalf of the disbursing official, 
shall notify the Federal employee in writing that an offset has occurred 
including:
    (A) A description of the payment and the amount of offset taken;
    (B) The identity of the creditor agency requesting the offset; and,
    (C) A contact point within the creditor agency that will handle 
concerns regarding the offset.
    (ii) The information described in paragraphs (i)(2)(i)(B) and 
(i)(2)(i)(C) of this section does not need to be provided to the Federal 
employee when the offset occurs if such information was included in a 
prior notice from the disbursing official or paying agency.
    (3) The disbursing official will advise each creditor agency of the 
names, mailing addresses, and taxpayer identifying numbers of the 
debtors from whom amounts of past-due, legally enforceable debt were 
collected and of the amounts collected from each debtor for that agency. 
The disbursing official will not advise the creditor agency of the 
source of payment from which such amounts were collected.
    (j) Fees. Agencies that perform centralized salary offset computer 
matching services may charge a fee sufficient to cover the full cost for 
such services. In addition, FMS, or a paying agency acting on behalf of 
FMS, may charge a fee sufficient to cover the full cost of implementing 
the administrative offset program. FMS may deduct the fees from amounts 
collected by offset or may bill the creditor agencies. Fees charged for 
offset shall be based on actual administrative offsets completed.
    (k) Disposition of amounts collected. The disbursing official 
conducting the offset will transmit amounts collected for debts, less 
fees charged under paragraph (j) of this section, to the appropriate 
creditor agency. If an erroneous offset payment is made to a creditor 
agency, the disbursing official will notify the creditor agency that an 
erroneous offset payment has been made. The disbursing official may 
deduct the amount of the erroneous offset payment from future amounts 
payable to the creditor agency. Alternatively, upon the disbursing 
official's request, the creditor agency shall return promptly to the 
disbursing official or the affected payee an amount equal to the amount 
of the erroneous payment (without regard to whether any other amounts 
payable to such agency have been paid). The disbursing official and the 
creditor agency shall adjust the debtor records appropriately.

[63 FR 23357, Apr. 28, 1998]



Sec. 285.8  Offset of tax refund payments to collect state income tax obligations.

    (a) Definitions. For purposes of this section:
    Debt as used in this section means past-due, legally enforceable 
State income tax obligation unless otherwise indicated.
    Debtor as used in this section means a person who owes a state 
income tax obligation.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Past-due, legally enforceable State income tax obligation means a 
debt which resulted from:
    (1) A judgment rendered by a court of competent jurisdiction which 
has determined an amount of State income tax to be due,
    (2) A determination after an administrative hearing which has 
determined

[[Page 111]]

an amount of state income tax to be due and which is no longer subject 
to judicial review, or
    (3) A State income tax assessment (including self-assessments) which 
has become final in accordance with State law but not collected and 
which has not been delinquent for more than 10 years.
    State means the several States of the United States. The term 
``State'' also includes the District of Columbia, American Samoa, Guam, 
the United States Virgin Islands, the Commonwealth of the Northern 
Mariana Islands, and the Commonwealth of Puerto Rico.
    State income tax obligation means State income tax obligations as 
determined under State law. For purposes of this section, State income 
tax obligation includes any local income tax administered by the chief 
tax administration agency of the State.
    Tax refund offset means withholding or reducing a tax refund 
overpayment by an amount necessary to satisfy a debt owed by the 
payee(s).
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any Federal tax on the part of the 
person who made the overpayment.
    (b) General rule. (1) FMS will collect past-due, legally enforceable 
State income tax obligations by tax refund offset upon notification to 
FMS of a past-due, legally enforceable State income tax obligation in 
accordance with 26 U.S.C. 6402(e) and this section.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name on a payment certification record are the same as the taxpayer 
identifying number and name on a delinquent debtor record. When a match 
occurs and all other requirements for tax refund offset have been met, 
FMS will reduce the amount of any tax refund payment payable to a debtor 
by the amount of any past-due, legally enforceable State income tax 
obligation owed by the debtor. Any amounts not offset will be paid to 
the payee(s) listed in the payment certification record.
    (3) FMS only will offset a tax refund payment if the address shown 
on the Federal tax return for the taxable year of the overpayment is an 
address within the State seeking the offset.
    (c) Notification of past-due, legally enforceable State income tax 
obligations. (1) Notification to FMS of past-due, legally enforceable 
State income tax obligations. States notifying FMS of state income tax 
obligations shall do so in the manner and format prescribed by FMS. The 
notification of liability must be accompanied by a certification that 
the debt is past-due and legally enforceable and that the State has 
complied with the requirements contained in paragraph (c)(3) of this 
section and with any requirements applicable to the offset of Federal 
tax refunds to collect past-due, legally enforceable State income tax 
obligations imposed by State law or procedures. The certification must 
specifically state that none of the debts submitted for collection by 
offset are debts owed by an individual who has claimed immunity from 
state taxation by reason of being an enrolled member of an Indian tribe 
who lives on a reservation and derives all of his or her income from 
that reservation unless such claim has been adjudicated de novo on its 
merits in accordance with paragraph (c)(3). FMS may reject a 
notification of past-due, legally enforceable State income tax 
obligations which do not comply with the requirements of this section. 
Upon notification of the rejection and the reason for rejection, the 
State may resubmit a corrected notification.
    (2) Minimum amount of past-due, legally enforceable State income tax 
obligations that may be submitted. FMS only will accept notification of 
past-due, legally enforceable State income tax obligations of $25 or 
more or such higher amounts as determined by FMS. States will be 
notified annually of any changes in the minimum debt amount.
    (3)(i) Advance notification to the debtor of the State's intent to 
collect by Federal tax refund offset. The State is required to provide a 
written notification to the

[[Page 112]]

debtor by certified mail, return receipt requested, informing the debtor 
that the State intends to refer the debt for collection by tax refund 
offset. The notice must also give the debtor at least 60 days to present 
evidence, in accordance with procedures established by the State, that 
all or part of the debt is not past-due or not legally enforceable.
    (ii) Determination. The State must, in accordance with procedures 
established by the State, consider any evidence presented by a debtor in 
response to the notice described in paragraph (c)(3)(i) of this section 
and determine whether an amount of such debt is past-due and legally 
enforceable. In those cases where a debtor claims that he or she is 
immune from State taxation by reason of being an enrolled member of an 
Indian tribe who lives on a reservation and derives all of his or her 
income from that reservation, State procedures shall include 
consideration of such claims de novo on the merits unless such claims 
have been previously adjudicated by a court of competent jurisdiction. 
States shall, upon request from the Secretary of the Treasury, make such 
procedures available to the Secretary of the Treasury for review.
    (iii) Reasonable efforts. Prior to submitting a debt to FMS for 
collection by tax refund offset the State must make reasonable efforts 
to collect the debt. Reasonable efforts include making written demand on 
the debtor for payment and complying with any other prerequisites to 
offset established by the State.
    (4) Correcting and updating notification. The State shall, in the 
manner and in the time frames provided by FMS, notify FMS of any 
deletion or decrease in the amount of past-due, legally enforceable 
State income tax obligation referred to FMS for collection by tax refund 
offset. The State may notify FMS of any increases in the amount of the 
debt referred to FMS for collection by tax refund offset provided that 
the State has complied with the requirements of paragraph (c)(3) of this 
section with regard to those debts.
    (d) Priorities for offset. (1) As provided in 26 U.S.C. 6402, a tax 
refund payment shall be reduced first by the amount of any past-due 
support assigned to a State; second, by the amount of any past-due, 
legally enforceable debt owed to a Federal agency; third, by the amount 
of any qualifying past-due support not assigned to a State and fourth, 
by any past-due, legally enforceable State income tax obligation.
    (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), (d) and (e) shall occur prior to crediting the overpayment 
to any future liability for an internal revenue tax. Any amount 
remaining after tax refund offset under 26 U.S.C. 6402(a), (c), (d) and 
(e) shall be refunded to the taxpayer, or applied to estimated tax, if 
elected by the taxpayer pursuant to IRS regulations.
    (3) If FMS receives notice from a State of more than one debt 
subject to this section that is owed by a debtor to the State, any 
overpayment by the debtor shall be applied against such debts in the 
order in which such debts accrued.
    (e) Post-offset notice. (1) When an offset occurs, FMS shall notify 
the debtor in writing of:
    (i) The amount and date of the offset and that the purpose of the 
offset was to satisfy a past-due, legally enforceable State income tax 
obligation;
    (ii) The State to which this amount has been paid or credited; and
    (iii) A contact point within the State that will handle concerns or 
questions regarding the offset.
    (2) The notice in paragraph (e)(1) of this section also will advise 
any non-debtor spouse who may have filed a joint return with the debtor 
of the steps which the non-debtor spouse may take in order to secure his 
or her proper share of the tax refund. See paragraph (f) of this 
section.
    (3) FMS will advise States of the names, mailing addresses, and 
taxpayer identifying numbers of the debtors from whom amounts of state 
income tax obligations were collected, and of the amounts collected from 
each debtor through tax refund offset.
    (4) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts owed for 
past-due, legally enforceable State income tax

[[Page 113]]

obligations were collected from tax refund offsets and the amounts 
collected from each debtor.
    (f) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due, legally enforceable State income tax obligation takes 
appropriate action to secure his or her proper share of a tax refund 
from which an offset was made, the IRS will pay the person his or her 
share of the refund and request that FMS deduct that amount from future 
amounts payable to the State or that FMS otherwise obtain the funds back 
from the State. FMS, or the appropriate State, will adjust their debtor 
records accordingly.
    (g) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (h) of this 
section, to the appropriate State. If FMS learns that an erroneous 
offset payment is made to any State, FMS will notify the appropriate 
State that an erroneous offset payment has been made. FMS may deduct the 
amount of the erroneous offset payment from future amounts payable to 
the State. Alternatively, upon FMS' request, the State shall return 
promptly to the affected taxpayer or FMS an amount equal to the amount 
of the erroneous payment (unless the State previously has paid such 
amounts, or any portion of such amounts, to the affected taxpayer). 
States shall notify FMS any time a State returns an erroneous offset 
payment to an affected taxpayer. FMS, or the appropriate State, will 
adjust their debtor records accordingly.
    (h) Fees. The State will pay a fee to FMS to cover the full cost of 
offsets taken. The fee will be established annually in such amount as 
FMS determines to be sufficient to reimburse FMS for the full cost of 
the offset procedure. FMS will deduct the fees from amounts collected 
prior to disposition and transmit a portion of the fees deducted to 
reimburse the IRS for its share of the cost of administering the tax 
refund offset program for purposes of collecting past-due, legally 
enforceable State income tax obligations reported to FMS by the States. 
Fees will be charged only for actual tax refund offsets completed.
    (i) Review of tax refund offsets. In accordance with 26 U.S.C. 
6402(f), any reduction of a taxpayer's refund made pursuant to 26 U.S.C. 
6402(e) shall not be subject to review by any court of the United States 
or by the Secretary of the Treasury, FMS or IRS in an administrative 
proceeding. No action brought against the United States to recover the 
amount of this reduction shall be considered to be a suit for refund of 
tax. This subsection does not preclude any legal, equitable, or 
administrative action against the State to which the amount of such 
reduction was paid.
    (j) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program is permitted to the extent necessary in establishing 
appropriate agency records, locating any person with respect to whom a 
reduction under 26 U.S.C. 6402(e) is sought for purposes of collecting 
the debt, and in the defense of any litigation or administrative 
procedure ensuing from a reduction made under section 6402(e).
    (k) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 beginning January 1, 2000.

[64 FR 71231, Dec. 20, 1999]



                Subpart B--Authorities Other Than Offset



Sec. 285.11  Administrative wage garnishment.

    (a) Purpose. This section provides procedures for Federal agencies 
to collect money from a debtor's disposable pay by means of 
administrative wage garnishment to satisfy delinquent nontax debt owed 
to the United States.
    (b) Scope. (1) This section applies to any Federal agency that 
administers a program that gives rise to a delinquent nontax debt owed 
to the United States and to any agency that pursues recovery of such 
debt.
    (2) This section shall apply notwithstanding any provision of State 
law.

[[Page 114]]

    (3) Nothing in this section precludes the compromise of a debt or 
the suspension or termination of collection action in accordance with 
applicable law. See, for example, the Federal Claims Collection 
Standards (FCCS), 4 CFR parts 101-105.
    (4) The receipt of payments pursuant to this section does not 
preclude a Federal agency from pursuing other debt collection remedies, 
including the offset of Federal payments to satisfy delinquent nontax 
debt owed to the United States. A Federal agency may pursue such debt 
collection remedies separately or in conjunction with administrative 
wage garnishment.
    (5) This section does not apply to the collection of delinquent 
nontax debt owed to the United States from the wages of Federal 
employees from their Federal employment. Federal pay is subject to the 
Federal salary offset procedures set forth in 5 U.S.C. 5514 and other 
applicable laws.
    (6) Nothing in this section requires agencies to duplicate notices 
or administrative proceedings required by contract or other laws or 
regulations.
    (c) Definitions. As used in this section the following definitions 
shall apply:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations. For 
purposes of this section, agency means either the agency that 
administers the program that gave rise to the debt or the agency that 
pursues recovery of the debt.
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal legal holiday.
    Certificate of service means a certificate signed by an agency 
official indicating the nature of the document to which it pertains, the 
date of mailing of the document, and to whom the document is being sent.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, a Sunday, or a 
Federal legal holiday.
    Debt or claim means any amount of money, funds or property that has 
been determined by an appropriate official of the Federal Government to 
be owed to the United States by an individual, including debt 
administered by a third party as an agent for the Federal Government. 
Delinquent nontax debt means any nontax debt that has not been paid by 
the date specified in the agency's initial written demand for payment, 
or applicable agreement, unless other satisfactory payment arrangements 
have been made. For purposes of this section, the terms ``debt'' and 
``claim'' are synonymous and refer to delinquent nontax debt.
    Debtor means an individual who owes a delinquent nontax debt to the 
United States.
    Disposable pay means that part of the debtor's compensation 
(including, but not limited to, salary, bonuses, commissions, and 
vacation pay) from an employer remaining after the deduction of health 
insurance premiums and any amounts required by law to be withheld. For 
purposes of this section, ``amounts required by law to be withheld'' 
include amounts for deductions such as social security taxes and 
withholding taxes, but do not include any amount withheld pursuant to a 
court order.
    Employer means a person or entity that employs the services of 
others and that pays their wages or salaries. The term employer 
includes, but is not limited to, State and local Governments, but does 
not include an agency of the Federal Government.
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and the paying of those amounts to a creditor 
in satisfaction of a withholding order.
    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial or administrative body. For 
purposes of this section, the terms ``wage garnishment order'' and 
``garnishment order'' have the same meaning as ``withholding order.''
    (d) General rule. Whenever an agency determines that a delinquent 
debt is owed by an individual, the agency may initiate proceedings 
administratively to garnish the wages of the delinquent debtor.

[[Page 115]]

    (e) Notice requirements. (1) At least 30 days before the initiation 
of garnishment proceedings, the agency shall mail, by first class mail, 
to the debtor's last known address a written notice informing the debtor 
of:
    (i) The nature and amount of the debt;
    (ii) The intention of the agency to initiate proceedings to collect 
the debt through deductions from pay until the debt and all accumulated 
interest, penalties and administrative costs are paid in full; and
    (iii) An explanation of the debtor's rights, including those set 
forth in paragraph (e)(2) of this section, and the time frame within 
which the debtor may exercise his or her rights.
    (2) The debtor shall be afforded the opportunity:
    (i) To inspect and copy agency records related to the debt;
    (ii) To enter into a written repayment agreement with the agency 
under terms agreeable to the agency; and
    (iii) For a hearing in accordance with paragraph (f) of this section 
concerning the existence or the amount of the debt or the terms of the 
proposed repayment schedule under the garnishment order. However, the 
debtor is not entitled to a hearing concerning the terms of the proposed 
repayment schedule if these terms have been established by written 
agreement under paragraph (e)(2)(ii) of this section.
    (3) The agency will keep a copy of a certificate of service 
indicating the date of mailing of the notice. The certificate of service 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.
    (f) Hearing--(1) In general. Agencies shall prescribe regulations 
for the conduct of administrative wage garnishment hearings consistent 
with this section or shall adopt this section without change by 
reference.
    (2) Request for hearing. The agency shall provide a hearing, which 
at the agency's option may be oral or written, if the debtor submits a 
written request for a hearing concerning the existence or amount of the 
debt or the terms of the repayment schedule (for repayment schedules 
established other than by written agreement under paragraph (e)(2)(ii)) 
of this section.
    (3) Type of hearing or review. (i) For purposes of this section, 
whenever an agency is required to afford a debtor a hearing, the agency 
shall provide the debtor with a reasonable opportunity for an oral 
hearing when the agency determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the claim turns on the issue of credibility or veracity.
    (ii) If the agency determines that an oral hearing is appropriate, 
the time and location of the hearing shall be established by the agency. 
An oral hearing may, at the debtor's option, be conducted either in-
person or by telephone conference. All travel expenses incurred by the 
debtor in connection with an in-person hearing will be borne by the 
debtor. All telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (iii) In those cases when an oral hearing is not required by this 
section, an agency shall nevertheless accord the debtor a ``paper 
hearing,'' that is, an agency will decide the issues in dispute based 
upon a review of the written record. The agency will establish a 
reasonable deadline for the submission of evidence.
    (4) Effect of timely request. Subject to paragraph (f)(13) of this 
section, if the debtor's written request is received by the agency on or 
before the 15th business day following the mailing of the notice 
described in paragraph (e)(1) of this section, the agency shall not 
issue a withholding order under paragraph (g) of this section until the 
debtor has been provided the requested hearing and a decision in 
accordance with paragraphs (f)(10) and (f)(11) of this section has been 
rendered.
    (5) Failure to timely request a hearing. If the debtor's written 
request is received by the agency after the 15th business day following 
the mailing of the notice described in paragraph (e)(1) of this section, 
the agency shall provide a hearing to the debtor. However, the agency 
will not delay issuance of a withholding order unless the agency 
determines that the delay in filing the request was caused by factors 
over which the debtor had no control, or the

[[Page 116]]

agency receives information that the agency believes justifies a delay 
or cancellation of the withholding order.
    (6) Hearing official. A hearing official may be any qualified 
individual, as determined by the head of the agency, including an 
administrative law judge.
    (7) Procedure. After the debtor requests a hearing, the hearing 
official shall notify the debtor of:
    (i) The date and time of a telephonic hearing;
    (ii) The date, time, and location of an in-person oral hearing; or
    (iii) The deadline for the submission of evidence for a written 
hearing.
    (8) Burden of proof. (i) The agency will have the burden of going 
forward to prove the existence or amount of the debt.
    (ii) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must present by a preponderance of the evidence 
that no debt exists or that the amount of the debt is incorrect. In 
addition, the debtor may present evidence that the terms of the 
repayment schedule are unlawful, would cause a financial hardship to the 
debtor, or that collection of the debt may not be pursued due to 
operation of law.
    (9) Record. The hearing official must maintain a summary record of 
any hearing provided under this section. A hearing is not required to be 
a formal evidentiary-type hearing, however, witnesses who testify in 
oral hearings will do so under oath or affirmation.
    (10) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, as soon as practicable, but not 
later than sixty (60) days after the date on which the request for such 
hearing was received by the agency. If an agency is unable to provide 
the debtor with a hearing and render a decision within 60 days after the 
receipt of the request for such hearing:
    (i) The agency may not issue a withholding order until the hearing 
is held and a decision rendered; or
    (ii) If the agency had previously issued a withholding order to the 
debtor's employer, the agency must suspend the withholding order 
beginning on the 61st day after the receipt of the hearing request and 
continuing until a hearing is held and a decision is rendered.
    (11) Content of decision. The written decision shall include:
    (i) A summary of the facts presented;
    (ii) The hearing official's findings, analysis and conclusions; and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The hearing official's decision will be 
the final agency action for the purposes of judicial review under the 
Administrative Procedure Act (5 U.S.C. 701 et seq.).
    (13) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a hearing scheduled pursuant to paragraph (f)(4) 
of this section will be deemed as not having timely filed a request for 
a hearing.
    (g) Wage garnishment order. (1) Unless the agency receives 
information that the agency believes justifies a delay or cancellation 
of the withholding order, the agency shall send, by first class mail, a 
withholding order to the debtor's employer within 30 days after the 
debtor fails to make a timely request for a hearing (i.e., within 15 
business days after the mailing of the notice described in paragraph 
(e)(1) of this section), or, if a timely request for a hearing is made 
by the debtor, within 30 days after a final decision is made by the 
agency to proceed with garnishment.
    (2) The withholding order sent to the employer under paragraph 
(g)(1) of this section shall be in a form prescribed by the Secretary of 
the Treasury and signed by the head of the agency or his/her delegatee. 
The order shall contain only the information necessary for the employer 
to comply with the withholding order. Such information includes the 
debtor's name, address, and social security number, as well as 
instructions for withholding and information as to where payments should 
be sent.
    (3) The agency will keep a copy of a certificate of service 
indicating the date of mailing of the order. The certificate of service 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.
    (h) Certification by employer. Along with the withholding order, the 
agency

[[Page 117]]

shall send to the employer a certification in a form prescribed by the 
Secretary of the Treasury. The employer shall complete and return the 
certification to the agency within the time frame prescribed in the 
instructions to the form. The certification will address matters such as 
information about the debtor's employment status and disposable pay 
available for withholding.
    (i) Amounts withheld. (1) After receipt of the garnishment order 
issued under this section, the employer shall deduct from all disposable 
pay paid to the applicable debtor during each pay period the amount of 
garnishment described in paragraph (i)(2) of this section.
    (2)(i) Subject to the provisions of paragraphs (i)(3) and (i)(4) of 
this section, the amount of garnishment shall be the lesser of:
    (A) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (B) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on 
Garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount 
by which a debtor's disposable pay exceeds an amount equivalent to 
thirty times the minimum wage. See 29 CFR 870.10.
    (3) When a debtor's pay is subject to withholding orders with 
priority the following shall apply:
    (i) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (i)(2) of this section and shall have priority over other 
withholding orders which are served later in time. Notwithstanding the 
foregoing, withholding orders for family support shall have priority 
over withholding orders issued under this section.
    (ii) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (A) The amount calculated under paragraph (i)(2) of this section, or
    (B) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (iii) If a debtor owes more than one debt to an agency, the agency 
may issue multiple withholding orders provided that the total amount 
garnished from the debtor's pay for such orders does not exceed the 
amount set forth in paragraph (i)(2) of this section. For purposes of 
this paragraph (i)(3)(iii), the term agency refers to the agency that is 
owed the debt.
    (4) An amount greater than that set forth in paragraphs (i)(2) and 
(i)(3) of this section may be withheld upon the written consent of 
debtor.
    (5) The employer shall promptly pay to the agency all amounts 
withheld in accordance with the withholding order issued pursuant to 
this section.
    (6) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (7) Any assignment or allotment by an employee of his earnings shall 
be void to the extent it interferes with or prohibits execution of the 
withholding order issued under this section, except for any assignment 
or allotment made pursuant to a family support judgment or order.
    (8) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the agency to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.
    (j) Exclusions from garnishment. The agency may not garnish the 
wages of a debtor who it knows has been involuntarily separated from 
employment until the debtor has been reemployed continuously for at 
least 12 months. The debtor has the burden of informing the agency of 
the circumstances surrounding an involuntary separation from employment.
    (k) Financial hardship. (1) A debtor whose wages are subject to a 
wage withholding order under this section, may, at any time, request a 
review by the agency of the amount garnished, based on materially 
changed circumstances such as disability, divorce,

[[Page 118]]

or catastrophic illness which result in financial hardship.
    (2) A debtor requesting a review under paragraph (k)(1) of this 
section shall submit the basis for claiming that the current amount of 
garnishment results in a financial hardship to the debtor, along with 
supporting documentation. Agencies shall consider any information 
submitted in accordance with procedures and standards established by the 
agency.
    (3) If a financial hardship is found, the agency shall downwardly 
adjust, by an amount and for a period of time agreeable to the agency, 
the amount garnished to reflect the debtor's financial condition. The 
agency will notify the employer of any adjustments to the amounts to be 
withheld.
    (l) Ending garnishment. (1) Once the agency has fully recovered the 
amounts owed by the debtor, including interest, penalties, and 
administrative costs consistent with the FCCS, the agency shall send the 
debtor's employer notification to discontinue wage withholding.
    (2) At least annually, an agency shall review its debtors' accounts 
to ensure that garnishment has been terminated for accounts that have 
been paid in full.
    (m) Actions prohibited by the employer. An employer may not 
discharge, refuse to employ, or take disciplinary action against the 
debtor due to the issuance of a withholding order under this section.
    (n) Refunds. (1) If a hearing official, at a hearing held pursuant 
to paragraph (f)(3) of this section, determines that a debt is not 
legally due and owing to the United States, the agency shall promptly 
refund any amount collected by means of administrative wage garnishment.
    (2) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.
    (o) Right of action. The agency may sue any employer for any amount 
that the employer fails to withhold from wages owed and payable to an 
employee in accordance with paragraphs (g) and (i) of this section. 
However, a suit may not be filed before the termination of the 
collection action involving a particular debtor, unless earlier filing 
is necessary to avoid expiration of any applicable statute of 
limitations period. For purposes of this section, ``termination of the 
collection action'' occurs when the agency has terminated collection 
action in accordance with the FCCS or other applicable standards. In any 
event, termination of the collection action will have been deemed to 
occur if the agency has not received any payments to satisfy the debt 
from the particular debtor whose wages were subject to garnishment, in 
whole or in part, for a period of one (1) year.

[63 FR 25139, May 6, 1998, as amended at 64 FR 22908, Apr. 28, 1999]



Sec. 285.12  Transfer of debts to Treasury for collection.

    (a) Definitions. For purposes of this section:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal government to be 
owed to the United States by a person. As used in this section, the term 
``debt'' does not include debts arising under the Internal Revenue Code 
of 1986.
    Debt collection center means an agency or a unit or subagency within 
an agency that has been designated by the Secretary of the Treasury to 
collect debt owed to the United States. FMS is a debt collection center.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Secretary means the Secretary of the Treasury.
    (b) In general. Cross-servicing means that FMS or another debt 
collection center is taking appropriate debt collection action on behalf 
of one or more

[[Page 119]]

Federal agencies or a unit or subagency thereof.
    (c) Mandatory transfer of debts to FMS. (1) Except as set forth in 
paragraph (d) of this section, a creditor agency shall transfer any debt 
that is more than 180 days delinquent to FMS for debt collection 
services. For accounting and reporting purposes, the debt remains on the 
books and records of the agency which transferred the debt.
    (2) On behalf of the creditor agency, FMS will take appropriate 
action to collect or compromise the transferred debt, or to suspend or 
terminate collection action thereon, in accordance with the statutory 
and regulatory requirements and authorities applicable to the debt and 
the action. Appropriate action to collect a debt may include referral to 
another debt collection center, a private collection contractor, or the 
Department of Justice for litigation. The creditor agency shall advise 
FMS, in writing, of any specific statutory or regulatory requirements 
pertaining to their debt and will agree, in writing, to a collection 
strategy which includes parameters for entering into compromise and 
repayments agreements with debtors.
    (3)(i) A debt is considered 180 days delinquent for purposes of this 
section if it is 180 days past due and is legally enforceable. A debt is 
past-due if it has not been paid by the date specified in the agency's 
initial written demand for payment or applicable agreement or instrument 
(including a post-delinquency payment agreement) unless other 
satisfactory payment arrangements have been made. A debt is legally 
enforceable if there has been a final agency determination that the 
debt, in the amount stated, is due and there are no legal bars to 
collection action. Where, for example, a debt is the subject of a 
pending administrative review process required by statute or regulation 
and collection action during the review process is prohibited, the debt 
is not considered legally enforceable for purposes of mandatory transfer 
to FMS and is not to be transferred even if the debt is more than 180 
days past-due.
    (ii) When a final agency determination is made after an 
administrative appeal or review process, the creditor agency must 
transfer such debt to FMS, if more than 180 days delinquent, within 30 
days after the date of the final decision.
    (iii) Nothing in this section is intended to impact the date of 
delinquency of a debt for other purposes such as for purposes of 
accruing interest and penalties.
    (4) Agencies are not required to transfer to FMS debts which are 
less than $25 (including interest, penalties, and administrative costs), 
or such other amount as FMS may determine. Agencies may transfer debts 
less than $25 to FMS if the creditor agency, in consultation with FMS, 
determines that transfer is important to ensure compliance with the 
agency's policies or programs. Agencies may combine individual debts of 
less than $25 owed by the same debtor for purposes of meeting the $25 
threshold.
    (d) Exceptions to mandatory transfer. (1) A creditor agency is not 
required to transfer a debt to FMS pursuant to paragraph (c)(1) of this 
section only during such period of time that the debt:
    (i) Is in litigation or foreclosure as described in paragraph (d)(2) 
of this section;
    (ii) Is scheduled for sale as described in paragraph (d)(3) of this 
section;
    (iii) Is at a private collection contractor if the debt has been 
referred to a private collection contractor in accordance with paragraph 
(e) of this section;
    (iv) Is at a debt collection center if the debt has been referred to 
a Treasury-designated debt collection center in accordance with 
paragraph (f) of this section;
    (v) Is being collected by internal offset as described in paragraph 
(d)(4) of this section; or
    (vi) Is covered by an exemption granted by the Secretary as 
described in paragraph (d)(5) of this section.
    (2)(i) A debt is in litigation if:
    (A) The debt has been referred to the Attorney General for 
litigation by the creditor agency; or
    (B) The debt is the subject of proceedings pending in a court of 
competent jurisdiction, including bankruptcy proceedings, whether 
initiated by the creditor agency, the debtor, or any other party.

[[Page 120]]

    (ii) A debt is in foreclosure if:
    (A)(1) Collateral securing the debt is the subject of judicial 
foreclosure proceedings in a court of competent jurisdiction; or
    (2) Notice has been issued that collateral securing the debt will be 
foreclosed upon, liquidated, sold, or otherwise transferred pursuant to 
applicable law in a nonjudicial proceeding; and
    (B) The creditor agency anticipates that proceeds will be available 
from the liquidation of the collateral for application to the debt.
    (3) A debt is scheduled for sale if:
    (i) The debt will be disposed of under an asset sales program within 
one (1) year after becoming eligible for sale; or
    (ii) The debt will be disposed of under an asset sales program and a 
schedule established by the creditor agency and approved by the Director 
of the Office of Management and Budget.
    (4) A debt is being collected by internal offset if a creditor 
agency expects the debt to be collected in full within three (3) years 
from the date of delinquency through internal offset. A debt is being 
collected by internal offset if the creditor agency is withholding funds 
payable to the debtor by the creditor agency, or if the creditor agency 
has issued notice to the debtor of the creditor agency's intent to 
offset such funds.
    (5)(i) Upon the written request of the head of an agency, or as the 
Secretary may determine on his/her own initiative, the Secretary may 
exempt any class of debts from the application of the requirement 
described in paragraph (c)(1) of this section. In determining whether to 
exempt a class of debts, the Secretary will determine whether exemption 
is in the best interests of the Government after considering the 
following factors:
    (A) Whether an exemption is the best means to protect the 
government's financial interest, taking into consideration the number, 
dollar amount, age and collection rates of the debts for which exemption 
is requested;
    (B) Whether the nature of the program under which the delinquencies 
have arisen is such that the transfer of such debts would interfere with 
program goals; and
    (C) Whether an exemption would be consistent with the purposes of 
the Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-134, 110 
Stat. 1321-358 (April 26, 1996).
    (ii) Requests for exemptions must clearly identify the class of 
debts for which an exemption is sought and must explain how application 
of the factors listed above to that class of debts warrants an 
exemption.
    (iii) Requests for exemption must be made by the head of the agency 
requesting the exemption, the Chief Financial Officer of the agency, or 
the Deputy Chief Financial Officer of the agency. For purposes of this 
section, the head of an agency does not include the head of a 
subordinate organization within a department or agency.
    (6) In accordance with paragraph (d)(5)(i) of this section, debts 
being serviced and/or collected in accordance with applicable statutes 
and/or regulations by third parties, such as private lenders or guaranty 
agencies are exempt from the requirements in paragraph (c)(1) of this 
section.
    (e) Schedule of private collection contractors. FMS will maintain a 
schedule of private collection contractors eligible for referral of 
debts from FMS, other debt collection centers, and creditor agencies for 
collection action. An agency with debt which has not been transferred to 
FMS or referred to another debt collection center, for example, debt 
that is less than 180 days delinquent, may refer such debt to a private 
collection contractor listed on FMS' schedule of private collection 
contractors provided they do so in accordance with procedures 
established by FMS. Alternatively, an agency may refer debt that is less 
than 180 days delinquent to a private collection contractor pursuant to 
a contract between the creditor agency and the private collection 
contractor, as authorized by law.
    (f) Debt collection centers. A creditor agency may transfer debt 
that has not been transferred to FMS, such as debt less than 180 days 
delinquent, to a Treasury-designated debt collection center, with the 
consent of, and in accordance with procedures established by FMS. Debt 
collection centers will take action upon a debt in accordance

[[Page 121]]

with the statutory or regulatory requirements and other authorities that 
apply to the debt or to the particular action being taken. Debt 
collection centers may, on behalf of the creditor agency and subject to 
the terms under which the debt collection center has been designated as 
such by the Secretary, take any action to collect, compromise, suspend 
or terminate collection action on debts, in accordance with terms and 
conditions agreed upon in writing by the creditor agency and the debt 
collection center or FMS. Debt collection centers may charge fees for 
the debt collection services in accordance with the provisions of 
paragraph (j) of this section.
    (g) Administrative offset. As described in paragraph (c) of this 
section, under the DCIA, agencies are required to transfer all debts 
over 180 days delinquent to FMS for purposes of debt collection (i.e., 
cross-servicing). Agencies are also required, under the DCIA, to notify 
the Secretary of all debts over 180 days delinquent for purposes of 
administrative offset. Administrative offset is one type of collection 
tool used by FMS and Treasury-designated debt collection centers to 
collect debts transferred under this section. Thus, by transferring debt 
to FMS or to a Treasury-designated debt collection center under this 
section, Federal agencies will satisfy the requirement to notify the 
Secretary of debts for purposes of administrative offset and duplicate 
referrals are not required. A debt which is not transferred to FMS for 
purposes of debt collection, however, such as a debt which falls within 
one of the exempt categories listed in paragraph (d) of this section, 
nevertheless may be subject to the DCIA requirement of notification to 
the Secretary for purposes of administrative offset.
    (h) Voluntary referral of debts less than 180 days delinquent. A 
creditor agency may refer any debt that is less than 180 days delinquent 
to FMS or, with the consent of FMS, to a Treasury-designated debt 
collection center for debt collection services.
    (i) Certification. Before a debt may be transferred to FMS or 
another debt collection center, the head of the creditor agency or his 
or her delegatee must certify, in writing, that the debts being 
transferred are valid, legally enforceable, and that there are no legal 
bars to collection. Creditor agencies must also certify that they have 
complied with all prerequisites to a particular collection action under 
the laws, regulations or policies applicable to the agency unless the 
creditor agency has requested, and FMS has agreed, to do so on the 
creditor agency's behalf. The creditor agency shall notify FMS 
immediately of any change in the status of the legal enforceability of 
the debt, for example, if the creditor agency receives notice that the 
debtor has filed for bankruptcy protection.
    (j) Fees. FMS and other debt collection centers (as defined in 
paragraph (a) of this section) may charge fees sufficient to cover the 
full cost of providing debt collection services authorized by this 
section. Fees paid to recover amounts owed may not exceed amounts 
collected. Nothing in this rule precludes a creditor agency from 
agreeing to pay fees for debt collection services which are not based on 
amounts collected. FMS and debt collection centers are authorized to 
retain fees from amounts collected and may deposit and use such fees in 
accordance with 31 U.S.C. 3711(g). Fees charged by FMS and other debt 
collection centers may be added to the debt as an administrative cost if 
authorized under 31 U.S.C. 3717(e).

[63 FR 16356, Apr. 2, 1998, as amended at 64 FR 22908, Apr. 28, 1999]



Sec. 285.13  Barring delinquent debtors from obtaining Federal loans or loan insurance or guarantees.

    (a) Definitions. For purposes of this section:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States or an agency thereof by a person, including 
debt administered

[[Page 122]]

by a third party as an agent for the Federal Government.
    Federal financial assistance or financial assistance means any 
Federal loan (other than a disaster loan), loan insurance, or loan 
guarantee.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Nontax debt means any debt other than a debt under the Internal 
Revenue Code of 1986 (26 U.S.C. 1 et seq.).
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Secretary means the Secretary of the Treasury.
    (b) Purpose and scope. (1) This section prescribes standards for 
determining whether an outstanding nontax debt owed to the Federal 
Government is in delinquent status and whether such delinquency is 
resolved for the purpose of denying Federal financial assistance to a 
debtor. In addition, this section prescribes the circumstances under 
which the Secretary may exempt a class of debts from affecting a 
debtor's loan eligibility. This section also outlines the factors an 
agency should consider when determining whether waiver of the general 
rule in paragraph (c) of this section is appropriate.
    (2) Additional guidance concerning debt collection and debt 
management is provided in ``Managing Federal Receivables'' and other FMS 
publications.
    (3) Nothing in this section requires an agency to grant Federal 
financial assistance if denial otherwise is authorized by statute, 
regulation, or agency policies and procedures. For example, if an agency 
requires borrowers to have a satisfactory credit history, the agency may 
deny financial assistance even if a delinquent debt has been resolved.
    (4) This section does not confer any new rights or benefits on 
persons seeking Federal financial assistance.
    (5) This section applies to any person owing delinquent nontax debt 
and to any agency that administers a program that grants Federal 
financial assistance.
    (c) General rule. (1) As required by the provisions of 31 U.S.C. 
3720B, a person owing an outstanding nontax debt that is in delinquent 
status shall not be eligible for Federal financial assistance. This 
eligibility requirement applies to all persons seeking Federal financial 
assistance and owing an outstanding nontax debt in delinquent status, 
including, but not limited to, guarantors. This eligibility requirement 
applies to all Federal financial assistance even if creditworthiness or 
credit history is not otherwise a factor for eligibility purposes, e.g., 
student loans. A person may be eligible for Federal financial assistance 
only after the delinquency is resolved in accordance with this section. 
An agency may waive this eligibility requirement in accordance with 
paragraph (g) of this section.
    (2) An agency from which a person seeks Federal financial assistance 
may determine, under standards issued by the agency, that a person is 
ineligible for Federal financial assistance under this section if:
    (i) The person is controlled by a person owing an outstanding nontax 
debt that is in delinquent status (e.g., a corporation is controlled by 
an officer, director, or shareholder who owes a debt); or
    (ii) The person controls a person owing an outstanding nontax debt 
that is in delinquent status (e.g., a corporation controls a wholly-
owned or partially-owned subsidiary which owes a debt).
    (3) A creditor agency may obtain information concerning whether or 
not a person seeking Federal financial assistance owes a delinquent debt 
from, among other sources, credit reports, information contained on 
credit applications, and the Department of Housing and Urban 
Development's Credit Alert Interactive Voice Response System (CAIVRS). 
For information about participating in the CAIVRS program, agencies 
should contact the Director of Information Resources Management, Policy 
and Management Division, Office of Information Technology, Department of 
Housing and Urban Development, 451 7th Street, S.W., Washington, DC 
20410.
    (d) Delinquent status. (1) Except as otherwise provided in paragraph 
(d)(2) of this section, a debt is in ``delinquent status'' for purposes 
of this section if

[[Page 123]]

the debt has not been paid within 90 days of the payment due date. The 
payment due date is the date specified in the creditor agency's initial 
written demand for payment or applicable agreement or instrument 
(including a post-delinquency repayment agreement).
    (2) For purposes of this section, a debt is not in delinquent status 
if:
    (i) The person seeking Federal financial assistance has been 
released by the creditor agency from any obligation to pay the debt, or 
there has been an adjudication or determination that such person does 
not owe or does not have to pay the debt;
    (ii) The debtor is the subject of, or has been discharged in, a 
bankruptcy proceeding, and if applicable, the person seeking Federal 
financial assistance is current on any court authorized repayment plan; 
or
    (iii) The existence of the debt or the agency's determination that 
the debt is delinquent is being challenged under an ongoing 
administrative appeal or contested judicial proceeding and the appeal 
was filed by the debtor in a timely manner. Unless otherwise prohibited, 
an agency may defer making a determination as to whether or not to 
extend credit until the appeal process is completed.
    (3) Unless the provisions of paragraph (d)(2) apply, a debt is in 
delinquent status even if the creditor agency has suspended or 
terminated collection activity with respect to such debt. For example, a 
delinquent nontax debt that has been written off the books of the 
creditor agency or reported to the Internal Revenue Service as 
discharged (i.e., canceled) is in delinquent status for purposes of this 
section.
    (4) Nothing in this section defines the terms ``delinquent'' or 
``delinquent status'' for any purposes other than those described in 
this section.
    (e) Delinquency resolution. (1) For purposes of this section, a 
person's delinquent debt is resolved only if the person:
    (i) Pays or otherwise satisfies the delinquent debt in full;
    (ii) Pays the delinquent debt in part if the creditor agency accepts 
such part payment as a compromise in lieu of payment in full;
    (iii) Cures the delinquency under terms acceptable to the creditor 
agency in that the person pays any overdue payments, plus all interest, 
penalties, late charges, and administrative charges assessed by the 
creditor agency as a result of the delinquency; or
    (iv) Enters into a written repayment agreement with the creditor 
agency to pay the debt, in whole or in part, under terms and conditions 
acceptable to the creditor agency.
    (2) Unless the provisions of paragraph (e)(1) of this section apply, 
a delinquent debt is not resolved even if the creditor agency has 
suspended or terminated collection activity with respect to such debt. 
For example, a delinquent nontax debt that has been written off the 
books of the creditor agency or reported to the Internal Revenue Service 
as discharged (i.e., canceled) would not be ``resolved.'' If the 
provisions of paragraph (e)(1) of this section do apply, a delinquent 
debt is considered resolved. For example, if a portion of a debt has 
been written off after the person has paid the debt in part where the 
creditor agency accepts such part payment as a compromise in lieu of 
payment in full, the entire debt would be deemed ``resolved'' for 
purposes of this section in accordance with paragraph (e)(1)(ii) of this 
section.
    (f) Exemptions by the Secretary. (1) Upon the written request and 
recommendation of the head of the creditor agency to which a class of 
debts is owed, the Secretary may exempt any class of debts from 
affecting a debtor's eligibility for Federal financial assistance based 
on the provisions of 31 U.S.C. 3720B and this section.
    (2) The creditor agency recommending an exemption for a class of 
debts will provide the Secretary with information about:
    (i) The nature of the program under which the delinquencies have 
arisen;
    (ii) The number, dollar amount, and age of the debts in the program 
for which exemption is recommended;
    (iii) The reasons why an exemption is justified, including why the 
granting of financial assistance to persons owing the type of debt for 
which exemption is requested would not be contrary to the Government's 
goal to reduce losses by

[[Page 124]]

requiring proper screening of potential borrowers; and,
    (iv) Other information the Secretary deems necessary to consider the 
exemption request.
    (3) The Secretary may exempt a class of debts if exemption is in the 
best interests of the Federal Government.
    (g) Waivers by the agency. (1) The head of an agency from which a 
person seeks to obtain Federal financial assistance may waive the 
eligibility requirement described in paragraph (c) of this section. 
Waivers shall be granted only on a person by person basis. The head of 
the agency may delegate the waiver authority only to the Chief Financial 
Officer of the agency. The Chief Financial Officer may redelegate the 
authority only to the Deputy Chief Financial Officer of the agency.
    (2) The authorized agency official should balance the following 
factors when deciding whether to grant a waiver under paragraph (g)(1) 
of this section:
    (i) Whether the denial of the financial assistance to the person 
would tend to interfere substantially with or defeat the purposes of the 
financial assistance program or otherwise would not be in the best 
interests of the Federal Government; and
    (ii) Whether the agency's granting of the financial assistance to 
the person is contrary to the Government's goal to reduce losses from 
debt management activities by requiring proper screening of potential 
borrowers.
    (3) When balancing the factors described in paragraph (d)(2) of this 
section, the authorized agency official should consider:
    (i) The age, amount, and cause(s) of the delinquency and the 
likelihood that the person will resolve the delinquent debt; and
    (ii) The amount of total debt, delinquent or otherwise, owed by the 
person and the person's credit history with respect to repayment of 
debt.
    (4) Each agency shall retain a centralized record of the number and 
type of waivers granted under this section.
    (h) Effect of denial of Federal financial assistance. Nothing 
contained in this section precludes a person who has been denied Federal 
financial assistance from obtaining such assistance after that person's 
delinquent debt has been resolved in accordance with paragraph (e)(1) of 
this section.

[63 FR 67756, Dec. 8, 1998]

[[Page 125]]





                 SUBCHAPTER B--BUREAU OF THE PUBLIC DEBT


PART 306--GENERAL REGULATIONS GOVERNING U.S. SECURITIES--Table of Contents




                     Subpart A--General Information

Sec.
306.0  Applicability of regulations.
306.1  Official agencies.
306.2  Definitions of words and terms as used in these regulations.
306.3  Transportation charges and risks in the shipment of securities.

                         Subpart B--Registration

306.10  General.
306.11  Forms of registration for transferable securities.
306.12  Errors in registration.
306.13  Nontransferable securities.

              Subpart C--Transfers, Exchanges and Reissues

306.15  Transfers and exchanges of securities--closed periods.
306.16  Exchanges of registered securities.
306.17  Exchanges of registered securities for coupon securities.
306.18  Exchanges of coupon securities for registered securities.
306.19  Denominational exchanges of coupon securities.
306.20  Reissue of registered transferable securities.
306.21  Reissue of nontransferable securities.
306.22  Exchange of Treasury Bonds, Investment Series B-1975-80.
306.23  Securities eligible to be held in the TREASURY DIRECT Book-entry 
          Securities System.
306.24  Collection of fees on definitive securities.

                    Subpart D--Redemption or Payment

306.25  Presentation and surrender.
306.26  Redemption of registered securities at maturity, upon prior 
          call, or for prerefunding or advance refunding.
306.27  Redemption of bearer securities at maturity, upon prior call, or 
          for advance refunding or prerefunding.

                           Subpart E--Interest

306.35  Computation of interest.
306.36  Termination of interest.
306.37  Interest on registered securities.
306.38  Interest on bearer securities.

Appendix to Subpart E to Part 306--Interest--Computation of Interest on 
          Treasury Bonds, Treasury Notes, and Treasury Certificates of 
          Indebtedness, and Computation of Discount on Treasury Bills--
          Interest Tables

        Subpart F--Assignments of Registered Securities--General

306.40  Execution of assignments.
306.41  Form of assignment.
306.42  Alterations and erasures.
306.43  Voidance of assignments.
306.44  Discrepancies in names.
306.45  Certifying individuals.

          Subpart G--Assignments by or in Behalf of Individuals

306.55  Signatures, minor errors and change of name.
306.56  Assignment of securities registered in the names of or assigned 
          to two or more persons.
306.57  Minors and incompetents.
306.58  Nontransferable securities.

     Subpart H--Assignments in Behalf of Estates of Deceased Owners

306.65  Special provisions applicable to small amounts of securities, 
          interest checks or redemption checks.
306.66  Estates--administration.
306.67  Estates not administered.
306.68  Nontransferable securities.

     Subpart I--Assignments by or in Behalf of Trustees and Similar 
                               Fiduciaries

306.75  Individual fiduciaries.
306.76  Fiduciaries acting as a unit.
306.77  Corepresentatives and fiduciaries.
306.78  Nontransferable securities.

   Subpart J--Assignments in Behalf of Private or Public Organizations

306.85  Private corporations and unincorporated associations (including 
          nominees).
306.86  Change of name and succession of private organizations.
306.87  Partnerships (including nominee partnerships).
306.88  Political entities and public corporations.
306.89  Public officers.
306.90  Nontransferable securities.

                      Subpart K--Attorneys in Fact

306.95  Attorneys in fact.
306.96  Nontransferable securities.

[[Page 126]]

            Subpart L--Transfer Through Judicial Proceedings

306.100  Transferable securities.
306.101  Evidence required.
306.102  Nontransferable securities.

           Subpart M--Requests for Suspension of Transactions

306.105  Requests for suspension of transactions in registered 
          securities.
306.106  Requests for suspension of transactions in bearer securities.

     Subpart N--Relief for Loss, Theft, Destruction, Mutilation, or 
                        Defacement of Securities

306.110  Statutory authority and requirements.
306.111  Procedure for applying for relief.
396.112  Type of relief granted.
306.113  Cases not requiring bonds of indemnity.

                     Subpart O--Book-Entry Procedure

306.115  Definition of terms.
306.116  Scope and effect of book-entry procedure.
306.117  Withdrawal of eligible book-entry Treasury securities for 
          conversion to registered form.

                   Subpart P--Miscellaneous Provisions

306.125  Additional requirements.
306.126  Waiver of regulations.
306.127  Preservation of existing rights.
306.128  Supplements, amendments or revisions.

    Authority: 31 U.S.C. Chapter 31; 5 U.S.C. 301; 12 U.S.C. 391.

    Source: 38 FR 7078, Mar. 15, 1973, unless otherwise noted.



                     Subpart A--General Information



Sec. 306.0  Applicability of regulations.

    These regulations apply to all U.S. transferable and nontransferable 
securities,1 other than U.S. Savings Bonds and U.S. Savings 
Notes, to the extent specified in these regulations, the offering 
circulars or special regulations governing such securities.
---------------------------------------------------------------------------

    1 These regulations may also be applied to securities 
issued by certain agencies of the United States and certain Government 
and Government-sponsored corporations.
---------------------------------------------------------------------------



Sec. 306.1  Official agencies.

    The Bureau of the Public Debt of the Department of the Treasury is 
charged with matters relating to transactions in securities. 
Correspondence concerning transactions in securities and requests for 
appropriate forms may be addressed to the Division of Customer Service, 
Parkersburg, WV 26102.

[64 FR 38125, July 15, 1999]



Sec. 306.2  Definitions of words and terms as used in these regulations.

    (a) Advance refunding offer is an offer to a holder of a security, 
usually a year or more in advance of its call or maturity date, to 
exchange it for another security.
    (b) A bearer security is payable on its face at maturity or call for 
redemption before maturity in accordance with its terms to bearer. The 
ownership is not recorded. Title to such a security may pass by delivery 
without endorsement and without notice. A coupon security is a bearer 
security with interest coupons attached.
    (c) Bureau refers to the Bureau of the Public Debt, Division of 
Customer Service, Parkersburg, WV 26102.
    (d) Call date or date of call is the date fixed in the official 
notice of call published in the Federal Register as the date on which 
the obligor will make payment of the security before maturity in 
accordance with its terms.
    (e) Court means one which has jurisdiction over the parties and the 
subject matter.
    (f) Department refers to the Department of the Treasury.
    (g) Depository institution means an entity described in section 
19(b)(1)(A)(i)--(vi) of the Federal Reserve Act (12 U.S.C. 
461(b)(1)(A)(i)--(vi)). Under section 19(b) of the Federal Reserve Act, 
the term depository institution includes:
    (1) Any insured bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (2) Any mutual savings bank as defined in 12 U.S.C. 1813 or any bank 
which is eligible to make application to become an insured bank under 12 
U.S.C. 1815;

[[Page 127]]

    (3) Any savings bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (4) Any insured credit union as defined in 12 U.S.C. 1752 or any 
credit union which is eligible to make application to become an insured 
credit union under 12 U.S.C. 1781;
    (5) Any member as defined in 12 U.S.C. 1422; and
    (6) Any savings association (as defined in 12 U.S.C. 1813) which is 
an insured depository institution, as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811, et seq., or is eligible to apply to 
become an insured depository institution under such Act.
    (h) Face maturity date is the payment date specified in the text of 
a security.
    (i) Incompetent refers to a person under any legal disability except 
minority.
    (j) Joint owner and joint ownership refer to any permitted form of 
ownership by two or more persons.
    (k) Nontransferable securities are those issued only in registered 
form which according to their terms are payable only to the registered 
owners or recognized successors in title to the extent and in the manner 
provided in the offering circulars or special applicable regulations.
    (l) Payment and redemption, unless otherwise indicated by the 
context, are used interchangeably for payment at maturity or payment 
before maturity pursuant to a call for redemption in accordance with the 
terms of the securities.
    (m) Prerefunding offer is an offer to a holder of a security, 
usually within the year preceding its call or maturity date, to exchange 
it for another security.
    (n) Redemption-exchange is any authorized redemption of securities 
for the purpose of applying the proceeds in payment for other securities 
offered in exchange.
    (o) A registered security refers to a security the ownership of 
which is registered on the books of the Department. It is payable at 
maturity or call for redemption before maturity in accordance with its 
terms to the person in whose name it is inscribed, or his assignee.
    (p) Securities assigned in blank or securities so assigned as to 
become in effect payable to bearer refers to registered securities which 
are assigned by the owner or his authorized representative without 
designating the assignee. Registered securities assigned simply to The 
Secretary of the Treasury or in the case of Treasury Bonds, Investment 
Series B--1975-80, to The Secretary of the Treasury for exchange for the 
current Series EA or EO Treasury notes are considered to be so assigned 
as to become in effect payable to bearer.
    (q) Signature guarantee program means a signature guarantee program 
established in response to Rule 17 Ad-15 (17 CFR 240.17Ad-15), issued 
under authority of the Securities Exchange Act of 1934. For the purpose 
of the regulations, in this part, the Securities Transfer Agents 
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), 
and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) 
are recognized by Treasury as such signature guarantee programs.
    (r) Taxpayer identifying number means the appropriate identifying 
number as required on tax returns and other documents submitted to the 
Internal Revenue Service, i.e., an individual's social security account 
number or an employer identification number. A social security account 
number is composed of nine digits separated by two hyphens, for example, 
123-45-6789; an employer identification number is composed of nine 
digits separated by one hyphen, for example, 12-3456789. The hyphens are 
an essential part of the numbers and must be included.
    (s) Transferable securities, which may be in either registered or 
bearer form, refers to securities which may be sold on the market and 
transfer of title accomplished by assignment and delivery if in 
registered form, or by delivery only if in bearer form.
    (t) Treasury securities, Treasury bonds, Treasury notes, Treasury 
certificates of indebtedness, and Treasury bills, or simply securities, 
bonds, notes, certificates, and bills, unless otherwise indicated by

[[Page 128]]

the context, refer only to transferable securities.

[38 FR 7078, Mar. 15, 1973, as amended at 59 FR 59036, Nov. 15, 1994; 64 
FR 38125, July 15, 1999]



Sec. 306.3  Transportation charges and risks in the shipment of securities.

    The following guidelines apply to the transportation of reissued 
securities or securities presented for authorized transactions:
    (a) The securities may be presented in person by the owner or the 
owner's agent.
    (b) If securities are not presented in person, shipment of the 
securities is at the owner's risk and expense.
    (c) Reissued securities will be delivered by certified mail or by 
other means, at the risk of the registered owner and at the expense of 
the Department.

[64 FR 38125, July 15, 1999]



                         Subpart B--Registration



Sec. 306.10  General.

    The registration used must express the actual ownership of a 
security and may not include any restriction on the authority of the 
owner to dispose of it in any manner, except as otherwise specifically 
provided in these regulations. The Treasury Department reserves the 
right to treat the registration as conclusive of ownership. Requests for 
registration should be clear, accurate, and complete, conform with one 
of the forms set forth in this subpart, and include appropriate taxpayer 
identifying numbers.2 The registration of all bonds owned by 
the same person, organization, or fiduciary should be uniform with 
respect to the name of the owner and, in the case of a fiduciary, the 
description of the fiduciary capacity. Individual owners should be 
designated by the names by which they are ordinarily known or under 
which they do business, preferably including at least one full given 
name. The name of an individual may be preceded by any applicable title, 
as, for example, Mrs., Miss, Ms., Dr., or Rev., or followed by a 
designation such as M.D., D.D., Sr., or Jr. Any other similar suffix 
should be included when ordinarily used or when necessary to distinguish 
the owner from a member of his family. A married woman's own given name, 
not that of her husband, must be used, for example, Mrs. Mary A. Jones, 
not Mrs. Frank B. Jones. The address should include, where appropriate, 
the number and street, route, or any other local feature and the Zip 
Code.
---------------------------------------------------------------------------

    2 Taxpayer identifying numbers are not required for 
foreign governments, nonresident aliens not engaged in trade or business 
within the United States, international organizations and foreign 
corporations not engaged in trade or business and not having an office 
or place of business or a financial or paying agent within the United 
States, and other persons or organizations as may be exempted from 
furnishing such numbers under regulations of the Internal Revenue 
Service.
---------------------------------------------------------------------------



Sec. 306.11  Forms of registration for transferable securities.

    The forms of registration described below are authorized for 
transferable securities:
    (a) Natural persons in their own right. In the names of natural 
persons who are not under any legal disability, in their own right, 
substantially as follows:
    (1) One person. In the name of one individual. Examples:

John A. Doe (123-45-6789).
Mrs. Mary C. Doe. (123-45-6789).
Miss Elizabeth Jane Doe (123-45-6789).


An individual who is sole proprietor of a business conducted under a 
trade name may include a reference to the trade name. Examples:

John A. Doe, doing business as Doe's Home Appliance Store (123-45-6789).

                                   or

John A. Doe (123-45-6789), doing business as Doe's Home Appliance Store.

    (2) Two or more persons--general. Securities will not be registered 
in the name of one person payable on death to another, or in any form 
which purports to authorize transfer by less than all the persons named 
in the registration (or all the survivors).3 Securities will

[[Page 129]]

not be registered in the forms John A. Doe and Mrs. Mary C. Doe, or 
either of them or William C. Doe or Henry J. Doe, or either of them and 
securities so assigned will be treated as though the words or either of 
them do not appear in the assignments. The taxpayer identifying number 
of any of the joint owners may be shown on securities registered in 
joint ownership form.
---------------------------------------------------------------------------

    3 Warning. Difference Between Transferable Treasury 
Securities Registered in the Names of Two or More Persons and United 
States Savings Bonds in Coownership Form. The effect of registering 
Treasury securities to which these regulations apply in the names of two 
or more persons differs decidedly from registration of savings bonds in 
coownership form. Savings bonds are virtually redeemable on demand at 
the option of either coowner on his signature alone. Transferable 
Treasury securities are redeemable only at maturity or upon prior call 
by the Secretary of the Treasury.
---------------------------------------------------------------------------

    (i) With right of survivorship. In the names of two or more 
individuals with right of survivorship. Examples:

John A. Doe (123-45-6789) or Mrs. Mary C. Doe or the survivor.
John A. Doe (123-45-6789) or Mrs. Mary C. Doe or Miss Mary Ann Doe or 
the survivors or survivor.
John A. Doe (123-45-6789) or Mrs. Mary C. Doe.
John A. Doe (123-45-6789) and Mrs. Mary C. Doe.
John A. Doe (123-45-6789) and Mrs. Mary C. Doe as joint tenants with 
right of survivorship and not as tenants in common.

Limited to husband and wife:

John A. Doe (123-45-6789) and Mrs. Mary C. Doe, as tenants by the 
entireties.

    (ii) Without right of survivorship. In the names of two or more 
individuals in such manner as to preclude the right of survivorship. 
Examples:

John A. Doe (123-45-6789) and William B. Doe as tenants in common.
John A. Jones as natural guardian of Henry B. Jones, a minor, and Robert 
C. Jones (123-45-6789), without right of survivorship.
Limited to husband and wife:

Charles H. Brown (123-45-6789) and Ann R. Brown, as partners in 
community.

    (b) Minors and incompetents--(1) Natural guardians of minors. A 
security may be registered in the name of a natural guardian of a minor 
for whose estate no legal guardian or similar representative has legally 
qualified. Example:

John R. Jones as natural guardian of Henry M. Jones, a minor (123-45-
6789).

Either parent with whom the minor resides, or if he does not reside with 
either parent, the person who furnishes his chief support, will be 
recognized as his natural guardian and will be considered a fiduciary. 
Registration in the name of a minor in his own right as owner or as 
joint owner is not authorized. Securities so registered, upon 
qualification of the natural guardian, will be treated as though 
registered in the name of the natural guardian in that capacity.
    (2) Custodian under statute authorizing gifts to minors. A security 
may be purchased as a gift to a minor under a gifts to minors statute in 
effect in the State in which either the donor or the minor resides. The 
security should be registered as provided in the statute, with an 
identifying reference to the statute if the registration does not 
clearly identify it. Examples:

William C. Jones, as custodian for John A. Smith, a minor (123-45-6789), 
under the California Uniform Gifts to Minors Act.
Robert C. Smith, as custodian for Henry L. Brown, a minor (123-45-6789), 
under the laws of Georgia; Chapter 48-3, Code of Ga. Anno.

    (3) Incompetents not under guardianship. Registration in the form 
John A. Brown, an incompetent (123-45-6789), under voluntary 
guardianship, is permitted only on reissue after a voluntary guardian 
has qualified for the purpose of collecting interest. (See 
Secs. 306.37(c)(2) and 306.57(c)(2)). Otherwise, registration in the 
name of an incompetent not under legal guardianship is not authorized.
    (c) Executors, administrators, guardians, and similar 
representatives or fiduciaries. A security may be registered in the 
names of legally qualified executors, administrators, guardians, 
conservators, or similar representatives or fiduciaries of a single 
estate. The names and capacities of all the representatives or 
fiduciaries, as shown in their letters of appointment, must be included 
in the registration and must be followed by an adequate identifying 
reference to the estate. Examples:

John Smith, executor of will (or administrator of estate) of Henry J. 
Jones, deceased (12-3456789).

[[Page 130]]

William C. Jones, guardian (or conservator, etc.) of estate of James D. 
Brown, a minor (or an incompetent) (123-45-6789).

    (d) Life tenant under will. A security may be registered in the name 
of a life tenant followed by an adequate identifying reference to the 
will. Example:

Anne B. Smith, life tenant under the will of Adam A. Smith, deceased 
(12-3456789).
The life tenant will be considered a fiduciary.
    (e) Private trust estates. A security may be registered in the name 
and title of the trustee or trustees of a single duly constituted 
private trust, followed by an adequate identifying reference to the 
authority governing the trust. Examples:

John Jones and Blank Trust Co., Albany, NY, trustees under will of Sarah 
Jones, deceased (12-3456789).
John Doe and Richard Roe, trustees under agreement with Henry Jones 
dated February 9, 1970 (12-3456789).


The names of all trustees, in the form used in the trust instrument, 
must be included in the registration, except as follows:
    (1) If there are several trustees designated as a board or 
authorized to act as a unit, their names should be omitted and the words 
Board of Trustees substituted for the word trustees. Example:

Board of Trustees of Blank Co. Retirement Fund, under collective 
bargaining agreement dated June 30, 1970 (12-3456789).

    (2) If the trustees do not constitute a board or otherwise act as a 
unit, and are either too numerous to be designated in the inscription by 
names and title, or serve for limited terms, some or all of the names 
may be omitted. Examples:

John Smith, Henry Jones, et al., trustees under will of Henry J. Smith, 
deceased (12-3456789).
Trustees under will of Henry J. Smith, deceased (12-3456789).
Trustees of Retirement Fund of Industrial Manufacturing Co., under 
directors' resolution of June 30, 1950 (12-3456789).

    (f) Private organizations (corporations, unincorporated associations 
and partnerships). A security may be registered in the name of any 
private corporation, unincorporated association, or partnership, 
including a nominee, which for purposes of these regulations is treated 
as the owner. The full legal name of the organization, as set forth in 
its charter, articles of incorporation, constitution, partnership 
agreement, or other authority from which its powers are derived, must be 
included in the registration and may be followed, if desired, by a 
reference to a particular account or fund, other than a trust fund, in 
accordance with the rules and examples given below:
    (1) A corporation. The name of a business, fraternal, religious, or 
other private corporation must be followed by descriptive words 
indicating the corporate status unless the term corporation or the 
abbreviation Inc. is part of the name or the name is that of a 
corporation or association organized under Federal law, such as a 
national bank or Federal savings and loan association. Examples:

Smith Manufacturing Co., a corporation (12-3456789).
The Standard Manufacturing Corp. (12-3456789).
Jones & Brown, Inc.--Depreciation Acct. (12-3456789).
First National Bank of Albemarle (12- 3456789).
Abco & Co., Inc., a nominee corporation (12-3456789).

    (2) An unincorporated association. The name of a lodge, club, labor 
union, veterans' organization, religious society, or similar self-
governing organization which is not incorporated (whether or not it is 
chartered by or affiliated with a parent organization which is 
incorporated) must be followed by the words an unincorporated 
association. Examples:

American Legion Post No. --, Department of the D.C., an unincorporated 
association (12-3456789).
Local Union No. 100, Brotherhood of Locomotive Engineers, an 
unincorporated association (12-3456789).

Securities should not be registered in the name of an unincorporated 
    association if the legal title to its property in general, or the 
    legal title to the funds with which the securities are to be 
    purchased, is held by trustees. In such a case the securities should 
    be registered in the title of the trustees in accordance with 
    paragraph (e) of this section. The term unincorporated association 
    should not

[[Page 131]]

    be used to describe a trust fund, a partnership or a business 
    conducted under a trade name.
    (3) A partnership. The name of a partnership must be followed by the 
words a partnership. Example:

Smith & Brown, a partnership (12-3456789).
Acme Novelty Co., a limited partnership (12-3456789).
Abco & Co., a nominee partnership (12-3456789).

    (g) States, public bodies, and corporations and public officers. A 
security may be registered in the name of a State or county, city, town, 
village, school district, or other political entity, public body or 
corporation established by law (including a board, commission, 
administration, authority or agency) which is the owner or official 
custodian of public funds, other than trust funds, or in the full legal 
title of the public officer having custody. Examples:

State of Maine.
Town of Rye, NY.
Maryland State Highway Administration.
Treasurer, City of Springfield, IL.
Treasurer of Rhode Island--State Forestry Fund.

    (h) States, public officers, corporations or bodies as trustees. A 
security may be registered in the title of a public officer or in the 
name of a State or county or a public corporation or public body acting 
as trustee under express authority of law. An appropriate reference to 
the statute creating the trust may be included in the registration. 
Examples:

Insurance Commissioner of Pennsylvania, trustee for benefit of 
policyholders of Blank Insurance Co. (12-3456789), under Sec. --, Pa. 
Stats.
Rhode Island Investment Commission, trustee of General Sinking Fund 
under Ch. 35, Gen. Laws of RI.
State of Colorado in trust for Colorado Surplus Property Agency.

[38 FR 7078, Mar. 15, 1973; 38 FR 8153, Mar. 29, 1973]



Sec. 306.12  Errors in registration.

    If an erroneously inscribed security is received, it should not be 
altered in any respect, but the Bureau should be furnished full 
particulars concerning the error and asked to furnish instructions.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38125, July 15, 1999]



Sec. 306.13  Nontransferable securities.

    Upon authorized reissue, Treasury Bonds, Investment Series B--1975-
80, may be registered in the forms set forth in Sec. 306.11.



              Subpart C--Transfers, Exchanges and Reissues



Sec. 306.15  Transfers and exchanges of securities--closed periods.

    (a) General. The transfer of registered securities should be made by 
assignment in accordance with subpart F of this part. Transferable 
registered securities are eligible for denominational exchange. Specific 
instructions for issuance and delivery of the new securities, signed by 
the owner or his authorized representative, must accompany the 
securities presented. (Form PD 3905 or PD 1827, as appropriate, may be 
used.) Denominational exchanges may be made at any time. Securities 
presented for transfer must be received by the Bureau not less than 1 
full month before the date on which the securities mature or become 
redeemable pursuant to a call for redemption before maturity. Any 
security so presented which is received too late to comply with this 
provision will be accepted for payment only.
    (b) Closing of transfer books. The transfer books are closed for one 
full month preceding interest payment dates and call or maturity dates. 
If the date set for closing of the transfer books falls on Saturday, 
Sunday, or a legal holiday, the books will be closed as of the close of 
business on the last business day preceding that date. The books are 
reopened on the first business day following the date on which interest 
falls due. Registered securities which have not matured or been called, 
submitted for transfer, reissue, and coupon securities which have not 
matured or been called, submitted for exchange for registered 
securities, which are received during the period the books for that loan 
are closed, will be processed on or after the date such

[[Page 132]]

books are reopened. If registered securities are received for transfer, 
or coupon securities are received for exchange for registered 
securities, during the time the books are closed for payment of final 
interest at maturity or call, unless otherwise provided in the offering 
circular or notice of call, the following action will be taken:
    (1) Payment of final interest will be made to the registered owner 
of record on the date the books were closed.
    (2) Payment of principal will be made to the assignee under a proper 
assignment of the securities.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38125, July 15, 1999]



Sec. 306.16  Exchanges of registered securities.

    No assignments will be required for:
    (a) Authorized denominational exchanges of registered securities for 
like securities in the same names and forms of registration and
    (b) Redemption-exchanges, or prefundings, or advance refundings in 
the same names and forms as appear in the registration or assignments of 
the securities surrendered.



Sec. 306.17  Exchanges of registered securities for coupon securities.

    Exchanges of registered securities for bearer securities are not 
permitted.

[64 FR 38126, July 15, 1999]



Sec. 306.18  Exchanges of coupon securities for registered securities.

    Coupon securities presented for exchange for registered securities 
should have all matured interest coupons detached. All unmatured coupons 
should be attached, except that if presented when the transfer books are 
closed (in which case the exchange will be effected on or after the date 
on which the books are reopened), the next maturing coupons should be 
detached and held for collection in ordinary course when due. If any 
coupons which should be attached are missing, the securities must be 
accompanied by a remittance in an amount equal to the face amount of the 
missing coupons. The new registered securities will bear interest from 
the interest payment date next preceding the date on which the exchange 
is made.



Sec. 306.19  Denominational exchanges of coupon securities.

    Denominational exchanges of bearer securities are not permitted.

[64 FR 38126, July 15, 1999]



Sec. 306.20  Reissue of registered transferable securities.

    Assignments are not required for reissue of registered transferable 
securities in the name(s) of:
    (a) The surviving joint owner(s) of securities registered in the 
names of or assigned to two or more persons, unless the registration or 
assignment includes words which preclude the right of survivorship,
    (b) A succeeding fiduciary or other lawful successor,
    (c) A remainderman, upon termination of a life estate,
    (d) An individual, corporation or unincorporated association whose 
name has been legally changed,
    (e) A corporation or unincorporated association which is the lawful 
successor to another corporation or unincorporated association, and
    (f) A successor in title to a public officer or body.

Evidence of survivorship, succession, or change of name, as appropriate, 
must be furnished. The appropriate taxpayer identifying number also must 
be furnished if the registration of the securities submitted does not 
include such number for the person or organization to be named on the 
reissued securities.



Sec. 306.21  Reissue of nontransferable securities.

    Treasury Bonds, Investment Series B--1975-80, may be reissued only 
in the names of:
    (a) Lawful successors in title,
    (b) The legal representatives or distributees of a deceased owner's 
estate, or the distributees of a trust estate, and
    (c) State supervisory authorities in pursuance of any pledge 
required of the owner under State law, or upon termination of the pledge 
in the names of the pledgors or their successors.

[[Page 133]]


Bonds presented for reissue must be accompanied by evidence of 
entitlement.



Sec. 306.22  Exchange of Treasury Bonds, Investment Series B-1975-80.

    Bonds of this series presented for exchange for 1\1/2\ percent 5-
year Treasury notes must bear duly executed assignments to ``The 
Secretary of the Treasury for exchange for the current series of EA or 
EO Treasury notes to be delivered to (inserting the name and address of 
the person to whom the notes are to be delivered).'' The notes will bear 
the April 1 or October 1 date next preceding the date the bonds, duly 
assigned with supporting evidence, if necessary, are received by the 
Bureau or a Federal Reserve Bank or Branch. Interest accrued at the rate 
of 2\3/4\ percent on the bonds surrendered from the next preceding 
interest payment date to the date of exchange will be credited, and 
interest at the rate of 1\1/2\ percent on the notes for the same period 
will be charged and the difference will be paid to the owner.



Sec. 306.23  Securities eligible to be held in the TREASURY DIRECT Book-entry Securities System.

    (a) Eligible issues. The Secretary will, from time to time, cause to 
be published in the Federal Register a notice describing those series of 
Treasury issues of bonds and notes issued before August 1, 1986, that 
will be eligible for conversion to the TREASURY DIRECT Book-entry 
Securities System. The notice shall specify the period during which 
requests for conversion will be accepted.
    (b) Establishment of TREASURY DIRECT account. To convert a bearer or 
registered security to book-entry form to be held in TREASURY DIRECT, 
the owner(s) must establish at the time of conversion, or prior thereto, 
an account in TREASURY DIRECT in accordance with Sec. 357.20 of part 
357. Similarly, to transfer to TREASURY DIRECT a security held in book-
entry form under subpart O of this part, the owner(s) must establish at 
the time of transfer, or prior thereto, an account in TREASURY DIRECT in 
accordance with Sec. 357.20 of part 357.
    (c) Procedure for conversion of bearer security. To convert a bearer 
security to TREASURY DIRECT, the owner must present it to the Department 
of the Treasury, accompanied by a request for conversion, which must 
include the information needed for establishing a TREASURY DIRECT 
account, unless such account has been previously established, and is 
identified by its number in the request.
    (d) Procedures for conversion of registered security. To convert a 
registered security to TREASURY DIRECT, the owner(s) thereof must 
execute an assignment in accordance with subpart F of this part. The 
assignment must be in substantially the following form: ``To the 
Secretary of the Treasury for conversion to book-entry and deposit in 
TREASURY DIRECT,''. The security should be accompanied by the 
information needed for establishing the TREASURY DIRECT account, or 
where an account has been previously established, the above assignment 
should be reworded to include the account number.
    (e) Procedure for transfer of book-entry security held under subpart 
O. To transfer a book-entry security held under subpart O of this part, 
the owner(s) must arrange with the bank or other entity where the 
security is being held to transfer the same to TREASURY DIRECT. No such 
transfer will be accepted unless a TREASURY DIRECT account has 
previously been established and the number thereof is shown in the 
transfer request.
    (f) Terms and conditions of securities held in TREASURY DIRECT. An 
eligible security held in TREASURY DIRECT shall be subject to subpart C 
and other applicable portions of part 357, and the provisions of part 
306 shall not apply thereto.
    (g) Re-conversion from TREASURY DIRECT to registered form or to 
book-entry under subpart O. The owner(s) of a security converted or 
transferred to TREASURY DIRECT in the manner herein provided may, by 
executing an appropriate transaction request, transfer the book-entry 
security to a book-entry account held under the provisions of subpart O 
of this part. Thereafter, to the extent that the security was originally 
eligible for such conversion the book-entry security held under subpart 
O may be converted to

[[Page 134]]

one in registered form. Securities transferred from TREASURY DIRECT 
under this subsection shall be thereupon subject to the provisions of 
part 306, and part 357 shall no longer apply thereto.

[53 FR 15554, May 2, 1988, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.24  Collection of fees on definitive securities.

    A fee shall be charged for each registered security, as defined in 
Sec. 306.115 (a), issued as a result of a transfer, exchange, reissue, 
withdrawal from book-entry, or the granting of relief on account of 
loss, theft, destruction, mutilation, or defacement. The applicable fee, 
and the basis for its determination, will be published by notice in the 
Federal Register.

[60 FR 4377, Jan. 23, 1995, as amended at 64 FR 38126, July 15, 1999]



                    Subpart D--Redemption or Payment



Sec. 306.25  Presentation and surrender.

    (a) General. Securities, whether in registered or bearer form, are 
payable in regular course of business at maturity unless called for 
redemption before maturity in accordance with their terms, in which case 
they will be payable in regular course of business on the date of call. 
The Secretary of the Treasury may provide for the exchange of maturing 
or called securities, or in advance of call or maturity, may afford 
owners the opportunity of exchanging a security for another security 
pursuant to a prerefunding or an advance refunding offer. Registered and 
bearer securities should be presented and surrendered for redemption to 
the Bureau. No assignments or evidence in support of assignments will be 
required by or on behalf of the registered owner or assignee for 
redemption for his or its account, or for redemption-exchange, or 
exchange pursuant to a prerefunding or an advance refunding offer, if 
the new securities are to be registered in exactly the same names and 
forms as appear in the registrations or assignments of the securities 
surrendered. To the extent appropriate, these rules also apply to 
securities registered in the title of public officers who are official 
custodians of public funds.
---------------------------------------------------------------------------

    4 [Reserved]
---------------------------------------------------------------------------

    (b) ``Overdue'' securities. If a bearer security or a registered 
security assigned in blank, or to bearer, or so assigned as to become in 
effect payable to bearer, is presented and surrendered for redemption 
after it has become overdue, the Secretary of the Treasury will 
ordinarily require satisfactory proof of ownership. (Form PD 1071 may be 
used.) A security shall be considered to be overdue after the lapse of 
the following periods of time from its face maturity:
    (1) One month for securities issued for a term of 1 year or less.
    (2) Three months for securities issued for a term of more than 1 
year but not in excess of 7 years.
    (3) Six months for securities issued for a term of more than 7 
years.

[38 FR 7078, Mar. 15, 1973; 38 FR 8432, Apr. 2, 1973, as amended by 64 
FR 38126, July 15, 1999]



Sec. 306.26  Redemption of registered securities at maturity, upon prior call, or for prerefunding or advance refunding.

    Registered securities presented and surrendered for redemption at 
maturity or pursuant to a call for redemption before maturity need not 
be assigned, unless the owner desires that payment be made to some other 
person, in which case assignments should be made to ``The Secretary of 
the Treasury for redemption for the account of (inserting name and 
address of person to whom payment is to be made). Specific instructions 
for the issuance and delivery of the redemption check, signed by the 
owner or his authorized representative, must accompany the securities, 
unless included in the assignment. (Form PD 3905 may be used.) Payment 
of the principal will be made by check drawn on the United States 
Treasury to the order of the persons entitled and mailed in accordance 
with the instructions received. Securities presented for prerefunding or 
advance refunding should be assigned as provided in the prerefunding or 
advance refunding offer.

[64 FR 38126, July 15, 1999]

[[Page 135]]



Sec. 306.27  Redemption of bearer securities at maturity, upon prior call, or for advance refunding or prerefunding.

    All interest coupons due and payable on or before the date of 
maturity or date fixed in the call for redemption before maturity should 
be detached from coupon securities presented for redemption and should 
be collected separately in regular course. All coupons bearing dates 
subsequent to the date fixed in a call for redemption, or offer of 
prerefunding or advance refunding, should be left attached to the 
securities. If any such coupons are missing, the full face amount 
thereof will be deducted from the payment to be made upon redemption or 
the prerefunding or advance refunding adjustment unless satisfactory 
evidence of their destruction is submitted. Any amounts so deducted will 
be held in the Department to provide for adjustments or refunds in the 
event it should be determined that the missing coupons were subsequently 
presented or their destruction is later satisfactorily established. In 
the absence of other instructions, payment or bearer securities will be 
made by check drawn to the order of the person presenting and 
surrendering the securities and mailed to him at his address, as given 
in the advice accompanying the securities. (Form PD 3905 may be used.) 
Under appropriate circumstances, payment to a financial institution for 
detached past due coupons may be made by crediting the amount of the 
proceeds to the account maintained by the financial institution at the 
Federal Reserve bank of its district.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



                           Subpart E--Interest



Sec. 306.35  Computation of interest.

    The interest on Treasury securities accrues and is payable on a 
semiannual basis unless otherwise provided in the circular offering them 
for sale or exchange. If the period of accrual is an exact 6 months, the 
interest accrual is an exact one-half year's interest without regard to 
the number of days in the period. If the period of accrual is less than 
an exact 6 months, the accrued interest is computed by determining the 
daily rate of accrual on the basis of the exact number of days in the 
full interest period and multiplying the daily rate by the exact number 
of days in the fractional period for which interest has actually 
accrued. A full interest period does not include the day as of which 
securities were issued or the day on which the last preceding interest 
became due, but does include the day on which the next succeeding 
interest payment is due. A fractional part of an interest period does 
not include the day as of which the securities were issued or the day on 
which the last preceding interest payment became due, but does include 
the day as of which the transaction terminating the accrual of interest 
is effected. The 29th of February in a leap year is included whenever it 
falls within either a full interest period or a fractional part 
thereof.7
---------------------------------------------------------------------------

    7 The appendix to this subpart contains a complete explanation 
of the method of computing interest on a semiannual basis on Treasury 
bonds, notes, and certificates of indebtedness, and an outline of the 
method of computing the discount rates on Treasury bills. Also included 
are tables of computation of interest on semiannual and annual basis.
---------------------------------------------------------------------------



Sec. 306.36  Termination of interest.

    Securities will cease to bear interest on the date of their maturity 
unless they have been called for redemption before maturity in 
accordance with their terms, or are presented and surrendered for 
redemption-exchange or exchange pursuant to an advance refunding or 
prerefunding offer, in which case they will cease to bear interest on 
the date of call, or the exchange date, as the case may be.



Sec. 306.37  Interest on registered securities.

    (a) Method of payment. The interest on registered securities is 
payable by checks drawn on the United States Treasury to the order of 
the registered owners, except as otherwise provided herein. Interest 
checks are prepared by the Department in advance of the interest payment 
data and are ordinarily mailed in time to reach the addresses

[[Page 136]]

on that date. Interest on a registered security which has not matured or 
been called and which is presented for any transaction during the period 
the books for that loan are closed will be paid by check drawn to the 
order of the registered owner of record. Upon receipt of notice of the 
death or incompetency of an individual named as registered owner, a 
change in the name or in the status of a partnership, corporation, or 
unincorporated association, the removal, resignation, succession, or 
death of a fiduciary or trustee, delivery of interest checks will be 
withheld pending receipt and approval of evidence showing who is 
entitled to receive the interest checks. If the inscriptions on 
securities do not clearly identify the owners, delivery of interest 
checks will be withheld pending reissue of the securities in the correct 
registration. The final installment of interest, unless otherwise 
provided in the offering circular or notice of call, will be paid by 
check drawn to the order of the registered owner of record and mailed in 
advance of the interest payment date in time to reach the addressee on 
or about that date. Interest on securities presented for prerefunding or 
advance refunding will be adjusted as provided in the prerefunding or 
advance refunding offer.
    (b) Change of address. To assure timely delivery of interest checks, 
owners should promptly notify the Bureau of any change of address. (Form 
PD 345 may be used.) The notification must be signed by the registered 
owner or a joint owner or an authorized representative, and should show 
the owner's taxpayer identifying number, the old and new addresses, the 
serial number and denomination of each security, the titles of the 
securities (for example: 4\1/4\ percent Treasury Bonds of 1987-92, dated 
August 15, 1962), and the registration of each security. Notifications 
by attorneys in fact, trustees, or by the legal representatives of the 
estates of deceased, incompetent, or minor owners should be supported by 
proof of their authority, unless, in the case of trustees or legal 
representatives, they are named in the registration.
    (c) Collection of interest checks--(1) General. Interest checks may 
be collected in accordance with the regulations governing the 
endorsement and payment of Government warrants and checks, which are 
contained in the current revision of Department Circular No. 21 (part 
240 of this chapter).
    (2) By voluntary guardians of incompetents. Interest checks drawn to 
the order of a person who has become incompetent and for whose estate no 
legal guardian or similar representative has been appointed should be 
returned to the Bureau with a full explanation of the circumstances. For 
collection of interest, the Department will recognize the relative 
responsible for the incompetent's care and support or some other person 
as voluntary guardian for the incompetent. (Application may be made on 
Form PD 1461.)
    (d) Nonreceipt, loss, theft, or destruction of interest checks. If 
an interest check is not received within a reasonable period after an 
interest payment date, or if a check is lost, stolen, or destroyed after 
receipt, notification should be sent to the Bureau of the Public Debt, 
Division of Customer Service, Parkersburg, WV 26102. Notification should 
include the name and address of the owner, his taxpayer identifying 
number, and the serial number, denomination, and title of the security 
upon which the interest was payable. If the check is subsequently 
received or recovered, the Bureau should be notified.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.38  Interest on bearer securities.

    Unless the offering circular and notice of call provide otherwise, 
interest on coupon securities is payable in regular course of business 
upon presentation and surrender of the interest coupons as they mature. 
Such coupons are payable at participating Federal Reserve banks or by 
the Bureau.\8\ Interest on Treasury bills, and any other bearer 
securities which may be sold and issued on a discount basis and which 
are payable at par at maturity,

[[Page 137]]

is represented by the difference between the purchase price and the par 
value, and no coupons are attached.
---------------------------------------------------------------------------

    \8\ Banking institutions will usually cash the coupons without 
charge as an accommodation to their customers.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]

Appendix to Subpart E to Part 306--Interest--Computation of Interest on 
      Treasury Bonds, Treasury Notes, and Treasury Certificates of 
 Indebtedness, and Computation of Discount on Treasury Bills--Interest 
                                 Tables

                 computation of interest on annual basis

      One Day's Interest is \1/365\ or \1/366\ of 1-Year's Interest

    Computation of interest on Treasury bonds, notes, and certificates 
of indebtedness will be made on an annual basis in all cases where 
interest is payable in one amount for the full term of the security, 
unless such term is an exact half-year (6 months), and it is provided 
that interest shall be computed on a semi-annual basis.
    If the term of the securities is exactly 1 year, the interest is 
computed for the full period at the specified rate regardless of the 
number of days in such period.
    If the term of the securities is less than 1 full year, the annual 
interest period for purposes of computation is considered to be the full 
year from but not including the date of issue to and including the 
anniversary of such date.
    If the term of the securities is more than 1 full year, computation 
is made on the basis of one full annual interest period, ending with the 
maturity date, and a fractional part of the preceding full annual 
interest period.
    The computation of interest for any fractional part of an annual 
interest period is made on the basis of 365 actual days in such period, 
or 366 days if February 29 falls within such annual period.

               computation of interest on semiannual basis

  One Day's Interest is \1/181\, \1/182\, \1/183\ or \1/184\ or \1/2\ 
                             Year's Interest

    Computation of interest on Treasury bonds, notes, and certificates 
of indebtedness will be made on a semiannual basis in all cases where 
interest is payable for one or more full half-year (6 months) periods, 
or for one or more full half-year periods and a fractional part of a 
half-year period. A semiannual interest period is an exact half-year or 
6 months, for computation purposes, and may comprise 181, 182, 183 or 
184 actual days.
    An exact half-year's interest at the specified rate is computed for 
each full period of exactly 6 months, irrespective of the actual number 
of days in the half-year.
    If the initial interest covers a fractional part of a half-year, 
computation is made on the basis of the actual number of days in the 
half-year (exactly 6 months) ending on the day such initial interest 
becomes due. If the initial interest covers a period in excess of 6 
months, computation is made on the basis of one full half-year, ending 
with the interest due date, and a fractional part of the preceding full 
half-year period.
    Interest for any fractional part of a full half-year period is 
computed on the basis of the exact number of days in the full period, 
including February 29 whenever it falls within such a period.
    The number of days in any half-year period is shown in the following 
table:

                                                For the Half-Year
----------------------------------------------------------------------------------------------------------------
                                                                   Beginning and ending    Beginning and ending
                                                                   days are 1st or 15th    days are last days of
                                                                  of months listed under    months listed under
                                                                      interest period         interest period
                         Interest period                             (number of days)        (number of days)
                                                                 -----------------------------------------------
                                                                    Regular                 Regular
                                                                     year      Leap year     year      Leap year
----------------------------------------------------------------------------------------------------------------
January to July.................................................         181         182         181         182
February to August..............................................         181         182         184         184
March to September..............................................         184         184         183         183
April to October................................................         183         183         184         184
May to November.................................................         184         184         183         183
June to December................................................         183         183         184         184
July to January.................................................         184         184         184         184
August to February..............................................         184         184         181         182
September to March..............................................         181         182         182         183
October to April................................................         182         183         181         182
November to May.................................................         181         182         182         183
December to June................................................         182         183         181         182
                                                                 -----------------------------------------------
1 year (any 2 consecutive half-years)...........................         365         366         365         366
----------------------------------------------------------------------------------------------------------------


[[Page 138]]

    The following are dates for end-of-the-month interest computations.

------------------------------------------------------------------------
                                            Interest-computation period
      When interest period ends on--         will be from but will not
                                                     include--
------------------------------------------------------------------------
January 31...............................  July 31.
February 28 in 365-day year..............  August 31.
February 29..............................      Do.
March 30, 31.............................  September 30.
April 30.................................  October 31.
May 30, 31...............................  November 30.
June 30..................................  December 31.
July 31..................................  January 31.
August 29, 30, or 31.....................  February 28 in 365-day year.
                                           February 29 in leap year.
September 30.............................  March 31.
October 30, 31...........................  April 30.
November 30..............................  May 31.
December 30, 31..........................  June 30.
------------------------------------------------------------------------

                         use of interest tables

    In the appended tables decimals are set forth for use in computing 
interest for fractional parts of interest periods. The decimals cover 
interest on $1,000 for 1 day in each possible semiannual (Table I), and 
annual (Table II) interest period, at all rates of interest, in steps of 
\1/8\ percent, from \1/8\ to 9 percent. The amount of interest accruing 
on any date (for a fractional part of an interest period) on $1,000 face 
amount of any issue of Treasury bonds, Treasury notes, or Treasury 
certificates of indebtedness may be ascertained in the following way:
    (1) The date of issue, the dates for the payment of interest, the 
basis (semiannual or annual) upon which interest is computed, and the 
rate of interest (percent per annum) may be determined from the text of 
the security, or from the official circular governing the issue.
    (2) Determine the interest period of which the fraction is a part, 
and calculate the number of days in the full period to determine the 
proper column to be used in selecting the decimal for 1 day's interest.
    (3) Calculate the actual number of days in the fractional period 
from but not including the date of issue or the day on which the last 
preceding interest payment was made, to and including the day on which 
the next succeeding interest payment is due or the day as of which the 
transaction which terminates the accrual of additional interest is 
effected.
    (4) Multiply the appropriate decimal (1 day's interest on $1,000) by 
the number of days in the fractional part of the interest period. The 
appropriate decimal will be found in the appended table for interest 
payable semiannually or annually, as the case may be, opposite the rate 
borne by the security, and in the column showing the full interest 
period of which the fractional period is a part. (For interest on any 
other amount, multiply the amount of interest on $1,000 by the other 
amount expressed as a decimal of $1,000.)

                                treasury

    The methods of computing discount rates on U.S. Treasury bills are 
given below:
    Computation will be made on an annual basis in all cases. The annual 
period for bank discount is a year of 360 days, and all computations of 
such discount will be made on that basis. The annual period for true 
discount is 1 full year from but not including the date of issue to and 
including the anniversary of such date. Computation of true discount for 
a fractional part of a year will be made on the basis of 365 days in the 
year, or 366 days if February 29 falls within the year.

                              bank discount

    The bank discount rate on a Treasury bill may be ascertained by: (1) 
Subtracting the sale price of the bill from its face value to obtain the 
amount of discount; (2) dividing the amount of discount by the number of 
days the bill is to run to obtain the amount of discount per day; (3) 
multiplying the amount of discount per day by 360 (the number of days in 
a commercial year of 12 months of 30 days each) to obtain the amount of 
discount per year; and (4) dividing the amount of discount per year by 
the face value of the bill to obtain the bank discount rate.

For example:

91-day bill:
  Principal amount--maturity value..........................     $100.00
  Price at issue--amount received...........................       99.50
                                                             -----------
    Amount of discount......................................         .50
$0.5091 x 360$100=.01978 or 1.978 percent
 

                              true discount

    The true discount rate on a Treasury bill of not more than one-half 
year in length may be ascertained by (1 and 2) obtaining the amount of 
discount per day by following the first two steps described under ``Bank 
Discount''; (3) multiplying the amount of discount per day by the actual 
number of days in the year from date of issue (365 ordinarily, but 366 
if February 29 falls within the year from date of issue) to obtain the 
amount of discount per year; and (4) dividing the amount of discount per 
year by the sale price of the bill to obtain the true discount rate.

For example:

91-day bill:
  Principal amount--maturity value..........................     $100.00
  Price at issue--amount received...........................       99.50
                                                             -----------
    Amount of discount......................................         .50
$0.5091 x 365$99.50=.02016 or 2.016 percent
 


[[Page 139]]


   Table I--Decimal for 1 Day's Interest on $1,000 at Various Rates of Interest, Payable Semiannually or on a
 Semiannual Basis, in Regular Years of 365 Days and in Leap Years of 366 Days (to Determine Applicable Number of
                           Days, See ``Computation of Interest on Semiannual Basis'')
----------------------------------------------------------------------------------------------------------------
                                                Half-year of     Half-year of     Half-year of     Half-year of
          Rate per annum (percent)                184 days         183 days         182 days         181 days
----------------------------------------------------------------------------------------------------------------
\1/8\.......................................   $0.003 396 739   $0.003 415 301   $0.003 434 066   $0.003 453 039
\1/4\.......................................     .006 793 478     .006 830 601     .006 868 132     .006 906 077
\3/8\.......................................     .010 190 217     .010 245 902     .010 302 198     .010 359 116
\1/2\.......................................     .013 586 957     .013 661 202     .013 736 264     .013 812 155
\5/8\.......................................     .016 983 696     .017 076 503     .017 170 330     .017 265 193
\3/4\.......................................     .020 380 435     .020 491 803     .020 604 396     .020 718 232
\7/8\.......................................     .023 777 174     .023 907 104     .024 038 462     .024 171 271
1...........................................     .027 173 913     .027 322 404     .027 472 527     .027 624 309
1\1/8\......................................     .030 570 652     .030 737 705     .030 906 593     .031 077 348
1\1/4\......................................     .033 967 391     .034 153 005     .034 340 659     .034 530 387
1\3/8\......................................     .037 364 130     .037 568 306     .037 774 725     .037 983 425
1\1/2\......................................     .040 760 870     .040 983 607     .041 208 791     .041 436 464
1\5/8\......................................     .044 157 609     .044 398 907     .044 642 857     .044 889 503
1\3/4\......................................     .047 554 348     .047 814 208     .048 076 923     .048 342 541
1\7/8\......................................     .050 951 087     .051 229 508     .051 510 989     .051 795 580
2...........................................     .054 347 826     .054 644 809     .054 945 055     .055 248 619
2\1/8\......................................     .057 744 565     .058 060 109     .058 379 121     .058 701 657
2\1/4\......................................     .061 141 304     .061 475 410     .061 813 187     .062 154 696
2\3/8\......................................     .064 538 043     .064 890 710     .065 247 253     .065 607 735
2\1/2\......................................     .067 934 783     .068 306 011     .068 681 319     .069 060 773
2\5/8\......................................     .071 331 522     .071 721 311     .072 115 385     .072 513 812
2\3/4\......................................     .074 728 261     .075 136 612     .075 549 451     .075 966 851
2\7/8\......................................     .078 125 000     .078 551 913     .078 983 516     .079 419 890
3...........................................     .081 521 739     .081 967 213     .082 417 582     .082 872 928
3\1/8\......................................     .084 918 478     .085 382 514     .085 851 648     .086 325 967
3\1/4\......................................     .088 315 217     .088 797 814     .089 285 714     .089 779 006
3\3/8\......................................     .091 711 957     .092 213 115     .092 719 780     .093 232 044
3\1/2\......................................     .095 108 696     .095 628 415     .096 153 846     .096 685 083
3\5/8\......................................     .098 505 435     .099 043 716     .099 021 978     .100 138 122
3\3/4\......................................     .101 902 174     .102 459 016     .103 021 978     .103 591 160
3\7/8\......................................     .105 298 913     .105 874 317     .106 456 044     .107 044 190
4...........................................     .108 695 652     .109 289 617     .109 890 110     .110 497 238
4\1/8\......................................     .112 092 391     .112 704 918     .113 324 176     .113 950 236
4\1/4\......................................     .115 489 130     .116 120 219     .116 758 242     .117 403 375
4\3/8\......................................     .118 885 870     .119 535 519     .120 192 308     .120 856 317
4\1/2\......................................     .122 282 609     .122 950 820     .123 626 374     .124 309 394
4\5/8\......................................     .125 679 348     .126 366 120     .127 060 440     .127 762 432
4\3/4\......................................     .129 076 087     .129 781 421     .130 494 505     .131 215 471
4\7/8\......................................     .132 472 826     .133 196 721     .133 928 571     .134 668 500
5...........................................     .135 869 565     .136 612 022     .137 362 637     .138 121 548
5\1/8\......................................     .139 266 304     .140 027 322     .140 796 703     .141 574 586
5\1/4\......................................     .142 663 043     .143 442 623     .144 230 769     .145 027 624
5\3/8\......................................     .146 059 783     .146 857 923     .147 664 835     .148 480 663
5\1/2\......................................     .149 456 522     .150 273 224     .151 098 901     .151 933 702
5\5/8\......................................     .152 853 261     .153 688 525     .154 532 967     .155 386 748
5\3/4\......................................     .156 250 000     .157 103 825     .157 967 033     .158 839 706
5\7/8\......................................     .159 646 739     .160 519 126     .161 401 099     .162 292 876
6...........................................     .163 043 478     .163 934 426     .164 835 165     .165 745 856
6\1/8\......................................      166 440 217     .167 349 727     .168 269 231     .169 198 895
6\1/4\......................................     .169 836 957     .170 765 027     .171 703 297     .172 651 934
6\3/8\......................................     .173 233 696     .174 180 328     .175 137 363     .176 104 972
6\1/2\......................................     .176 630 435     .177 595 628     .178 571 429     .179 558 011
6\5/8\......................................     .180 027 174     .181 010 929     .182 005 495     .183 011 050
6\3/4\......................................     .183 423 913     .184 426 230     .185 439 560     .186 464 088
6\7/8\......................................     .186 820 652     .187 841 530     .188 873 626     .189 917 127
7...........................................     .190 217 391     .191 256 831     .192 307 692     .193 370 166
7\1/8\......................................     .193 614 130     .194 672 131     .195 741 758     .196 823 204
7\1/4\......................................     .197 010 870     .198 087 432     .199 175 824     .200 276 243
7\3/8\......................................     .200 407 609     .201 502 732     .202 609 890     .203 729 282
7\1/2\......................................     .203 804 348     .204 918 033     .206 043 956     .207 182 320
7\5/8\......................................     .207 201 087     .208 333 333     .209 478 022     .210 635 359
7\3/4\......................................     .210 597 826     .211 748 634     .212 912 088     .214 088 398
7\7/8\......................................     .213 994 565     .215 163 934     .216 346 154     .217 541 436
8...........................................     .217 391 304     .218 579 235     .219 780 220     .220 994 475
8\1/8\......................................     .220 788 043     .221 994 536     .223 214 286     .224 447 514
8\1/4\......................................     .224 184 783     .225 409 836     .226 648 352     .227 900 552
8\3/8\......................................     .227 581 522     .228 825 137     .230 082 418     .231 353 591

[[Page 140]]

 
8\1/2\......................................     .230 978 261     .232 240 437     .233 516 484     .234 806 630
8\5/8\......................................     .234 375 000     .235 655 738     .236 950 549     .238 259 669
8\3/4\......................................     .237 771 739     .239 071 038     .240 384 615     .241 712 707
8\7/8\......................................     .241 168 478     .242 486 339     .243 818 681     .245 165 746
9...........................................     .244 565 217     .245 901 639     .247 252 747     .248 618 785
9\1/8\......................................     .247 961 957     .249 316 940     .250 686 813     .252 071 823
9\1/4\......................................     .251 358 696     .252 732 240     .254 120 879     .255 524 862
9\3/8\......................................     .254 755 435     .256 147 541     .257 554 945     .258 977 901
9\1/2\......................................     .258 152 174     .259 562 842     .260 989 011     .262 430 939
9\5/8\......................................     .261 548 913     .262 978 142     .264 423 077     .265 883 978
9\3/4\......................................     .264 945 652     .266 393 443     .267 857 143     .269 337 017
9\7/8\......................................     .268 342 391     .269 808 743     .271 291 209     .272 790 055
10..........................................     .271 739 130     .273 224 044     .274 725 275     .276 243 094
10\1/8\.....................................     .275 135 870     .276 639 344     .278 159 341     .279 696 133
10\1/4\.....................................     .278 853 609     .280 054 645     .281 593 407     .283 149 171
10\3/8\.....................................     .281 929 348     .283 469 945     .285 027 473     .286 602 210
10\1/2\.....................................     .285 326 087     .286 885 246     .288 461 538     .290 055 249
10\5/8\.....................................     .288 722 826     .290 300 546     .291 895 604     .293 508 287
10\3/4\.....................................     .292 119 565     .293 715 847     .295 329 670     .296 961 326
10\7/8\.....................................     .295 516 304     .297 131 148     .298 763 736     .300 414 365
11..........................................     .298 913 043     .300 546 448     .302 197 802     .303 867 403
11\1/8\.....................................     .302 309 783     .303 961 749     .305 631 868     .307 320 442
11\1/4\.....................................     .305 706 522     .307 377 049     .309 065 934     .310 773 481
11\3/8\.....................................     .309 103 261     .310 792 350     .312 500 000     .314 226 519
11\1/2\.....................................     .312 500 000     .314 207 650     .315 934 066     .317 679 558
11\5/8\.....................................     .315 896 739     .317 622 951     .319 368 132     .321 132 597
11\3/4\.....................................     .319 293 478     .321 038 251     .322 802 198     .324 585 635
11\7/8\.....................................     .322 690 217     .324 453 552     .326 236 264     .328 038 674
12..........................................     .326 086 957     .327 868 852     .329 670 330     .331 491 713
----------------------------------------------------------------------------------------------------------------


  Table II--Decimal for 1 Day's Interest on $1,000 at Various Rates of
  Interest, Payable Annually or on an Annual Basis, in Regular Years of
                 365 Days and in Leap Years of 366 Days
------------------------------------------------------------------------
                                         Regular year,    Leap year, 366
       Rate per annum (percent)             365 days           days
------------------------------------------------------------------------
\1/8\.................................   $0.003 424 658   $0.003 415 301
\1/4\.................................     .006 849 315     .006 830 601
\3/8\.................................     .010 273 973     .010 245 902
\1/2\.................................     .013 698 630     .013 661 202
\5/8\.................................     .017 123 288     .017 076 503
\3/4\.................................     .020 547 945     .020 491 803
\7/8\.................................     .023 972 603     .023 907 104
1.....................................     .027 397 260     .027 322 404
1\1/8\................................     .030 821 918     .030 737 705
1\1/4\................................     .034 246 575     .034 153 005
1\3/8\................................     .037 671 233     .037 568 306
1\1/2\................................     .041 095 890     .040 983 607
1\5/8\................................     .044 520 548     .044 398 907
1\3/4\................................     .047 945 205     .047 814 208
1\7/8\................................     .051 369 863     .051 229 508
2.....................................     .054 794 521     .054 644 809
2\1/8\................................     .058 219 178     .058 060 109
2\1/4\................................     .061 643 836     .061 475 410
2\3/8\................................     .065 068 493     .064 890 710
2\1/2\................................     .068 493 151     .068 306 011
2\5/8\................................     .071 917 808     .071 721 311
2\3/4\................................     .075 342 466     .075 136 612
2\7/8\................................     .078 767 123     .078 551 913
3.....................................     .082 191 781     .081 967 213
3\1/8\................................     .085 616 438     .085 382 514
3\1/4\................................     .089 041 096     .088 797 814
3\3/8\................................     .092 465 753     .092 213 115
3\1/2\................................     .095 890 411     .095 628 415
3\5/8\................................     .099 315 068     .099 043 716
3\3/4\................................     .102 739 726     .102 459 016
3\7/8\................................     .106 164 384     .105 874 317
4.....................................     .109 589 041     .109 289 617
4\1/8\................................     .113 013 699     .112 704 918
4\1/4\................................     .116 438 356     .116 120 219
4\3/8\................................     .119 863 014     .119 535 519
4\1/2\................................     .123 287 671     .122 950 820
4\5/8\................................     .126 712 329     .126 366 120
4\3/4\................................     .130 136 986     .129 781 421
4\7/8\................................     .133 561 644     .133 196 721
5.....................................     .136 986 301     .136 612 022
5\1/8\................................     .140 410 959     .140 027 322
5\1/4\................................     .143 835 616     .143 442 623
5\3/8\................................     .147 260 274     .146 857 923
5\1/2\................................     .150 684 932     .150 273 224
5\5/8\................................     .154 109 589     .153 688 525
5\3/4\................................     .157 534 247     .157 103 825
5\7/8\................................     .160 958 904     .160 519 126
6.....................................     .164 383 562     .163 934 426
6\1/8\................................     .167 808 219     .167 349 727
6\1/4\................................     .171 232 877     .170 765 027
6\3/8\................................     .174 657 534     .174 180 328
6\1/2\................................     .178 082 192     .177 595 628
6\5/8\................................     .181 506 849     .181 010 929
6\3/4\................................     .184 931 507     .184 426 230

[[Page 141]]

 
6\7/8\................................     .188 356 164     .187 841 530
7.....................................     .191 780 822     .191 256 831
7\1/8\................................     .195 205 479     .194 672 131
7\1/4\................................     .198 630 137     .198 087 432
7\3/8\................................     .202 054 795     .201 502 732
7\1/2\................................     .205 479 452     .204 918 033
7\5/8\................................     .208 904 110     .208 333 333
7\3/4\................................     .212 328 767     .211 748 634
7\7/8\................................     .215 753 425     .215 163 934
8.....................................     .219 178 082     .218 579 235
8\1/8\................................     .222 602 740     .221 994 536
8\1/4\................................     .226 027 397     .225 409 836
8\3/8\................................     .229 452 055     .228 825 137
8\1/2\................................     .232 876 712     .232 240 437
8\5/8\................................     .236 301 370     .235 655 738
8\3/4\................................     .239 726 027     .239 071 038
8\7/8\................................     .243 150 685     .242 486 339
9.....................................     .246 575 342     .245 901 639
9\1/8\................................     .250 000 000     .249 316 940
9\1/4\................................     .253 424 658     .252 732 240
9\3/8\................................     .256 849 315     .256 147 541
9\1/2\................................     .260 273 973     .259 562 842
9\5/8\................................     .263 698 630     .262 978 142
9\3/4\................................     .267 123 288     .266 393 443
9\7/8\................................     .270 547 945     .269 808 743
10....................................     .273 972 603     .273 224 044
10\1/8\...............................     .277 397 260     .276 639 344
10\1/4\...............................     .280 821 918     .280 054 645
10\3/8\...............................     .284 246 575     .283 469 945
10\1/2\...............................     .287 671 233     .286 885 246
10\5/8\...............................     .291 095 890     .290 300 546
10\3/4\...............................     .294 520 548     .293 715 847
10\7/8\...............................     .297 945 205     .297 131 148
11....................................     .301 369 863     .300 546 448
11\1/8\...............................     .304 794 521     .303 961 749
11\1/4\...............................     .308 219 178     .307 377 049
11\3/8\...............................     .311 643 836     .310 792 350
11\1/2\...............................     .315 068 493     .314 207 650
11\5/8\...............................     .318 493 151     .317 622 951
11\3/4\...............................     .321 917 808     .321 038 251
11\7/8\...............................     .325 342 466     .324 453 552
12....................................     .328 767 123     .327 868 852
------------------------------------------------------------------------


[38 FR 7078, Mar. 15, 1973; 38 FR 8153, Mar. 29, 1973; 38 FR 10004, Apr. 
23, 1973, as amended at 44 FR 34125, June 14, 1979]



        Subpart F--Assignments of Registered Securities--General



Sec. 306.40  Execution of assignments.

    The assignment of a registered security should be executed by the 
owner, or his or her authorized representative, in the presence of an 
individual authorized to certify assignments. All assignments must be 
made on the backs of the securities, unless otherwise authorized by the 
Bureau. An assignment by mark (X) must be witnessed not only by a 
certifying individual, but also by at least one other person, who should 
add an endorsement substantially as follows: ``Witness to signature by 
mark,'' followed by the witness' signature and address.

[59 FR 59036, Nov. 15, 1994, as amended by 64 FR 38126, July 15, 1999]



Sec. 306.41  Form of assignment.

    Registered securities may be assigned in blank, to bearer, to a 
specified transferee, or to the Secretary of the Treasury for redemption 
or for exchange for other securities offered at maturity, upon call or 
pursuant to an advance refunding or prerefunding offer. Assignments to 
``The Secretary of the Treasury,'' ``The Secretary of the Treasury for 
transfer,'' or ``The Secretary of the Treasury for exchange'' will not 
be accepted unless supplemented by specific instructions by or in behalf 
of the owner.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.42  Alterations and erasures.

    If an alteration or erasure has been made in an assignment, the 
assignor should appear before an authorized certifying officer and 
execute a new assignment to the same assignee. If the new assignment is 
to other than the assignee whose name has been altered or erased, a 
disclaimer from the first-named assignee should be obtained. Otherwise, 
an affidavit of explanation by the person responsible for the alteration 
or erasure should be submitted for consideration.



Sec. 306.43  Voidance of assignments.

    An assignment of a security to or for the account of another person, 
not completed by delivery, may be voided by a disclaimer of interest 
from that person. This disclaimer should be executed in the presence of 
an officer authorized to certify assignments of securities. Unless 
otherwise authorized by the Bureau, the disclaimer must be written, 
typed, or stamped on the back of the security in substantially the 
following form:


[[Page 142]]


    The undersigned as assignee of this security hereby disclaims any 
interest herein.

                                                     (Signature)        

    I certify that the above-named person as described, whose identity 
is well known or proved to me, personally appeared before me the ______ 
day of ____________ (Month and year) at ____________________ (Place) and 
signed the above disclaimer of interest.
(seal)__________________________________________________________________
(Signature and official designation of   certifying officer)


In the absence of a disclaimer, an affidavit or affidavits should be 
submitted for consideration explaining why a disclaimer cannot be 
obtained, reciting all other material facts and circumstances relating 
to the transaction, including whether or not the security was delivered 
to the person named as assignee and whether or not the affiants know of 
any basis for the assignee claiming any right, title, or interest in the 
security. After an assignment has been voided, in order to dispose of 
the security, an assignment by or on behalf of the owner will be 
required.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.44  Discrepancies in names.

    The Department will ordinarily require an explanation of 
discrepancies in the names which appear in inscriptions, assignments, 
supporting evidence or in the signatures to any assignments. (Form PD 
385 may be used for this purpose.) However, where the variations in the 
name of the registered owner, as inscribed on securities of the same or 
different issues, are such that both may properly represent the same 
person, for example, ``J. T. Smith'' and ``John T. Smith,'' no proof of 
identity will be required if the assignments are signed exactly as the 
securities are inscribed and are duly certified by the same certifying 
officer.



Sec. 306.45  Certifying individuals.

    (a) General. The following individuals may certify assignments of, 
or forms with respect to, securities:
    (1) Officers and employees of depository institutions, corporate 
central credit unions, and institutions that are members of Treasury-
recognized signature guarantee programs who have been authorized:
    (i) Generally to bind their respective institutions by their acts;
    (ii) Unqualifiedly to guarantee signatures to assignments of 
securities; or
    (iii) To certify assignments of securities.
    (2) Officers and authorized employees of Federal Reserve Banks and 
branches.
    (3) Officers of Federal Land Banks, Federal Intermediate Credit 
Banks and Banks for Cooperatives, and Federal Home Loan Banks.
    (4) Commissioned officers and warrant officers of the Armed Forces 
of the United States but only with respect to signatures executed by 
Armed Forces personnel, civilian field employees, and members of their 
families.
    (5) U.S. Attorneys, Collectors of Customs, and Regional 
Commissioners, District Directors, and Service Center Directors, 
Internal Revenue Service.
    (6) Judges and Clerks of U.S. Courts.
    (7) Such other persons as the Commissioner of the Public Debt or his 
designee may authorize.
    (b) Foreign countries. The following individuals are authorized to 
certify assignments of, or forms with respect to, securities executed in 
a foreign country:
    (1) United States diplomatic or consular officials.
    (2) Managers and officers of foreign branches of depository 
institutions and institutions that are members of Treasury-recognized 
signature guarantee programs.
    (3) Notaries public and other officers authorized to administer 
oaths, provided their official position and authority are certified by a 
United States diplomatic or consular official under seal of the office.
    (c) Duties and liabilities of certifying individuals--(1) General. 
Except as specified in paragraph (c)(2) of this section, a certifying 
individual shall require that the security or related form be signed in 
the certifying individual's presence after he or she has established the 
identity of the person seeking the certification. An employee who is not

[[Page 143]]

an officer should insert the words ``Authorized signature'' in the space 
provided for the title. A certifying individual and the organization for 
which he or she is acting are jointly and severally liable for any loss 
the United States may incur as a result of the individual's negligence 
in making the certification.
    (2) Signature guaranteed. The assignment or related form need not be 
executed in the presence of a certifying individual if he or she 
unqualifiedly guarantees the signature, in which case the certifying 
individual shall, after the signature, add the following endorsement: 
``Signature guaranteed, First National Bank of Smithville, Smithville, 
NH, by A.B. Doe, President'', and add the date. In guaranteeing a 
signature, the certifying individual and the organization for which he 
or she is acting warrant to the Department that the signature is genuine 
and that the signer had the legal capacity to execute the assignment or 
related form.
    (3) Absence of signature guaranteed by depository institution. A 
security or related form need not be actually signed by the owner in any 
case where a certifying individual associated with a depository 
institution has placed an endorsement on the security or the form 
reading substantially as follows: ``Absence of signature by owner and 
validity of transaction guaranteed, Second State Bank of Jonesville, 
Jonesville, NC, by B.R. Butler, Vice President''. The endorsement should 
be dated, and the seal of the institution should be added. This form of 
endorsement is an unconditional guarantee to the Department that the 
institution is acting for the owner under proper authorization.
    (d) Evidence of certifying individual's authority. The authority of 
a certifying individual to act is evidenced by affixing to the 
certification the following:
    (1) Officers and employees of depository institutions. The 
institution's seal or signature guarantee stamp; if the institution is 
an authorized paying agent for U.S. Savings Bonds, a legible imprint of 
the paying agent's stamp; or, if the institution is a member of the 
Securities Transfer Agents Medallion Program (STAMP), a legible imprint 
of the STAMP signature guarantee stamp.
    (2) Officers and authorized employees of institutions that are 
members of Treasury-recognized signature guarantee programs. A legible 
imprint of the program's signature guarantee stamp, e.g., the STAMP, 
SEMP, or MSP stamp for members of the Securities Transfer Agents 
Medallion Program, the Stock Exchanges Medallion Program, or the New 
York Stock Exchange Incorporated Medallion Signature Program, 
respectively.
    (3) Officers and authorized employees of Federal Reserve Banks. 
Whatever is prescribed in procedures established by the Department.
    (4) Officers and employees of corporate central credit unions and 
other entities listed in paragraph (a)(3) of this section. The entity's 
seal.
    (5) Notaries public, diplomatic or consular officials. The official 
seal or stamp of the office. If the certifying individual has no seal or 
stamp, then the official's position must be certified by some other 
authorized individual, under seal or stamp, or otherwise proved to the 
satisfaction of the Department.
    (6) Commissioned or warrant officers of the United States Armed 
Forces. A statement which sets out the officer's rank and the fact that 
the person executing the assignment or form is one whose signature the 
officer is authorized to certify under the regulations in this part.
    (7) A judge or clerk of the court. The seal of the court.
    (8) Any other certifying individual. The official seal or stamp of 
the office. If the certifying individual has no seal or stamp, then the 
certifying individual's position and signature must be certified by some 
other authorized individual under official seal or stamp, or otherwise 
proved to the satisfaction of the Department.
    (e) Interested persons not to act as certifying individual. Neither 
the transferor, the transferee, nor any person having an interest in a 
security involved in the transaction may act as a certifying individual. 
However, an authorized officer or employee of a depository institution 
or of an institution that is a member of a Treasury-recognized signature

[[Page 144]]

guarantee program may act as a certifying individual on a security or 
related form for transfer of a security to the institution, or any 
security or related form executed by another individual on behalf of the 
institution.

[59 FR 59037, Nov. 15, 1994]



          Subpart G--Assignments by or in Behalf of Individuals



Sec. 306.55  Signatures, minor errors and change of name.

    The owner's signature to an assignment should be in the form in 
which the security is inscribed or assigned, unless such inscription or 
assignment is incorrect or the name has since been changed. In case of a 
change of name, the signature to the assignment should show both names 
and the manner in which the change was made, for example, ``John Young, 
changed by order of court from Hans Jung.'' Evidence of the change will 
be required. However, no evidence is required to support an assignment 
if the change resulted from marriage and the signature, which must be 
duly certified by an authorized officer, is written to show that fact, 
for example, ``Mrs. Mary J. Brown, changed by marriage from Miss Mary 
Jones.''



Sec. 306.56  Assignment of securities registered in the names of or assigned to two or more persons.

    (a) Transfer or exchange. Securities registered in the names of or 
assigned to two or more persons may be transferred during the lives of 
all the joint owners only upon assignments by all or on their behalf by 
authorized representatives. Upon proof of the death of one, the 
Department will accept an assignment by or in behalf of the survivor or 
survivors, unless the form of registration or assignment includes words 
which precludes the right of survivorship.9 In the latter 
case, in addition to assignment by or in behalf of the survivor or 
survivors, an assignment in behalf of the decedent's estate will be 
required.
---------------------------------------------------------------------------

    9 See Sec. 306.11(a) (2) for forms of registration 
expressing or precluding survivorship.
---------------------------------------------------------------------------

    (b) Advance refunding or prerefunding offers. No assignments are 
required for exchange of securities registered in the names of or 
assigned to two or more persons if the securities to be received in the 
exchange are to be registered in the same names and form. If securities 
in a different form are to be issued, all persons named must assign, 
except that in case of death paragraph (a) of this section shall apply.
    (c) Redemption or redemption-exchange--(1) Alternative registration 
or assignment. Securities registered in the names of or assigned to two 
or more persons in the alternative, for example, ``John B. Smith or Mrs. 
Mary J. Smith'' or ``John B. Smith or Mrs. Mary J. Smith or the 
survivor,'' may be assigned by one of them at maturity or upon call, for 
redemption or redemption-exchange, for his own account or otherwise, 
whether or not the other joint owner or owners are deceased.
    (2) Joint registration or assignment. Securities registered in the 
names of or assigned to two or more persons jointly, for example, ``John 
B. Smith and Mrs. Mary J. Smith,'' or ``John B. Smith and Mrs. Mary J. 
Smith as tenants in common,'' or ``John B. Smith and Mary J. Smith as 
partners in community,'' may be assigned by one of them during the lives 
of all only for redemption at maturity or upon call, and then only for 
redemption for the account of all. No assignments are required for 
redemption-exchange for securities to be registered in the same names 
and forms as appear in the registration or assignment of the securities 
surrendered. Upon proof of the death of a joint owner, the survivor or 
survivors may assign securities so registered or assigned for redemption 
or redemption-exchange for any account, except that, if words which 
preclude the right of survivorship 9 appear in the 
registration or assignment, assignment in behalf of the decedent's 
estate also will be required.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.57  Minors and incompetents.

    (a) Assignments by natural guardian of securities registered in name 
of minor. Securities registered in the name of a minor for whose estate 
no legal guardian or similar representative has qualified may be 
assigned by the natural

[[Page 145]]

guardian upon qualification. (Form PD 2481 may be used for this 
purpose.)
    (b) Assignments of securities registered in name of natural guardian 
of minor. Securities registered in the name of a natural guardian of a 
minor may be assigned by the natural guardian for any authorized 
transaction except one for the apparent benefit of the natural guardian. 
If the natural guardian in whose name the securities are registered is 
deceased or is no longer qualified to act as natural guardian, the 
securities may be assigned by the person then acting as natural 
guardian. The assignment by the new natural guardian should be supported 
by proof of the death or disqualification of the former natural guardian 
and by evidence of his own status as natural guardian. (Form PD 2481 may 
be used for this purpose.) No assignment by a natural guardian will be 
accepted after receipt of notice of the minor's attainment of majority, 
removal of his disability of minority, disqualification of the natural 
guardian to act as such, qualification of a legal guardian or similar 
representative, or the death of the minor.
    (c) Assignments by voluntary guardian of incompetents. Registered 
securities belonging to an incompetent for whose estate no legal 
guardian or similar representative is legally qualified may be assigned 
by the relative responsible for his care and support or some other 
person as voluntary guardian:
    (1) For redemption, if the proceeds of the securities are needed to 
pay expenses already incurred, or to be incurred during any 90-day 
period, for the care and support of the incompetent or his legal 
dependents.
    (2) For redemption-exchange, if the securities are matured or have 
been called, or pursuant to an advance refunding or prerefunding offer, 
for reinvestment in other securities to be registered in the form ``A, 
an incompetent (123-45-6789) under voluntary guardianship.''

An application on Form PD 1461 by the person seeking authority to act as 
voluntary guardian will be required.
    (d) Assignments by legal guardians of minors or incompetents. 
Securities registered in the name and title of the legal guardian or 
similar representative of the estate of a minor or incompetent may be 
assigned by the representative for any authorized transaction without 
proof of his qualification. Assignments by a representative of any other 
securities belonging to a minor or incompetent must be supported by 
properly certified evidence of qualification. The evidence must be dated 
not more than 1 year before the date of the assignments and must contain 
a statement showing the appointment is in full force unless (1) it shows 
the appointment was made not more than 1 year before the date of the 
assignment, or (2) the representative or a corepresentative is a 
corporation. An assignment by the representative will not be accepted 
after receipt of notice of termination of the guardianship, except for 
transfer to the former ward.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.58  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
transactions in Treasury Bonds, Investment Series B- 1975-80.



     Subpart H--Assignments in Behalf of Estates of Deceased Owners



Sec. 306.65  Special provisions applicable to small amounts of securities, interest checks or redemption checks.

    Entitlement to, or the authority to dispose of, a small amount of 
securities and checks issued in payment thereof or in payment of 
interest thereon, belonging to the estate of a decedent, may be 
established through the use of certain short forms, according to the 
aggregate amount of securities and checks involved (excluding checks 
representing interest on the securities), as indicated by the following 
table:

------------------------------------------------------------------------
Amount      Circumstances             Form           To be executed by--
------------------------------------------------------------------------
  $100  No administration...  PD2216..............  Person who paid
                                                     burial expenses.
   500  Estate being          PD2488..............  Executor or
         administered.                               administrator.
   500  Estate settled......  PD2458-1............  Former executor or
                                                     administrator,
                                                     attorneys or other
                                                     qualified person.
------------------------------------------------------------------------


[[Page 146]]



Sec. 306.66  Estates--administration.

    (a) Temporary or special administrators. Temporary or special 
administrators may assign securities for any authorized transaction 
within the scope of their authority. The assignments must be supported 
by:
    (1) Temporary administrators. A certificate, under court seal, 
showing the appointment in full force within thirty days preceding the 
date of receipt of the securities.
    (2) Special administrators. A certificate, under court seal, showing 
the appointment in full force within 6 months preceding the date of 
receipt of the securities.

Authority for assignments for transactions not within the scope of 
appointment must be established by a duly certified copy of a special 
order of court.
    (b) In course of administration. A security belonging to the estate 
of a decedent which is being administered by a duly qualified executor 
or general administrator will be accepted for any authorized transaction 
upon assignment by such representative. (See Sec. 306.77.) Unless the 
security is registered in the name of and shows the capacity of the 
representative, the assignment must be supported by a certificate or a 
copy of the letters of appointment, certified under court seal. The 
certificate or certification, if required, must be dated not more than 6 
months before the date of the assignment and must contain a statement 
that the appointment is in full force, unless:
    (1) It shows the appointment was made not more than 1 year before 
the date of the assignment, or
    (2) The representative or a corepresentative is a corporation, or
    (3) Redemption is being made for application of the proceeds in 
payment of Federal estate taxes as provided by Sec. 306.28.
    (c) After settlement through court proceedings. Securities belonging 
to the estate of a decedent which has been settled in court will be 
accepted for any authorized transaction upon assignments by the person 
or persons entitled, as determined by the court. The assignments should 
be supported by a copy, certified under court seal, of the decree of 
distribution, the representative's final account as approved by the 
court, or other pertinent court records.



Sec. 306.67  Estates not administered.

    (a) Special provisions under State laws. If, under State law, a 
person has been recognized or appointed to receive or distribute the 
assets of a decedent's estate without regular administration, his 
assignment of securities belonging to the estate will be accepted 
provided he submits appropriate evidence of his authority.
    (b) Agreement of persons entitled. When it appears that no legal 
representative of a decedent's estate has been or is to be appointed, 
securities belonging to the estate may be duly disposed of pursuant to 
an agreement and assignment by all persons entitled to share in the 
decedent's personal estate. (Form PD 1646 may be used.) However, all 
debts of the decedent and his estate must be paid or provided for and 
the interests of any minors or incompetents must be protected.



Sec. 306.68  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
transactions in Treasury Bonds, Investment Series B- 1975-80.



     Subpart I--Assignments by or in Behalf of Trustees and Similar 
                               Fiduciaries



Sec. 306.75  Individual fiduciaries.

    (a) General. Securities registered in, or assigned to, the names and 
titles of individual fiduciaries will be accepted for any authorized 
transaction upon assignment by the designated fiduciaries without proof 
of their qualification. If the fiduciaries in whose names the securities 
are registered, or to whom they have been assigned, have been succeeded 
by other fiduciaries, evidence of successorship must be furnished. If 
the appointment of a successor is not required under the terms of the 
trust instrument or otherwise and is not contemplated, assignments by 
the surviving or remaining fiduciary or fiduciaries must be supported by 
appropriate proof. This requires:

[[Page 147]]

    (1) Proof of the death, resignation, removal or disqualification of 
the former fiduciary and
    (2) Evidence that the surviving or remaining fiduciary or 
fiduciaries are fully qualified to administer the fiduciary estate, 
which may be in the form of a certificate by them showing the 
appointment of a successor has not been applied for, is not contemplated 
and is not necessary under the terms of the trust instrument or 
otherwise.

Assignments of securities registered in the titles, without the names of 
the fiduciaries, for example, ``Trustees of the George E. White Memorial 
Scholarship Fund under deed of trust dated 11/10/40, executed by John W. 
White,'' must be supported by proof that the assignors are the qualified 
and acting trustees of the designated trust estate, unless they are 
empowered to act as a unit in which case the provisions of Sec. 306.76 
shall apply. (Form PD 2446 may be used to furnish proof of incumbency of 
fiduciaries.) Assignments by fiduciaries of securities not registered or 
assigned in such manner as to show that they belong to the estate for 
which the assignors are acting must also be supported by evidence that 
the estate is entitled to the securities.
    (b) Life tenants. Upon termination of a life estate by reason of the 
death of the life tenant in whose name a security is registered, or to 
whom it has been assigned, the security will be accepted for any 
authorized transaction upon assignment by the remainderman, supported by 
evidence of entitlement.



Sec. 306.76  Fiduciaries acting as a unit.

    Securities registered in the name of or assigned to a board, 
committee or other body authorized to act as a unit for any public or 
private trust estate may be assigned for any authorized transaction by 
anyone authorized to act in behalf of such body. Except as otherwise 
provided in this section, the assignments must be supported by a copy of 
a resolution adopted by the body, properly certified under its seal, or, 
if none, sworn to by a member of the body having access to its records. 
(Form PD 2495 may be used.) If the person assigning is designated in the 
resolution by title only, his incumbency must be duly certified by 
another member of the body. (Form PD 2446 may be used.) If the 
fiduciaries of any trust estate are empowered to act as a unit, although 
not designated as a board, committee or other body, securities 
registered in their names or assigned to them as such, or in their 
titles without their names, may be assigned by anyone authorized by the 
group to act in its behalf. Such assignments may be supported by a sworn 
copy of a resolution adopted by the group in accordance with the terms 
of the trust instrument, and proof of their authority to act as a unit 
may be required. As an alternative, assignments by all the fiduciaries, 
supported by proof of their incumbency, if not named on the securities, 
will be accepted.

[38 FR 7078, Mar. 15, 1973; 38 FR 10004, Apr. 23, 1973]



Sec. 306.77  Corepresentatives and fiduciaries.

    If there are two or more executors, administrators, guardians or 
similar representatives, or trustees of an estate, all must unite in the 
assignment of any securities belonging to the estate. However, when a 
statute, a decree of court, or the instrument under which the 
representatives or fiduciaries are acting provides otherwise, 
assignments in accordance with their authority will be accepted. If the 
securities have matured or been called and are submitted for redemption 
for the account of all, or for redemption-exchange or pursuant to an 
advance refunding or prerefunding offer, and the securities offered in 
exchange are to be registered in the names of all, no assignment is 
required.



Sec. 306.78  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
assignments of Treasury Bonds, Investment Series B- 1975-80.

[[Page 148]]



   Subpart J--Assignments in Behalf of Private or Public Organizations



Sec. 306.85  Private corporations and unincorporated associations (including nominees).

    Securities registered in the name of, or assigned to, an 
unincorporated association, or a private corporation in its own right or 
in a representative or fiduciary capacity, or as nominee, may be 
assigned in its behalf for any authorized transaction by any duly 
authorized officer or officers. Evidence, in the form of a resolution of 
the governing body, authorizing the assigning officer to assign, or to 
sell, or to otherwise dispose of the securities will ordinarily be 
required. Resolutions may relate to any or all registered securities 
owned by the organization or held by it in a representative or fiduciary 
capacity. (Form PD 1010, or any substantially similar form, may be used 
when the authority relates to specific securities; Form PD 1011, or any 
substantially similar form, may be used for securities generally.) If 
the officer derives his authority from a charter, constitution or 
bylaws, a copy, or a pertinent extract therefrom, properly certified, 
will be required in lieu of a resolution. If the resolution or other 
supporting document shows the title of an authorized officer, without 
his name, it must be supplemented by a certificate of incumbency. (Form 
PD 1014 may be used.)



Sec. 306.86  Change of name and succession of private organizations.

    If a private corporation or unincorporated association changes its 
name or is lawfully succeeded by another corporation or unincorporated 
association, its securities may be assigned in behalf of the 
organization in its new name or that of its successor by an authorized 
officer in accordance with Sec. 306.85. The assignment must be supported 
by evidence of the change of name or successorship.



Sec. 306.87  Partnerships (including nominee partnerships).

    An assignment of a security registered in the name of or assigned to 
a partnership must be executed by a general partner. Upon dissolution of 
a partnership, assignment by all living partners and by the persons 
entitled to assign in behalf of any deceased partner's estate will be 
required unless the laws of the jurisdiction authorize a general partner 
to bind the partnership by any act appropriate for winding up 
partnership affairs. In those cases where assignments by or in behalf of 
all partners are required this fact must be shown in the assignment; 
otherwise, an affidavit by a former general partner must be furnished 
identifying all the persons who had been partners immediately prior to 
dissolution. Upon voluntary dissolution, for any jurisdiction where a 
general partner may not act in winding up partnership affairs, an 
assignment by a liquidating partner, as such, must be supported by a 
duly executed agreement among the partners appointing the liquidating 
partner.



Sec. 306.88  Political entities and public corporations.

    Securities registered in the name of, or assigned to, a State, 
county, city, town, village, school district or other political entity, 
public body or corporation, may be assigned by a duly authorized 
officer, supported by evidence of his authority.



Sec. 306.89  Public officers.

    Securities registered in the name of, or assigned to, a public 
officer designated by title may be assigned by such officer, supported 
by evidence of incumbency. Assignments for the officer's own apparent 
individual benefit will not be recognized.



Sec. 306.90  Nontransferable securities.

    The provisions of this subpart apply to Treasury Bonds, Investment 
Series B-1975-80.



                      Subpart K--Attorneys in Fact



Sec. 306.95  Attorneys in fact.

    (a) General. Assignments by an attorney in fact will be recognized 
if supported by an adequate power of attorney. Every power must be 
executed in the presence of an authorized certifying officer under the 
conditions set

[[Page 149]]

out in Sec. 306.45 for certification of assignments. Powers need not be 
submitted to support redemption-exchanges or exchanges pursuant to 
advance refunding or prefunding offers where the securities to be issued 
are to be registered in the same names and forms as appear in the 
inscriptions or assignments of the securities surrendered. In all other 
cases, the original power, or a photocopy showing the grantor's 
autograph signature, properly certified, must be submitted, together 
with the security assigned on the owner's behalf by the attorney in 
fact. An assignment by a substitute attorney in fact must be supported 
by an authorizing power of attorney and power of substitution. An 
assignment by an attorney in fact or a substitute attorney in fact for 
the apparent benefit of either will not be accepted unless expressly 
authorized. (Form PD 1001 or 1003, as appropriate, may be used to 
appoint an attorney in fact. An attorney in fact may use Form PD 1006 or 
1008 to appoint a substitute. However, any form sufficient in substance 
may be used.) If there are two or more joint attorneys in fact or 
substitutes, all must unite in an assignment, unless the power 
authorizes less than all to act. A power of attorney or of substitution 
not coupled with an interest will be recognized until the Bureau 
receives proof of revocation or proof of the grantor's death or 
incompetency.
    (b) For legal representatives and fiduciaries. Assignments by an 
attorney in fact or substitute attorney in fact for a legal 
representative or fiduciary, in addition to the power of attorney and of 
substitution, must be supported by evidence, if any, as required by 
Secs. 306.57(d), 306.66(b), 306.75, and 306.76. Powers must specifically 
designate the securities to be assigned.
    (c) For corporations or unincorporated associations. Assignments by 
an attorney in fact or a substitute attorney in fact in behalf of a 
corporation or unincorporated association, in addition to the power of 
attorney and power of substitution, must be supported by one of the 
following documents certified under seal of the organization, or, if it 
has no seal, sworn to by an officer who has access to the records:
    (1) A copy of the resolution of the governing body authorizing an 
officer to appoint an attorney in fact, with power of substitution, if 
pertinent, to assign, or to sell, or to otherwise dispose of, the 
securities, or
    (2) A copy of the charter, constitution, or bylaws, or a pertinent 
extract therefrom, showing the authority of an officer to appoint an 
attorney in fact, or
    (3) A copy of the resolution of the governing body directly 
appointing an attorney in fact.

If the resolution or other supporting document shows only the title of 
the authorized officer, without his name, a certificate of incumbency 
must also be furnished. (Form PD 1014 may be used.) The power may not be 
broader than the resolution or other authority.
    (d) For public corporations. A general power of attorney in behalf 
of a public corporation will be recognized only if it is authorized by 
statute.



Sec. 306.96  Nontransferable securities.

    The provisions of this subpart shall apply to nontransferable 
securities, subject only to the limitations imposed by the terms of the 
particular issues.



            Subpart L--Transfer Through Judicial Proceedings



Sec. 306.100  Transferable securities.

    The Department will recognize valid judicial proceedings affecting 
the ownership of or interest in transferable securities, upon 
presentation of the securities together with evidence of the 
proceedings. In the case of securities registered in the names of two or 
more persons, the extent of their respective interests in the securities 
must be determined by the court in proceedings to which they are parties 
or must otherwise be validly established.10
---------------------------------------------------------------------------

    10 Title in a finder claiming ownership of a registered 
security will not be recognized. A finder claiming ownership of a bearer 
security or a registered security assigned in blank or so assigned as to 
become in effect payable to bearer must perfect his title in accordance 
with the provisions of State law. If there are no such provisions, the 
Department will not recognize his title to the security.

---------------------------------------------------------------------------

[[Page 150]]



Sec. 306.101  Evidence required.

    Copies of a final judgment, decree, or order of court and of any 
necessary supplementary proceedings must be submitted. Assignments by a 
trustee in bankruptcy or a receiver of an insolvent's estate must be 
supported by evidence of his qualification. Assignments by a receiver in 
equity or a similar court officer must be supported by a copy of an 
order authorizing him to assign, or to sell, or to otherwise dispose of, 
the securities. Where the documents are dated more than 6 months prior 
to presentation of the securities, there must also be submitted a 
certificate dated within 6 months of presentation of the securities, 
showing the judgment, decree, or order, or evidence of qualification, is 
in full force. Any such evidence must be certified under court seal.



Sec. 306.102  Nontransferable securities.

    The provisions of this subpart shall apply to Treasury Bonds, 
Investment Series B-1975-80, except that prior to maturity any reference 
to assignments shall be deemed to refer to assignments of the bonds for 
exchange for the current series of 1\1/2\ percent 5-year EA or EO 
Treasury notes.



           Subpart M--Requests for Suspension of Transactions



Sec. 306.105  Requests for suspension of transactions in registered securities.

    (a) Timely notice. If prior to the time a registered security 
bearing an apparently valid assignment has been functioned, a claim is 
received from the owner or his authorized representative showing that:
    (1) The security was lost, stolen, or destroyed and that it was 
unassigned, or not so assigned as to have become in effect payable to 
bearer, or
    (2) The assignment was affected by fraud, the transaction for which 
the security was received will be suspended.

The interested parties will be given a reasonable period of time in 
which to effect settlement of their interests by agreement, or to 
institute judicial proceedings.
    (b) Late notice. If, after a registered security has been 
transferred, exchanged, or redeemed in reliance on an apparently valid 
assignment, an owner notifies the Bureau that the assignment was 
affected by fraud or that the security had been lost or stolen, the 
Department will undertake only to furnish available information.
    (c) Forged assignments. A claim that an assignment of a registered 
security is a forgery will be investigated. If it is established that 
the assignment was in fact forged and that the owner did not authorize 
or ratify it, or receive any benefit therefrom, the Department will 
recognize his ownership and grant appropriate relief.



Sec. 306.106  Requests for suspension of transactions in bearer securities.

    (a) Securities not overdue. Neither the Department nor any of its 
agents will accept notice of any claim or of pending judicial 
proceedings by any person for the purpose of suspending transactions in 
bearer securities, or registered securities so assigned as to become in 
effect payable to bearer which are not overdue as defined in 
Sec. 306.25.11 However, if the securities are received and 
retired, the department will undertake to notify persons who appear to 
be

[[Page 151]]

entitled to any available information concerning the source from which 
the securities were received.
---------------------------------------------------------------------------

    11 It has been the longstanding policy of the Department 
to assume no responsibility for the protection of bearer securities not 
in the possession of persons claiming rights therein and to give no 
effect to any notice of such claims. This policy was formalized on April 
27, 1867, when the Secretary of the Treasury issued the following 
statement:
    ``In consequence of the increasing trouble, wholly without practical 
benefit, arising from notices which are constantly received at the 
Department respecting the loss of coupon bonds, which are payable to 
bearer, and of Treasury notes issued and remaining in blank at the time 
of loss, it becomes necessary to give this public notice, that the 
Government cannot protect and will not undertake to protect the owners 
of such bonds and notes against the consequences of their own fault or 
misfortune.''
    ``Hereafter all bonds, notes, and coupons, payable to bearer, and 
Treasury notes issued and remaining in blank, will be paid to the party 
presenting them in pursuance of the regulations of the Department, in 
the course of regular business; and no attention will be paid to caveats 
which may be filed for the purpose of preventing such payment.''
---------------------------------------------------------------------------

    (b) Overdue securities. Reports that bearer securities, or 
registered securities so assigned as to become in effect payable to 
bearer, were lost, stolen, or possibly destroyed after they became 
overdue as defined in Sec. 306.25 will be accepted by the Bureau for the 
purpose of suspending redemption of the securities if the claimant 
establishes his interest. If the securities are presented, their 
redemption will be suspended and the presenter and the claimant will 
each be given an opportunity to establish ownership.



     Subpart N--Relief for Loss, Theft, Destruction, Mutilation, or 
                        Defacement of Securities



Sec. 306.110  Statutory authority and requirements.

    Relief is authorized, under certain conditions, for the loss, theft, 
destruction, mutilation or defacement of U.S. securities, whether 
before, at, or after maturity. A bond of indemnity, in such form and 
with such surety, sureties or security as may be required to protect the 
interests of the United States, is required as a condition of relief on 
account of any bearer security or any registered security assigned in 
blank or so assigned as to become in effect payable to bearer, and is 
ordinarily required in the case of unassigned registered securities.



Sec. 306.111  Procedure for applying for relief.

    Prompt report of the loss, theft, destruction, mutilation or 
defacement of a security should be made to the Bureau. The report should 
include:
    (a) The name and present address of the owner and his address at the 
time the security was issued, and, if the report is made by some other 
person, the capacity in which he represents the owner.
    (b) The identity of the security by title of loan, issue date, 
interest rate, serial number and denomination, and in the case of a 
registered security, the exact form of inscription and a full 
description of any assignment, endorsement or other writing.
    (c) A full statement of the circumstances.

All available portions of a mutilated, defaced or partially destroyed 
security must also be submitted.



Sec. 306.112  Type of relief granted.

    (a) Prior to call or maturity. After a claim on account of the loss, 
theft, destruction, mutilation, or defacement of a security which has 
not matured or been called has been satisfactorily established and the 
conditions for granting relief have been met, a security of like 
description will be issued to replace the original security.
    (b) At or after call or maturity. Payment will be made on account of 
the loss, theft, destruction, mutilation, or defacement of a called or 
matured security after the claim has been satisfactorily established and 
the conditions for granting relief have been met.
    (c) Interest coupons. Where relief has been authorized on account of 
a destroyed, mutilated or defaced coupon security which has not matured 
or been called, the replacement security will have attached all 
unmatured interest coupons if it is established to the satisfaction of 
the Secretary of the Treasury that the coupons were attached to the 
original security at the time of its destruction, mutilation or 
defacement. In every other case only those unmatured interest coupons 
for which the Department has received payment will be attached. The 
price of the coupons will be their value as determined by the Department 
at the time relief is authorized using interest rate factors based on 
then current market yields on Treasury securities of comparable 
maturities.



Sec. 306.113  Cases not requiring bonds of indemnity.

    A bond of indemnity will not be required as a condition of relief 
for the loss, theft, destruction, mutilation, or defacement of 
registered securities in any of the following classes of cases unless 
the Secretary of the Treasury deems it essential in the public interest:
    (a) If the loss, theft, destruction, mutilation, or defacement, as 
the case may be, occurred while the security was in the custody or 
control of the

[[Page 152]]

United States, or a duly authorized agent thereof (not including the 
Postal Service when acting solely in its capacity as public carrier of 
the mails), or while in the course of shipment effected under 
regulations issued pursuant to the Government Losses in Shipment Act 
(parts 260, 261, and 262 of this chapter).
    (b) If substantially the entire security is presented and 
surrendered and the Security of the Treasury is satisfied as to the 
identity of the security and that any missing portions are not 
sufficient to form the basis of a valid claim against the United States.
    (c) If the security is one which by the provisions of law or by the 
terms of its issue is nontransferable or is transferable only by 
operation of law.
    (d) If the owner or holder is the United States, a Federal Reserve 
bank, a Federal Government corporation, a State, the District of 
Columbia, a territory or possession of the United States, a municipal 
corporation, or, if applicable, a political subdivision of any of the 
foregoing, or a foreign government.



                     Subpart O--Book-Entry Procedure



Sec. 306.115  Definition of terms.

    For the purposes of this subpart, the definitions provided in 31 CFR 
357.3 are applicable, with the following additions:
    Definitive Treasury security means a Treasury bond, note, 
certificate of indebtedness, or bill issued under 31 U.S.C. chapter 31 
in engraved or printed form.
    Eligible book-entry Treasury security means a security maintained in 
TRADES that was originally issued prior to August 15, 1986, which by the 
terms of its offering circular is available in either definitive or 
book-entry form.

[61 FR 43637, Aug. 23, 1996]



Sec. 306.116  Scope and effect of book-entry procedure.

    (a) Except as provided in Sec. 306.117, the provisions of 31 CFR 
part 357, subparts A, B, and D apply.
    (b) This subpart is effective January 1, 1997.

[61 FR 43637, Aug. 23, 1996]



Sec. 306.117  Withdrawal of eligible book-entry Treasury securities for conversion to registered form.

    (a) Eligible book-entry Treasury securities may be withdrawn from 
TRADES by requesting delivery of like definitive Treasury securities.
    (b) Public Debt shall, upon receipt of appropriate instructions to 
withdraw eligible book-entry Treasury securities from book-entry form in 
TRADES, convert such securities into registered Treasury securities and 
deliver them in accordance with such instructions; no such conversion 
shall affect existing interests in such Treasury securities.
    (c) All requests for withdrawal of eligible book-entry Treasury 
securities must be made prior to the maturity or date of call of the 
securities.
    (d) Treasury securities which are to be delivered upon withdrawal 
may be issued in registered form, to the extent permitted by the 
applicable offering circular.

[61 FR 43637, Aug. 23, 1996; 64 FR 38126, July 15, 1999]



                   Subpart P--Miscellaneous Provisions



Sec. 306.125  Additional requirements.

    In any case or any class of cases arising under these regulations 
the Secretary of the Treasury may require such additional evidence and a 
bond of indemnity, with or without surety, as may in his judgment be 
necessary for the protection of the interests of the United States.



Sec. 306.126  Waiver of regulations.

    The Secretary of the Treasury reserves the right, in his discretion, 
to waive or modify any provision or provisions of these regulations in 
any particular case or class of cases for the convenience of the United 
States or in order to relieve any person or persons of unnecessary 
hardship, if such action is not inconsistent with law, does not impair 
any existing rights, and he is satisfied that such action would not 
subject the United States to any substantial expense or liability.

[[Page 153]]



Sec. 306.127  Preservation of existing rights.

    Nothing contained in these regulations shall limit or restrict 
existing rights which holders of securities heretofore issued may have 
acquired under the circulars offering such securities for sale or under 
the regulations in force at the time of acquisition.



Sec. 306.128  Supplements, amendments or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional supplemental, amendatory or revised regulations 
with respect to U.S. securities.



PART 308--GENERAL REGULATIONS GOVERNING FULL-PAID INTERIM CERTIFICATES--Table of Contents




Sec.
308.1  Issue.
308.2  Exchange for definitive securities.
308.3  Exchanges of denominations.
308.4  Applicable regulations.
308.5  Reservations.

    Authority: 80 Stat. 379; sec. 8. 50 Stat. 481, as amended; secs. 1, 
18, 5, 40 Stat. 288, as amended, 1309, as amended, 290, as amended; sec. 
32, 30 Stat. 466, as amended; 5 U.S.C. 301; 31 U.S.C. 738a, 752, 753, 
754, 756.

    Source: 6 FR 5289, Oct. 17, 1941, unless otherwise noted.



Sec. 308.1  Issue.

    Federal Reserve Banks, as Fiscal Agents of the United States, and 
the Treasury Department may issue full-paid interim certificates in lieu 
of definitive securities, against full-paid allotments of subscriptions, 
when specifically authorized by the Secretary of the Treasury in 
connection with the issue, hereafter, to the public, of United States 
securities. Interim certificates shall be in such form, and in such 
denominations, as the Secretary of the Treasury may determine when an 
issue is authorized.



Sec. 308.2  Exchange for definitive securities.

    Upon surrender of a full-paid interim certificate to a Federal 
Reserve Bank, or to the Treasury Department, Washington, DC 20226, the 
definitive securities described therein, when prepared, will be 
delivered. Exchanges shall be made on like par amount basis.



Sec. 308.3  Exchanges of denominations.

    Pending availability of definitive securities, exchanges of 
authorized denominations of interim certificates, from higher to lower 
will be permitted.



Sec. 308.4  Applicable regulations.

    Except as may otherwise be provided, and in so far as applicable, 
the general regulations of the Treasury Department, as contained in part 
306 of this subchapter, as amended or revised, shall apply to full-paid 
interim certificates.



Sec. 308.5  Reservations.

    The Secretary of the Treasury reserves the right to withdraw or 
amend at any time or from time to time any or all of the provisions of 
this part.



PART 309--ISSUE AND SALE OF TREASURY BILLS--Table of Contents




Sec.
309.1  Authority for issue and sale.
309.2  Description of Treasury bills (General).
309.3  Denominations and exchange.
309.4  Taxation.
309.5  Acceptance of Treasury bills for various purposes.
309.6  Public notice of offering.
309.7  Tenders; submission through Federal Reserve Banks and branches 
          and to the Bureau of the Public Debt.
309.8  Tenders; when cash deposit is required.
309.9  Tenders; acceptance by the Secretary of the Treasury.
309.10  Tenders; reservation of right to reject.
309.11  Tenders; payment of accepted tenders.
309.12  Relief on account of loss, theft or destruction, etc.
309.13  Functions of Federal Reserve Banks.
309.14  Reservation as to terms of circular.

    Authority: 80 Stat. 379; sec. 8, 50 Stat. 481, as amended; sec. 5, 
40 Stat. 290, as amended; 5 U.S.C. 301; 31 U.S.C. 738a, 754.

    Source: 41 FR 44006, Oct. 5, 1976, unless otherwise noted.



Sec. 309.1  Authority for issue and sale.

    The Secretary of the Treasury is authorized by the Second Liberty 
Bond Act, as amended, to issue Treasury

[[Page 154]]

bills of the United States on an interest-bearing basis, on a discount 
basis, or on a combination interest-bearing and discount basis, at such 
price or prices and with interest computed in such manner and payable at 
such time or times as he may prescribe; and to fix the form, terms, and 
conditions thereof, and to offer them for sale on a competitive or other 
basis, under such regulations and upon such terms and conditions as he 
may prescribe. Pursuant to said authorization, the Secretary of the 
Treasury may, from time to time, by public notice, offer Treasury bills 
for sale, and invite tenders therefor, through the Federal Reserve Banks 
and branches and through the Department of the Treasury, Bureau of the 
Public Debt. The Treasury bills so offered, and the tenders made, will 
be subject to the terms and conditions and to the general rules and 
regulations herein set forth, except as they may be modified in the 
public notices issued by the Secretary of the Treasury in connection 
with particular offerings.1
---------------------------------------------------------------------------

    1 Accordingly, these regulations do not constitute a specific 
offering of Treasury bills.
---------------------------------------------------------------------------



Sec. 309.2  Description of Treasury bills (General).

    Treasury bills are bearer obligations of the United States promising 
to pay a specified amount on a specified date. They will be payable at 
maturity upon presentation to the Bureau of the Public Debt, Washington, 
DC 20226, or to any Federal Reserve Bank or branch. Treasury bills are 
issued only by Federal Reserve Banks and branches and the Bureau of the 
Public Debt pursuant to tenders accepted by the Secretary of the 
Treasury, and shall not be valid unless the issue date and the maturity 
date are entered thereon. Treasury bills bearing the same issue date and 
the same maturity date shall constitute a series.



Sec. 309.3  Denominations and exchange.

    Treasury bills will be issued in denominations (maturity value) of 
$10,000, $15,000, $50,000, $100,000, $500,000, and $1,000,000. Exchanges 
from higher to lower and lower to higher denominations of the same 
series (bearing the same issue and maturity dates) will be permitted at 
Federal Reserve Banks and branches and at the Bureau of the Public Debt, 
Washington, DC 20226. Insofar as applicable, the general regulations of 
the Treasury Department governing transactions in bonds and notes will 
govern transactions in Treasury bills.



Sec. 309.4  Taxation.

    The income derived from Treasury bills, whether interest or gain 
from the sale or other disposition of the bills, shall not have any 
exemption, as such, and loss from the sale or other disposition of 
Treasury bills shall not have any special treatment, as such, under the 
Internal Revenue Code, or laws amendatory or supplementary thereto. The 
bills shall be subject to estate, inheritance, gift or other excise 
taxes, whether Federal or State, but shall be exempt from all taxation 
now or hereafter imposed on the principal or interest thereof by any 
State, or any of the possessions of the United States, or by any local 
taxing authority. For purposes of taxation the amount of discount at 
which Treasury bills are originally sold by the United States shall be 
considered to be interest.



Sec. 309.5  Acceptance of Treasury bills for various purposes.

    (a) Acceptable as security for public deposits. Treasury bills will 
be acceptable at maturity value to secure deposits of public monies.
    (b) Acceptable in payment of taxes. The Secretary of the Treasury, 
in his discretion, when inviting tenders for Treasury bills, may provide 
that Treasury bills of any series will be acceptable at maturity value, 
whether at or before maturity, under such rules and regulations as he 
shall prescribe or approve, in payment of income taxes payable under the 
provisions of the Internal Revenue Code. Treasury bills which by the 
terms of their issue are acceptable in payment of income taxes may be 
surrendered to any Federal Reserve Bank or Branch, acting as fiscal 
agent of the United States, or to the Bureau of the Public Debt, 
Washington, DC 20226, 15 days or less before the date on which the taxes 
become due.

[[Page 155]]

    (1) In the case of payments of corporation income taxes (including 
payments of estimates) for taxable years ending on or after December 31, 
1967, the bills shall be accompanied by a preinscribed Form 503, Federal 
Tax Deposit, Corporation Income Taxes, on which the face amount of the 
bills being surrendered should be entered in the space provided for the 
amount of the tax deposit. The office receiving the bills and Form 503 
will acknowledge receipt of the bills to the owner corporation and 
effect the tax deposit on the date on which the taxes become due. 
Accordingly, in these cases, it will no longer be necessary to submit 
receipts for Treasury bills to the Internal Revenue Service with the 
corporation's declaration or tax return.
    (2) In the case of payments of all other income taxes the office 
receiving the bills will issue receipts (in duplicate) to the owners. 
The original of the receipt shall be submitted, by the owner, in lieu of 
the bills, together with the tax return, to the District Director, 
Internal Revenue Service.
    (c) Discounting by Federal Reserve Bank of notes secured by Treasury 
bills. Notes securied by Treasury bills are eligible for discount or 
rediscount at Federal Reserve Banks as provided under the provisions of 
section 13 of the Federal Reserve Act, as are notes securied by bonds 
and notes of the United States.
    (d) Acceptable in connection with foreign obligations held by United 
States. Treasury bills will be acceptable at maturity, but not before, 
in payment of interest or of principal on account of obligations of 
foreign governments held by the United States.



Sec. 309.6  Public notice of offering.

    When Treasury bills are to be offered, tenders therefor will be 
invited through public notice given by the Secretary of the Treasury. 
Such public notices may be issued by the Secretary of the Treasury in 
the name of ``the Treasury Department'' with the same force and effect 
as if issued in the name of the Secretary of the Treasury. In such 
notice there will be set forth the amount of Treasury bills for which 
tenders are then invited, the date of issue, the date or dates when such 
bills will become due and payable, the date and closing hour for the 
receipt of tenders at the Federal Reserve Banks and branches and at the 
Bureau of the Public Debt, Washington, DC 20226, and the date on which 
payment for accepted tenders must be made or completed.



Sec. 309.7  Tenders; submission through Federal Reserve Banks and branches and to the Bureau of the Public Debt.

    Tenders in response to any such public notice will be received at 
the Federal Reserve Banks, or Branches thereof and at the Bureau of the 
Public Debt, Washington, DC 20226, and unless received before the time 
fixed for closing will be disregarded. Each tender must be for a minimum 
amount of $10,000. Tenders over $10,000 must be in multiples of $5,000 
(maturity value). In the case of competitive tenders the price or prices 
offered by the bidder for the amount or amounts (at maturity value) 
applied for must be stated, and must be expressed on the basis of 100, 
with not more than three decimals, e.g., 99.925. Fractions may not be 
used.



Sec. 309.8  Tenders; when cash deposit is required.

    Tenders should be submitted on the printed forms and forwarded in 
the special envelopes which will be supplied on application to any 
Federal Reserve Bank, or Branch or to the Bureau of the Public Debt, 
Washington, DC 20226. If a special envelope is not available, the 
inscription ``Tender for Treasury Bills'' should be placed on the 
envelope used. The instructions set forth in the public notice 
announcing the offering should be observed with respect to the 
submission of tenders. Banking institutions generally may submit tenders 
for account of customers provided the names of the customers are set 
forth in such tenders. Others than banking institutions, will not be 
permitted to submit tenders except for their own account. Tenders from 
incorporated banks and trust companies, and from responsible and 
recognized dealers in investment securities will be received without 
deposit. Tenders from all others must be accompanied by a payment of 
such percent of the face amount of the Treasury bills applied for as the

[[Page 156]]

Secretary of the Treasury may from time to time prescribe: Provided, 
however, That such deposit will not be required if the tender is 
accompanied by an express guaranty of payment in full by an incorporated 
bank or trust company. Forfeiture of the prescribed payment may be 
declared by the Secretary of the Treasury, if payment is not completed, 
in the case of accepted tenders, on the prescribed date.



Sec. 309.9  Tenders; acceptance by the Secretary of the Treasury.

    At the time fixed for closing, as specified in the public notice, 
all tenders received by the Federal Reserve Banks and Branches and by 
the Bureau of the Public Debt will be opened. The Secretary of the 
Treasury will determine the acceptable prices offered and will make 
public announcement thereof those submitting tenders will be advised of 
the acceptance or rejection thereof, and payment on accepted tenders 
must be made or completed on the date specified in the public notice.



Sec. 309.10  Tenders; reservation of right to reject.

    In considering the acceptance of tenders, the highest prices offered 
will be accepted in full down to the amount required, and if the same 
price appears in two or more tenders and it is necessary to accept only 
a part of the amount offered at such price, the amount accepted at such 
price will be prorated in accordance with the respective amounts applied 
for. However, the Secretary of the Treasury expressly reserves the right 
on any occasion to accept non-competitive tenders entered in accordance 
with specific offerings, to reject any or all tenders or parts of 
tenders, and to award less than the amount applied for; and any action 
he may take in any such respect or respects shall be final.



Sec. 309.11  Tenders; payment of accepted tenders.

    Settlement for accepted tenders in accordance with the bids must be 
made or completed at the appropriate Federal Reserve Bank or branch or 
at the Bureau of the Public Debt in cash or other immediately available 
funds on or before the date specified, except that the Secretary of the 
Treasury, in his discretion, when inviting tenders for Treasury bills, 
may provide:
    (a) That any qualified depositary may make such settlement by 
credit, on behalf of itself and its customers, up to any amount for 
which it shall be qualified in excess of existing deposits, when so 
notified by the Federal Reserve Bank of its District or
    (b) That such settlement may be made in maturing Treasury bills 
accepted in exchange.

Whenever the Secretary provides for settlement in maturing Treasury 
bills, cash adjustments will be made for differences between the par 
value of the maturing bills and the issue price of the new bills.



Sec. 309.12  Relief on account of loss, theft or destruction, etc.

    (a) Relief on account of the loss, theft, destruction, mutilation or 
defacement of Treasury bills may be given only under the authority of, 
and subject to the conditions set forth in section 8 of the act of July 
8, 1937 (50 Stat. 481), as amended (31 U.S.C. 738a) and the regulations 
pursuant thereto in (Treasury Department Circular No. 300 insofar as 
applicable.
    (b) In case of the loss, theft, destruction, mutilation or 
defacement of Treasury bills, immediate advice, with a full description 
of the bill or bills involved, should be sent to the Bureau of the 
Public Debt, Division of Securities Operations, Department of the 
Treasury, Washington, DC 20226, either direct or though any Federal 
Reserve Bank or Branch, and, if relief under the statutes may be given, 
instructions and necessary blank forms will be furnished.



Sec. 309.13  Functions of Federal Reserve Banks.

    Federal Reserve Banks and Branches, as fiscal agents of the United 
States, are authorized to perform all such acts as may be necessary to 
carry out the provisions of this circular and of any public notice or 
notices issued in connection with any offering of Treasury bills.

[[Page 157]]



Sec. 309.14  Reservation as to terms of circular.

    The Secretary of the Treasury reserves the right further to amend, 
supplement, revise or withdraw all or any of the provisions of this 
circular at any time, or from time to time.



PART 312--FEDERAL SAVINGS AND LOAN ASSOCIATIONS AND FEDERAL CREDIT UNIONS AS FISCAL AGENTS OF THE UNITED STATES--Table of Contents




    Note: Pursuant to the regulations in this part, the Acting Secretary 
of the Treasury on September 15, 1936, designated for employment as 
fiscal agents of the United States for the purpose of taking 
applications solely from their own members and forwarding remittances 
for, and making delivery of, United States Savings Bonds, all Federal 
savings and loan associations and Federal credit unions in good standing 
having five hundred or more members, and further designated all Federal 
savings and loan associations in good standing for employment as fiscal 
agents of the United States, for the purpose of collecting delinquent 
accounts arising out of insurance and loan transactions of the 
Administrator under Title I of the National Housing Act, and making 
investigations and rendering reports respecting the said delinquencies 
as may be directed from time to time by the Administrator.
    Pursuant to these same regulations, the Fiscal Assistant Secretary 
has now designated for employment, as fiscal agents of the United 
States, for the purpose of taking applications from nonmembers, as well 
as their own members, and forwarding remittances for, and making 
delivery of United States Savings Bonds, all Federal credit unions in 
good standing.
Sec.
312.1  Authority.
312.2  [Reserved]
312.3  Collections, investigations, and reports for the Federal Housing 
          Administration.
312.4  Bond of indemnity.
312.5  Fiscal agents to serve without compensation.
312.6  Applications other than to Federal Reserve Banks.

    Authority: Secs. 5(k), 17, 48 Stat. 646, 1222; 12 U.S.C. 1464(k), 
1767.

    Source: 1 FR 1587, Sept. 17, 1936, unless otherwise noted; 57 FR 
34684, Aug. 6, 1992.

    Cross References: For National Credit Union Administration, see 12 
CFR chapter VII. For Farm Credit Administration, see 12 CFR chapter VI. 
For Federal Home Loan Bank Board, see 12 CFR chapter V. For Federal 
Housing Commissioner, Office of Assistant Secretary for Housing, 
Department of Housing and Urban Development, see 24 CFR chapter II.



Sec. 312.1  Authority.

    (a) Home Owners' Loan Act. Section 5(k) of the Home Owners' Loan Act 
of 1933, as amended (48 Stat. 645; 12 U.S.C. 1464(k), is as follows:

    (k) When designated for that purpose by the Secretary of the 
Treasury, any Federal savings and loan association * * * may be employed 
as fiscal agent of the Government under such regulations as may be 
prescribed by said Secretary and shall perform all such reasonable 
duties as fiscal agent of the Government as may be required of it * * *.

    (b) Federal Credit Union Act. Section 17 of the Federal Credit Union 
Act (48 Stat. 1222; 12 U.S.C. 1767) is as follows:

    Each Federal credit union organized under this Act, when requested 
by the Secretary of the Treasury, shall act as fiscal agent of the 
United States and shall perform such services as the Secretary of the 
Treasury may require in connection with * * * the lending, borrowing, 
and repayment of money by the United States, including the issue, sale, 
redemption or repurchase of bonds, notes, Treasury certificates of 
indebtedness, or other obligations of the United States * * *.



Sec. 312.2  [Reserved]



Sec. 312.3  Collections, investigations, and reports for the Federal Housing Administration.

    Federal savings and loan associations, when designated for 
employment as fiscal agents of the United States for the purpose of 
collecting delinquent accounts arising out of insurance and loan 
transactions of the Administrator under Title I of the National Housing 
Act (48 Stat. 1246, 1247; 12 U.S.C. 1702-1706), and making 
investigations and rendering reports respecting the said delinquencies 
as may be directed from time to time by the Administrator, shall 
promptly forward remittances in the form collected to the Commissioner 
of the Federal Housing Administration, except, that remittances received 
in cash should be forwarded in the form of money order or check.



Sec. 312.4  Bond of indemnity.

    No Federal savings and loan association or Federal credit union 
which may

[[Page 158]]

have been designated for employment mentioned in this part shall 
perform, or make any effort to perform any of the acts included in such 
employment, or advertise in any manner that it is authorized to perform 
such acts until it has qualified by the execution of, delivery to, and 
approval of a bond of indemnity in favor of the United States with 
satisfactory surety, or with the pledge of collateral security as 
provided in part 225 of this chapter, conditioned upon the faithful 
performance of the obligor's duties as fiscal agent of the United States 
in the principal amount of $1,000 and until the Federal Home Loan Bank 
Board or the Bureau of Federal Credit Unions, Department of Health, 
Education, and Welfare, respectively, shall have certified to the 
Secretary of the Treasury that such association or credit union is in 
good standing and is eligible, under the terms and conditions prescribed 
by the Secretary, to qualify for the performance of the designated acts. 
The Federal Home Loan Bank Board and the Bureau of Credit Unions, 
respectively, shall keep the Secretary of the Treasury currently advised 
of the changes in the lists of associations and credit unions which are 
eligible, under the aforesaid terms and conditions, to qualify for the 
performance of the designated acts.

[32 FR 3447, Mar. 2, 1967]



Sec. 312.5  Fiscal agents to serve without compensation.

    All of the fiscal agency employment mentioned in this part shall be 
performed without compensation, reimbursement for expenses, or allowance 
of service charges.



Sec. 312.6  Applications other than to Federal Reserve Banks.

    Nothing contained in this part shall be construed as preventing such 
associations and credit unions, if they desire to assume such 
responsibility, from acting as agents of prospective purchasers in 
making applications to, and obtaining United States Savings Bonds from 
post offices or other designated places of issuance.



PART 315--REGULATIONS GOVERNING U.S. SAVINGS BONDS, SERIES A, B, C, D, E, F, G, H, J, AND K, AND U.S. SAVINGS NOTES--Table of Contents




                     Subpart A--General Information

Sec.
315.0  Applicability.
315.1  Official agencies.
315.2  Definitions.

                         Subpart B--Registration

315.5  General rules.
315.6  Restrictions on registration.
315.7  Authorized forms of registration.

               Subpart C--Limitations on Annual Purchases

315.10  Limitations.
315.11  Excess purchases.

              Subpart D--Limitations on Transfer or Pledge

315.15  Transfer.
315.16  Pledge.

 Subpart E--Limitations on Judicial Proceedings--No Stoppage or Caveats 
                                Permitted

315.20  General.
315.21  Payment to judgment creditors.
315.22  Payment or reissue pursuant to judgment.
315.23  Evidence.

Subpart F--Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds

315.25  General.
315.26  Application for relief--after receipt of bond.
315.27  Application for relief--nonreceipt of bond.
315.28  Recovery or receipt of bond before or after relief is granted.
315.29  Adjudication of claims.

                           Subpart G--Interest

315.30  Series E bonds and savings notes.
315.31  Series H bonds.
315.32  Series A, B, C, D, F, G, J, and K bonds.

                Subpart H--General Provisions for Payment

315.35  Payment (redemption).
315.36  Payment during life of sole owner.

[[Page 159]]

315.37  Payment during lives of both coowners.
315.38  Payment during lifetime of owner of beneficiary bond.
315.39  Surrender for payment.
315.40  Special provisions for payment.
315.41  Partial redemption.
315.42  Nonreceipt or loss of check issued in payment.
315.43  Effective date of request for payment.
315.44  Withdrawal of request for payment.

             Subpart I--Reissue and Denominational Exchange

315.45  General.
315.46  Effective date of request for reissue.
315.47  Authorized reissue--during lifetime.
315.48  Restrictions on reissue.
315.49  Correction of errors.
315.50  Change of name.
315.51  Requests for reissue.

                     Subpart J--Certifying Officers

315.55  Individuals authorized to certify.
315.56  General instructions and liability.
315.57  When a certifying officer may not certify.
315.58  Forms to be certified.

    Subpart K--Minors, Incompetents, Aged Persons, Absentees, et al.

315.60  Conditions for payment to representative of an estate.
315.61  Payment after death.
315.62  Payment to minors.
315.63  Payment to a parent or other person on behalf of a minor.
315.64  Payment, reinvestment, or exchange--voluntary guardian of an 
          incapacitated person.
315.65  Reissue.

            Subpart L--Deceased Owner, Coowner or Beneficiary

315.70  General rules governing entitlement.
315.71  Estate administered.
315.72  Estate not administered.

                         Subpart M--Fiduciaries

315.75  Payment or reissue during the existence of the fiduciary estate.
315.76  Payment or reissue after termination of the fiduciary estate.
315.77  Exchanges by fiduciaries.

     Subpart N--Private Organizations (Corporations, Associations, 
    Partnerships, etc.) and Governmental Agencies, Units and Officers

315.80  Payment to corporations or unincorporated associations.
315.81  Payment to partnerships.
315.82  Reissue or payment to successors of corporations, unincorporated 
          associations, or partnerships.
315.83  Reissue or payment on dissolution of corporation or partnership.
315.84  Payment to certain institutions.
315.85  Reissue in name of trustee or agent for reinvestment purposes.
315.86  Reissue upon termination of investment agency.
315.87  Payment to governmental agencies, units, or their officers.

                   Subpart O--Miscellaneous Provisions

315.90  Waiver of regulations.
315.91  Additional requirements; bond of indemnity.
315.92  Preservation of rights.
315.93  Supplements, amendments, or revisions.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 45 FR 64091, Sept. 26, 1980, unless otherwise noted.



                     Subpart A--General Information



Sec. 315.0  Applicability.

    The regulations in this circular, Department of the Treasury 
Circular No. 530, and the provisions of the respective offering 
circulars, govern--
    (a) United States Savings Bonds of Series E and Series H and United 
States Savings Notes, and
    (b) United States Savings Bonds of Series A, B, C, D, F, G, J, and 
K, all of which have matured and are no longer earning interest.

The regulations in Department of the Treasury Circular, Public Debt 
Series No. 3-80 (31 CFR, part 353), govern United States Savings Bonds 
of Series EE and Series HH.



Sec. 315.1  Official agencies.

    (a) The Bureau of the Public Debt of the Department of the Treasury 
is responsible for administering the Savings Bonds Program. Authority to 
process most transactions has been delegated to Federal Reserve Banks 
and Branches in the list below, as fiscal agents of the United States.
    (b) Communications concerning transactions and requests for forms 
should be addressed to:
    (1) A Federal Reserve Bank or Branch in the list below; the Bureau 
of the

[[Page 160]]

Public Debt. 200 Third Street, Parkersburg, WV 26101; or the Bureau of 
the Public Debt, Washington, DC 20226.
    (2)(i) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         Vt, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,     Richmond,         AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.  Atlanta.           (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (ii) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10534, Mar. 4, 1994]



Sec. 315.2  Definitions.

    As used in these regulations--
    (a) Bond means a United States Savings Bond of any series except EE 
and HH, unless the context indicates otherwise. General references to 
bonds and direct references to Series E bonds also include United States 
Savings Notes, unless specifically excluded.
    (b) Extended maturity period means any period after the original 
maturity date during which the owner may retain a bond and continue to 
earn interest on the maturity value or extended maturity value under 
applicable provisions of the circular offering the bond for sale.
    (c) Extended maturity value is the value of a bond at the end of the 
applicable extended maturity period.
    (d) Final extended maturity date is the date on which a bond will 
mature and cease to bear interest at the end of the final extended 
maturity period.
    (e) Incompetent means an individual who is incapable of handling his 
or her business affairs because of a legal, mental or medically-
established physical disability, except that a minor is not an 
incompetent solely because of age.
    (f) Issuing agent means an organization that has been qualified 
under the provisions of Department of the Treasury Circular, Public Debt 
Series No. 4-67, current revision (31 CFR part 317), to issue savings 
bonds.
    (g) Original maturity date means the date on which the bond reaches 
the end of the term for which it was initially offered and, unless 
further extended, ceases to earn interest.
    (h) Paying agent means a financial institution that has been 
qualified under the provisions of Department of the Treasury Circular 
No. 750, current revision (31 CFR part 321), to make payment of savings 
bonds.
    (i) Payment means redemption, unless otherwise indicated by context.
    (j) Person means any legal entity including, but without limitation, 
and individual, corporation (public or private), partnership, 
unincorporated association, or fiduciary estate.
    (k) Personal trust estates means trust estates established by 
natural persons in their own right for the benefit of themselves or 
other natural persons in whole or in part, and common trust funds 
comprised in whole or in part of such trust estates.
    (l) Reissue means the cancellation and retirement of a bond and the 
issuance of a new bond or bonds of the same series, same issue date, and 
same total face amount.

[[Page 161]]

    (m) Representative of the estate of a minor, incompetent, aged 
person, absentee, et al. means the court-appointed or otherwise 
qualified person, regardless of title, who is legally authorized to act 
for the individual. The term does not include parents in their own 
right, voluntary or natural guardians, or the executors or 
administrators of decedents' estates.
    (n) Surrender means the actual receipt of a bond with an appropriate 
request for payment or reissue by either a Federal Reserve Bank or 
Branch, the Bureau of the Public Debt, or, if a paying agent is 
authorized to handle the transaction, the actual receipt of the bond and 
the request for payment by the paying agent.
    (o) Taxpayer identifying number means a social security account 
number or an employer identification number.
    (p) Voluntary guardian means an individual who is recognized as 
authorized to act for an incompetent, as provided by Sec. 315.64.



                         Subpart B--Registration



Sec. 315.5  General rules.

    (a) Registration is conclusive of ownership. Savings bonds are 
issued only in registered form. The registration must express the actual 
ownership of, and interest in, the bond. The registration is conclusive 
of ownership, except as provided in Sec. 315.49.
    (b) Requests for registration. Registrations requested must be 
clear, accurate and complete, conform substantially with one of the 
forms set forth in this subpart, and include the taxpayer identifying 
number of the owner or first-named coowner. The taxpayer identifying 
number of the second-named coowner or beneficiary is not required but 
its inclusion is desirable. The registration of all bonds owned by the 
same person, organization, or fiduciary should be uniform with respect 
to the name of the owner and any description of the fiduciary capacity. 
An individual should be designated by the name he or she is ordinarily 
known by or uses in business, including at least one full given name. 
The name may be preceded or followed by any applicable title, such as 
Miss, Mr., Mrs., Ms., Dr., Rev., M.D., or D.D.. A suffix, such as Sr. or 
Jr., must be included when ordinarily used or when necessary to 
distinguish the owner from another member of his family. A married 
woman's own given name, not that of her husband, must be used; for 
example, Mary A. Jones or Mrs. Mary A. Jones, NOT Mrs. Frank B. Jones. 
The address must include, where appropriate, the number and street, 
route, or any other local feature, city, State, and ZIP Code.



Sec. 315.6  Restrictions on registration.

    (a) Natural persons. Only an individual in his or her own right may 
be designated as coowner or beneficiary along with any other individual, 
whether on original issue or reissue, except as provided in 
Sec. 315.7(g).
    (b) Residence. The designation of an owner or first-named coowner is 
restricted, on original issue only, to persons (whether individuals or 
others) who are--
    (1) Residents of the United States, its territories and possessions, 
the Commonwealth of Puerto Rico, and the former Canal Zone;
    (2) Citizens of the United States residing abroad;
    (3) Civilian employees of the United States or members of its armed 
forces, regardless of their residence or citizenship; and
    (4) Residents of Canada or Mexico who work in the United States but 
only if the bonds are purchased on a payroll deduction plan and the 
owner provides a taxpayer identifying number.

A nonresident alien may be designated coowner or beneficiary or, on 
authorized reissue, owner, unless the nonresident alien is a resident of 
an area with respect to which the Department of the Treasury restricts 
or regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities. See Department of the 
Treasury Circular No. 655, current revision (31 CFR part 211). 
Registration is not permitted in any form which includes the name of any 
alien who is a resident of any restricted area.
    (c) Minors. (1) Minors may purchase with their wages, earnings, or 
other funds belonging to them and under their control bonds registered 
in their

[[Page 162]]

names alone or with a coowner or beneficiary.
    (2) Bonds purchased by another person with funds belonging to a 
minor not under legal guardianship or similar fiduciary estate must be 
registered, without a coowner or beneficiary, in the name of the minor 
or a natural guardian on behalf of a minor.
    (3) Bonds purchased with funds of another may be registered to name 
the minor as owner, coowner, or beneficiary. If the minor is under legal 
guardianship or similar fiduciary estate, the registration must include 
an appropriate reference to it.
    (4) Bonds purchased as a gift to a minor under a gifts-to-minors 
statute must be registered as prescribed by the statute and no coowner 
or beneficiary may be named.
    (5) Bonds purchased by a representative of a minor's estate must be 
registered in the name of the minor and must include in the registration 
an appropriate reference to the guardianship or similar fiduciary 
estate. Bonds purchased by a representative of the estates of two or 
more minors, even though appointed in a single proceeding, must be 
registered in the name of each minor separately with appropriate 
reference to the guardianship or similar fiduciary estate.
    (d) Incompetents. Bonds may be registered to a name as owner, 
coowner, or beneficiary an incompetent for whose estate a guardian or 
similar representative has been appointed, except that a coowner or 
beneficiary may not be named on bonds purchased with funds belonging to 
the incompetent. The registration must include appropriate reference to 
the guardianship or similar fiduciary estate. Bonds should not be 
registered in the name of an incompetent unless there is a 
representative for his or her estate, except as provided in Sec. 315.64.



Sec. 315.7  Authorized forms of registration.

    (a) General. Subject to any limitations or restrictions contained in 
these regulations on the right of any person to be named as owner, 
coowner, or beneficiary, bonds should be registered as indicated below. 
A savings bond inscribed in a form not substantially in agreement with 
one of the forms authorized by this subpart is not considered validly 
issued.
    (b) Natural persons. A bond may be registered in the names of 
individuals in their own right, but only in one of the forms authorized 
by this paragraph.
    (1) Single ownership form. A bond may be registered in the name of 
one individual. Example:

    John A. Jones 123-45-6789.

    (2) Coownership form. A bond may be registered in the names of two 
individuals in the alternative as coowners. The form of registration ``A 
and B'' is not authorized. Examples:

John A. Jones 123-45-6789 or Ella S. Jones 987-65-4321.
John A. Jones 123-45-6789 or (Miss, Ms. or Mrs.) Ella S. Jones.
Ella S. Jones 987-65-4321 or John A. Jones.

    (3) Beneficiary form. A bond may be registered in the name of one 
individual payable on death to another. ``Payable on death to'' may be 
abbreviated to ``P.O.D.'' Examples:

John A. Jones 123-45-6789 payable on death to Mrs. Ella S. Jones.
John A. Jones 123-45-6789 P.O.D. Ella S. Jones 987-65-4321.

    (c) Fiduciaries (including legal guardians and similar 
representatives, certain custodians, natural guardians, executors, 
administrators, and trustees)--(1) General. A bond may be registered in 
the name of any person or persons or any organization acting as 
fiduciary of a single fiduciary estate, but not where the fiduciary will 
hold the bond merely or principally as security for the performance of a 
duty, obligation, or service. Registration should conform to a form 
authorized by this paragraph. A coowner or beneficiary may be named only 
in accordance with the applicable provisions of Sec. 315.6(c) and (d). A 
common trust fund established and maintained by a financial institution 
authorized to act as a fiduciary will be considered a single fiduciary 
estate within the meaning of these regulations.
    (2) Legal guardians, conservators, similar representives, certain 
custodians. A bond may be registered in the name

[[Page 163]]

and title or capacity of the legally appointed or authorized 
representative of the estate of a minor, incompetent, aged or infirm 
person, absentee, et al., or in the name of that individual followed by 
an appropriate reference to the estate. Examples:

Tenth National Bank, guardian (or conservator, trustee, etc.) of the 
estate of George N. Brown 123-45-6789, a minor (or an incompetent, aged 
person, infirm person, or absentee).
Henry C. Smith, conservator of the estate of John R. White 123-45-6789, 
an adult, pursuant to Sec. 633.572 of the Iowa Code.
John F. Green 123-45-6789, a minor (or an incompetent) under 
custodianship by designation of the Veterans Administration.
Frank M. Redd 123-45-6789, an incompetent for whom Eric A. Redd has been 
designated trustee by the Department of the Army pursuant to 37 U.S.C. 
602.
Arnold A. Ames, as custodian for Barry B. Bryan 123-45-6789, under the 
California Uniform Gifts to Minors Act.
Thomas J. Reed, as custodian for Lawrence W. Reed 123-45-6789, a minor, 
under the laws of Georgia.
Richard A. Rowe 123-45-6789, for whom Reba L. Rowe is representative 
payee for social security benefits (or black lung benefits, as the case 
may be). (If the beneficiary is a minor, the words ``a minor'' should 
appear immediately after the social security number.)
Henry L. Green 123-45-6789 or George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Henry L. Green 123-45-6789 P.O.D. George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Redd State Hospital and School, selected payee for John A. Jones 123-45-
6789, a Civil Service annuitant, pursuant to 5 U.S.C. 8345(e).

    (3) Natural guardians. A bond may be registered in the name of 
either parent of a minor, as natural guardian. The registration of a 
bond in this form is considered as establishing a fiduciary 
relationship. A coowner or beneficiary may be named but only if the 
funds used to purchase the bond do not belong to the minor. Examples:

John A. Jones, as natural guardian for Henry M. Jones 123-45-6789.
Melba Smith, as natural guardian for Thelma Smith 123-45-6789 P.O.D. 
Bartholomew Smith.

    (4) Executors and administrators. A bond may be registered in the 
name of the representative appointed by a court to act for an estate of 
a decedent, or in the name of an executor authorized to administer a 
trust under the terms of a will although not named trustee. The name and 
capacity of all the representatives as shown in the letters of 
appointment must be included in the registration and be followed by an 
adequate identifying reference to the estate. Examples:

John H. Smith and Calvin N. Jones, executors of the will (or 
administrators of the estate) of Robert J. Smith, deceased 12-3456789.
John H. Smith, executor of the will of Robert J. Smith, deceased, in 
trust for Mrs. Jane L. Smith, with remainder over 12-3456789.

    (5) Trustee or life tenants under wills, deeds of trust, agreements, 
or similar instruments. A bond may be registered in the name and title 
of the trustee of a trust estate, or in the name of a life tenant, 
followed by an adequate identifying reference to the authority governing 
the trust or life tenancy. Examples:

Thomas J. White and Tenth National Bank, trustees under the will of 
Robert J. Smith, deceased 12-3456789.
Jane N. Black 123-45-6789, life tenant under the will of Robert J. 
Black, deceased.
Tenth National Bank, trustee under agreement with Paul E. White, dated 
2/1/76, 12-3456789.
Carl A. Black and Henry B. Green, trustees under agreement with Paul E. 
White, dated 2/1/76, 12-3456789.
Paul E. White, trustee under declaration of trust dated 2/1/76, 12-
3456789.

    (i) If the trust instrument designates by title only an officer of a 
board or an organization as trustee, only the title of the officer 
should be used. Example:

Chairman, Board of Trustees, First Church of Christ, Scientist, of 
Chicago, Illinois, in trust under the will of Robert J. Smith, deceased 
12-3456789.

    (ii) The names of all trustees, in the form used in the trust 
instrument, must be included in the registration, except as follows:
    (A) If there are several trustees designated as a board or they are 
required to act as a unit, their names may be omitted and the words 
``Board of Trustees'' substituted for the word ``trustee''. Example:


[[Page 164]]


Board of Trustees of Immediate Relief Trust of Federal Aid Association, 
under trust indenture dated 2/1/76, 12-3456789.

    (B) If the trustees do not constitute a board or are not required to 
act as a unit, and are too numerous to be designated in the registration 
by names and title, some or all the names may be omitted. Examples:

John A. Smith, Henry B. Jones, et al., trustees under the will of Edwin 
O. Mann, deceased 12-3456789.
    Trustees under the will of Edwin O. Mann, deceased 12-3456789.

    (6) Employee thrift, savings, vacation and similar plans. A bond may 
be registered in the name and title, or title alone, of the trustee of 
an eligible employee thrift, savings, vacation or similar plan, as 
defined in Sec. 316.5, of Department of the Treasury Circular No. 653, 
current revision. If the instrument creating the trust provides that the 
trustees shall serve for a limited term, their names may be omitted. 
Examples:

Tenth National Bank, trustee of Pension Fund of Safety Manufacturing 
Company, U/A with the company, dated March 31, 1976, 12-3456789.
Trustees of Retirement Fund of Safety Manufacturing Company, under 
directors' resolution adopted March 31, 1976, 12-3456789.
County Trust Company, Trustee of the Employee Savings Plan of Jones 
Company, Inc., U/A dated January 17, 1976, 12-3456789.
Trustee of the Employee Savings Plan of Brown Brothers, Inc., U/A dated 
January 20, 1976, 12-3456789.

    (7) Funds of lodges, churches, societies, or similar organizations. 
A bond may be registered in the title of the trustees, or a board of 
trustees, holding funds in trust for a lodge, church, or society, or 
similar organization, whether or not incorporated. Examples:

Trustees of the First Baptist Church, Akron, Ohio, acting as a Board 
under section 15 of its bylaws 12-3456789.
Trustees of Jamestown Lodge No. 1000, Benevolent and Protective Order of 
Elks, under section 10 of its bylaws 12-3456789.
Board of Trustees of Lotus Club, Washington, Indiana, under Article 10 
of its constitution 12-3456789.

    (8) Investment agents for religious, educational, charitable and 
non-profit organizations. A bond may be registered in the name of a 
bank, trust company, or other financial institution, or an individual, 
as agent under an agreement with a religious, educational, charitable or 
non-profit organization, whether or not incorporated, if the agent holds 
funds for the sole purpose of investing them and paying the income to 
the organization. The name and designation of the agent must be followed 
by an adequate reference to the agreement. Examples:

Tenth National Bank, fiscal agent U/A with the Evangelical Lutheran 
Church of the Holy Trinity, dated 12/28/76, 12-3456789.
Sixth Trust Company, Investment Agent U/A dated September 16, 1976, with 
Central City Post, Department of Illinois, American Legion, 12-3456789.
John Jones, Investment Agent U/A dated September 16, 1976, with Central 
City Post, Department of Illinois, American Legion, 12-3456789.

    (9) Funds of school groups or activities. A bond may be registered 
in the title of the principal or other officer of a public, private, or 
parochial school holding funds in trust for a student body fund or for a 
class, group, or activity. If the amount purchased for any one fund does 
not exceed $2,500 (face amount), no reference need be made to a trust 
instrument. Examples:

Principal, Western High School, in trust for the Class of 1976 Library 
Fund, 12-3456789.
Director of Athletics, Western High School, in trust for Student 
Activities Association, under resolution adopted 5/12/76, 12-3456789.

    (10) Public corporations, bodies, or officers as trustees. A bond 
may be registered in the name of a public corporation or a public body, 
or in the title of a public officer, acting as trustee under express 
authority of law, followed by an appropriate reference to the statute 
creating the trust. Examples:

Rhode Island Investment Commission, trustee of the General Sinking Fund 
under Title 35, Ch. 8, Gen. Laws of Rhode Island.
Superintendent of the Austin State Hospital Annex, in trust for the 
Benefit Fund under Article 3183C, Vernon's Civ. Stat. of Texas Ann.

    (d) Private organizations (corporations, associations, 
partnerships)--(1) General. A bond may be registered in the name of any 
private organization in its own right. The full legal name of the 
organization as set forth in its charter, articles of incorporation, 
constitution,

[[Page 165]]

partnership agreement, or other authority from which its powers are 
derived, must be included in the registration and may be followed by a 
parenthetical reference to a particular account other than a trust 
account.
    (2) Corporations. A bond may be registered in the name of a 
business, fraternal, religious, non-profit, or other private 
corporation. The words ``a corporation'' must be included in the 
registration unless the fact of incorporation is shown in the name. 
Examples:

Smith Manufacturing Company, a corporation 12-3456789.
Green and Redd, Inc. 12-3456789 (Depreciation Acct.).

    (3) Unincorporated associations. A bond may be registered in the 
name of a club, lodge, society, or a similar self-governing association 
which is unincorporated. The words ``an unincorporated association'' 
must be included in the registration. This form of registration must not 
be used for a trust fund, board of trustees, a partnership, or a sole 
proprietorship. If the association is chartered by or affiliated with a 
parent organization, the name or designation of the subordinate or local 
organization must be given first, followed by the name of the parent 
organization. The name of the parent organization may be placed in 
parentheses and, if well known, may be abbreviated. Examples:

The Lotus Club, an unincorporated association, 12-3456789.
Local 447, Brotherhood of Railroad Trainmen, an unincorporated 
association, 12-3456789.
Eureka Lodge 317 (A.F. and A.M.), an unincorporated association, 12-
3456789.

    (4) Partnerships. A bond may be registered in the name of a 
partnership. The words ``a partnership'' must be included in the 
registration. Examples:

Smith & Jones, a partnership, 12-3456789.
Acme Novelty Company, a partnership, 12-3456789.

    (5) Sole proprietorships. A bond may be registered in the name of an 
individual who is doing business as a sole proprietor. A reference may 
be made to the trade name under which the business is conducted. 
Example:
    John Jones d.b.a. Jones Roofing Company, 123-45-6789

    (e) Institutions (churches, hospitals, homes, schools, etc.). A bond 
may be registered in the name of a church, hospital, home, school, or 
similar institution conducted by a private organization or by private 
trustees, regardless of the manner in which it is organized or governed 
or title to its property is held. Descriptive words, such as ``a 
corporation'' or ``an unincorporated association'', must not be included 
in the registration. Examples:

Shriners' Hospital for Crippled Children, St. Louis, MO, 12-3456789.
St. Mary's Roman Catholic Church, Albany, NY, 12-3456789.
Rodeph Shalom Sunday School, Philadelphia, PA, 12-3456789.

    (f) States, public bodies and corporations, and public officers. A 
bond may be registered in the name of a State, county, city, town, 
village, school district, or other political entity, public body, or 
corporation established by law (including a board, commission, 
administration, authority, or agency) which is the owner or official 
custodian of public funds, other than trust funds, or in the full legal 
title of the public officer having custody of the funds. Examples:

State of Maine.
Town of Rye, NY (Street Improvement Fund).
Maryland State Highway Administration.
Treasurer, City of Chicago.

    (g) The United States Treasury. A person who desires to have a bond 
become the property of the United States upon his or her death may 
designate the United States Treasury as coowner or beneficiary. 
Examples:

George T. Jones 123-45-6789 or the United States Treasury.
George T. Jones 123-45-6789 P.O.D. the United States Treasury.



               Subpart C--Limitations on Annual Purchases



Sec. 315.10  Limitations.

    Specific limitations have been placed on the amounts of bonds of 
each series and savings notes that might be purchased in any one year in 
the name of any one person or organization. The amounts applicable to 
each series of

[[Page 166]]

bonds and savings notes for each specific year, which has varied from 
time to time, can be found in the appropriate offering circulars, as 
revised and amended.



Sec. 315.11  Excess purchases.

    The Commissioner of the Public Debt may permit excess purchases to 
stand in any particular case or class of cases.



              Subpart D--Limitations on Transfer or Pledge



Sec. 315.15  Transfer.

    Savings bonds are not transferable and are payable only to the 
owners named on the bonds, except as specifically provided in these 
regulations and then only in the manner and to the extent so provided.



Sec. 315.16  Pledge.

    (a) General. A savings bond may not be hypothecated, pledged, or 
used as security for the performance of an obligation, except as 
provided in paragraph (b) of this section.
    (b) Pledge under Treasury Circular No. 154. A bond may be pledged by 
the registered owner in lieu of surety under the provisions of 
Department of the Treasury Circular No. 154, current revision (31 CFR 
part 225), if the bond approving officer is the Secretary of the 
Treasury. In this case, an irrevocable power of attorney shall be 
executed authorizing the Secretary of the Treasury to request payment.



 Subpart E--Limitations on Judicial Proceedings--No Stoppage or Caveats 
                                Permitted



Sec. 315.20  General.

    The following general rules apply to the recognition of a judicial 
determination on adverse claims affecting savings bonds:
    (a) The Department of the Treasury will not recognize a judicial 
determination that gives effect to an attempted voluntary transfer inter 
vivos of a bond, or a judicial determination that impairs the rights of 
survivorship conferred by these regulations upon a coowner or 
beneficiary. All provisions of this Subpart are subject to these 
restrictions.
    (b) The Department of the Treasury will recognize a claim against an 
owner of a savings bond and conflicting claims of ownership of, or 
interest in, a bond between coowners or between the registered owner and 
the beneficiary, if established by valid, judicial proceedings, but only 
as specifically provided in this subpart. Section 315.23 specifies the 
evidence required to establish the validity of the judicial proceedings.
    (c) The Department of the Treasury and the agencies that issue, 
reissue, or redeem savings bonds will not accept a notice of an adverse 
claim or notice of pending judicial proceedings, nor undertake to 
protect the interests of a litigant not in possession of a savings bond.



Sec. 315.21  Payment to judgment creditors.

    (a) Purchaser or officer under levy. The Department of the Treasury 
will pay (but not reissue) a savings bond to the purchaser at a sale 
under a levy or to the officer authorized under appropriate process to 
levy upon property of the registered owner or coowner to satisfy a money 
judgment. Payment will be made only to the extent necessary to satisfy 
the money judgment. The amount paid is limited to the redemption value 
60 days after the termination of the judicial proceedings. Payment of a 
bond registered in coownership form pursuant to a judgment or a levy 
against only one coowner is limited to the extent of that coowner's 
interest in the bond. That interest must be established by an agreement 
between the coowners or by a judgment, decree, or order of a court in a 
proceeding to which both coowners are parties.
    (b) Trustee in bankruptcy, receiver, or similar court officer. The 
Department of the Treasury will pay, at current redemption value, a 
savings bond to a trustee in bankruptcy, a receiver of an insolvent's 
estate, a receiver in equity, or a similar court officer under the 
provisions of paragraph (a) of this section.

[[Page 167]]



Sec. 315.22  Payment or reissue pursuant to judgment.

    (a) Divorce. The Department of the Treasury will recognize a divorce 
decree that ratifies or confirms a property settlement agreement 
disposing of bonds or that otherwise settles the interests of the 
parties in a bond. Reissue of a savings bond may be made to eliminate 
the name of one spouse as owner, coowner, or beneficiary, or to 
substitute the name of one spouse for that of the other spouse as owner, 
coowner, or beneficiary pursuant to the decree. However, if the bond is 
registered in the name of one spouse with another person as coowner, 
there must be submitted either:
    (1) A request for reissue by the other person or
    (2) A certified copy of a judgment, decree, or court order entered 
in proceedings to which the other person and the spouse named on the 
bond are parties, determining the extent of the interest of that spouse 
in the bond.

Reissue will be permitted only to the extent of that spouse's interest. 
The evidence required under Sec. 315.23 must be submitted in every case. 
When the divorce decree does not set out the terms of the property 
settlement agreement, a certified copy of the agreement must be 
submitted. Payment, rather than reissue, will be made if requested.
    (b) Gift causa mortis. A savings bond belonging solely to one 
individual will be paid or reissued at the request of the person found 
by a court to be entitled by reason of a gift causa mortis from the sole 
owner.
    (c) Date for determining rights. When payment or reissue under this 
section is to be made, the rights of the parties will be those existing 
under the regulations current at the time of the entry of the final 
judgment, decree, or court order.



Sec. 315.23  Evidence.

    (a) General. To establish the validity of judicial proceedings, 
certified copies of the final judgment, decree, or court order, and of 
any necessary supplementary proceedings, must be submitted. If the 
judgment, decree, or court order was rendered more than six months prior 
to the presentation of the bond, there must also be submitted a 
certificate from the clerk of the court, under court seal, dated within 
six months of the presentation of the bond, showing that the judgment, 
decree, or court order is in full force.
    (b) Trustee in bankruptcy or receiver of an insolvent's estate. A 
request for payment by a trustee in bankruptcy or a receiver of an 
insolvent's estate must be supported by appropriate evidence of 
appointment and qualification. The evidence must be certified by the 
clerk of the court, under court seal, as being in full force on a date 
that is not more than six months prior to the presentation of the bond.
    (c) Receiver in equity or similar court officer. A request for 
payment by the receiver in equity or a similar court officer, other than 
a receiver of an insolvent's estate, must be supported by a copy of an 
order that authorizes the presentation of the bond for redemption, 
certified by the clerk of the court, under court seal, as being in full 
force on a date that is not more than six months prior to the 
presentation of the bond.



Subpart F--Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds



Sec. 315.25  General.

    Relief, by the issue of a substitute bond or by payment, is 
authorized for the loss, theft, destruction, mutilation, or defacement 
of a bond after receipt by the owner or his or her representative. As a 
condition for granting relief, the Commissioner of the Public Debt, as 
designee of the Secretary of the Treasury, may require a bond of 
indemnity, in the form, and with the surety, or security, he considers 
necessary to protect the interests of the United States. In all cases 
the savings bond must be identified by serial number and the applicant 
must submit satisfactory evidence of the loss, theft, or destruction, or 
a satisfactory explanation of the mutilation or defacement.



Sec. 315.26  Application for relief--after receipt of bond.

    (a) Serial number known. If the serial number of the lost, stolen, 
or destroyed

[[Page 168]]

bond is known, the claimant should execute an application for relief on 
the appropriate form and submit it to the Bureau of the Public Debt, 
Parkersburg, WV 26101.
    (b) Serial number not known. If the bond serial number is not known, 
the claimant must provide sufficient information to enable the Bureau of 
the Public Debt to identify the bond by serial number. See 
Sec. 315.29(c). The Bureau will furnish the proper application form and 
instructions.
    (c) Defaced or mutilated bond. A defaced bond and all available 
fragments of a mutilated bond should be submitted to the Bureau.
    (d) Execution of claims application. The application must be made by 
the person or persons (including both coowners, if living) authorized 
under these regulations to request payment of the bonds. In addition--
    (1) If the bond is in beneficiary form and the owner and beneficiary 
are both living, both will ordinarily be required to join in the 
application.
    (2) If a minor named on a bond as owner, coowner, or beneficiary is 
not of sufficient competency and understanding to request payment, both 
parents will ordinarily be required to join in the application.
    (e) If the application is approved, relief will be granted by the 
issuance of a bond bearing the same issue date as the bond for which the 
claim was filed or by the issuance of a check in payment.



Sec. 315.27  Application for relief--nonreceipt of bond.

    If a bond issued on any transaction is not received, the issuing 
agent must be notified as promptly as possible and given all information 
available about the nonreceipt. An appropriate form and instructions 
will be provided. If the application is approved, relief will be granted 
by the issuance of a bond bearing the same issue date as the bond that 
was not received.



Sec. 315.28  Recovery or receipt of bond before or after relief is granted.

    (a) Recovery prior to granting relief. If a bond reported lost, 
stolen, destroyed, or not received, is recovered or received before 
relief is granted, the Bureau of the Public Debt, Parkersburg, WV 26101, 
must be notified promptly.
    (b) Recovery subsequent to granting of relief. A bond for which 
relief has been granted is the property of the United States and, if 
recovered, must be promptly submitted to the Bureau of the Public Debt, 
Parkersburg, WV 26101, for cancellation.



Sec. 315.29  Adjudication of claims.

    (a) General. The Bureau of the Public Debt will adjudicate claims 
for lost, stolen or destroyed bonds on the basis of records created and 
regularly maintained in the ordinary course of business.
    (b) Claims filed ten years after payment. A bond for which no claim 
has been filed within ten years of the recorded date of redemption will 
be presumed to have been properly paid. If a claim is subsequently 
filed, a photographic copy of the bond will not be available to support 
the disallowance. This provision will be effective 60 days after the 
effective date of the Eleventh Revision of Department of the Treasury 
Circular No. 530 (31 CFR part 315).
    (c) Claims filed six years after final maturity. No claim filed six 
years or more after the final maturity of a savings bond will be 
entertained, unless the claimant supplies the serial number of the bond.



                           Subpart G--Interest



Sec. 315.30  Series E bonds and savings notes.

    Series E bonds and savings notes are discount securities. The 
accrued interest is added to the issue price at stated intervals and is 
payable only at redemption as part of the redemption value. All Series E 
bonds and savings notes have been extended and continue to earn interest 
until their final maturity dates, unless redeemed earlier. Information 
regarding extended maturity periods, investment yields and redemption 
values is found in Department of the Treasury Circular No. 653, current 
revision (31 CFR part 316) for Series E bonds, and in Department of the 
Treasury Circular, Public Debt Series No. 3-67, current revision (31 CFR 
part 342) for savings notes.

[[Page 169]]



Sec. 315.31  Series H bonds.

    (a) General. Series H bonds are current income bonds issued at par 
(face amount). Interest on a Series H bond is paid semiannually 
beginning six months from the issue date. Interest ceases at final 
maturity, or if the bond is redeemed prior to final maturity, as of the 
end of the interest period last preceding the date of redemption. For 
example, if a bond on which interest is payable on January 1 and July 1 
is redeemed on September 1, interest ceases as of the preceding July 1, 
and no interest will be paid for the period from July 1 to September 1. 
However, if the redemption date falls on an interest payment date, 
interest ceases on that date. Information regarding authorized extended 
maturity periods and investment yields is found in Department Circular 
No. 905, current revision (31 CFR part 332).
    (b) Payment of interest. Series H bond interest accounts are 
maintained by the Bureau of the Public Debt, Parkersburg, WV. Interest 
is paid on each payment date by check drawn to the order of the owner or 
both coowners or, upon request, by the Automated Clearing House (ACH) 
method to the owner or coowner's account at a financial institution. 
Checks will be mailed to the delivery address provided to the Bureau.
    (c) Delivery of interest--(1) Notices affecting the delivery of 
interest payments. To ensure appropriate action, notices affecting the 
delivery of interest payments on Series H bonds must be received by the 
Bureau of the Public Debt, Parkersburg, WV, 26102-1328, at least one 
month prior to the interest payment date. Each notice must include the 
owner or coowner's name and the taxpayer identifying number appearing on 
the account under which records of the bonds are maintained.

(Approved by the Office of Management and Budget under control number 
1535-0094)
    (2) Owner or coowner deceased--(i) Sole owner. Upon receipt of 
notice of the death of the owner of a bond, payment of interest will be 
suspended until satisfactory evidence is submitted as to who is 
authorized to receive and collect interest payments on behalf of the 
estate of the decedent, in accordance with the provisions of subpart L.
    (ii) Coowner. Upon receipt of notice of the death of the ooowner to 
whom interest payments have been directed, payment of interest will be 
suspended until delivery instructions are received from the other 
coowner, if living. If both coowners are deceased, payment of interest 
will be suspended until satisfactory evidence is submitted as to who is 
authorized to receive and collect interest payments on behalf of the 
estate of the last deceased coowner, in accordance with the provisions 
of subpart L.
    (iii) Owner with beneficiary. Interest on a bond registered in 
beneficiary form is paid to the owner during his or her lifetime. Upon 
receiving notice of the owner's death, the Bureau of the Public Debt 
will suspend payment of interest until the bond is presented for payment 
or reissue by the beneficiary, if surviving, or some other proper party. 
Interest so withheld will be paid to the person entitled to the bond.
    (d) Representative appointed for the estate of a minor, incompetent, 
absentee, et al. Interest on Series H bonds is paid in accordance with 
the provisions of Sec. 315.60 to the representative appointed for the 
estate of an owner who is a minor, incompetent, absentee, et al. If the 
registration of the bonds does not include reference to the owner's 
status, the bonds should be submitted for reissue to a designated 
Federal Reserve Bank so that interest payments may be properly 
delivered. They must be accompanied by proof of appointment as required 
by Sec. 315.60.
    (e) Adult incapacitated owner having no representative. If an adult 
owner of a Series H bond is incompetent to receive and collect interest 
payments, and no legal guardian or similar representative has been 
appointed to act for him or her, the relative, or other person, 
responsible for the owner's care and support may apply to the Bureau of 
the Public Debt for recognition as voluntary guardian for the purpose of 
receiving and collecting the payments.
    (f) Reissue during interest period. Physical reissue of a Series H 
bond may be made without regard to interest payment dates. The Series H 
accounts maintained by the Bureau of the Public

[[Page 170]]

Debt will be closed in the first week of the month preceding each 
interest payment date, and payments will be made pursuant to the 
information contained in the accounts as of the date they are closed.
    (g) Endorsement of checks. Interest checks must be endorsed in 
accordance with the regulations governing the payment of fiscal agency 
checks contained in 31 CFR part 355.
    (h) Deposit account information for ACH payments--(1) Payments on 
same account. Payments on all Series H bonds assigned to the same 
account maintained by the Bureau will be made to the same deposit 
account at a financial institution.
    (2) Deposit account held by individuals in their own right. Where 
the Series H bonds are registered in the name of individual(s) as sole 
owner, or as owner and beneficiary, and the deposit account at the 
financial institution is held in the name of individual(s) in their own 
right, the owner's name must appear on the deposit account. Where the 
bonds are registered in the names of two individuals as coowners and the 
deposit account is held in the name of individual(s) in their own right, 
the registration of the bonds and the title of the account must contain 
at least one name that is common to both. The deposit account to which 
the interest payments are directed should preferably be established in a 
form identical to the registration of the bonds to ensure that rights of 
ownership and survivorship can be more easily identified and preserved. 
Neither the United States nor any Federal Reserve Bank shall be liable 
for any loss sustained because the interest(s) of the holder(s) of a 
deposit account to which payments are directed are not the same as the 
owner(s) of the bonds.
    (3) Deposit account held by organization. Where the deposit account 
to which interest payments are to be directed is held in the name of the 
financial institution itself, acting as sole trustee or as co-trustee, 
or is in the name of a commercially-managed investment fund, the owner 
or coowner should inquire whether the financial institution is able to 
receive ACH payments; if not, the owner or coowner should make 
alternative arrangements.
    (4) Financial institution cannot accept ACH payments. If after 
submission of deposit account information, it is determined that ACH 
payments cannot be accepted by the designated financial institution, 
pending receipt of new deposit account information, payment will be made 
by check drawn to the registered owner or both coowners and mailed to 
the address of record.
    (5) Cancellation of ACH arrangement. An ACH arrangement shall remain 
in effect until it is terminated by a request from the owner or coowner 
submitted to the Bureau of the Public Debt, Parkersburg, WV 26102-1328.
    (6) Rules. Series H interest payments made by the ACH method are 
governed by the regulations at 31 CFR part 370.
    (7) Nonreceipt or loss of interest payment. The Bureau of the Public 
Debt, Parkersburg, WV 26102 should be notified if:
    (i) An interest check is not received or is lost after receipt or
    (ii) An ACH payment is not credited to the designated account and 
the financial institution has no record of receiving it. The notice 
should include the owner or coowner's name and taxpayer identifying 
number and the interest payment date.

[54 FR 40255, Sept. 29, 1989, as amended at 59 FR 10535, Mar. 4, 1994; 
64 FR 40486, July 26, 1999]



Sec. 315.32  Series A, B, C, D, F, G, J, and K bonds.

    All bonds of these series have matured and no longer earn interest.



                Subpart H--General Provisions for Payment



Sec. 315.35  Payment (redemption).

    (a) General. Payment of a savings bond will be made to the person or 
persons entitled under the provisions of these regulations, except that 
checks in payment will not be delivered to addresses in areas with 
respect to which the Department of the Treasury restricts or regulates 
the delivery of checks drawn against funds of the United States. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211). Payment will be made without regard to any notice of

[[Page 171]]

adverse claims to a bond and no notification of stoppage or caveat 
against payment of a bond will be made.
    (b) Series A, B, C, D, F, and J. A bond of Series A, B, C, D, F, or 
J will be paid at face value.
    (c) Series E and Savings Notes. A Series E bond will be paid at any 
time after two months from issue date at the appropriate redemption 
value shown in Department of the Treasury Circular No. 653 (31 CFR part 
316), current revision. A savings note will be paid at anytime at the 
appropriate redemption value shown in Department of the Treasury 
Circular, Public Debt Series No. 3-67, current revision (31 CFR part 
342).
    (d) Series G and K. A bond of Series G or K will be paid at face 
value plus the final semiannual interest due. For Series G bonds, the 
final interest paid with principal is $1.25 per $100; for Series K 
bonds, the final interest is $6.90 per $500.
    (e) Series H. A Series H bond will be redeemed at face value at any 
time after six (6) months from issue date. In any case where Series H 
bonds are surrendered to a designated Federal Reserve Bank or Branch or 
the Department of the Treasury for redemption in the month prior to an 
interest payment date, redemption will not be deferred but will be made 
in regular course, unless the presenter specifically requests that the 
transaction be delayed until that date. A request to defer redemption 
made more than one month preceding the interest payment date will not be 
accepted.

[45 FR 64091, Sept. 26, 1980, as amended at 51 FR 23753, July 1, 1986; 
59 FR 10535, Mar. 4, 1994]



Sec. 315.36  Payment during life of sole owner.

    A savings bond registered in single ownership form (i.e., without a 
coowner or beneficiary) will be paid to the owner during his or her 
lifetime upon surrender with an appropriate request.



Sec. 315.37  Payment during lives of both coowners.

    A savings bond registered in coownership form will be paid to either 
coowner upon surrender with an appropriate request, and, upon payment 
(as determined in Sec. 315.43), the other coowner will cease to have any 
interest in the bond. If both coowners request payment and payment is to 
be made by check, the check will be drawn in the form, ``John A. Jones 
and Mary C. Jones''.



Sec. 315.38  Payment during lifetime of owner of beneficiary bond.

    A savings bond registered in beneficiary form will be paid to the 
registered owner during his or her lifetime upon surrender with an 
appropriate request. Upon payment (as determined in Sec. 315.43), the 
beneficiary will cease to have any interest in the bond.



Sec. 315.39  Surrender for payment.

    (a) Procedure for bonds of Series A to E, inclusive, in the names of 
individual owners or coowners only. An individual who is the owner or 
coowner of a bond of Series A, B, C, D, or E may present the bond to an 
authorized paying agent for redemption. The presenter must be prepared 
to establish his or her identity in accordance with Treasury 
instructions and identification guidelines. The owner or coowner must 
sign the request for payment on the bond or, if authorized, on a 
separate detached request, and add his or her address. In addition, in 
the case of a Series E bond or savings note, the presenter must record 
his or her social security number on the face of the security, provided 
it does not already appear in the inscription. Paying agents are 
authorized to refuse payment in any case where the presenter's number is 
not provided. If the request for payment has been signed, or signed and 
certified, before presentation of the bond, the paying agent must be 
satisfied that the person presenting the bond for payment is the owner 
or coowner and may require the person to sign the request for payment 
again. If the bond is in order for payment, the paying agent will make 
immediate payment at the current redemption value without charge to the 
presenter. Paying agents are not authorized to process any case 
involving partial redemption or any case in which supporting evidence is 
required.
    (b) Procedure for all other cases. In the case of a bond to which 
the procedure

[[Page 172]]

in paragraph (a) of this section does not apply, or if otherwise 
preferred, the owner or coowner, or other person entitled to payment, 
should appear before an officer authorized to certify requests for 
payment, establish his or her identity, sign the request for payment, 
and provide information as to the addresss to which the check in payment 
is to be mailed. In addition, in the case of a Series E bond or savings 
note, the presenter must record his or her social security number on the 
face of the security, provided it does not already appear in the 
inscription. The bond must be forwarded to a designated Federal Reserve 
Bank or Branch or the Bureau of the Public Debt. Usually, payment will 
be expedited by submission to a designated Federal Reserve Bank or 
Branch. In all cases, the cost and risk of presentation of a bond will 
be borne by the owner. Payment will be made by check drawn to the order 
of the registered owner or other person entitled and will be mailed to 
the address requested.
    (c) Date of request. Requests executed more than six months before 
the date of receipt of a bond for payment will not be accepted. Neither 
will a bond be accepted if payment is requested as of a date more than 
three months in the future.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.40  Special provisions for payment.

    (a) Owner's signature not required. A bond may be paid by a paying 
agent or a designated Federal Reserve Bank without the owner's signature 
to the request for payment, if the bond bears the special endorsement of 
a financial institution specifically qualified to place such an 
endorsement on savings bonds under the provisions of Department of the 
Treasury Circular No. 888, current revision (31 CFR part 330).
    (b) Signature by mark. A signature by mark (X) must be witnessed by 
at least one disinterested person and a certifying officer. See subpart 
J. The witness must attest to the signature by mark substantially as 
follows: ``Witness to signature by mark,'' followed by his or her 
signature and address.
    (c) Name change. If the name of the owner, coowner, or other person 
entitled to payment, as it appears in the registration or in evidence on 
file in the Bureau of the Public Debt, has been changed in any legal 
manner, the signature to the request for payment must show both names 
and the manner in which the change was made; for example, ``Mary T. 
Jones Smith (Mary T. J. Smith or Mary T. Smith) changed by marriage from 
Mary T. Jones,'' or ``John R. Young, changed by order of court from Hans 
R. Jung.'' See Sec. 315.50.
    (d) Attorneys-in-fact. A request for payment, reinvestment, or 
exchange executed by an attorney-in-fact will be recognized if it is 
accompanied by a copy of the power of attorney that meets the following 
requirements:
    (1) The power of attorney must bear the grantor's signature, 
properly certified or notarized, in accordance with applicable State 
law;
    (2) The power of attorney must grant, by its terms, authority for 
the attorney-in-fact to sell or redeem the grantor's securities, sell 
his or her personal property, or, otherwise contain similar authority; 
and
    (3) In the case of a grantor who has become incapacitated, the power 
of attorney must conform with pertinent provisions of State law 
concerning its durability. Generally, in such circumstances, the power 
of attorney should provide that the authority granted will not be 
affected by the subsequent incompetence or incapacity of the grantor. 
Medical evidence or other proof of the grantor's condition may be 
required in any case.

[45 FR 64091, Sept. 26, 1980, as amended at 57 FR 39602, Sept. 1, 1992; 
59 FR 10535, Mar. 4, 1994]



Sec. 315.41  Partial redemption.

    A bond of any series may be redeemed in part at current redemption 
value, but only in an amount corresponding to one or more authorized 
denominations, upon surrender of the bond to a designated Federal 
Reserve Bank or Branch or to the Bureau of the Public Debt in accordance 
with Sec. 315.39(b). In any case in which partial redemption is 
requested, the phrase ``to the extent of $____ (face amount) and reissue 
of the remainder'' should be

[[Page 173]]

added to the request. Upon partial redemption of the bond, the remainder 
will be reissued as of the original issue date, as provided in subpart 
I.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.42  Nonreceipt or loss of check issued in payment.

    If a Treasury check in payment of a bond surrendered for redemption 
is not received within a reasonable time or is lost after receipt, 
notice should be given to the same agency to which the bond was 
surrendered for payment. The notice should give the date the bond was 
surrendered for payment, and describe the bond by series, denomination, 
serial number, and registration, including the taxpayer identifying 
number of the owner.



Sec. 315.43  Effective date of request for payment.

    The Department of the Treasury will treat the receipt of a bond with 
an appropiate request for payment by:
    (a) A Federal Reserve Bank or Branch,
    (b) The Bureau of the Public Debt, or
    (c) A paying agent authorized to pay that bond, as the date upon 
which the rights of the parties are fixed for the purpose of payment.



Sec. 315.44  Withdrawal of request for payment.

    (a) Withdrawal by owner or coowner. An owner or coowner, who has 
surrendered a bond to a Federal Reserve Bank or Branch or to the Bureau 
of the Public Debt or an authorized paying agent with an appropriate 
request for payment, may withdraw the request if notice of intent to 
withdraw is received by the same agency prior to payment either in cash 
or through the issuance of the redemption check.
    (b) Withdrawal on behalf of deceased owner or incompetent. A request 
for payment may be withdrawn under the same conditions as in paragraph 
(a) of this section by the executor or administrator of the estate of a 
deceased owner or by the person or persons who would have been entitled 
to the bond under subpart L, or by the legal representative of the 
estate of a person under legal disability, unless surrender of the bond 
for payment has eliminated the interest of a surviving coowner or 
beneficiary. See Sec. 315.70 (b) and (c).



             Subpart I--Reissue and Denominational Exchange



Sec. 315.45  General.

    Reissue of a bond may be made only under the conditions specified in 
these regulations, and only at:
    (a) A Federal Reserve Bank or Branch, or
    (b) The Bureau of the Public Debt.

Reissue will not be made if the request is received less than one full 
calendar month before the final maturity date of a bond. The request, 
however, will be effective to establish ownership as though the reissue 
had been made.



Sec. 315.46  Effective date of request for reissue.

    The Department of the Treasury will treat the receipt by:
    (a) A Federal Reserve Bank or Branch or
    (b) The Bureau of the Public Debt of a bond and an acceptable 
request for reissue as determining the date upon which the rights of the 
parties are fixed for the purpose of reissue.

For example, if the owner or either coowner of a bond dies after the 
bond has been surrendered for reissue, the bond will be regarded as 
having been reissued in the decedent's lifetime.



Sec. 315.47  Authorized reissue--during lifetime.

    A bond belonging to an individual may be reissued in any authorized 
form of registration upon an appropriate request for the purposes 
outlined below:
    (a) Single ownership. A bond registered in single ownership form may 
be reissued--
    (1) To add a coowner or beneficiary;
    (2) To name a new owner, with or without a coowner or beneficiary, 
but only if:
    (i) The new owner is related to the previous owner by blood 
(including legal adoption) or marriage,
    (ii) The previous owner and the new owner are parties to a divorce 
or annulment, or

[[Page 174]]

    (iii) The new sole owner is the trustee of a personal trust estate 
which was created by the previous owner or which designates as 
beneficiary either the previous owner or a person related to him or her 
by blood (including legal adoption) or marriage.
    (b) Coownership--(1) Reissue--to name a related individual as owner 
or coowner. During the lifetime of both coowners, a coownership bond may 
be reissued in the name of another individual related by blood 
(including legal adoption) or marriage to either coowner--
    (i) As single owner,
    (ii) As owner with one of the original coowners as beneficiary, or
    (iii) As a new coowner with one of the original coowners.
    (2) Reissue--to name either coowner alone or with another individual 
as coowner or beneficiary. During the lifetime of both coowners, a 
coownership bond may be reissued in the name of either coowner alone or 
with another individual as coowner or beneficiary if--
    (i) After issue of the submitted bond, either coowner named thereon 
marries, or the coowners are divorced or legally separated from each 
other, or their marriage is annulled; or
    (ii) Both coowners on the submitted bond are related by blood 
(including legal adoption) or marriage to each other.
    (3) Reissue--to name the trustee of a personal trust estate. A bond 
registered in coownership form may be reissued to name a trustee of a 
personal trust estate created by either coowner or by some other person 
if:
    (i) Either coowner is a beneficiary of the trust, or
    (ii) A beneficiary of the trust is related by blood or marriage to 
either coowner.
    (c) Beneficiary. A bond registered in beneficiary form may be 
reissued--
    (1) To name the beneficiary as coowner;
    (2) To eliminate the name of the owner and to name as owner a 
custodian for the beneficiary, if a minor, under a statute authorizing 
gifts to minors;
    (3) To eliminate the beneficiary or to substitute another individual 
as beneficiary, but only if the request is supported by the certified 
consent of the beneficiary or by proof of his or her death; or
    (4) To eliminate the names of the owner and the beneficiary and to 
name as new owner the trustee of the personal trust estate which was 
created by the previous owner or which designates as beneficiary either 
the previous owner or a person related to him or her by blood (including 
legal adoption) or marriage, but only if the request is supported by the 
certified consent of the beneficiary or by proof of his or her death.



Sec. 315.48  Restrictions on reissue.

    (a) Denominational exchange. Reissue is not permitted solely to 
change denominations.
    (b) United States Treasury. Reissue may not be made to eliminate the 
United States Treasury as coowner or beneficiary.



Sec. 315.49  Correction of errors.

    A bond may be reissued to correct an error in registration upon 
appropriate request, supported by satisfactory proof of the error.



Sec. 315.50  Change of name.

    An owner, coowner, or beneficiary whose name is changed by marriage, 
divorce, annulment, order of court, or in any other legal manner after 
the issue of bond should submit the bond with a request for reissue to 
substitute the new name for the name inscribed on the bond. Documentary 
evidence may be required in any appropriate case.



Sec. 315.51  Requests for reissue.

    A request for reissue of bonds in coownership form during the 
lifetime of the coowners must be signed by both coowners, except that a 
request solely to eliminate the name of one coowner may be signed by 
that coowner only. A bond registered in beneficiary form may be reissued 
upon the request of the owner, supported by the certified consent of the 
beneficiary or by proof of his or her death. Public Debt forms are 
available for requesting reissue.

[[Page 175]]



                     Subpart J--Certifying Officers



Sec. 315.55  Individuals authorized to certify.

    The following individuals are authorized to act as certifying 
officers for the purpose of certifying a request for payment, reissue, 
or a signature to a Public Debt form:
    (a) Officers generally authorized--(1) At banks, trust companies, 
and member organizations of the Federal Home Loan Bank System. (i) Any 
officer of a bank incorporated in the United States, the territories or 
possessions of the United States, or the Commonwealth of Puerto Rico.
    (ii) Any officer of a trust company incorporated in the United 
States, the territories or possessions of the United States, or the 
Commonwealth of Puerto Rico.
    (iii) Any officer of an organization that is a member of the Federal 
Home Loan Bank System. This includes Federal savings and loan 
associations.
    (iv) Any officer of a foreign branch or a domestic branch of an 
institution described in paragraphs (a) (1)(i) through (iii) of this 
section.
    (v) Any officer of a Federal Reserve Bank, a Federal Land Bank, or a 
Federal Home Loan Bank.
    (vi) Any employee of an institution described in paragraphs 
(a)(1)(i) through (v) of this section, who is expressly authorized to 
certify by the institution.

Certification by these officers or designated employees must be 
authenticated by a legible imprint either of a corporate stamp of the 
institution or of the issuing or paying agent's stamp. An employee 
authorized to certify requests must sign his or her name over the title 
``Designated Employee''.
    (2) At issuing agents that are not banks or trust companies. Any 
officer of an organization, not a bank or a trust company, that is 
qualified as an issuing agent for savings bonds. The agent's stamp must 
be imprinted in the certification.
    (3) By United States officials. Any judge, clerk, or deputy clerk of 
a United States court, including United States courts for the 
territories and possessions of the United States, and the Commonwealth 
of Puerto Rico or any United States Commissioner or United States 
Attorney.
    (b) Officers with limited authority--(1) In the Armed Forces. Any 
commissioned officer or warrant officer of the Armed Forces of the 
United States, but only for members of the respective services, their 
families, and civilian employees at posts, bases, or stations. The 
certifying officer must indicate his or her rank and state that the 
individual signing the request is one of the class whose request the 
certifying officer is authorized to certify.
    (2) At Veterans Administration facilities, Federal penal 
institutions, and United States Public Health Service hospitals. Any 
officer in charge of a home, hospital, or other facility of the Veterans 
Administration, but only for the patients, or employees of the facility; 
any officer of a Federal penal institution or a United States Public 
Health Service hospital expressly authorized to certify by the Secretary 
of the Treasury or his designee, but only for the inmates, patients or 
employees of the institution involved. Officers of Veterans 
Administration facilities, Federal penal institutions, and Public Health 
Service hospitals must use the stamp of the particular institution or 
service.
    (c) Authorized officers in foreign countries. Any United States 
diplomatic or consular representative, or the officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate stamp or is 
certified to the Department of the Treasury. If none of these 
individuals is available, a notary public or other officer authorized to 
administer oaths may certify, but his or her official character and 
jurisdiction must be certified by a United States diplomatic or consular 
officer under seal of his or her office.
    (d) Authorized officers in particular localities. The Governor and 
the Treasurer of Puerto Rico; the Governor and the Commissioner of 
Finance of the Virgin Islands; the Governor and the Director of Finance 
of Guam; and the Governor and the Director of Administrative Services of 
American Samoa; and designated officers of the Panama Canal Commission.

[[Page 176]]

    (e) Special provisions. If no certifying officer is readily 
accessible, the Commissioner of the Public Debt, Deputy Commissioner, 
any Assistant Commissioner, or other designated official of the Bureau 
or of a Federal Reserve Bank or Branch is authorized to make special 
provision for any particular case.



Sec. 315.56  General instructions and liability.

    (a) Certification procedure. Certifying officers at financial 
institutions qualified as paying agents should observe the Treasury's 
payment instructions and identification guidelines in certifying savings 
bonds and savings notes being forwarded to a designated Federal Reserve 
Bank for any transaction. Other certifying officers should provide 
certification services for persons with whom they have substantial 
personal acquaintance, and for other persons whose identities have been 
unmistakably established. A notation showing exactly how identification 
was established should be placed on the back of the security or Public 
Debt form, or in a separate record. As part of the certification, the 
certifying officer must affix his or her official signature, title and 
address, the exact date of execution and, where one is available, a 
corporate stamp or issuing or paying agent's stamp.
    (b) Liability. The certifying officer and, if such person is an 
officer or an employee of an organization, the organization will be held 
fully responsible for the adequacy of the identification.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.57  When a certifying officer may not certify.

    Certifying officers may not certify the requests for payment of 
bonds, or appropriate Public Debt forms if, in their own right or in a 
representative capacity, they
    (a) Have an interest in the bonds, or
    (b) Will, by virtue of the requests being certified, acquire an 
interest in the bonds.



Sec. 315.58  Forms to be certified.

    When required in the instructions on a Public Debt form, the form 
must be signed before an authorized certifying officer.



    Subpart K--Minors, Incompetents, Aged Persons, Absentees, et al.



Sec. 315.60  Conditions for payment to representative of an estate.

    (a) General. The representative of an estate of an owner who is a 
minor, an aged person, incompetent, absentee, et al., may receive upon 
request--
    (1) If the registration shows the name and capacity of the 
representative;
    (2) If the registration shows the capacity but not the name of the 
representative and the request is accompanied by appropriate evidence; 
or
    (3) If the registration includes neither the name of the 
representative nor his or her capacity but the request is accompanied by 
appropriate evidence.
    (b) Evidence. Appropriate evidence for paragraphs (a) (2) and (3) of 
this section includes a certified copy of the letters of appointment or, 
if the representative is not appointed by a court, other proof of 
qualification. Except in thee case of corporate fiduciaries, the 
evidence must show that the appointment is in full force and be dated 
not more than one year prior to the presentation of the bond for 
payment. The request for payment appearing on the back of a bond must be 
signed by the representative as such, for example, ``John S. Jones, 
guardian (committee) of the estate of Henry W. Smith, a minor (an 
incompetent).''



Sec. 315.61  Payment after death.

    After the death of the ward, and at any time prior to the 
representative's discharge, the representative of the estate will be 
entitled to obtain payment of a bond to which the ward was solely 
entitled.



Sec. 315.62  Payment to minors.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of the 
minor's estate, payment will be made to the minor upon his or her 
request, provided the minor is of sufficient competency to sign the 
request for payment and to understand

[[Page 177]]

the nature of the transaction. In general, the fact that the request for 
payment has been signed by a minor and certified will be accepted as 
sufficient proof of competency and understanding.



Sec. 315.63  Payment to a parent or other person on behalf of a minor.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of his or 
her estate, and if the minor is not of sufficient competency to sign the 
request for payment and to understand the nature of the transaction, 
payment will be made to either parent with whom the minor resides or to 
whom legal custody has been granted. If the minor does not reside with 
either parent, payment will be made to the person who furnishes the 
chief support for the minor. The request must appear on the back of the 
bond in one of the following forms:
    (a) Request by parent.

    I certify that I am the mother of John C. Jones (with whom he 
resides) (to whom legal custody has been granted). He is ---- years of 
age and is not of sufficient understanding to make this request.

Mary Jones on behalf of John C. Jones.

    (b) Request by other person.

    I certify that John C. Jones does not reside with either parent and 
that I furnish his chief support. He is ---- years of age and is not of 
sufficient understanding to make this request.

Alice Brown, grandmother, on behalf of John C. Jones.



Sec. 315.64  Payment, reinvestment, or exchange--voluntary guardian of an incapacitated person.

    (a) Payment of bonds. When an adult owner of bonds is incapable of 
requesting payment as a result of incapacity and there is no other 
person legally qualified to do so, the relative, or other person, 
responsible for the owner's care and support may submit an application 
for recognition as voluntary guardian for the purpose of redeeming the 
owner's bonds, if the total redemption value of all of the owner's bonds 
does not exceed $20,000. The redemption value of the bonds shall be 
determined as of the date the bonds are received, accompanied by an 
appropriate request for payment. If the total redemption value exceeds 
$20,000, a legal representative must be appointed, as set forth in 
Sec. 315.60.
    (b) Reinvestment of bonds. If the bonds have finally matured and it 
is desired to redeem them and reinvest the proceeds in other savings 
bonds, the new bonds must be registered in the name of the incapacitated 
person, followed by words showing that he or she is under voluntary 
guardianship; for example, ``John Jones 123-45-6789, under voluntary 
guardianship''. A living coowner or beneficiary named on the matured 
bonds must be designated on the new bonds, unless such person furnishes 
a certified statement consenting to omission of his or her name. If an 
amount insufficient to purchase an additional bond of any authorized 
denomination of either series remains after the reinvestment, the 
voluntary guardian may furnish additional funds sufficient to purchase 
another bond of either series of the lowest available denomination. If 
additional funds are not furnished, the remaining amount will be paid to 
the voluntary guardian for the use and benefit of the incapacitated 
person.
    (c) Exchange of bonds. The provisions for reinvestment of the 
proceeds of matured bonds are equally applicable to any authorized 
exchange of bonds of one series for those of another.

[57 FR 39602, Sept. 1, 1992]



Sec. 315.65  Reissue.

    A bond on which a minor or other person under legal disability is 
named as the owner or coowner, or in which he or she has an interest, 
may be reissued under the following conditions:
    (a) A minor for whose estate no representative has been appointed 
may request reissue if the minor is of sufficient competency to sign his 
or her name to the request and to understand the nature of the 
transaction.
    (b) A bond on which a minor is named as beneficiary or coowner may 
be reissued in the name of a custodian for the minor under a statute 
authorizing gifts to minors upon the request of the adult whose name 
appears on the bond as owner or coowner.
    (c) A minor coowner for whose estate no representative has been 
appointed,

[[Page 178]]

may be named sole owner upon the request of the competent coowner.
    (d) Reissue to eliminate the name of a minor or incompetent for 
whose estate a legal representative has been appointed is permitted only 
if supported by evidence that a court has authorized the representative 
of the minor's or incompetent's estate to request the reissue. See 
Sec. 315.23.

Except to the extent provided in paragraphs (a) through (d), of this 
section, reissue will be restricted to a form of registration which does 
not adversely affect the existing ownership or interest of a minor who 
is not of sufficient understanding to make a request, or other person 
under legal disability. Requests for reissue should be executed by the 
person authorized to request payment under Secs. 315.60 and 315.63, or 
the person who may request recognition as voluntary guardian under 
Sec. 315.64.

[45 FR 64091, Sept. 26, 1980. Redesignated at 57 FR 39602, Sept. 1, 
1992]



            Subpart L--Deceased Owner, Coowner or Beneficiary



Sec. 315.70  General rules governing entitlement.

    The following rules govern ownership or entitlement where one or 
both of the persons named on a bond have died without the bond having 
been surrendered for payment or reissue:
    (a) Single owner bond. If the owner of a bond registered in single 
ownership form has died, the bond becomes the property of that 
decedent's estate, and payment or reissue will be made as provided in 
this subpart.
    (b) Coowner bond--(1) One coowner deceased. If one of the coowners 
named on a bond has died, the surviving coowner will be recognized as 
its sole and absolute owner, and payment or reissue will be made as 
though the bond were registered in the name of the survivor alone. Any 
request for reissue by the surviving coowner must be supported by proof 
of death of the other coowner.
    (2) Both coowners deceased. If both coowners named on a bond have 
died, the bond becomes the property of the estate of the coowner who 
died last, and payment or reissue will be made as if the bond were 
registered in the name of the last deceased coowner alone. Proof of 
death of both coowners will be required to establish the order of death.
    (3) Simultaneous death of both coowners. If both coowners die under 
conditions where it cannot be established, either by presumption of law 
or otherwise, which coowner died first, the bond becomes the property of 
both equally, and payment or reissue will be made accordingly.
    (c) Beneficiary bond--(1) Owner deceased. If the owner of a bond 
registered in beneficiary form has died and is survived by the 
beneficiary, upon proof of death of the owner, the beneficiary will be 
recognized as the sole and absolute owner of the bond. Payment or 
reissue will be made as though the bond were registered in the 
survivor's name alone. A request for payment or reissue by the 
beneficiary must be supported by proof of death of the owner.
    (2) Beneficiary deceased. If the beneficiary's death occurs before, 
or simultaneous with, that of the registered owner, payment or reissue 
will be made as though the bond were registered in the owner's name 
alone. Proof of death of the owner and beneficiary is required to 
establish the order of death.
    (d) Nonresident aliens. If the person who becomes entitled to a bond 
because of the death of an owner is an alien who is a resident of an 
area with respect to which the Department of the Treasury restricts or 
regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities, delivery of the redemption 
check will not be made so long as the restriction applies. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211).



Sec. 315.71  Estate administered.

    (a) During administration. The legal representative of an estate may 
request payment of bonds, including interest or redemption checks, 
belonging to the estate or may have the bonds reissued in the names of 
the persons entitled to share in the estate under the following 
conditions:

[[Page 179]]

    (1) When there is more than one legal representative, all must join 
in the request for payment or reissue, unless Sec. 315.75(a)(1) or (b) 
applies.
    (2) The request for payment or reissue must be signed in the form: 
``John A. Jones, administrator of the estate (or executor of the will) 
of Henry M. Jones, deceased''. The request must be supported by evidence 
of the legal representative's authority in the form of a court 
certificate or a certified copy of the legal representative's letters of 
appointment which must be dated within six months of the date of 
presentation of the bond, unless the evidence shows that the appointment 
was made within one year prior to the presentation of the bond.
    (3) For reissue, the legal representative must certify that each 
person in whose name reissue is requested is entitled to the extent 
specified and must certify that each person has consented to the 
reissue. If a person in whose name reissue is requested desires to name 
a coowner or beneficiary, the person must execute an additional request 
for reissue on the appropriate form.
    (b) After administration. If the estate of the decedent has been 
settled through judicial proceedings, the bond and interest and 
redemption checks will be paid, or the bond will be reissued, upon the 
request of the person shown to be entitled by the court order. The 
request must be supported by a certified copy of the legal 
representative's court-approved final account, the decree of 
distribution, or other pertinent court records. If two or more persons 
have an interest in the bond, they must enter into an agreement 
concerning the bond's disposition. If the person entitled desires to 
name a coowner or beneficiary, a separate request must be made on an 
appropriate form.
    (c) Special provisions for small amounts. Special procedures are 
available for establishing entitlement to, or effecting disposition of, 
savings bonds and interest and redemption checks if the aggregate face 
amount, excluding interest checks, does not exceed $1,000.



Sec. 315.72  Estate not administered.

    (a) Special State law provisions. A request for payment or reissue 
of a bond by the person who has qualified under State law to receive or 
distribute the assets of a decedent's estate will be accepted, provided 
evidence of the person's authority is submitted.
    (b) Agreement of persons entitled. If there is no legal 
representative for the estate of a decedent, the bonds will be paid to, 
or reissued in the name of, the persons entitled, pursuant to an 
agreement and request executed by all persons entitled to share in the 
decedent's personal estate. If the persons entitled to share in the 
decedent's personal estate include minors or incompetents, payment or 
reissue of the bonds must be made to them or in their names unless their 
interest in the bonds is otherwise protected.
    (c) Creditors. An institutional creditor of a deceased owner's 
estate is entitled to payment only to the extent of its claim.
    (d) Special provisions for payment of small amounts--survivors of 
the decedent. (1) If the face amount of the bond does not exceed $500 
and there is no legal representative of the deceased owner's estate, the 
bond will be paid upon the request of the person who paid the burial 
expenses and who has not been reimbursed.
    (2) If there is no legal representative of the estate of a decedent 
who died without a will, and the total face amount of bonds in the 
estate does not exceed $1,000 (face amount), the bonds may be paid to 
the decedent's survivors upon request in the following order of 
precedence:
    (i) Surviving spouse;
    (ii) If no surviving spouse, to the child or children of the 
decedent, and the descendants of deceased children by representation;
    (iii) If none of the above, to the parents of the decedent, or the 
survivor;
    (iv) If none of the above, to the brothers and sisters, and the 
descendants of deceased brothers or sisters by representation;
    (v) If none of the above, to other next-of-kin, as determined by the 
laws of the owner's domicile at death;
    (vi) If none of the above, to persons related to the decedent by 
marriage.

The payment pursuant to this subsection shall be made upon the request

[[Page 180]]

and agreement of the survivors to receive the redemption proceeds 
individually and for the account of any persons entitled. Interest 
checks held for the estate of a decedent will be distributed with the 
bonds.



                         Subpart M--Fiduciaries



Sec. 315.75  Payment or reissue during the existence of the fiduciary estate.

    (a) Payment or reissue before maturity--(1) Request from the 
fiduciary named in the registration. A request for reissue or payment 
prior to maturity must be signed by all of the fiduciaries unless by 
statute, decree of court, or the terms of the governing instrument, any 
lesser number may properly execute the request. If the fiduciaries named 
in the registration are still acting, no further evidence will be 
required. In other cases, evidence to support the request will be 
required, as specified:
    (i) Fiduciaries by title only. If the bond is registered only in the 
titles, without the names, of fiduciaries not acting as a board, 
satisfactory evidence of their incumbency must be furnished, except in 
the case of bonds registered in the title of public officers as 
trustees.
    (ii) Boards, committees, commissions, etc. If a bond is registered 
in the name of a governing body which is empowered to act as a unit, and 
which holds title to the property of a religious, educational, 
charitable or nonprofit organization or a public corporation, the 
request should be signed in the name of the body by an authorized 
person. Ordinarily, a signed and certified request will be accepted 
without further evidence.
    (iii) Corporate fiduciaries. If a bond is registered in the name of 
a public or private corporation or a governmental body as fiduciary, the 
request must be signed by an authorized officer in the name of the 
organization as fiduciary. Ordinarily, a signed and certified request 
will be accepted without further evidence.
    (2) Trustee of a common trust fund. A bond held by a financial 
institution in a fiduciary capacity may be reissued in the name of the 
institution as trustee of its common trust fund to the extent that 
participation in the common trust fund is authorized by law or 
regulation. The request for reissue should be executed by the 
institution and any cofiduciary.
    (3) Successor fiduciary. If the fiduciary in whose name the bond is 
registered has been replaced by another fiduciary, satisfactory evidence 
of successorship must be furnished.
    (b) Payment at or after final maturity. At or after final maturity, 
a request for payment signed by any one or more of the fiduciaries will 
be accepted. Payment will be made by check drawn as the bond is 
registered.



Sec. 315.76  Payment or reissue after termination of the fiduciary estate.

    A bond registered in the name or title of a fiduciary may be paid or 
reissued to the person who has become entitled by reason of the 
termination of a fiduciary estate. Requests for reissue made by a 
fiduciary pursuant to the termination of a fiduciary estate should be 
made on the appropriate form. Requests for payment or reissue by other 
than the fiduciary must be accompanied by evidence to show that the 
person has become entitled in accordance with applicable State law or 
otherwise. When two or more persons have become entitled, the request 
for payment or reissue must be signed by each of them.



Sec. 315.77  Exchanges by fiduciaries.

    Fiduciaries are authorized to request an exchange of bonds of one 
series for those of another, pursuant to any applicable Department of 
the Treasury offering. A living coowner or beneficiary named on the 
bonds submitted in exchange may be retained in the same capacity on the 
new bonds.



     Subpart N--Private Organizations (Corporations, Associations, 
    Partnerships, etc.) and Governmental Agencies, Units and Officers



Sec. 315.80  Payment to corporations or unincorporated associations.

    A bond registered in the name of a private corporation or an 
unincorporated association will be paid to the

[[Page 181]]

corporation or unincorporated association upon a request for payment on 
its behalf by an authorized officer. The signature to the request should 
be in the form, for example, ``The Jones Coal Company, a corporation, by 
John Jones, President'', or ``The Lotus Club, an unincorporated 
association, by William A. Smith, Treasurer''. A request for payment so 
signed and certified will ordinarily be accepted without further 
evidence of the officer's authority.



Sec. 315.81  Payment to partnerships.

    A bond registered in the name of an existing partnership will be 
paid upon a request for payment signed by a general partner. The 
signature to the request should be in the form, for example, ``Smith and 
Jones, a partnership, by John Jones, a general partner''. A request for 
payment so signed and certified will ordinarily be accepted as 
sufficient evidence that the partnership is still in existence and that 
the person signing the request is authorized.



Sec. 315.82  Reissue or payment to successors of corporations, unincorporated associations, or partnerships.

    A bond registered in the name of a private corporation, an 
unincorporated associations, or a partnership which has been succeeded 
by another corporation, unincorporated association, or partnership by 
operation of law or otherwise, in any manner whereby the business or 
activities of the original organization are continued without 
substantial change, will be paid to or reissued in the name of the 
succeeding organization upon appropriate request on its behalf, 
supported by satisfactory evidence of successorship. The appropriate 
form should be used.



Sec. 315.83  Reissue or payment on dissolution of corporation or partnership.

    (a) Corporations. A bond registered in the name of a private 
corporation which is in the process of dissolution will be paid to the 
authorized representative of the corporation upon a request for payment, 
supported by satisfactory evidence of the representative's authority. At 
the termination of dissolution proceedings, the bond may be reissued 
upon the request of the authorized representative in the names of those 
persons, other than creditors, entitled to the assets of the 
corporation, to the extent of their respective interests. Proof will be 
required that all statutory provisions governing the dissolution of the 
corporation have been complied with and that the persons in whose names 
reissue is requested are entitled and have agreed to the reissue. If the 
dissolution proceedings are under the direction of a court, a certified 
copy of an order of the court, showing the authority of the 
representative to make the distribution requested must be furnished.
    (b) Partnerships. A bond registered in the name of a partnership 
which has been dissolved by death or withdrawal of a partner, or in any 
other manner--
    (1) Will be paid upon a request for payment by any partner or 
partners authorized by law to act on behalf of the dissolved 
partnership, or
    (2) Will be paid to or reissued in the names of the persons entitled 
as the result of such dissolution to the extent of their respective 
interests, except that reissue will not be made in the names of 
creditors.

The request must be supported by satisfactory evidence of entitlement, 
including proof that the debts of the partnership have been paid or 
properly provided for. The appropriate form should be used.



Sec. 315.84  Payment to certain institutions.

    A bond registered in the name of a church, hospital, home, school, 
or similar institution, without reference in the registration to the 
manner in which it is organized or governed or to the manner in which 
title to its property is held, will be paid upon a request for payment 
signed on behalf of such institution by an authorized representative. A 
request for payment signed by a pastor of a church, superintendent of a 
hospital, president of a college, or by any official generally 
recognized as having authority to conduct the financial affairs of the 
particular institution will ordinarily be accepted without further proof 
of authority. The signature to the request should be in the form,

[[Page 182]]

for example, ``Shriners' Hospital for Crippled Children, St. Louis, MO, 
by William A. Smith, Superintendent'', or ``St. Mary's Roman Catholic 
Church, Albany, NY, by the Rev. John Smyth, Pastor''.



Sec. 315.85  Reissue in name of trustee or agent for reinvestment purposes.

    A bond registered in the name of a religious, educational, 
charitable or nonprofit organization, whether or not incorporated, may 
be reissued in the name of a financial institution, or an individual, as 
trustee or agent. There must be an agreement between the organization 
and the trustee or agent holding funds of the organization, in whole or 
in part, for the purpose of investing and reinvesting the principal and 
paying the income to the organization. Reissue should be requested on 
behalf of the organization by an authorized officer using the 
appropriate form.



Sec. 315.86  Reissue upon termination of investment agency.

    A bond registered in the name of a financial institution, or 
individual, as agent for investment purposes only, under an agreement 
with a religious, an educational, a charitable, or a nonprofit 
organization, may be reissued in the name of the organization upon 
termination of the agency. The former agent should request such reissue 
and should certify that the organization is entitled by reason of the 
termination of the agency. If such request and certification are not 
obtainable, the bond will be reissued in the name of the organization 
upon its own request, supported by satisfactory evidence of the 
termination of the agency. The appropriate form should be used.



Sec. 315.87  Payment to governmental agencies, units, or their officers.

    (a) Agencies and units. A bond registered in the name of a State, 
county, city, town, village, or in the name of a Federal, State, or 
local governmental agency, such as a board, commission, or corporation, 
will be paid upon a request signed in the name of the governmental 
agency or unit by an authorized officer. A request for payment so signed 
and certified will ordinarily be accepted without further proof of the 
officer's authority.
    (b) Officers. A bond registered in the official title of an officer 
of a governmental agency or unit will be paid upon a request for payment 
signed by the officer. The request for payment so signed and certified 
will ordinarily be accepted as proof that the person signing is the 
incumbent of the office.



                   Subpart O--Miscellaneous Provisions



Sec. 315.90  Waiver of regulations.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may waive or modify any provision or provisions of these 
regulations. He may do so in any particular case or class of cases for 
the convenience of the United States or in order to relieve any person 
or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity, (b) 
if it does not impair any existing rights, and (c) if he is satisfied 
that such action would not subject the United States to any substantial 
expense or liability.



Sec. 315.91  Additional requirements; bond of indemnity.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may require
    (a) Such additional evidence as he may consider necessary or 
advisable, or
    (b) A bond of indemnity, with or without surety, in any case in 
which he may consider such a bond necessary for the protection of the 
interests of the United States.



Sec. 315.92  Preservation of rights.

    Nothing contained in these regulations shall be construed to limit 
or restrict existing rights which holders of savings bonds previously 
issued may have acquired under circulars offering the bonds for sale or 
under the regulations in force at the time of the purchase.



Sec. 315.93  Supplements, amendments, or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional, supplemental,

[[Page 183]]

amendatory, or revised rules and regulations governing the United States 
Savings Bonds and Savings Notes to which this circular applies.



PART 316--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES E--Table of Contents




Sec.
316.1  Offering of bonds.
316.2  Description of bonds.
316.3  Governing regulations.
316.4  Registration.
316.5  Limitation on holdings.
316.6  Purchase of bonds.
316.7  Delivery of bonds.
316.8  Extended terms and yields for outstanding bonds.
316.9  Taxation.
316.10  Payment or redemption.
316.11  Reservation as to issue of bonds.
316.12  Fiscal agents.
316.13  Reservation as to terms of offer.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 57 FR 14276, Apr. 17, 1992, unless otherwise noted.



Sec. 316.1  Offering of bonds.

    The Secretary of the Treasury offered for sale to the people of the 
United States, United States Savings Bonds of Series E, hereinafter 
generally referred to as ``Series E bonds'' or ``bonds''.
    This offer was terminated as of December 31, 1979, except that, as 
to bonds purchased under payroll savings plans and employee plans, the 
offer was terminated as of June 30, 1980.



Sec. 316.2  Description of bonds.

    (a) General. Series E bonds bear a facsimile of the signature of the 
Secretary of the Treasury and of the Seal of the Department of the 
Treasury. They were issued only in registered form and are 
nontransferable.
    (b) Denominations and prices. Series E bonds were issued on a 
discount basis. The denominations and issue prices were:

 
                       Denomination                          Issue price
 
$25.......................................................        $18.75
50........................................................         37.50
75........................................................         56.25
100.......................................................         75.00
200.......................................................        150.00
500.......................................................        375.00
1,000.....................................................        750.00
10,000....................................................      7,500.00
100,000\1\................................................     75,000.00
 
\1\ The $100,000 denomination was available only for purchase by
  trustees of employee savings and savings and vacation plans (see
  paragraph (b) of Sec.  316.5).

    (c) Inscription and issue. At the time of issue, the issuing agent:
    (1) Inscribed on the face of each bond the name, social security 
number and address of the owner, and the name of the beneficiary, if 
any, or the name, social security number and address of the first-named 
coowner and the name of the other coowner (the inscription of the social 
security number was required for bonds issued on or after January 1, 
1974);
    (2) Entered the issue date in the upper right-hand portion of the 
bond; and
    (3) Imprinted the agent's validation indicia in the lower right-hand 
portion to show the date the bond was actually inscribed. A bond was 
valid only if an authorized issuing agent received payment therefor and 
duly inscribed, dated and imprinted validation indicia on the bond.
    (d) Term. A Series E bond was dated as of the first day of the month 
in which payment of the purchase price was received by an agent 
authorized to issue the bonds. This date is the issue date. The bonds 
mature as shown in Sec. 316.8. The bond may not be called for redemption 
by the Secretary of the Treasury prior to maturity or the end of any 
extended maturity period (see paragraph (a) of Sec. 316.8). The bond may 
be redeemed at the owner's option at any time at fixed redemption 
values.
    (e) Investment yield (interest). The investment yield (interest) on 
Series E bonds is defined in paragraphs (c) and (d) of Sec. 316.8. 
Beginning in the third month from its issue date, a bond increased in 
redemption value on the first day of each month, up to and including the 
thirtieth month from issue date, so as to provide for such period an 
investment yield of no less than 4 percent per annum, compounded 
semiannually. Thereafter, its redemption value increases at the 
beginning of each successive half-year period. The interest is paid as 
part of the redemption value.

[[Page 184]]



Sec. 316.3  Governing regulations.

    Series E bonds are subject to the regulations of the Department of 
the Treasury, now or hereafter prescribed, governing United States 
Savings Bonds of Series A, B, C, D, E, F, G, H, J and K, contained in 31 
CFR part 315, also published as Department of the Treasury Circular No. 
530, current revision.\2\
---------------------------------------------------------------------------

    \2\ Copies may be obtained from any designated Federal Reserve Bank 
or Branch or the Bureau of the Public Debt, 200 Third Street, 
Parkersburg, WV 26106-1328.

[57 FR 14276, Apr. 17, 1992, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 316.4  Registration.

    Series E bonds were permitted to be registered as set forth in 
subpart B of 31 CFR part 315, also published as Department of the 
Treasury Circular No. 530, current revision.



Sec. 316.5  Limitation on holdings.

    (a) General limitation. The amount of Series E bonds, originally 
issued during any one calendar year, that could be held by any one 
person, computed in accordance with the governing regulations, ranged 
from $5,000 (face amount) to $20,000 (face amount), depending upon the 
issue date.
    (b) Special limitation for employee savings plans. A special 
limitation for employee savings plans was provided, which was $2,000 
(face amount) multiplied by the highest number of participants in any 
employee savings plan, as defined in paragraph (b)(1) of this section, 
at any time during the year in which the bonds were issued. The plan had 
to be established, as set forth below.
    (1) Definition of plan and conditions of eligibility. (i) The 
employee savings plan must have been established by the employer for the 
exclusive and irrevocable benefit of employees or their beneficiaries, 
afforded employees the means of making regular savings from their wages 
through payroll deduction, and provided for employer contributions to be 
added to such savings.
    (ii) The entire assets thereof must have been credited to the 
individual accounts of participating employees and the assets so 
credited could be distributed only to the employees or their 
beneficiaries, except as otherwise provided herein.
    (iii) Series E bonds were to be purchased only with assets credited 
to the accounts of participating employees and only if the amount taken 
from any account at any time for that purpose was equal to the purchase 
price of a bond or bonds in an authorized denomination or denominations, 
and shares therein were credited to the accounts of the individuals from 
whom the purchase price thereof was derived, in amounts corresponding 
with such shares. For example, if $37.50 credited to the account of John 
Jones was commingled with funds credited to the accounts of other 
employees to make a total of $7,500, with which a Series E bond in the 
denomination of $10,000 (face amount) was purchased in December 1978 and 
registered in the name and title of the trustee, the plan must have 
provided, in effect, that John Jones' account would be credited to show 
that he was the owner of a Series E bond in the denomination of $50 
(face amount) bearing the issue date of December 1, 1978.
    (iv) Each participating employee has an irrevocable right at any 
time to demand and receive from the trustee all assets credited to his 
or her account or the value thereof, if he or she so prefers, without 
regard to any condition other than the loss or suspension of the 
privilege of participating further in the plan. However, a plan was not 
deemed to be inconsistent herewith if it limited or modified the 
exercise of any such right by providing that the employer's contribution 
did not vest absolutely until the employee had made contributions under 
the plan in each of not more than 60 calendar months succeeding the 
month for which the employer's contribution was made.
    (v) Upon the death of an employee, his or her beneficiary has the 
absolute and unconditional right to demand and receive from the trustee 
all assets credited to the account of the employee, or the value 
thereof, if he or she so prefers.
    (vi) When settlement is made with an employee, or his or her 
beneficiary, with respect to any bond registered in the name and title 
of the trustee in

[[Page 185]]

which the employee has a share (see paragraphs (b)(1) (ii) and (iii) of 
this section), the bond must be submitted for redemption or reissue to 
the extent of such share. If an employee or his or her beneficiary is to 
receive distribution in kind, bonds bearing the same issue dates as 
those credited to the employee's account will be reissued in the name of 
the distributee to the extent to which he or she is entitled, in any 
authorized form of registration, upon the request and certification of 
the trustee, in accordance with the governing reguations.
    (2) Definitions of terms used in paragraph (b)--related provisions. 
(i) The term savings plan includes any regulations issued under the plan 
with regard to Series E bonds. A trustee desiring to purchase bonds in 
excess of the general limitation in any calendar year should have 
submitted to the Federal Reserve Bank of the district a copy of the 
plan, any such regulations, and the trust agreement, all certified to be 
true copies, in order to establish eligibility.
    (ii) The term assets means all funds, including the employee 
contributions and employer contributions and assets purchased therewith, 
as well as accretions thereto, such as dividends on stock, the increment 
in value on bonds and all other income; but, notwithstanding any other 
provision of this paragraph, the right to demand and receive all assets 
credited to the account of an employee shall not be construed to require 
the distribution of assets in kind when it would not be possible or 
practicable to make such distribution; for example, Series E bonds may 
not be reissued in unauthorized denominations, and fractional shares of 
stock are not readily distributable in kind.
    (iii) The term beneficiary means the person or persons, if any, 
designated by the employee in accordance with the terms of the plan to 
receive the benefits of the trust upon his or her death, or the estate 
of the employee, and the term distributee means the employee, or his or 
her beneficiary.



Sec. 316.6  Purchase of bonds.

    Series E bonds were purchased, as follows:
    (a) Over-the-counter for cash--(1) Bonds registered in names of 
natural persons in their own right only. At such incorporated banks, 
trust companies, and other agencies as had been duly qualified as 
issuing agents.
    (2) Bonds registered in names of trustees of employee savings plans. 
At such incorporated bank, trust company, or other agency, duly 
qualified as an issuing agent, provided the agent was trustee of an 
approved employee savings plan eligible for the special limitation in 
paragraph (b) of Sec. 316.5 and prior approval to issue the bonds was 
obtained from the Federal Reserve Bank of the agent's district.
    (3) Bonds registered in all authorized forms. At Federal Reserve 
Banks and Branches and at the Department of the Treasury, Washington, DC 
20226.
    (b) On mail order. By mail upon application to any Federal Reserve 
Bank or Branch or to the Department of the Treasury, accompanied by a 
remittance to cover the issue price. Any form of exchange, including 
personal checks, was accepted, subject to collection. Checks or other 
forms of exchange were to be drawn to the order of the Federal Reserve 
Bank or the United States Treasury, as the case may be. Checks payable 
by endorsement were not acceptable. Any depositary qualified pursuant to 
the provisions of 31 CFR part 203, also published as Department of the 
Treasury Circular No. 92, current revision, was permitted to make 
payment by credit for bonds applied for on behalf of its customers up to 
any amount for which it was qualified in excess of existing deposits, 
when so notified by the Federal Reserve Bank of its district.
    (c) Savings stamps. The sale of United States Savings Stamps was 
terminated effective June 30, 1970. However, outstanding stamps affixed 
in fully or partially completed albums could be used to purchase Series 
E bonds at banks or other financial institutions authorized to issue 
such bonds. Stamps may be redeemed at banks and other financial 
institutions, through designated Federal Reserve Banks and the Bureau of 
the Public Debt, Parkersburg, West Virginia.

[57 FR 14276, Apr. 17, 1992, as amended at 59 FR 10535, Mar. 4, 1994]

[[Page 186]]



Sec. 316.7  Delivery of bonds.

    Issuing agents were authorized to deliver Series E bonds either 
over-the-counter in person, or by mail at the risk and expense of the 
United States, to the address given by the purchaser, but only within 
the United States, its territories and possessions, and the Commonwealth 
of Puerto Rico. No mail deliveries elsewhere were made. If purchased by 
citizens of the United States temporarily residing abroad, the bonds 
were delivered to such address in the United States as the purchaser 
directed.



Sec. 316.8  Extended terms and yields for outstanding bonds.

    (a) General. The terms extended maturity period, second extended 
maturity period, third extended maturity period and fourth extended 
maturity period, when used herein, refer to periods of 10 years or less 
after the original maturity dates during which owners may retain their 
bonds and continue to earn interest. No special action is required to 
take advantage of any extensions heretofore or herein granted. Series E 
bonds cease to accrue interest upon reaching final maturity.
    (b) Extended maturity periods--(1) Bonds issued from May 1, 1941 
through April 1, 1952. Series E bonds with issue dates of May 1, 1941, 
through April 1, 1952, reached or will reach final maturity 40 years 
after their respective issue dates, as shown below.

------------------------------------------------------------------------
                                        Life of   Final maturity dates--
       Issue dates--1st day of        bonds yrs.        1st day of
------------------------------------------------------------------------
May 1941-Apr. 1952..................          40  May 1981-Apr. 1992.
------------------------------------------------------------------------

    (2) Bonds issued from May 1, 1952 through November 1, 1965. Bonds 
with issue dates of May 1, 1952, through November 1, 1965, will receive 
an additional extension of maturity ranging from 4 months to 2 years and 
3 months, as shown below, so that these bonds will reach final maturity 
40 years after their respective issue dates.

------------------------------------------------------------------------
                                       Previous
                                      maturities      Previous maturity
      Issue dates--lst day of      ----------------   dates--1st day of
                                     yrs.    mos.
------------------------------------------------------------------------
May 1952-Jan. 1957................      39       8  Jan. 1992-Sept.
                                                     1996.
Feb. 1957-May 1959................      38      11  Jan. 1996-Apr. 1998.
Jun. 1959-Nov. 1965...............      37       9  Mar. 1997-Aug. 2003.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                               Additional
                                                extended
                                                maturity       Life of
          Issue dates--1st day of                period      bonds--yrs.
                                            ----------------
                                              yrs.    mos.
------------------------------------------------------------------------
May 1952-Jan. 1957.........................  ......       4           40
Feb. 1957-May 1959.........................       1       1           40
Jun. 1959-Nov. 1965........................       2       3          40.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                              Final maturity dates--1st
          Issue dates--1st day of                      day of
------------------------------------------------------------------------
May 1952-Jan. 1957........................  May 1992-Jan. 1997.
Feb. 1957-May 1959........................  Feb. 1997-May 1999.
Jun. 1959-Nov. 1965.......................  June. 1999-Nov. 2005.
------------------------------------------------------------------------

    (3) Bonds issued from December 1, 1965 through June 1, 1980. Bonds 
with issue dates of December 1, 1965, through June 1, 1980, will receive 
an additional extension of maturity ranging from 3 years to 5 years, as 
shown below, so that these bonds will reach final maturity 30 years 
after their respective issue dates.

------------------------------------------------------------------------
                                       Previous
                                      maturities      Previous maturity
      Issue dates--1st day of      ----------------   dates--1st day of
                                     yrs.    mos.
------------------------------------------------------------------------
Dec. 1965-May 1969................      27  ......  Dec. 1992-May 1996.
June. 1969-Nov. 1973..............      25      10  Apr. 1995-Sept.
                                                     1999.
Dec. 1973-Jun. 1980...............      25  ......  Dec. 1998-Jun. 2005.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                               Additional
                                                extended
                                                maturity       Life of
          Issue dates--1st day of                period      bonds--yrs.
                                            ----------------
                                              yrs.    mos.
------------------------------------------------------------------------
Dec. 1965-May 1969.........................       3  ......           30
Jun. 1969-Nov. 1973........................       4       2           30
Dec. 1973-Jun. 1980........................       5  ......           30
------------------------------------------------------------------------


------------------------------------------------------------------------
                                              Final maturity dates--1st
          Issue dates--1st day of                      day of
------------------------------------------------------------------------
Dec. 1965-May 1969........................  Dec. 1995-May 1999.
Jun. 1969-Nov. 1973.......................  Jun. 1999-Nov. 2003.
Dec. 1973-Jun. 1980.......................  Dec. 2003-Jun. 2010.
------------------------------------------------------------------------

    (c) Guaranteed minimum investment yield--(1) General. Except as 
provided in paragraph (c)(2) of this section, the guaranteed minimum 
investment yields for outstanding Series E bonds are as follows:

[[Page 187]]

    (i) For Series E bonds that were in original or extended maturity 
periods prior to November 1, 1982, the guaranteed minimum investment 
yield was 8.5 percent per annum, compounded semiannually, effective for 
the period from the first semiannual interest accrual date on or after 
May 1, 1981, through the end of such periods, unless the bonds reached 
final maturity before November 1, 1981.\3\ For bonds that entered 
extensions, see paragraphs (c)(1)(ii) through (c)(1)(iv) of this 
section.
---------------------------------------------------------------------------

    \3\ Series E bonds issued from May 1, 1941, through October 1, 1941, 
had reached final maturity May 1, 1981, through October 1, 1981, before 
the 8.5 percent yield had become effective.
---------------------------------------------------------------------------

    (ii) For Series E bonds that entered extended maturity periods 
during the period of November 1, 1982, through October 1, 1986, the 
guaranteed minimum yield was or is 7.5 percent per annum, compounded 
semiannually, for such periods, including bonds that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--          Extension             of--
------------------------------------------------------------------------
Mar. 1953-Nov. 1957..............  3rd.............  Nov. 1982-Oct.
                                                      1986.
Feb. 1965-Dec. 1970..............  2nd.............  Nov. 1982-Oct.
                                                      1986.
Nov. 1977-June 1980..............  1st.............  Nov. 1982-June
                                                      1985.
------------------------------------------------------------------------

    (iii) For Series E bonds that entered into extended maturity periods 
during the period of November 1, 1986, through February 1, 1993, the 
guaranteed minimum yield was or is 6 percent per annum, compounded 
semiannually, for such periods, including bonds that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--       Extension \4\            of--
------------------------------------------------------------------------
May 1952-Aug. 1953..............  4th (final) \5\..  Jan. 1992-Apr.
                                                      1993.
Dec. 1957-May 1965..............  3rd..............  Nov. 1986-Feb.
                                                      1993.
Dec. 1965-Feb. 1966.............  3rd (final)......  Dec. 1992-Feb.
                                                      1993.
Jan. 1971-Feb. 1978.............  2nd..............  Nov. 1986-Feb.
                                                      1993.
------------------------------------------------------------------------
\4\ Interest for interest accrual periods of less than 6 months is
  prorated.
\5\ All Series E bonds issued between May 1, 1941 and April 1, 1953,
  have matured and are no longer earning interest.

    (iv) For Series E bonds entering extended maturity periods on or 
after March 1, 1993, the guaranteed minimum yield is 4 percent per 
annum, compounded semiannually, or the guaranteed minimum investment 
yield in effect at the beginning of the period, including bonds that 
enter extended maturity periods, as shown below: \6\
---------------------------------------------------------------------------

    \6\ Series E bonds with issue dates of July 1 and August 1, 1953, 
entered a final maturity period of 4 months on March 1, and April 1, 
1993, respectively, and received a minimum investment yield of 6 percent 
per annum, compounded semiannually, for that period.

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--        Extension \7\           of--
------------------------------------------------------------------------
Sep. 1953-May 1965..............  4th (final).......  May 1993-Feb.
                                                       2003.
Jun. 1965-Nov. 1965.............  3rd...............  Mar. 1993-Aug.
                                                       1993.
Jun. 1965-Nov. 1965.............  4th (final).......  Mar. 2003-Aug.
                                                       2003.
Mar. 1966-Feb. 1978.............  3rd (final).......  Mar. 1993-Feb.
                                                       2003.
Mar. 1978-Jun. 1980.............  2nd...............  Mar. 1993-Jun.
                                                       1995
Mar. 1978-Jun. 1980.............  3rd (final).......  Mar. 2003-Jun.
                                                       2005.
------------------------------------------------------------------------
\7\ See footnote 2 above.

    (2) Eleven-year bonus. If a bond bearing an issue date of January 1, 
1951, or thereafter, was held for the 11-year period from the first 
semianual interest accrual period that began on or after January 1, 
1980, its guaranteed minimum investment yield for such period was 
increased by one-half of one percent per annum, compounded semiannually.
    (d) Market-based variable investment yield. In order to be eligible 
for the market-based variable investment yield, Series E savings bonds 
had to be held at least five years beginning with the first semiannual 
interest accrual date occurring on or after November 1, 1982. The 
market-based variable investment yield shall be determined by the 
Secretary of the Treasury as follows:
    (1) For each 6-month period, starting with the period beginning May 
1, 1982, the average market yield on outstanding marketable Treasury 
securities with a remaining term to maturity of approximately 5 years 
during such period is determined. Such determination by the Secretary of 
the Treasury or his or her delegate shall be final and conclusive.
    (2) For bonds which entered an extended maturity period prior to May 
1,

[[Page 188]]

1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occurring on or after November 
1, 1987, will be 85 percent, rounded to the nearest one-fourth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (d)(1) of this section, for the 
appropriate number of 6-month periods involved, starting with the period 
beginning May 1, 1982.
    (3) For bonds which entered an extended maturity period on or after 
May 1, 1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occurring on or after November 
1, 1989, will be 85 pecent, rounded to the nearest one-hundredth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (d)(1) of this section, for the 
appropriate number of 6-month periods involved, starting with the period 
beginning May 1, 1982.
    (e) Determination of redemption values during any extended maturity 
period. The redemption value of a bond on a given interest accrual date 
during any extended maturity period will be the higher of the value 
produced by using the applicable guaranteed minimum investment yield or 
the value produced by using the appropriate market-based variable 
investment yield. The calculation of these values is described below:
    (1) Guaranteed minimum investment yield and resulting values during 
an extended maturity period. A bond has a guaranteed minimum investment 
yield for each of its extended maturity periods. The applicable 
guaranteed minimum investment yields for the current extended maturity 
period and any subsequent periods are specified in paragraph (c) of this 
section. In order to determine the value of a bond during an extended 
maturity period, the value of the bond either at the end of the next 
preceding maturity period or when the guaranteed minimum investment 
yield last increased,\8\ whichever occurs later, is determined using the 
applicable guaranteed minimum investment yield. This value is then used 
as the base upon which interest accrues during the extended maturity 
period at the guaranteed minimum investment yield in effect for savings 
bonds at the beginning of that period. The resulting semiannual values 
are then compared with the corresponding values determined by using the 
applicable market-based variable investment yields.
---------------------------------------------------------------------------

    \8\ The 11-year bonus was the last increase in the guaranteed 
minimum investment yield (see paragraph (b)(2)). Series E bonds which 
were eligible to receive this bonus received it on the first semiannual 
interest accrual date occuring on or after January 1, 1991.
---------------------------------------------------------------------------

    (2) Market-based variable investment yield and resulting values 
during an extended maturity period. The market-based variable investment 
yield from the first semiannual interest accrual date occuring on or 
after November 1, 1982 to each semiannual interest accrual date 
occurring on or after November 1, 1987, is determined as specified in 
paragraph (d) of this section. The value of a bond on its first 
seimannual interest accrual date occurring on or after November 1, 1982 
is used as the base upon which interest accrues during an extended 
maturity period at the applicable market-based variable investment 
yield. If redeemed, the bond will receive the higher of the two values 
produced by using the applicable guaranteed minimum investment yield and 
the applicable market-based variable investment yield.
    (f) Market-based variable investment yields and tables of redemption 
values. The market-based variable investment yields for bonds redeemed 
during each 6-month period, beginning on May 1 and November 1 of each 
year, are made available prior to each of those dates by the Bureau of 
the Public Debt, Parkersburg, West Virginia 26106-1328, accompanied by 
tables of the redemption values of bonds for the following 6 months, 
based on either the applicable market-based variable investment yields 
or guaranteed minimum investment yields.

[57 FR 14276, Apr. 17, 1992, as amended at 58 FR 60936, 60937, Nov. 18, 
1993]

[[Page 189]]



Sec. 316.9  Taxation.

    (a) General. For the purpose of determining taxes and tax 
exemptions, the increment in value represented by the difference between 
the price paid for Series E bonds and the redemption value received 
therefor constitutes interest. Such interest is subject to all taxes 
imposed under the Internal Revenue Code of 1986, as amended. The bonds 
are subject to estate, inheritance, gift, or other excise taxes, whether 
Federal or State, but are exempt from all other taxation now or 
hereafter imposed on the principal or interest thereof by any State, or 
any of the possesions of the United States, or by any local taxing 
authority.
    (b) Federal income tax on bonds. An owner of Series E bonds who is a 
cash-basis taxpayer may use either of the following two methods of 
reporting the increase in the redemption value of the bonds for Federal 
income tax purposes:
    (1) Defer reporting the increase to the year of final maturity, 
actual redemption, or other disposition, whichever is earlier; or
    (2) Elect to report the increases each year as they accrue, in which 
case the election applies to all Series E bonds then owned and those 
subsequently acquired, as well as to any other similar obligations 
purchased on a discount basis. If the method in paragraph (b)(1) of this 
section is used, the taxpayer may change to the method in paragraph 
(b)(2) of this section without obtaining permission from the Internal 
Revenue Service. However, once the election to use the method in 
paragraph (b)(2) of this section is made, the taxpayer may not change 
the method of reporting without permission from the Internal Revenue 
Service. For further information on Federal income taxes, the Service 
Center Director, or District Director, Internal Revenue Service, of the 
taxpayer's district may be contacted.



Sec. 316.10  Payment or redemption.

    (a) General. A Series E bond may be redeemed in accordance with its 
terms at the appropriate redemption value shown in the applicable table 
described in paragraph (f) of Sec. 316.8. The redemption values of bonds 
in the denomination of $100,000 are not shown in the tables. However, 
the redemption value of a bond in that denomination will be equal to ten 
times the redemption value of a $10,000 bond of the same issue date. A 
bond in a denomination higher that $25 (face amount) may be redeemed in 
part but only in the amount of an authorized denomination or multiple 
thereof.
    (b) Federal Reserve Banks and Branches and United States Treasury. 
Owners of Series E bonds may obtain payment upon presentation and 
surrender of the bonds to a Federal Reserve Bank or Branch referred to 
in Sec. 316.12 or to the Department of the Treasury with the request for 
payment on the bonds duly executed and certified in accordance with the 
governing regulations.
    (c) Incorporated banks, savings and loan associations and other 
financial institutions. (1) A financial institution qualified as a 
paying agent under the provisions of 31 CFR part 321, also published as 
Department of the Treasury Circular, Public Debt Series No. 750, as 
revised, will pay the current redemption value of a Series E bond 
presented for payment by an individual whose name is inscribed on the 
bond as owner or coowner, provided:
    (i) The bond is in order for payment; and
    (ii) The presenter establishes his or her identity to the 
satisfaction of the agent, in accordance with Treasury instructions and 
identification guidelines, and signs and completes the requests for 
payment.
    (2) A paying agent may (but is not required to) pay a Series E bond, 
at current redemption value, upon the request of a legal representative 
designated in the bond's registration by name and capacity, a court-
appointed legal representative of the last-deceased registrant's estate, 
or a beneficiary, if he or she survives the owner, provided:
    (i) The bond is in order for payment; and
    (ii) The presenter establishes his or her identity to the 
satisfaction of the agent, in accordance with Treasury instructions, 
indentification guidelines,

[[Page 190]]

and otherwise complies with evidentiary requirements.

[57 FR 14276, Apr. 17, 1992, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 316.11  Reservation as to issue of bonds.

    The Secretary of the Treasury reserved the right to reject any 
application for purchase of Series E bonds, in whole or in part, and to 
refuse to issue, or permit to be issued hereunder, any such bonds in any 
case or any class or classes of cases if such action was deemed to be in 
the public interest. Any action in any such respect was final.



Sec. 316.12  Fiscal agents.

    (a) Federal Reserve Banks and Branches referred to below, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury in connection 
with the redemption and payment of Series E bonds.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, such services will be phased out 
over the period prior to that date.

[59 FR 10535, Mar. 4, 1994]



Sec. 316.13  Reservation as to terms of offer.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of this offering of bonds, or of any 
amendments or supplements thereto.



PART 317--REGULATIONS GOVERNING AGENCIES FOR ISSUE OF UNITED STATES SAVINGS BONDS--Table of Contents




Sec.
317.0  Purpose and effective date.
317.1  Definitions.
317.2  Organizations authorized to act.
317.3  Procedure for qualifying and serving as issuing agent.
317.4  Issuing agents currently qualified.
317.5  Termination of qualification.
317.6  Issuance of bonds.
317.7  Obtaining and accounting for bond stock.
317.8  Remittance of sales proceeds and registration records.
317.9  Role of Federal Reserve Banks.
317.10  Reservation.

    Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12 U.S.C. 391; 12 U.S.C. 
1767; 31 U.S.C. 3105.

    Source: 54 FR 40830, Oct. 3, 1989, unless otherwise noted.



Sec. 317.0  Purpose and effective date.

    The regulations in this part govern the manner in which an 
organization may qualify and act as an agent for the sale and issue of 
Series EE and Series I United States Savings Bonds.

[63 FR 38041, July 14, 1998]



Sec. 317.1  Definitions.

    (a) Bond(s) means Series EE United States Savings Bonds and Series I 
United States Savings Bonds.

[[Page 191]]

    (b) Federal Reserve Bank refers to the Federal Reserve Bank or 
Branch providing savings bond services to the district in which the 
issuing agent or the applicant organization is located. See 
Sec. 317.9(a).
    (c) Issuing agent refers to an organization that has been qualified 
by a designated Federal Reserve Bank or the Commissioner of the Bureau 
of the Public Debt to sell savings bonds. An issuing agent acts as an 
agent of the purchaser in handling the remittance. The definition 
encompasses:
    (1) Each organization that accepts and processes purchase orders for 
bonds sold over-the-counter, but does not inscribe bonds, and
    (2) Each organization that is authorized to inscribe bonds sold 
over-the-counter or through payroll savings plans.
    (d) Offering circular refers to Department of the Treasury Circular, 
Public Debt Series No. 1-80, current revision, for Series EE savings 
bonds, and to Department of the Treasury Circular, Public Debt Series 
No. 1-98 for Series I savings bonds.
    (e) Organization means an entity, as described in Sec. 317.2, that 
may qualify as an issuing agent of bonds.

[63 FR 64550, Nov. 20, 1998]



Sec. 317.2  Organizations authorized to act.

    The following organizations are eligible to apply for qualification 
and to serve as savings bond issuing agents:
    (a) Banks, credit unions, trust companies and savings institutions, 
if they are chartered by or incorporated under the laws of the United 
States, any State or Territory of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico.
    (b) Agencies of the United States and State and local governments.
    (c) Employers operating payroll savings plans for the purchase of 
United States Savings Bonds, as well as organizations operating payroll 
savings plans on behalf of employers.
    (d) Other organizations specifically and individually qualified by 
the Commissioner of the Bureau of the Public Debt whenever the 
Commissioner deems such a qualification to be in the public interest. In 
selecting an issuing agent, the Commissioner may use such process that 
the Commissioner deems to be appropriate. The selected issuing agent 
will be subject to such conditions that the Commissioner deems to be 
appropriate.

[63 FR 64550, Nov. 20, 1998, as amended at 65 FR 2035, Jan. 13, 2000]



Sec. 317.3  Procedure for qualifying and serving as issuing agent.

    (a) Execution of application agreement. An organization seeking 
issuing agent qualification generally shall obtain from and file with a 
designated Federal Reserve Bank an application-agreement form. However, 
if an organization seeks qualification under Sec. 317.2(d) or because of 
its status as an organization operating a payroll savings plan on behalf 
of an employer under Sec. 317.2(c), it shall make application directly 
to the Bureau of the Public Debt for approval by the Commissioner of the 
Bureau of the Public Debt. An application-agreement sent directly to the 
Bureau of the Public Debt shall be supplemented by such other 
information as the Bureau of the Public Debt may request.
    (1) The terms of each application agreement shall include the 
provisions prescribed by section 202 of Executive Order No. 11246, 
entitled ``Equal Employment Opportunity'' (3 CFR, subchapter B, 42 
U.S.C. 2000e note).
    (2) The provisions of the Privacy Act of 1974, as amended (5 U.S.C. 
552a), and regulations issued pursuant thereto (31 CFR part 1, subpart 
C).
    (b) Certificate of qualification. Upon approval of an application-
agreement, the designated Federal Reserve Bank or the Bureau of the 
Public Debt will issue a certificate of qualification to the 
organization. Until the receipt of such a certificate, an organization 
shall not perform any act as an issuing agent, or advertise in any 
manner that it is authorized to so act or that it has applied for 
qualification as an issuing agent. After receipt of a certificate of 
qualification, an organization may perform the functions of an issuing 
agent. Under the terms of the application-agreement, the proceeds of the 
sale of bonds are at all times the property of the United States for 
which the organization shall be fully accountable.

[[Page 192]]

    (c) Adverse action or change in qualification. An organization will 
be notified by the designated Federal Reserve Bank or the Bureau of the 
Public Debt if its application-agreement to act as issuing agent is not 
approved, or if, after issuance, its certificate of qualification is 
terminated.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10535, 10536, Mar. 4, 
1994; 63 FR 64550, Nov. 20, 1998]



Sec. 317.4  Issuing agents currently qualified.

    Each organization, qualified as an issuing agent under a trust 
agreement currently in effect, is authorized to continue to act in that 
capacity without requalification. By so acting, it shall be subject to 
the terms and conditions of the previously executed application-
agreement and these regulations in the same manner and to the same 
extent as though it had requalified hereunder.



Sec. 317.5  Termination of qualification.

    (a) By the United States. The Secretary of the Treasury or a 
delegate may terminate the qualification of an issuing agent at any 
time, upon due notice to the agent. If this action is taken, the agent 
will be required to make a final accounting for the balance of savings 
bond stock for which it is charged, based on the records of the 
designated Federal Reserve Bank. The agent must surrender all unissued 
bonds and remit the issue price of any remaining bonds included in its 
accountability.
    (b) At request of issuing agent. A designated Federal Reserve Bank 
will terminate the qualification of an issuing agent upon its request, 
provided the agent is in full compliance with the terms of its agreement 
and the applicable regulations and instructions, and renders a final 
accounting.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 317.6  Issuance of bonds.

    (a) General. Each issuing agent shall comply with all regulations 
and instructions issued by the Department of the Treasury directly, or 
through the designated Federal Reserve Bank, concerning the sale, 
inscription, dating, and validation of bonds; the acceptance, 
processing, and transmittal of over-the-counter purchase orders; the 
remittance of sales proceeds; and the disposition of paper and 
electronic registration records. No issuing agent shall have authority 
to sell bonds other than as provided in the offering circular.
    (b) Fees. Each issuing agent, other than a Federal agency, will be 
paid fees. Only issuing agents are eligible to collect fees. With prior 
approval, agents that are authorized to inscribe bonds and receive fee 
payments will also be paid a bonus for presorting savings bond mailings. 
Schedules reflecting the amount of the fees and presort bonuses, and the 
basis on which they are computed and paid, will be published separately 
in the Federal Register.
    (c) No charge to customers. Any issuing agent that accepts fees from 
the Department of the Treasury for selling savings bonds, and/or 
accepting over-the-counter purchase orders, shall not make any charge to 
customers for the same service.

[54 FR 40830, Oct. 3, 1989, as amended at 55 FR 39960, Oct. 1, 1990; 58 
FR 63529, Dec. 2, 1993; 59 FR 10536, Mar. 4, 1994; 63 FR 64550, Nov. 20, 
1998]



Sec. 317.7  Obtaining and accounting for bond stock.

    An issuing agent that is authorized to inscribe bonds sold over-the-
counter or through payroll savings plans may obtain bond stock from the 
designated Federal Reserve Bank. The bond stock is, at all times, the 
property of the United States. The organization shall be fully 
accountable for the bond stock consigned to it in accordance with all 
regulations and instructions issued by the Department of the Treasury.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 317.8  Remittance of sales proceeds and registration records.

    An issuing agent shall account for and remit bond sales proceeds and 
registration records promptly in accordance with regulations and 
instructions

[[Page 193]]

issued by the Department of the Treasury, either directly or through the 
designated Federal Reserve Banks. Failure to comply with these 
instructions may subject an agent to penalties, including termination of 
its qualification as an issuing agent.

 Appendix to Sec. 317.8--Remittance of Sales Proceeds and Registration 
 Records, Department of the Treasury Circular, Public Debt Series No. 4-
  67, Third Revision (31 CFR Part 317), Fiscal Service, Bureau of the 
                               Public Debt

                     Subpart A--General Information

    1. Purpose. This appendix is issued for the guidance of 
organizations qualified as issuing agents of Series EE and I United 
States Savings Bonds under the provisions of Department of the Treasury 
Circular, Public Debt Series No. 4-67, current revision. Its purpose is 
to supplement the provisions of Sec. 317.8 of the Circular relating to 
the remittance of savings bond sales proceeds and registration records, 
including the interest charge to be collected for late remittances.
    2. Definition of terms. As used in this appendix:
    (a) Issue Date is the date as of which a bond begins to earn 
interest. It is the date entered by the issuing agent in the upper right 
corner of the bond.
    (b) Validation Date is the date as of which a bond is actually 
inscribed for issue. It is entered by the issuing agent immediately 
below the ``Issue Date'' in the area marked ``Issuing Agent's Dating 
Stamp''.
    (c) Over-the-counter sale means any sale of savings bonds other than 
payroll sales.
    (d) Payroll sale includes all issues of savings bonds paid for with 
deductions withheld from the pay of employees of organizations which 
maintain (i) payroll savings plans or (ii) thrift, savings, vacation, or 
similar plans.
    (e) Issuing agent, as provided in Sec. 317.1(c) of the Circular, 
refers to an organization that has been qualified by a designated 
Federal Reserve Bank or the Commissioner of the Bureau of the Public 
Debt to sell savings bonds.
    (f) Immediately available funds are remittances of funds which are 
available for the use by the Department of the Treasury immediately upon 
receipt by the Department or its fiscal agents, and include, but are not 
limited to:
    (1) A change to the remitter's (or a correspondent depository 
institution's) reserve account with a Federal Reserve Bank;
    (2) A Federal funds check;
    (3) A United States Government check; or
    (4) A postal money order.
    (g) Financial institutions refers to banks, trust companies, credit 
unions, and savings institutions chartered by or incorporated under the 
laws of the United States, or those of any State or Territory of the 
United States, the District of Columbia, or the Commonwealth of Puerto 
Rico.
    (h) Nonfinancial institutions refers to any issuing agent not 
described under paragraph (g) of this appendix.
    3. Determination of issue date. The obligation of the United States 
to pay interest on a savings bond is determined by its issue date. That 
date is the first day of the month in which a qualified issuing agent 
receives or accumulates the full purchase price of the bond. In the case 
of a bond purchased under a payroll savings plan operated by an 
organization which is not an issuing agent, the issue date should be 
fixed as of the month in which the organization accumulates the full 
purchase price of the bond. Such funds must, however, be remitted to the 
issuing agent in time to permit such dating.
    4. Forms of remittance. Issuing agents shall remit sales proceeds in 
timely fashion as follows:
    (a) Issuing agents which are financial institutions must remit in 
immediately available funds.
    (b) Issuing agents which are nonfinancial institutions should remit 
in immediately available funds.
    (c) The Commissioner of the Public Debt, as designee of the 
Secretary of the Treasury, may waive or modify this provision. The 
Commissioner may do so in any particular case or class of cases for the 
convenience of the United States or in order to relieve any agent or 
agents of unusual hardship:
    (1) If such action would not be inconsistent with law or equity,
    (2) If it does not impair any existing rights, and
    (3) If the Commissioner is satisfied that such action would not 
subject the United States to any substantial expense or liability.
    5. Remittance date. Sales proceeds should be remitted on the date 
shown on the transmittal document, i.e., PD F 3252-OC or PD F 5255-RDS 
for over-the-counter sales or PD F 4848 for payroll sales. If there is a 
significant time difference between the date on the transmittal document 
and the date of receipt in the designated Federal Reserve Bank, the 
transmittal date may be determined, for purposes of this appendix, by 
the postmark, if the remittance is mailed, or the receipt date, if the 
remittance is forwarded by courier, messenger, or similar means.

                    Subpart B--Over-the-Counter Sales

    1. Regional Delivery (RDS) participants. An agent participating in 
the Regional Delivery System (RDS) is authorized to sell bonds over-the-
counter. It will accept and review

[[Page 194]]

customer purchase orders, but it will not inscribe the bonds. Purchase 
order information will be forwarded to a designated Federal Reserve Bank 
for inscription of the bonds. An authorized RDS participant shall remit 
sales proceeds and purchase orders (on paper or in an electronically 
processible format) to a designated Federal Reserve Bank within five (5) 
business days of receipt from the customer.
    2. Issues-on-Tape Program participants. An agent that has been 
authorized by the Bureau of the Public Debt to inscribe bonds sold over-
the-counter and report such sales on magnetic tape shall remit sales 
proceeds and electronic issue records no less often than once a week on 
a schedule established by the designated Federal Reserve Bank.

             Subpart C--Remittance of Payroll Sales Proceeds

    1. Application of requirements. The remittance requirements for 
payroll sales apply only to issuing agents. An employer that maintains a 
payroll savings plan but does not issue bonds shall be notified by the 
servicing issuing agent that it must remit sales proceeds to the issuing 
agent in sufficient time to permit compliance with the requirements.
    2. Remittance of payroll sales deductions. Issuing agents shall 
remit sales proceeds throughout the month shown in the issue date as 
soon as the full amount of the purchase price of the bonds has been 
received or accumulated. In no case should such proceeds be remitted 
later than the second business day of the month following the month 
shown in the issue date. The issuing agent shall ensure that its system 
properly accounts for and recognizes when the full purchase price has 
been received, or has been accumulated, so that timely remittance can be 
made. The issuing agent shall transmit registration records in an 
electronically processible format within thirty (30) days following the 
month shown on the issue date.

                 Subpart D--Interest on Late Remittances

    1. Rate of interest. Interest will be assessed for each day's delay 
in the remittance of sales proceeds, based on the actual date of 
remittance. The rate of interest to be used will be the current value of 
funds to the Department of the Treasury, as set forth each quarter in 
the Treasury Financial Manual. The rate applied will be that in effect 
during the entire period in which the remittance is late. The interest 
assessment will be collected by the designated Federal Reserve Bank.
    2. Waiver. Interest will be waived in the situations described below 
as well as in any specific case where, in the judgment of the 
Commissioner of the Public Debt, the circumstances warrant such action. 
The Commissioner's decision on any waiver action shall be final.
    (a) Bonds inscribed by issuing agent--(i) Payroll sales. If, during 
any three (3) month period, the interest assessed on an issuing agent's 
late remittance of proceeds from payroll savings plan sales or thrift, 
savings, vacation, or similar plan sales accumulates to less than $50 
for each type of sales, the interest assessed for the first month will 
be waived. The interest assessed for each type of sales for the 
remaining two (2) months will then be carried forward to the next period 
of three (3) consecutive months.
    (ii) Over-the-counter issues. The interest assessed on an agent's 
late remittance of over-the-counter sales proceeds transmitted during a 
given month will be waived if it is less than $50.
    (b) Bonds inscribed by the designated Federal Reserve Bank. The 
interest assessed on late remittance of all sales proceeds transmitted 
during a given month will be waived if it is less than $25.
    (c) Suspension of waiver. The Commissioner may suspend the 
application of the waiver in the case of any agent that consistently 
fails to meet the remittance requirements.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994; 63 
FR 38041, July 14, 1998; 63 FR 64550, Nov. 20, 1998]



Sec. 317.9  Role of Federal Reserve Banks.

    (a) Role as fiscal agents. In their capacity as fiscal agents of the 
United States, the Federal Reserve Banks referred to below are 
authorized to perform such duties, including the issuance of 
instructions and forms, as may be necessary to fulfill the purposes and 
requirements of these regulations.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).

[[Page 195]]

 
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV,
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (c) Specific activities of designated Federal Reserve Banks. The 
specific activities of designated Federal Reserve Banks include:
    (1) Qualifying issuing agents;
    (2) Supplying agents with bond stock, maintaining records of agent 
accountability, and monitoring compliance with stock consignment rules;
    (3) Instructing agents regarding the sale and issue of bonds, the 
custody and control of bond stock, and the accounting for and remittance 
of sales proceeds; and
    (4) Providing guidelines covering the amount of bond stock agents 
may ordinarily requisition and maintain.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994; 63 
FR 38041, July 14, 1998]



Sec. 317.10  Reservation.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of these regulations.



PART 321--PAYMENTS BY BANKS AND OTHER FINANCIAL INSTITUTIONS OF UNITED STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES (FREEDOM SHARES)--Table of Contents




                     Subpart A--General Information

Sec.
321.0  Purpose.
321.1  Definitions.

                 Subpart B--Procedures for Qualification

321.2  Eligible organizations.
321.3  Procedure for qualifying and serving as paying agent.
321.4  Paying agents previously qualified.
321.5  Termination of qualification.

                      Subpart C--Scope of Authority

321.6  General.
321.7  Authorized cash payments.
321.8  Redemption-exchange of Series E and EE savings bonds and savings 
          notes.
321.9  Specific limitations on payment authority.
321.10  Responsibilities of paying agents.

            Subpart D--Payment and Transmittal of Securities

321.11  Payment.
321.12  Redemption value of securities.
321.13  Cancellation of redeemed securities.
321.14  Transmittal to and settlement by Federal Reserve Bank.

           Subpart E--Losses Resulting From Erroneous Payments

321.15  Liability for losses.
321.16  Report of erroneous payment.
321.17  Investigation of potential loss.
321.18  Determination of loss.
321.19  Certification of signatures.
321.20  Applicability of provisions.
321.21  Replacement and recovery of losses.

                       Subpart F--Forwarding Items

321.22  Forwarding securities not payable by an agent.

                   Subpart G--Miscellaneous Provisions

321.23  Paying agent fees and charges.
321.24  Claims on account of lost securities.
321.25  Role of Federal Reserve Banks.
321.26  Preservation of rights.
321.27  Supplements, amendments, or revisions.

Appendix to Part 321--Appendix to Department of the Treasury Circular 
          No. 750, Fourth Revision

    Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 
3105, 3126.

    Source: 53 FR 37511, Sept. 26, 1988, unless otherwise noted.

[[Page 196]]



                     Subpart A--General Information



Sec. 321.0  Purpose.

    These regulations govern the manner in which financial institutions 
may qualify and act as paying agents for the redemption of:
    (a) United States Savings Bonds of Series A, B, C, D, E, EE, and I, 
and United States Savings Notes (Freedom Shares), presented for cash 
payment; and
    (b) Eligible Series E and EE savings bonds and savings notes 
presented for redemption in exchange for Series HH savings bonds under 
the provisions of Department of the Treasury Circular, Public Debt 
Series No. 2-80 (31 CFR part 352).

[53 FR 37511, Sept. 26, 1988, as amended at 63 FR 38042, July 14, 1998]



Sec. 321.1  Definitions.

    (a) ACH payment or ACH means an Automated Clearing House method of 
transferring funds under the provisions of 31 CFR part 210.
    (b) Beneficiary means an individual whose name is inscribed on a 
security as the person to whom it is payable in his or her right upon 
the prior death of the other individual designated thereon as owner, 
shown commonly in the form: ``A P.O.D. [payable on death to] B.''
    (c) Cash payment means payment in currency, by check or by credit to 
a checking, savings or share account.
    (d) Central Site refers to the Federal Reserve Bank of Cleveland, 
Pittsburgh Branch, EZ CLEAR Department.
    (e) EZ CLEAR refers to the system by which financial institutions 
present redeemed securities to a Federal Reserve Bank through the 
commercial check collection system in the same manner as other cash 
items.
    (f) Federal Reserve Bank or Branch refers to the Federal Reserve 
Bank to which the agent is instructed to transmit redeemed securities; 
or to which the agent is instructed to forward securities for payment or 
other transactions, and includes parent Banks, Branches and Regional 
Check Processing Centers, as appropriate.
    (g) Legal Representative or representative means the court-appointed 
(or otherwise qualified) person, regardless of title, who is legally 
authorized to act for the estate of a minor, incompetent, aged person, 
absentee, et al., the court-appointed executor or administrator, 
regardless of title, who is legally authorized to act for a decedent's 
estate; and the trustee of a personal trust estate.
    (h) Mixed cash letter refers to a bundle containing nonsegregated 
redeemed securities, cash items, and other items submitted to a Federal 
Reserve Bank via the commercial check collection system.
    (i) Paying agent or agent means:
    (1) A financial institution that is qualified under the provisions 
of this part as originally issued, or any subsequent revision, to make 
payment of securities, and includes branches located within the United 
States, its territories and possessions, and the Commonwealth of Puerto 
Rico; and
    (2) Any banking facilities of such institutions establishing at 
military installations overseas, provided the offering of such 
redemption services has been authorized by the Department of the 
Treasury.
    (j) Presenter means the individual requesting the redemption or 
redemption-exchange of securities.
    (k) Presenting institution means the organization from which the 
Federal Reserve Bank receives redeemed securities to be processed via EZ 
CLEAR. If a paying agent submits separately sorted or mixed cash letters 
directly to the Bank, using its own ABA code, it is the presenting 
institution. If a correspondent financial institution submits cash 
letters on behalf of another institution using the correspondent's ABA 
code, the correspondent is the presenting institution.
    (l) Redemption and payment are used interchangeably for payment of a 
security in accordance with the terms of its offering and governing 
regulations, including redemption-exchange.
    (m) Redemption-exchange means the authorized redemption of eligible 
securities for the purpose of applying the proceeds in payment for other 
securities offered in exchange by the Treasury.

[[Page 197]]

    (n) Registrant means a person whose name is inscribed on a security 
as owner, coowner, or beneficiary.
    (o) Security means a United States Savings Bond of Series A, B, C, 
D, E, EE, or I and/or a United States Savings Note (Freedom Share).
    (p) Separately sorted cash letter refers to a bundle of redeemed 
securities that have been segregated from all other items prior to 
transmittal to a Federal Reserve Bank via EZ CLEAR.
    (q) Taxpayer identifying number means a social security account 
number or an employer identification number.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 35395, Aug. 29, 1990; 59 FR 10536, Mar. 4, 1994; 63 FR 38042, July 
14, 1998]



                 Subpart B--Procedures for Qualification



Sec. 321.2  Eligible organizations.

    (a) Organizations eligible to apply for qualification and to serve 
as paying agents are commercial banks, trust companies, savings banks, 
savings and loan associations, building and loan associations (including 
cooperative banks), credit unions, cash depositories, industrial banks, 
or similar financial institutions which:
    (1) Are incorporated under Federal law or the laws of a State, 
territory or possession of the United States, the District of Columbia, 
or the Commonwealth of Puerto Rico;
    (2) In the usual course of business accept, subject to withdrawal, 
funds for desposit or the purchase of shares;
    (3) Are under the supervision of the banking department or 
equivalent authority of the jurisdiction in which they are incorporated; 
and
    (4) Maintain regular offices for the transaction of business.
    (b)(1) An organization that desires to redeem securities must first 
qualify as a paying agent. An organization that has qualified and is 
serving as a paying agent must:
    (i) MICR-encode data on securities accepted for payment,
    (ii) Submit them directly to the Check Department of the appropriate 
Federal Reserve Bank or Branch or the Regional Check Processing Center, 
and
    (iii) Receive payment of fees by ACH, or arrange to obtain one or 
more of these services from another financial institution.
    (2) All presenting institutions, as defined in Sec. 321.1, must 
qualify as savings bond paying agents and enroll in EZ CLEAR.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 321.3  Procedure for qualifying and serving as paying agent.

    (a) Execution of application-agreement. An eligible organization 
wishing to act as a paying agent shall obtain from, execute, and file an 
application-agreement with the appropriate Federal Reserve Office 
referred to in Sec. 321.25. The terms of each application-agreement 
shall include a reference to the following provisions to which paying 
agents are subject:
    (1) The provisions prescribed by section 202 of Executive Order 
11246, entitled ``Equal Employment Opportunity'', as amended (42 U.S.C. 
2000e note); and
    (2) The provisions of the Privacy Act of 1974, as amended (5 U.S.C. 
552a), and regulations issued pursuant thereto (31 CFR part 1, subpart 
C).

For the purpose of these regulations, eligible institutions in Puerto 
Rico and the Virgin Islands shall make application to the Federal 
Reserve Bank Branch in Buffalo, New York and eligible institutions in 
Guam shall make application to the Federal Reserve Bank of Kansas City.
    (b) Qualification. Each Federal Reserve Bank referred to in 
Sec. 321.25, as fiscal agent of the United States, is authorized to 
qualify any eligible organization, located in the Reserve Bank's 
geographical area, as shown in Sec. 321.25, which possesses adequate 
authority under its charter to act as paying agent. Upon approval of an 
application-agreement, the Bank will issue a certificate of 
qualification to the organization. Such a certificate automatically 
qualifies the branches of the organization to redeem securities as 
provided in this part.
    (c) Announcement of authority. Upon receipt of a certificate of 
qualification from a Federal Reserve Bank referred to in Sec. 321.25, a 
financial institution

[[Page 198]]

may announce or advertise its authority to redeem eligible securities 
for cash and to process eligible Series E and EE savings bonds and 
savings notes presented for redemption in exchange for Series HH savings 
bonds under the provisions of Department of the Treasury Circular, 
Public Debt Series No. 2-80 (31 CFR part 352).
    (d) Adverse action. An organization will be notified by the 
appropriate Federal Reserve Bank referred to in Sec. 321.25, in writing, 
if its application-agreement to act as paying agent is not approved.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35395, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994; 63 FR 38042, July 14, 1998]



Sec. 321.4  Paying agents previously qualified.

    Institutions qualified as paying agents under previous revisions of 
this Part are authorized to continue to act in that capacity without 
requalification. By so acting, they shall be subject to the terms and 
conditions of their previously executed application-agreements and these 
regulations in the same manner and to the same extent as though they had 
requalified hereunder.



Sec. 321.5  Termination of qualification.

    (a) By the Treasury. The Secretary of the Treasury, or a designee, 
may authorize a Federal Reserve Bank referred to in Sec. 321.25 to 
terminate the qualification of any paying agent at any time, following 
prior written notice of such action to the agent.
    (b) At request of paying agent. A Federal Reserve Bank referred to 
in Sec. 321.25 will terminate the qualification of a paying agent upon 
its written request, provided the agent renders a final accounting for 
all redeemed securities and is found to have fully complied with the 
terms of its agreement and the applicable regulations and instructions.
    (c) Reservation. Termination of the qualification as paying agent of 
any institution shall not prejudice the right of the Treasury to recover 
the amounts of any erroneous payment(s) made by the institution.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



                      Subpart C--Scope of Authority



Sec. 321.6  General.

    Securities are issued only in registered form (subject to 31 CFR 
359.11), are not transferable, may not be hypothecated or used as 
collateral for a loan, and, except as otherwise specifically provided in 
the governing regulations and this part, are payable to the owner or 
coowner named on the security. The regulations governing Series EE and 
HH bonds are contained in Department of the Treasury Circular, Public 
Debt Series No. 3-80, current revision (31 CFR part 353); those 
governing Series I bonds are contained in Department of the Treasury 
Circular, Public Debt Series No. 2-98 (31 CFR part 360); and, those 
governing all other series of U.S. savings securities are contained in 
Department of the Treasury Circular No. 530, current revision (31 CFR 
part 315).

[63 FR 38042, July 14, 1998]



Sec. 321.7  Authorized cash payments.

    (a) General. Subject to the terms and conditions appearing on the 
securities, the governing regulations, and the provisions of this part, 
and any instructions issued in connection therewith, an agent may make 
payment of savings bonds of Series A, B, C, D, E, EE, and I, and savings 
notes, presented for cash redemption. Except as provided in paragraphs 
(b) through (d), and (f) of this section, the securities must be 
presented by an individual whose name is inscribed on the securities as 
owner or coowner, and who is known to the agent, or who can establish 
his or her identity in accordance with Treasury instructions and 
guidelines (See Sec. 321.11(b)).
    (b) Change of name by marriage. If the name of the presenter has 
been changed by marriage from that shown on the security, and the agent 
knows or establishes that the presenter and the person whose name 
appears on the security are one and the same individual, the agent may 
pay the security in accordance with paragraph (a) of this section. The 
signature to the request for payment should show both names, e.g., 
``Mary J. Smith, changed by marriage from Mary T. Jones.''

[[Page 199]]

    (c) Parent of a minor. Payment of a security bearing the name of a 
minor child, who is not of sufficient competency and understanding to 
sign the request for payment and comprehend the nature of the act, may 
be made to either parent with whom the minor resides or to whom custody 
has been granted, provided the form of registration does not indicate 
that a guardian or similar representative of the estate of the minor has 
been appointed or is otherwise legally qualified. Payment under this 
subsection may not be made to any person other than a parent. The parent 
requesting payment must sign the request for payment in the form, e.g., 
``John A. Jones, on behalf of John C. Jones.'' The following endorsement 
must be typed or imprinted on the back of the security:

    I certify that I am the (father or mother) of John C. Jones and the 
person (with whom he resides) (to whom custody has been granted). He is 
---- years of age and is not of sufficient competency and understanding 
to sign the request.

    (d) Payment to beneficiary. An agent may redeem a security 
registered ``A P.O.D. [payable on death to] B'' for cash at the request 
of the surviving beneficiary following the owner's death. A copy of the 
owner's death certificate, certified under seal of the State or local 
registrar, must be furnished to support the request for payment.
    (e) Payment to a legal representative designated on a security by 
name and title. An agent may redeem a security registered in the name 
and title of a legal representative as defined in Sec. 321.1(f), if the 
legal representative is known to the agent, or can establish identity in 
accordance with Treasury instructions and guidelines. The request for 
payment on the back of each security must be signed by the legal 
representative designated by name and title in the registration on the 
front of the security, or by a person authorized or empowered to act for 
a corporate legal representative so designated. The full title of the 
legal representative should be shown adjacent to each signature and, in 
the case of a corporate legal representative, the full corporate name, 
as well as the title, i.e., vice president, trust officer, etc., should 
be shown. Examples:

    Henry C. Smith, conservator of the estate of John R. White, an 
adult, pursuant to Sec. 633.572 of the Iowa Code.
    Tenth National Bank by Arnold A. Ames, Vice President, guardian of 
the estate of Barry B. Bryan, a minor.

    (f) Payment to a legal representative of a decedent's estate not 
designated on a security. An agent may redeem a security bearing the 
names of deceased persons in the registration, if the legal 
representative of the estate of the last deceased registrant:
    (1) Presents the security;
    (2) Signs the request for payment on the back of the security, 
showing the representative's full title adjacent to the signature; and
    (3) Presents acceptable evidence of the legal representative's 
appointment and of the dates of death of all persons named in the 
security's registration, in accordance with this part and the appendix.

In the case of a corporate legal representative, the full corporate 
name, as well as the title, must be shown. Examples:

    John H. Smith and Charles N. Jones, co-executors of the will of 
Robert J. Smith, deceased.
    Tenth National Bank by John F. Green, Trust Officer, executor of the 
will of George N. Brown, deceased.

    (g) Interest reporting. A paying agent is required to report 
interest in the amount of $10 or more, paid as part of the redemption 
value of securities, to the payee and to the Internal Revenue Service, 
in accordance with 26 CFR 1.6049-4. (See Item 26 of the appendix to this 
part for information concerning the education feature of Series EE 
savings bonds issued on or after January 1, 1990, and of Series I 
savings bonds.)

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35395, Aug. 29, 1990; 
63 FR 38042, July 14, 1998]



Sec. 321.8  Redemption-exchange of Series E and EE savings bonds and savings notes.

    (a) General. Subject to the provisions of Circular No. 2-80 (31 CFR 
part 352), the governing regulations, and the provisions of this part 
and its appendix, an

[[Page 200]]

agent may make payment of eligible securities presented for redemption 
in exchange for Series HH bonds. Securities eligible for exchange are:
    (1) Series EE bonds presented no earlier than six months from their 
issue dates; and
    (2) Series E bonds and savings notes presented no later than one 
year from the month in which they reached final maturity. The total 
redemption value of the securities presented for exchange must be at 
least $500.
    (b) Requirements for redemption-exchange. An agent shall not accept 
and redeem eligible securities on exchange unless:
    (1) The securities are accompanied by a completed exchange 
subscription signed by the presenter;
    (2) The presenter is the owner, the legal representative (excluding 
a representative of a decedent's estate), the surviving coowner or 
beneficiary, or the principal coowner (as defined in Sec. 352.7(e)(2) in 
31 CFR part 352 (Circular No. 2-80)) of the securities presented for 
exchange and is to be named as owner or first-named coowner on the 
Series HH bonds; and
    (3) The request for payment on each security is signed by the 
presenter. A presenter who is a legal representative should show the 
full title adjacent to each signature and, in the case of a corporate 
legal representative, should show the full corporate name, as well as 
the title. If the name of the presenter has been changed by marriage, or 
if the presenter is named as beneficiary or legal representative on the 
securities, the agent may process the transaction in accordance with the 
provisions of Sec. 321.7 (b), (d), or (e) of this part. If the agent is 
authorized and elects to use the special endorsement procedure, set out 
in 31 CFR part 330 (Circular No. 888, current revision), the requests 
for payment do not need to be signed; however, this special endorsement 
may not be used in lieu of the presenter's signature on the exchange 
subscription.
    (c) Interest reporting. To the extent that it represents interest of 
$10 or more, a paying agent is required to report cash, refunded in an 
exchange transaction, to the presenter and to the Internal Revenue 
Service under the provisions of 26 CFR 1.6049-4.
    (d) Completion of transaction. An agent shall transmit for 
settlement via EZ CLEAR securities redeemed on exchange and, at the same 
time, forward the exchange application (PD F 3253) and any additional 
cash needed to complete the transaction, to the Fiscal Agency Department 
of the servicing Federal Reserve Bank referred to in Sec. 321.25. 
Securities redeemed on exchange may be commingled with cash redemptions 
in mixed or separately sorted cash letters.''

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994]



Sec. 321.9  Specific limitations on payment authority.

    An agent is not authorized to redeem a security for cash or on 
redemption-exchange:
    (a) If it is a Series EE bond or a Series I bond presented for 
payment prior to six months from its issue date.
    (b) If it is a savings bond of Series F, G, H, J, K, or HH.
    (c) If the presenter is acting under a power of attorney.
    (d) If the agent does not know or cannot establish the identity of 
the presenter as a person entitled to request payment as provided in 
Sec. 321.7.
    (e) If the presenter does not sign his or her name in ink as it is 
inscribed on the security (except as provided in Sec. 321.7 (b) or (c) 
of this part, or appears in evidence of appointment (see Sec. 321.7(f)), 
and show a home or business address.
    (f) If the taxpayer identifying number of the presenter, or the 
estate represented by the presenter, is not known to the agent and the 
presenter refuses to furnish the number.
    (g) If the security bears a material irregularity, such as an 
illegible, incomplete or unauthorized inscription, issue date, or 
issuing agent's validating data, or if any essential part of the 
security appears to have been altered or is mutilated or defaced in such 
a manner as to create doubt or arouse suspicion.
    (h) If the security is registered in the name of a corporation, 
association,

[[Page 201]]

partnership, or other organization in its own right.
    (i) If Treasury regulations require the submission of documentary 
evidence to support the redemption, except as provided in Sec. 321.7 (d) 
or (f) of this part, as in the case of incompetents, minors under legal 
guardianship, or the change of a registrant's name other than by 
marriage.
    (j) If the presenter is a minor who, in the opinion of the agent, is 
not of sufficient competency and understanding to sign the request for 
payment and comprehend the nature of the act.
    (k) If it is known to the agent that the presenter has been legally 
declared incompetent to manage his or her affairs.
    (l) If partial redemption is requested.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
63 FR 38042, July 14, 1998]



Sec. 321.10  Responsibilities of paying agents.

    (a) Payment of securities. A paying agent is required to redeem 
eligible securities during its regular business hours for any presenter, 
whether or not a customer, who can establish his or her identity as the 
owner or co-owner named on the securities, in accordance with the 
provisions of this part, and the appendix to this part, and the Treasury 
Identification Guide for Cashing United States Savings Bonds. An agent 
is encouraged, but is not required, to redeem eligible securities during 
its regular business hours for a surviving beneficiary, a legal 
representative designated in the registration of securities presented, 
or a legal representative of the last deceased registrant's estate who 
can provide acceptable evidence (see Sec. 321.7 (d) or (f)) and 
establish identity in accordance with this part.
    (b) Restrictions. A paying agent shall not advance money, make loans 
on, or discount the redemption value of securities, nor in any manner 
assist others to do so. An agent shall not pay a presenter the current 
value of a security and then defer presentation to the Treasury for the 
purpose of obtaining for its own profit an increased value.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990]



            Subpart D--Payment and Transmittal of Securities



Sec. 321.11  Payment.

    (a) Examination. Before making a payment of a security, a paying 
agent shall examine the security to determine that it is eligible for 
redemption and is one the agent is authorized to pay under the 
provisions of this part.
    (b) Identification and evidence of entitlement. The agent shall 
determine that the presenter of the security is entitled to request 
payment, as provided in Sec. 321.7 of this part. Unless the presenter is 
a person whose identity is well-known to the agent or is an established 
customer, he or she should be asked to furnish satisfactory 
identification in accordance with the Treasury instructions and 
guidelines. At the time of payment, the agent should make a notation on 
the back of the security, or in its own records, specifying precisely 
what was relied on to establish the presenter's identity.
    (c) Evidence--Payment to a beneficiary. The agent shall determine 
that the presenter of the security as beneficiary is entitled to request 
payment, as provided in Sec. 321.7(d). In addition to establishing the 
presenter's identification, as required by paragraph (b) of this 
section, the agent shall require presentation of the owner's death 
certificate in accordance with this part and the appendix.
    (d) Evidence--Payment to a legal representative of the last deceased 
registrant's estate. The agent shall determine whether the legal 
representative is entitled to request payment, as provided in 
Sec. 321.7(f). In addition to establishing the presenter's 
identification, as required by paragraph (b) of this section, the agent 
shall require evidence of appointment as well as evidence of the dates 
of death of all persons named in the registrations of the securities 
presented. Evidence of the representative's appointment must be either a 
court certificate or a copy of the letters of appointment, certified to 
be true and correct under seal of the court or clerk of court. If the 
original appointment was made more than one year prior to the 
presentation of the securities it must also bear the court

[[Page 202]]

clerk's statement that the appointment is in full force and effect. This 
statement must be under seal of the court or clerk of court and dated 
within six months of the presentation. Such evidence of appointment must 
pertain to the estate of the last deceased registrant designated on the 
securities. A copy of a death certificate, certified under seal of the 
State or local registrar, is the only acceptable evidence of the date of 
death.
    (e) Execution of request. (1) The agent shall require:
    (i) That the request for payment on the back of each security be 
signed by the presenter in the presence of one of its officers or 
authorized employees; and
    (ii) That the presenter's address be furnished. Fiduciaries must 
sign as provided in Sec. 321.7 (e) and (f).
    (2) If the agent is qualified under 31 CFR part 330 (Circular No. 
888, current revision) and elects to use the special endorsement 
procedure, the request for payment need not be signed. If the request 
has already been signed when the security is presented, it should be 
signed again.
    (f) Certification of request. An agent is not required to complete 
the certification to the requests for payment on securities it redeems. 
When an agent transmits redeemed securities for settlement, as indicated 
in Sec. 321.14 of this part, such agent shall be understood by such 
submission to have represented and certified that the identity of the 
presenter, and his or her entitlement to request payment, have been 
established in accordance with this part and the appendix hereto.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994]



Sec. 321.12  Redemption value of securities.

    The redemption value of each savings security is determined by the 
terms of its offering and the length of time it has been outstanding. 
The Bureau of the Public Debt determines redemption values for Series A-
E bonds, eligible Series EE and I bonds, and savings notes, that should 
be used in redeeming savings securities.

[63 FR 38042, July 14, 1998]



Sec. 321.13  Cancellation of redeemed securities.

    An agent shall cancel each redeemed security by imprinting the word 
``PAID'' on its face and entering the amount and date of the actual 
payment and the agent's name, location, and four-digit code number 
assigned by the appropriate Federal Reserve Bank. The recordation of 
this data shall constitute a certification by the agent that the 
security was redeemed in accordance with the provisions of this part, 
that the presenter's identity and entitlement to request payment were 
duly established, and that the proceeds were paid to the presenter or 
remitted to an appropriate Federal Reserve Bank in payment for Series HH 
bonds.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



Sec. 321.14  Transmittal to and settlement by Federal Reserve Bank.

    In accordance with Federal Reserve Bank instructions, a paying agent 
shall transmit with an EZ CLEAR cash letter securities redeemed for cash 
and on redemption-exchange, either directly or through a correspondent 
institution, to the Check Department of the appropriate Bank or Branch, 
or to a Regional Check Processing Center (RCPC). Upon receipt of the 
securities, the Bank, Branch, or RCPC will arrange for immediate 
settlement with the presenting institution. Such settlement shall be 
made by a credit to the presenting institution's Reserve or other 
clearing account in the total amount paid, as reflected on the cash 
letter, and shall be subject to adjustment via a charge or credit to 
that account if any discrepancy is subsequently discovered.

[59 FR 10537, Mar. 4, 1994]



           Subpart E--Losses Resulting From Erroneous Payments



Sec. 321.15  Liability for losses.

    Under the governing statute, as amended (31 U.S.C. 3126(a)), an 
agent cannot be relieved of liability for a loss resulting from an 
erroneous payment unless the Secretary of the Treasury can make a 
determination that the loss

[[Page 203]]

resulted from no fault or negligence on the agent's part.



Sec. 321.16  Report of erroneous payment.

    If an agent discovers an erroneous payment of securities, it should 
immediately advise the Bureau of the Public Debt, Parkersburg, WV 26106-
1328, (304) 420-6402. If the circumstances of the payment warrant such 
action, the agent should also notify the nearest office of the United 
States Secret Service.



Sec. 321.17  Investigation of potential loss.

    (a) Notice to an agent. When it determines that a loss has occurred, 
because of the erroneous payment of securities, the Bureau of the Public 
Debt will notify the agent in writing and identify the securities.
    (b) Investigative procedure. The Bureau of the Public Debt may 
request the United States Secret Service to investigate potential 
losses. Upon request, the agent shall make available to the Bureau of 
the Public Debt, or its investigative agent, all records and information 
pertaining to the transaction in question, including the disposition of 
the redemption proceeds. If the proceeds were deposited in an account 
maintained by the agent, the information made available shall include 
the ultimate disposition of the redemption proceeds from the account.



Sec. 321.18  Determination of loss.

    Upon completion of the investigation, and after consideration of the 
results, the Bureau of the Public Debt shall advise the agent through 
which the payment occurred:
    (a) That no final loss to the United States has occurred, and, 
accordingly, that the agent is relieved from liability for the payment, 
or that no claim for reimbursement shall be made unless and until a loss 
has been sustained; or
    (b) That while a final loss to the United States has occurred, the 
agent is not required to make reimbursement therefor, as the Secretary 
of the Treasury, or his designee, has determined that such loss resulted 
from no fault or negligence on the part of such agent; or
    (c) That a final loss to the United States has occurred, and that, 
the Secretary of the Treasury, or his designee, has been unable to make 
an affirmative finding that such loss resulted from no fault or 
negligence on the part of such agent, reimbursement must be made 
promptly, except where credit for the payment had not previously been 
extended.



Sec. 321.19  Certification of signatures.

    The regulations in this subpart shall, to the extent appropriate, 
apply to losses resulting from payments made in reliance on 
certifications of signatures by an officer or designated employee of any 
financial institution authorized to certify requests for payment.



Sec. 321.20  Applicability of provisions.

    The provisions of this subpart shall apply to securities redeemed by 
any Federal Reserve Bank referred to in Sec. 321.25, as fiscal agent, or 
any Treasury office authorized to redeem securities, as well as to 
paying agents.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



Sec. 321.21  Replacement and recovery of losses.

    (a) If a final loss results from the redemption of a security, and 
the paying agent redeeming the security is not relieved of liability for 
such loss under 31 U.S.C. 3126(a), the Bureau of the Public Debt will 
demand that the paying agent promptly reimburse the United States in the 
amount of the final loss and will take such other action as may be 
necessary to collect such amount as set out in the procedure described 
in Paragraph 21 of the appendix to this part.
    (b) If a final loss has resulted from the redemption of a security, 
and no reimbursement has been or will be made, the loss shall be subject 
to replacement out of the fund established by the Government Losses in 
Shipment Act, as amended.

[61 FR 37197, July 16, 1996]



                       Subpart F--Forwarding Items



Sec. 321.22  Forwarding securities not payable by an agent.

    Any securities an agent is not authorized to pay under the 
provisions of

[[Page 204]]

this part should be forwarded for redemption to the Fiscal Agency 
Department of a Federal Reserve Bank referred to in Sec. 321.25. The 
requests for payment on the securities should be properly certified. Any 
documentary evidence required to support the redemption should accompany 
the securities. If the securities are presented for redemption-exchange, 
they must also be accompanied by a completed and signed exchange 
subscription and any additional cash needed to complete the transaction. 
Unpaid securities so forwarded must not be commingled with redeemed 
securities transmitted for settlement.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



                   Subpart G--Miscellaneous Provisions



Sec. 321.23  Paying agent fees and charges.

    (a) Fees. Fees shall be paid as outlined in this section. A schedule 
setting out the fees, and the basis on which they are computed and paid, 
is separately published in the Federal Register. Current information is 
available from a Federal Reserve Bank referred to in Sec. 321.25.
    (1) Securities transmitted via EZ CLEAR. A fee will be paid for each 
security redeemed during a calendar month and transmitted via EZ CLEAR 
to a Federal Reserve Bank in separately sorted cash letters. Payment 
will be made to the presenting institution by ACH. No fees will be paid 
for redeemed securities received by a Bank in mixed cash letters.
    (2) To comply with the provisions of the Balanced Budget and 
Emergency Deficit Control Act of 1985, as amended (2 U.S.C. 901, et 
seq.), or the legislative resolution resulting therefrom, the Secretary 
may authorize, upon notice in the Federal Register, the discontinuance, 
reduction or delay of fee payments. Fee payments so affected may 
subsequently be paid in accordance with the schedule of fees as 
hereafter published, subject to the availability of funds therefor, and 
to the extent permitted by law. Fee payments for servicing occurring 
after notice of the resumption of such payments has been published in 
the Federal Register will be made in accordance with the schedule of 
fees published in such notice.
    (b) Charges to presenters. A paying agent shall not make any charge 
whatever to persons entitled to request payment of securities, for 
redeeming them under the provisions of this part.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 39960, Oct. 1, 1990; 59 FR 10537, Mar. 4, 1994]



Sec. 321.24  Claims on account of lost securities.

    If a security redeemed by an agent is lost, stolen or destroyed 
while in its custody or in transit prior to settlement, the agent's 
claim for reimbursement of the missing security's redemption value on 
the original payment date will be considered, provided the security can 
be identified by serial number.



Sec. 321.25  Role of Federal Reserve Banks.

    (a) The Federal Reserve Banks referred to below, as fiscal agents of 
the United States, shall perform such services in connection with this 
part as may be requested by the Secretary of the Treasury, or his 
designee. The Banks are authorized and directed to perform such duties, 
including the issuance of instructions and forms, as may be necessary to 
fulfill the purposes and requirements of these regulations.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).

[[Page 205]]

 
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------


[59 FR 10537, Mar. 4, 1994, as amended at 63 FR 38042, July 14, 1998]



Sec. 321.26  Preservation of rights.

    Nothing contained in this part shall limit or restrict any existing 
rights which holders of securities may have acquired under the offering 
circulars and the applicable regulations.



Sec. 321.27  Supplements, amendments, or revisions.

    The Secretary of the Treasury may, at any time or from time to time, 
revise, supplement, amend or withdraw, in whole or in part, the 
provisions of this part.

 Appendix to Part 321--Appendix to Department of the Treasury Circular 
                        No. 750, Fourth Revision

                Fiscal Service, Bureau of the Public Debt

                     Subpart A--General Information

    1. Purpose. This appendix is issued for the guidance of banks and 
other financial institutions qualified as paying agents of United States 
Savings Bonds and United States Savings Notes (Freedom Shares) under the 
provisions of 31 CFR part 321 [Department of the Treasury Circular No. 
750, Fourth Revision]. Its purpose is to provide information to 
supplement the regulations contained in the part and specific 
instructions for processing redemption and redemption-exchange 
transactions. The information and instructions are indexed to the 
sections and subsections of part 321 which they explain or expand.
    2. Other pertinent publications. In addition to part 321, agents 
should be familiar with the provisions of the following publications:
    (a) Offering circulars. Department of the Treasury Circulars, Public 
Debt Series Nos. 1-80 (31 CFR part 351, Series EE bonds), 2-80 (31 CFR 
part 352, Series HH bonds), 1-98 (31 CFR part 359, Series I bonds), and 
3-67 (31 CFR part 342, savings notes), and Department of the Treasury 
Circulars Nos. 653 (31 CFR part 316, Series E bonds) and 905 (31 CFR 
part 339, Series H bonds).
    (b) Regulations. Department of the Treasury Circular, Public Debt 
Series No. 3-80 (Series EE and HH bonds); Department of the Treasury 
Circular, Public Debt Series 2-98 (Series I bonds); Department of the 
Treasury Circulars Nos. 530 (all other series of savings securities) and 
888 (special endorsements); Federal Tax Regulations (26 CFR 1.6049); 
Federal Claims Collection Standards (4 CFR parts 101-105); Regulation J, 
Collection of Checks and Other Items and Wire Transfers of Funds (12 CFR 
part 210); and operating circulars issued by Federal Reserve Banks 
relating to the collection of cash items and Federal payments by ACH.

                 Subpart B--Procedures for Qualification

    3. Qualification of branches. [Sec. 321.3(b)] Qualification of an 
institution as a paying agent automatically qualifies only its domestic 
branches. A foreign branch of a qualified paying agent may redeem 
securities provided settlement is made through a qualified facility 
located in the Unied States.
    4. Paying agent code numbers. [Secs. 321.3(b) and 321.13] The 
appropriate Federal Reserve Bank will assign a four-digit code number to 
each agent it qualifies. A separate number will be assigned to each 
branch authorized to redeem and submit redeemed securities for its own 
account to a Federal Reserve Bank or Branch or to a Regional Check 
Processing Center. At the paying agent's request, only one four-digit 
code will be assigned for use by all of its branches. The presenting 
institution's ABA number will be used in the adjustment of discrepancies 
and in the computation and payment of fees for securities transmitted in 
separately sorted cash letters.
    5. Requalification. [Sec. 321.3(b)] If there has been a change in 
the corporate name of an agent, whether through merger, consolidation, 
sale of assets, or in any other manner, the agent may be asked by the 
appropriate Federal Reserve Bank referred to in Sec. 321.25 to requalify 
to reflect the change. Ordinarily, requalification is not required 
unless (a) the change results in a corporation that, under State law, 
cannot retain the rights of

[[Page 206]]

the corporation that ceased to exist, or (b) in the case of a purchase 
of assets and assumption of liability, the purchaser corporation is not 
a qualified paying agent.
    6. Announcement of authority. [Sec. 321.3(c)] On and after the 
effective date of its qualification, a paying agent may appropriately 
announce or advertise its authority to redeem eligible securities for 
cash and in exchange for Series HH bonds. Such statements and notices 
should not, directly or indirectly, encourage the encashment of the 
securities. Two examples of acceptable statements for use in 
advertisements or displays are:
    (a) ``We are an authorized agent for payment of U.S. Savings Bonds 
and U.S. Savings Notes (Freedom Shares).''
    (b) ``This (bank/savings and loan association/credit union, etc.) is 
authorized to pay U.S. Savings Bonds and U.S. Savings Notes (Freedom 
Shares) and process eligible Series E and EE bonds and savings notes in 
exchange for Series HH bonds.''

                      Subpart C--Scope of Authority

    7. Authorized cash payments. [Sec. 321.7]
    (a) General. [Sec. 321.7(a)] The general authority of paying agents 
to redeem savings securities for cash extends to Series A, B, C, D, E, 
EE, and I bonds and savings notes presented by the owner, coowner, 
surviving beneficiary, parent on behalf of a minor, legal representative 
designated in the registrations of savings securities presented, or 
legal representative of the last deceased registrant's estate. The 
presenter must sign the requests for payment and establish his or her 
identity and, in the case of a beneficiary, parent or legal 
representative of the last deceased registrant's estate, entitlement to 
request payment.
    (b) Securities submitted by mail. [Sec. 321.7(a)] An agent may 
accept eligible securities submitted, for redemption by mail, from known 
customers. The agent should be satisfied that the customer is entitled 
to request payment and that he or she has signed the requests for 
payment. The agent should obtain written instructions to credit the 
redemption proceeds to the customer's account or to make some other 
disposition. For its protection, the agent should retain such 
instructions for as long as ten years in the event the transaction is 
later questioned.
    (c) Interest reporting. [Sec. 321.7(e)] Pursuant to 26 CFR 1.6049-4, 
an agent is required to report interest income in the amount of $10 or 
more paid as part of the redemption value of securities. Reports to 
payees should be made on Form 1099-INT or an IRS-approved substitute; 
reports to the Internal Revenue Service should be made in accordance 
with that agency's instructions. A separate report may be made for each 
transaction in which interest in the amount of $10 or more is paid, or 
all interest payments, made during a calendar year, may be aggregated 
and reported annually should the total amount be $10 or more.
    8. Redemption-exchange of Series E and EE savings bonds and savings 
notes. [Sec. 321.8]
    (a) General. [Sec. 321.8 (a) and (b)] The general authority of 
paying agents to redeem securities in exchange for Series HH bonds 
extends only to eligible Series E and EE savings bonds and savings notes 
presented with a completed Form PD 3253, ``Exchange Subscription for 
United States Savings Bonds of Series HH.'' Securities eligible for 
exchange are: (1) Series EE bonds presented no earlier than six months 
from their issue dates; and (2) Series E bonds and savings notes 
presented no later than one year from the month in which they reached 
final maturity. The current redemption value of securities presented in 
one transaction must be at least $500. The presenter must establish his 
or her identity and entitlement to request the exchange and sign the 
exchange subcription and the requests for payment on the securities.
    (b) Securities in the name of a minor. [Sec. 321.8(b)] If an 
exchange subscription is submitted on behalf of a minor who is too young 
to comprehend the nature of the transaction, the form must be completed 
to request that the Series HH bonds be registered either in the minor's 
name alone or in exactly the same form as the securities presented for 
exchange. Agents are instructed to discourage exchange transactions 
involving minors who are too young to conduct them on their own.
    (c) Interest reporting. [Sec. 321.8(c)] Pursuant to 26 CFR 1.6049-4, 
an agent is required to report interest income in the amount of $10 or 
more included in any cash refunded in a redemption-exchange transaction. 
Reports to payees should be made on Form 1099-INT or an IRS-approved 
substitute; reports to the Internal Revenue Service should be made in 
accordance with that agency's instructions. A separate report may be 
made for each redemption-exchange transaction in which interest in the 
amount of $10 or more is refunded, or all interest paid in both cash 
transactions and redemption-exchanges during a calendar year may be 
aggregated and reported annually should the total amount be $10 or more.
    9. Specific limitations on payment authority. [Sec. 321.9]
    (a) Allowable exceptions. [Sec. 321.9] Securities which an agent may 
not redeem because of the limitations in Sec. 321.9 should be forwarded 
to the Fiscal Agency Department of a Federal Reserve Bank referred to in 
Sec. 321.25 for handling. However, if an agent is willing to assume full 
responsibility, it may make payment of an eligible security which bears 
a minor irregularity, such as a misspelled

[[Page 207]]

name, a transposition of letters, etc., because of its knowledge of the 
facts, or because it wishes to rely on the integrity of the presenter.
    (b) Taxpayer identifying number of presenter. [Sec. 321.9(f)] An 
agent shall refuse payment of any security if the taxpayer identifying 
number of the presenter, or the estate represented by the presenter, is 
not known to the agent and the presenter is unwilling to furnish the 
number. A parent who requests payment on behalf of a minor in accordance 
with Sec. 321.7(c) of this part must provide the minor's social security 
number.
    (c) Payments to minors. [Sec. 321.9(j)] A minor may not request 
payment of securities if he or she is not of sufficient competency and 
understanding to comprehend the nature of the act. Because of individual 
differences in comprehension, the Treasury has not established any rule 
as to the exact age at which a minor should be able to redeem 
securities. An agent may interview a minor to ascertain his or her 
ability to understand the transaction.
    10. Responsibilities of paying agents. [Sec. 321.10]
    (a) Requirements for redeeming securities. [Sec. 321.10(a)] A paying 
agent shall redeem eligible savings securities during its regular 
business hours for a presenter who establishes his or her identity as 
the owner or coowner of the securities, in accordance with this part and 
this appendix. While a paying agent is not required to redeem eligible 
Series E and EE savings bonds and savings notes in exchange for Series 
HH bonds for any presenter, or Series E, EE, or I bonds or savings notes 
for cash upon the request of a surviving beneficiary or legal 
representative, it is encouraged to do so, provided the presenter can 
establish his/her identity and provide acceptable evidence to accordance 
with this part and this appendix (See Sec. 321.7 (d) and (f)). An agent 
is not required to redeem savings securities during Saturday and evening 
hours if it is open during such periods primarily as a service for its 
depositors.
    (b) Restrictions. [Sec. 321.10(b)] Violation of the regulatory 
prohibitions on making charges for redeeming securities; on advancing 
money on, making loans on, or discounting the redemption value of 
securities; and on deferring presentation of redeemed securities to 
obtain a larger credit, will be cause for disqualification and recovery 
of the redemption proceeds and profits realized therefrom.

            Subpart D--Payment and Transmittal of Securities

    11. Identification of presenter. [Sec. 321.11(b)]
    (a) Identification guide. [Sec. 321.11(b)] The Treasury Department 
has issued an identification guide, Form PD 3900, to assist paying 
agents in redeeming securities. Careful compliance with the instructions 
contained therein will enable agents to accommodate reasonable 
redemption requests and protect themselves from losses. Reliance on 
newly opened customer accounts as identification, or paying more than 
$1,000 in a single transaction based on documentary evidence alone, 
should be particularly avoided.
    (b) Record of identification practice and evidence presented. [Sec. 
321.11 (b) through (d)] At the time of payment, the agent should make a 
notation on the back of the security or in its own records specifying 
precisely what was relied on to establish the presenter's identity. The 
identification should be adequate to identify the payee under the 
circumstances of the transaction. If an agent redeems a security upon 
the request of a surviving beneficiary or a legal representative of the 
last deceased registrant's estate, it should also make a notation of the 
evidence presented to establish the payee's entitlement; this might 
include the document or case number on the death certificate(s) and/or 
evidence of the legal representative's appointment, the date(s) of 
death, and the names and locations of the issuing authorities. The 
notations should be sufficient to permit a determination of the evidence 
of identity and entitlement at a later date. Otherwise, the agent runs 
the risk that no evidence can be developed to show that it acted without 
fault or negligence, in which case it could not be relieved of liability 
should a loss occur.
    12. Request for payment. [Sec. 321.11(d)]
    (a) Signature. [Sec. 321.11(e)] Except where an agent qualified 
under 31 CFR part 330 (Circular No. 888) elects to use the special 
endorsement procedure, each security redeemed by the agent must bear the 
signature of the presenter. The name must be signed exactly as it is 
inscribed on the security, unless the provisions of 31 CFR part 330 and 
this appendix provide for an exception, such as in cases involving a 
change of name by marriage, a request by a parent on behalf of a minor, 
or a legal representative of the last deceased registrant's estate. An 
agent may be held liable if the request for payment is not properly 
signed. Legal representatives must sign as provided in Sec. 321.7 (e) 
and (f).
    (b) Address. [Sec. 321.11(d)] The presenter must enter a current 
home or business address in the space provided on the back of the 
security. If a single transaction includes a group of securities, the 
address must be shown on at least one security of each of the following 
types: (1) Paper securities issued prior to October 1957; (2) punch card 
or machine readable paper securities issued prior to January 1989; and 
(3) machine readable paper securities issued subsequent to December 
1988.
    13. Redemption value of securities. [Sec. 321.12]

[[Page 208]]

    (a) Redemption value tables. [Sec. 321.12] The Bureau of the Public 
Debt distributes redemption values in various formats and as part of 
programs for personal computers, for: (1) Series E bonds, (2) Series EE 
bonds, (3) Series I bonds, and (4) savings notes. Additional tables or 
information may be requested from the appropriate Federal Reserve Bank 
referred to in Sec. 321.25.
    (b) Use of tables. [Sec. 321.12] Care should be exercised to 
correctly determine the current redemption value of the security 
presented for the month in which it is redeemed. Incorrect payments can 
lead to costly and time-consuming adjustments for the agent, Department 
of the Treasury, and the appropriate Federal Reserve Bank referred to in 
Sec. 321.25.
    (c) Cash redemption. [Sec. 321.12] The correct redemption value of 
securities redeemed by an agent should be paid to the presenter in 
currency or, upon request, by check payable to the presenter or by 
credit to his or her account.
    (d) Redemption-exchange. [Sec. 321.12] The redemption values of 
eligible Series E and EE savings bonds and savings notes presented for 
exchange (Series I savings bonds are not eligible for exchange) for 
Series HH bonds shall be those payable in the month the agent accepts a 
correctly completed and signed exchange subscription, Public Debt Form 
3253. The total redemption value of securities presented for exchange in 
any one transaction must be at least $500. If the redemption value is 
$500 or an even multiple thereof, Series HH bonds must be requested in 
that exact amount. If the redemption value exceeds $500, but is not an 
even multiple of that amount, the presenter may add cash to increase the 
amount of the subscription to the next higher $500 multiple, or reduce 
the amount of the subscription to the next lower $500 multiple. The 
maximum amount which may be added to or refunded in an exchange 
transaction is $499.99. For example, if the total redemption value of 
the securities is $4,253.33, the presenter may request no less than 
$4,000 and no more than $4,500 in Series HH bonds. In the first 
instance, the agent will pay the presenter $253.33; in the second, it 
will collect $246.67 when it accepts the exchange subscription.
    14. Cancellation of redeemed securities. [Sec. 321.13]
    (a) Paying agent stamp. [Sec. 321.13] Each redeemed security must be 
cancelled by the imprint of a payment stamp. The stamp may not exceed 
1\1/8\ inches in any dimension and must include the following 
information in the arrangement shown:
Paid $______ (for recording amount paid).
Name, location, and four-digit paying agent code number assigned by the 
          appropriate Federal Reserve Bank referred to in Sec. 321.25 
          (subject to abbreviation and arrangement by the Bank).

Date ______ (for recording actual date of payment).
By ______ (for use by agent in recording initials, or signature, codes, 
          symbols, etc., of the officer or employee who approved or made 
          the payment).

    (b) Procurement of stamps. [Sec. 321.12] A paying agent may 
requisition stamps from the Fiscal Agency Department of the appropriate 
Federal Reserve Bank referred to in Sec. 321.25 or purchase its own 
stamps. Stamps not provided by the appropriate Federal Reserve Bank 
referred to in Sec. 321.25 must conform exactly in size and design to 
that prescribed or approved by the Bank. To insure legible impressions, 
stamps should be replaced when worn.
    (c) Imprinting payment stamp and recording payment date. [Sec. 
321.13] After determining that a security is eligible for payment, the 
agent should carefully imprint the payment stamp on its face in the open 
space immediately to the left of, and as close as possible to, the issue 
date and issuing agent validating data. It is important not to overprint 
any data on the security, particularly the serial number, since the 
security will subsequently be microfilmed. No other stamps shall be 
placed on the face of the security. Care should be taken to record 
legibly the correct amount, the exact date of redemption, and the 
signature, initials, or other identification of the agent's employee who 
approved or made the payment. A dark-colored ink must be used, and care 
should be taken not to smear the stamp impression or the writing.
    (d) Redemption-exchange. [Sec. 321.13] Eligible Series E and EE 
savings bonds and savings notes presented for redemption-exchange shall 
be stamped ``PAID'' in the same manner as securities redeemed for cash, 
but only when all elements of the transaction have been completed, 
including receipt of any additional cash. The exact date of redemption 
shall also be recorded on the exchange subscription to enable the 
appropriate Federal Reserve Bank referred to in Sec. 321.25 to establish 
the proper issue date for the Series HH bonds. An officer or other 
authorized employee of the agent shall also sign the exchange 
subscription, in his or her official capacity, and furnish other 
requested information that identifies the paying agent.
    (e) MICR-encoding of payment information. [Sec. 321.13] An agent 
shall MICR-encode the redemption value in the ``Amount'' field on the 
face of each security or arrange to have this service performed by 
another financial institution. If the agent transmits securities in 
mixed cash letters, it must also MICR-encode the routing/transit number 
assigned to the Bureau of the Public Debt's savings bond activity in the 
``R/T'' field on the face of all pre-October 1957 paper securities and 
those punch card securities on which it does not

[[Page 209]]

already appear. The Bureau's routing/transit number is 000090007. Care 
should be taken in repairing MICR-encoded items so as not to obliterate 
any data in surrounding MICR fields or elsewhere on the face of the 
security.
    15. Transmittal of securities to Federal Reserve Bank. [Sec. 321.14] 
An agent shall transmit and receive settlement for redeemed securities 
via EZ CLEAR, i.e., the Check Department of a Federal Reserve Bank or 
Branch or the Regional Check Processing Center. Redeemed securities may 
be transmitted in separately sorted or mixed cash letters to the Check 
Department of a Federal Reserve Bank or Branch, or to a Regional Check 
Processing Center, either directly, or via a parent office or 
correspondent institution. An agent shall transmit redeemed securities 
under cover of the appropriate transmittal document. Eligible Series E 
and EE savings bonds and savings notes redeemed in exchange for Series 
HH bonds must be transmitted for settlement via EZ CLEAR at the same 
time as the exchange application (Public Debt Form 3253) and any 
additional cash needed to complete the transaction are forwarded to the 
Fiscal Agency Department of the servicing Federal Reserve Bank referred 
to in Sec. 321.25. Eligible Series E and EE savings bonds and savings 
notes redeemed on exchange may be commingled with cash redemptions in 
mixed or separately sorted cash letters.
    16. Transmittal of securities to Federal Reserve Bank via fiscal 
agency system. [Sec. 321.14] The Fiscal Agency Department of a Federal 
Reserve Bank or Branch will not accept for settlement securities an 
agent has redeemed.
    17. Transmittal of securities to Federal Reserve Bank via EZ CLEAR. 
[Sec. 321.14]
    (a) Form to be used. [Sec. 321.14] The presenting institution shall 
transmit all redeemed securities to the Check Department of a Federal 
Reserve Bank or Branch or Regional Check Processing Center in accordance 
with the Bank's instructions. Except as otherwise provided in the Bank's 
instructions and operating circulars, cash letters may be comprised of 
one or more bundles of separately sorted redeemed securities (separately 
sorted cash letter) or one or more bundles of mixed items (mixed cash 
letter). The cash letter shall show the name, address, and ABA number of 
the presenting institution, the date of presentation, the total number 
of pieces transmitted, the value of each of the bundles in the cash 
letter, and the total value of the cash letter.
    (b) Composition of cash letters. [Sec. 321.14] Series A, B, C, D, E, 
EE, and I bonds and savings notes redeemed for cash or eligible Series E 
and EE bonds and savings notes redeemed on exchange may be commingled in 
mixed cash letters containing commercial checks and other items or 
separately sorted cash letters containing only redeemed securities. Each 
cash letter shall also contain a listing prepared in accordance with the 
Federal Reserve Bank's instructions.
    (c) Transmittal of securities. [Sec. 321.14] Cash letters containing 
redeemed securities shall be transmitted to a Federal Reserve Bank in 
accordance with the Bank's circulars and instructions.
    (d) Timing of transmittals. [Sec. 321.14] Cash letters containing 
redeemed securities should be transmitted according to the same schedule 
used for other commercial check collection system items.
    (e) Settlement for the audit of paid securities.
    (1) Settlement. [Sec. 321.14] The Federal Reserve Bank will make 
immediate settlement for the total value of redeemed securities as shown 
on each cash letter. Settlement will be made by a credit to the reserve 
or clearing account of the agent or designated correspondent 
institution. Data concerning redeemed security transmittals will be sent 
to the Bureau of the Public Debt for audit. The amount will be subject 
to adjustment if discrepancies are discovered after settlement has been 
made.
    (2) Audit and adjustment [Sec. 321.14] The Bureau of the Public Debt 
will audit all redemption data received from the Central Site as 
promptly as possible. Each presenting institution will, in due course, 
be notified by the Bank of any adjustments required. The Bank will 
adjust via a charge or credit to the presenting institution's Reserve or 
clearing account any amounts previously credited to that account.
    (3) Requests for Adjustments. Depositors who discover errors in 
their EZ CLEAR cash letters subsequent to deposit should allow sixty 
(60) calendar days from the date of their EZ CLEAR cash letter before 
requesting adjustments for the cash letter. This will allow sufficient 
time for the Treasury to classify the savings bonds, forward adjustments 
to the Central Site and for the Central Site to research and function 
adjustments to the depositor.
    (4) Separately Sorting Depositors should submit adjustment requests 
directly to the Central Site Adjustments Department in correspondence. 
However, all requests for adjustments due to incorrect cash letter 
crediting should be directed to the servicing Federal Reserve Bank.
    (5) Mixed Depositors should submit adjustment requests to their 
servicing Federal Reserve Bank.
    18. Record of securities paid. [Secs. 321.14 and 321.24] A record of 
the serial number and the amount paid for each redeemed security must be 
retained by the agent for one year so that settlement can be made if the 
security is lost in transit, and so that the agent can process any 
subsequent adjustment as described in paragraph 17(e)(2) above. For that 
purpose, agents are authorized to microfilm the face and back of each 
security

[[Page 210]]

they redeem. Such film records shall be kept confidential and prints 
therefrom may be made only with the permission of the Bureau of the 
Public Debt or an appropriate Federal Reserve Bank.

           Subpart E--Losses Resulting from Erroneous Payments

    19. Report of erroneous payment. [Sec. 321.16] Any erroneous payment 
that comes to the attention of an agent should be reported immediately 
to the Bureau of the Public Debt, Parkersburg, WV 26106-1328. The 
nearest office of the Secret Service should also be notified if the 
agent believes that a security presented for redemption may be 
counterfeit or stolen, or if the circumstances of the presentation are 
suspicious in any other respect.
    20. Notice to agent. [Sec 321.17(a)] The paying agent will be 
notified if an erroneous payment has occurred. The notice will generally 
be in writing from the Bureau of the Public Debt. If an investigation is 
to be made, the notice will enable the agent to notify its bonding 
company, assemble pertinent information concerning the transaction for 
presentation during the investigation, and take any other action it 
deems appropriate to protect its interest.
    21. Determination of liability. [Sec. 321.18 and Sec. 321.21]
    (a) Upon completing the investigation, the Bureau of the Public Debt 
will examine the available information and determine whether a paying 
agent may be relieved of liability for any loss that may have resulted. 
If the paying agent cannot be relieved of liability, demand will be made 
upon the paying agent to reimburse the Treasury promptly. Any amount not 
paid within 30 days following the mailing of the first demand letter is 
subject to the following charges.
    (1) Interest shall accrue from the date the first demand letter is 
mailed to the date reimbursement is made. The rate of interest to be 
used will be the current value of funds rate published annually or 
quarterly in the Federal Register and in effect during the entire period 
in which the remittance is late.
    (2) Administrative costs shall be assessed as set out in the first 
demand letter, if reimbursement is not made within 30 days of the date 
the first demand letter is mailed.
    (3) Penalty charges shall be assessed, in accordance with 31 U.S.C. 
3717(e), if reimbursement is not made within 120 days of the date the 
first demand letter is mailed. The penalty charge will accrue and be 
calculated from 30 days after the date the first demand letter is mailed 
to the date of reimbursement.
    (b) When a paying agent fails, within 120 days of the date the first 
demand letter is mailed, to make such reimbursement or to submit new 
evidence sufficient for Public Debt to change the determination of 
liability, by virtue of the paying agent's acceptance of settlement via 
credits to a Reserve, correspondent, or clearing account with a Federal 
Reserve Bank or Branch, the agent is deemed to have authorized the 
Federal Reserve Bank to debit the amount due from that account 
designated or utilized by the agent at the Federal Reserve Bank or 
Branch. An institution, designated by a paying agent to receive 
settlement on its behalf, in authorizing such paying agent to utilize 
its Reserve, correspondent, or clearing account on the books at the 
Federal Reserve Bank shall similarly be deemed to authorize such debits 
from that account.
    (c) Reconsideration of a determination of liability will be made in 
any case when a paying agent so requests and presents additional 
evidence and information regarding the transaction.
    22. Relief for lack of timely notice. [Sec 321.18] A paying agent 
will be relieved of liability to the United States for any loss 
resulting from the erroneous payment of securities where the Secretary 
of the Treasury, or his designee, determines that written notice of 
either liability or potential liability has not been given to the agent 
within ten years of the date of the erroneous payment.

                       Subpart F--Forwarding Items

    23. Securities forwarded to Federal Reserve Bank for payment. [Sec 
321.22]
    (a) General. [Sec 321.22] Securities presented for cash payment or 
redemption-exchange, that an agent is not authorized to redeem, shall be 
forwarded to the Fiscal Agency Department of the appropriate Federal 
Reserve Bank referred to in Sec. 321.25, with all required supporting 
documentation and any necessary payment instructions.
    (b) Signature to and certification of request for payment. [Sec 
321.22] An agent qualified under part 330 (Circular No. 888) may elect 
to specially endorse securities for presenters in lieu of requiring 
completion of the requests for payment. Unless this procedure is used, 
the presenter must sign the request on each security and the signature 
must be certified. Before completing the certification, the agent should 
establish the identity of the presenter. The Treasury's identification 
guidelines should be followed in view of the potential liability that 
attaches to such certification.
    (c) Address and Taxpayer identifying number. [Sec 321.22] In every 
case, a current address shall be furnished. The presenter's taxpayer 
identifying number (social security number or employer identification 
number) shall be provided if it is not included in the inscription.
    (d) Redemption-exchange. [Sec 321.22] For redemption-exchange 
transactions submitted as forwarding items, the issue date of the Series 
HH bonds will be the first day of the month in which a correctly 
completed and

[[Page 211]]

signed exchange subscription and full payment are received by the 
appropriate Federal Reserve Bank referred to in Sec. 321.25.
    (e) Partial redemption. [Secs. 321.9(l) and 321.22] Partial 
redemption of a security other than a $25 Series E bond or savings note, 
a $50 Series EE or I bond, or a $500 Series H or HH bond may be made by 
the appropriate Federal Reserve Bank referred to in Sec. 321.25. The 
amount paid must be equal to the redemption value of one or more 
authorized denominations on the date of the transaction. If a security 
is received by an agent for partial redemption, the words ``to the 
extent of $ (face amount) and reissue of the remainder'' should be added 
to the first sentence of the request for payment. The request should 
then be completed in the regular manner and the signature of the 
presenter certified or guaranteed. The security shall be forwarded to 
the Fiscal Agency Department of a Federal Reserve Bank.

                   Subpart G--Miscellaneous Provisions

    24. Fees and charges. [Sec 321.23] Service fees are not intended to 
compensate paying agents for the reporting of interest paid as part of 
the redemption value of securities as required by Federal Tax 
Regulations (26 CFR 1.0649-4).
    Fees will be paid to the presenting institution for securities 
redeemed during each calendar month that are submitted in separately 
sorted cash letters; such fee payments will be made only by ACH. No fees 
will be paid for securities received by the Federal Reserve Bank in 
mixed cash letters. The Bank will charge the presenting institution for 
processing redeemed securities received in mixed cash letters. Inquiries 
regarding separately sorted cash letters should be directed to the 
Pittsburgh Branch, Federal Reserve Bank of Cleveland, P.O. Box 867, 
Pittsburgh, PA 15230-0867. Inquiries regarding mixed cash letters should 
be directed to the Federal Reserve Bank or Branch or Regional Check 
Processing Center where the cash letters were directed.
    25. Claims on account of lost securities [Sec. 321.24] If a security 
redeemed by an agent is lost, stolen, or destroyed while in the custody 
of the agent, or in transit prior to settlement or audit, relief will be 
considered, provided the security can be identified by serial number. 
[See paragraph 18 of this appendix regarding the maintenance of records 
of redeemed securities]. The presenting institution should resubmit a 
photocopy of the security to obtain settlement in accordance with 
established procedures. Questions concerning the established procedures 
should be referred to the servicing Federal Reserve Bank.
    26. Education savings bond program. [Sec. 321.7(g)]
    (a) Section 6009 of the Technical Corrections and Miscellaneous 
Revenue Act of 1988, Public Law 100-647 (see 26 U.S.C. 135), permits 
taxpayers to exclude all, or a portion, of the interest earned on Series 
EE savings bonds bearing issue dates on or after January 1, 1990, and on 
Series I savings bonds from their income under certain conditions. This 
legislation did not create new savings bond redemption and interest 
reporting requirements for savings bond paying agents. However, if a 
bond owner indicates that he or she intends to seek the special tax 
treatment offered under this program, the paying agent is encouraged to 
provide assistance by:
    (1) Suggesting that he or she read IRS Form 8815 (particularly, the 
instructions on the form) as well as relevant portions of IRS 
Publication 17, ``Your Federal Income Tax ``, and Publication 550, 
``Investment Income and Expenses,'' for detailed information; and
    (2) Suggesting that the presenter make a record of eligible bonds 
redeemed either by using IRS Optional Form 8818, or otherwise.
    (b) Bond owners seeking to benefit from the special tax exclusion, 
available through the savings bond education feature, should be aware of 
the following basic rules:
    (1) Only interest earned on Series EE bonds bearing issue dates on 
or after January 1, 1990, is eligible for the exclusion of interest 
income, where the proceeds from the redemption of the bonds are used to 
pay qualified post-secondary education expenses. Interest received on 
bonds bearing issue dates prior to January 1, 1990, is not eligible.
    (2)(i) The bonds must be registered in the name of a taxpayer as 
sole owner, or in the name of the taxpayer as co-owner, with the 
taxpayer's spouse as the other co-owner. Bonds registered in the name of 
the taxpayer's child, as owner or co-owner, will not qualify for the 
exclusion. A taxpayer may purchase bonds registered in beneficiary form, 
i.e., ``A payable on death to B'', naming any individual, including a 
child, as beneficary.
    (ii) The bonds must be registered in the name of a taxpayer who has 
attained the age of 24 years at the time of issue. Generally, a taxpayer 
must be 24 years of age on or before the first day of the month in which 
the taxpayer purchases the bond, because savings bonds bear the issue 
date of the first day of the month in which purchased.
    (3) The bond must be redeemed by the owner or co-owner. It may not 
be transferred to-the educational institution.
    (4) If the entire amount of the proceeds of the eligible bonds is 
less than, or equal to, the qualified post-secondary educational 
expenses incurred by the owner, his or her spouse, or his or her 
dependent, all interest received is excludable, subject to the 
limitations in paragraph (b)(7) of this section. If the amount of the 
proceeds exceeds such qualified expenses, the excludable portion of the 
interest will be reduced by a pro rata amount.

[[Page 212]]

    (5) Qualified educational expenses are limited to tuition and fees 
required for the enrollment of, or attendance by, the taxpayer, or the 
taxpayer's spouse or dependent, at an eligible educational institution. 
These expenses are calculated net of scholarships, fellowships, 
employer-provided educational assistance, and other tuition reduction 
amounts, and must be incurred during the tax year of the redemption of 
the bonds for which the interest exclusion is claimed.
    (6) Eligible educational institutions include those defined in 
sections 1201(a) and 481(a)(1) (C) and (D) of the Higher Education Act 
of 1965, as in effect on October 21, 1988, excluding proprietary 
institutions. Such eligible institutions include post-secondary 
institutions, and vocational schools that meet the standards for 
participation in Federal financial aid programs, excluding proprietary 
institutions. Additional gudiance concerning eligible institutions 
should be obtained from the Department of Education.
    (7)(i) Interest exclusion benefits are based on the modified 
adjusted gross income of the taxpayer. For taxpayers filing a joint 
Federal income tax return, the exclusion is gradually decreased for 
modified adjusted gross income between $60,000 and $90,000. Married 
taxpayers filing jointly who have modified adjusted gross incomes above 
$90,000 are ineligible for the exclusion. For single taxpayers and heads 
of households, the exclusion is gradually decreased for such incomes 
between $40,000 and $55,000. Single taxpayers with such incomes above 
$55,000 are ineligible for the exclusion. After 1990, these income 
limits will be adjusted for inflation.
    (ii) Married taxpayers must file a joint return in order to qualify 
for the exclusion. Married taxpayers filing separate returns will not 
qualify for the exclusion, regardless of their modified adjusted gross 
incomes.
    (8) The taxpayer is responsible for maintaining adequate records of 
bond redemption transactions to support claims for the exclusion, in 
accordance with applicable rules and regulations of the Internal Revenue 
Service.
    (9) The Internal Revenue Service should be consulted for advice 
concerning the eligibility and tax treatment of bonds for the income 
exclusion under the educational savings bond program.
    27. Additional information. [Sec 321.25] Requests for additional 
advice, clarification of the payment regulations or this Appendix, and 
other matters relating to the actions of a financial institution as 
paying agent should generally be made to the appropriate Federal Reserve 
Bank referred to in Sec. 321.25.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 35397, Aug. 29, 1990; 59 FR 10538, Mar. 4, 1994; 61 FR 37197, July 
16, 1996; 63 FR 38042, 38043, July 14, 1998]



PART 323--DISCLOSURE OF RECORDS--Table of Contents




Sec.
323.1  Purpose of regulations.
323.2  Rules governing availability of information.
323.3  Materials available for inspection and copying.
323.4  Requests for identifiable records.
323.5  Fees.

    Authority: 80 Stat. 379; sec. 3, 60 Stat. 238, as amended; 5 U.S.C. 
301, 552.

    Source: 32 FR 9967, July 7, 1967, unless otherwise noted.



Sec. 323.1  Purpose of regulations.

    The regulations of this part are issued to implement 5 U.S.C. 552(a) 
(2) and (3). The requirements of 5 U.S.C. 552(a)(1) are met through the 
publication in the Federal Register of the statement of the 
organization, functions and procedures available of the Fiscal Service, 
including the Bureau of the Public Debt, and revisions thereof, and 
through the publication therein of substantive and procedural 
regulations of the Bureau. A synopsis of the statements of Bureau 
organization, functions and procedures available will be published 
annually by the Office of the Federal Register in the U.S. Government 
Organization Manual.



Sec. 323.2  Rules governing availability of information.

    (a) General. The records of the Bureau of the Public Debt required 
by 5 U.S.C. 552 to be made available to the public shall be made 
available in accordance with the regulations on the Disclosure of 
Records of the Office of the Secretary issued under 5 U.S.C. 552 and 
published as part I of title 31 of the Code of Federal Regulations, 32 
FR 9562, July 1, 1967, except as specifically provided in this part.
    (b) Limitations on the availability of records relating to 
securities. Records relating to the purchase, ownership of, and 
transactions in Treasury securities or other securities handled by the 
Bureau of the Public Debt for government agencies or wholly or partially 
Government-owned corporations will ordinarily be disclosed only to the 
owners

[[Page 213]]

of such securities, their executors, administrators or other legal 
representatives or to their survivors or to investigative and certain 
other agencies of the Federal and State governments, to trustees in 
bankruptcy, receivers of insolvents' estates or where proper order has 
been entered requesting disclosure of information to Federal and State 
courts. These records are held confidential because they relate to 
private financial affairs of the owners.



Sec. 323.3  Materials available for inspection and copying.

    (a) Availability. The materials which are required under 5 U.S.C. 
552(a)(2) to be made available for inspection and copying are:
    (1) Final opinions or orders made in the adjudication of cases. Any 
issued by the Bureau of the Public Debt would be in the form of letters 
or memorandums setting out determinations made in disposing of any 
matter before the Bureau.
    (2) Statements of policy and interpretations which have been adopted 
by the Bureau but not published in the Federal Register.
    (3) Administrative staff manuals and instructions to the staff that 
affect any member of the public. Some Federal Reserve Bank memorandums 
and Public Debt memorandums will be made available under this provision.
    (b) Location. The materials listed in paragraph (a) of this section 
are available for inspection and copy during office hours in the Public 
Reading Room of the Treasury Department, 15th Street and Pennsylvania 
Avenue NW., Washington, DC 20220.



Sec. 323.4  Requests for identifiable records.

    (a) Procedure. (1) A written request for an identifiable record 
relating to a U.S. savings bond or note shall be addressed to the Deputy 
Commissioner, Bureau of the Public Debt, Chicago, IL 60605.
    (2) A request for an identifiable record relating to any Treasury 
Department security, other than a savings bond or note, or a security of 
a Government agency or a wholly or partially Government-owned 
corporation, the record of which is maintained by the Bureau of the 
Public Debt, shall be addressed to the Chief, Division of Loans and 
Currency, Bureau of the Public Debt, Washington, DC 20226.
    (3) A request for an identifiable record relating to any security of 
a Government agency or wholly or partially Government-owned corporation, 
the record for which is maintained by the Federal Reserve Bank of New 
York, shall be addressed to the Federal Reserve Bank of New York, New 
York, NY 10045.
    (4) A written request for any identifiable record that the Bureau of 
the Public Debt has other than those set out in paragraphs (a) (1), (2), 
and (3) of this section shall be addressed to the Commissioner of the 
Public Debt, Washington, DC 20220.
    (5) A request may be presented in person at the office to which a 
written request would be addressed.
    (b) Determination of availability. Determination as to whether or 
not a requested record shall be disclosed will be made by the Officer to 
whom the request should be directed under paragraph (a) of this section, 
and by the Bureau of Public Debt Information Officer for requests 
directed to the Office of the Commissioner, subject to an appeal to the 
Commissioner of the Public Debt. The decision of the Commissioner shall 
constitute final agency action unless he refers the appeal to the Fiscal 
Assistant Secretary, in which case the decision of the Fiscal Assistant 
Secretary shall constitute final agency action.



Sec. 323.5  Fees.

    The fees provided in part 1 of title 31 of the CFR (32 FR 9562, July 
1, 1967), shall apply to all requests for identifiable records under 
this part except as follows:
    (a) No charge will be made for verifying the record of a savings 
bond or note identified by series and denomination and either the 
registration and issue date or the serial number at the request of the 
owner, coowner, or surviving beneficiary or person entitled to the 
security under the applicable regulations.
    (b) No charge will be made for verifying the record of a registered 
Treasury security, other than a savings

[[Page 214]]

bond or note, or a registered security of a Government agency or a 
wholly or partially Government-owned corporation, identified as to loan 
and registration for an owner, joint owner or person entitled to the 
security under the applicable regulations.
    (c) No charge will be made for advising a person who has submitted 
satisfactory evidence of ownership as to the status of a bearer Treasury 
security or a bearer security of a Government agency or a wholly or 
partially Government-owned corporation.
    (d) No charge will be made for furnishing an owner, coowner, joint 
owner, surviving beneficiary, or person who is entitled to the security 
under the applicable regulations a photocopy or similar reproduction of 
any Treasury security, with any necessary supporting documents, which it 
is alleged was improperly paid or was reissued, transferred or redeemed 
on a forged or defective request, endorsement, or assignment.
    (e) Fees may be waived for other classes of requested records upon a 
finding by the Commissioner of the Public Debt that the person 
requesting the information is entitled to the record requested without 
charge.



PART 328--RESTRICTIVE ENDORSEMENTS OF U.S. BEARER SECURITIES--Table of Contents




Sec.
328.1  Scope of regulations.
328.2  Definitions.
328.3  Authorization for restrictive endorsements.
328.4  Effect of restrictive endorsements.
328.5  Forms of endorsement.
328.6  Requirements for endorsement.
328.7  Shipment of securities.
328.8  Loss, theft, or destruction of securities bearing restrictive 
          endorsements.
328.9  Miscellaneous.

    Authority: R.S. 3706; 40 Stat. 288, 502, 1309; 46 Stat. 20; 48 Stat. 
343; 49 Stat. 20; 56 Stat. 189; 73 Stat. 622; 85 Stat. 5, 74 (31 U.S.C. 
738a, 739, 752, 752a, 753, 754, 754a and 754b); and 5 U.S.C. 301.

    Source: 38 FR 10682, Apr. 30, 1973, unless otherwise noted.



Sec. 328.1  Scope of regulations.

    The regulations in this part are applicable only to U.S. bearer 
securities 1 presented:
---------------------------------------------------------------------------

    1  Certain agencies of the United States and certain 
Government and Government-sponsored corporations also authorize the 
restrictive endorsement of bearer securities.
---------------------------------------------------------------------------

    (a) By or through banks for payment at or after their maturity or 
call date, or in exchange for any securities under any exchange 
offering,
    (b) By banks for conversion to book-entry securities,
    (c) By or through banks at any time prior to their maturity or call 
date for redemption at par and application of the entire proceeds in 
payment of Federal estate taxes, provided said securities by the terms 
of their issue are eligible for such redemption, and
    (d) By Service Center Directors and District Directors, Internal 
Revenue Service, for redemption, with the proceeds to be applied in 
payment of taxes (other than securities presented under paragraph (c) of 
this section).

These regulations do not apply to bearer securities presented for any 
other transactions, or to registered securities assigned in blank, or to 
bearer, or so assigned as to become, in effect, payable to bearer.



Sec. 328.2  Definitions.

    Certain words and terms, as used in these regulations, are defined 
as follows:
    (a) Banks refer to, and include, incorporated banks (i.e., banks 
doing a general commercial banking business), incorporated trust 
companies (i.e., trust companies doing either a general banking business 
or a general trust business), and savings and loan associations, 
building and loan associations, and such other financial institutions as 
may be designated by the Federal Reserve banks. This definition is 
limited to institutions incorporated within the United States, its 
territories and possessions, the Commonwealth of Puerto Rico and the 
Canal Zone.
    (b) Bearer securities or securities are those which are payable on 
their face to bearer, the ownership of which is not recorded. They 
include Treasury

[[Page 215]]

bonds,Treasury notes, Treasury certificates of indebtedness, and 
Treasury bills.



Sec. 328.3  Authorization for restrictive endorsements.

    (a) By banks. Banks are authorized, under the conditions and in the 
form hereinafter provided, to place restrictive endorsements upon the 
face of bearer securities owned by themselves or their customers for the 
purpose of presentation to Federal Reserve banks or branches, or to the 
Bureau of the Public Debt, as follows:
    (1) For payment or redemption--at any time within 1 calendar month 
prior to their maturity date, or the date on which they become payable 
pursuant to a call for redemption, or at any time after their maturity 
or call date;
    (2) For exchange--during any period for their presentation pursuant 
to an exchange offering;
    (3) For redemption at par in payment of Federal estate taxes (only 
eligible securities)--at any time prior to their maturity or call 
redemption date; and
    (4) For conversion to book-entry securities under subpart O of part 
306 of this chapter--at any time prior to their maturity or call 
redemption date.
    (b) By Service Center Directors and District Directors, Internal 
Revenue Service. Service Center Directors and District Directors, 
Internal Revenue Service, are authorized, under the conditions and in 
the form hereinafter provided, to place restrictive endorsements upon 
the face of bearer securities for the purpose of presentation to Federal 
Reserve banks or branches, or to the Bureau of the Public Debt, for 
redemption and application of the proceeds in payment of taxes (other 
than securities presented for redemption at par and application of the 
proceeds in payment of Federal estate taxes).
    (c) Instructions from Federal Reserve banks. Federal Reserve banks 
will inform eligible banks and Service Center Directors and District 
Directors, Internal Revenue Service, in their respective districts as to 
the procedure to be followed under the authority granted by these 
regulations. Restrictive endorsements shall not be placed on securities 
until such information is received from the Federal Reserve banks.



Sec. 328.4  Effect of restrictive endorsements.

    Bearer securities bearing restrictive endorsements as herein 
provided will thereafter be nonnegotiable and payment, redemption, or 
exchange will be made only as provided in such endorsements.



Sec. 328.5  Forms of endorsement.

    (a) When presented by banks--(1) For payment or exchange. The 
endorsement placed on a bearer security presented for payment or 
exchange by a bank should be in the following form:

For presentation to the Federal Reserve Bank of ____________________, 
Fiscal Agent of the United States, for redemption or in exchange for 
securities of a new issue, in accordance with written instructions 
submitted by ____________________. (Insert name of presenting bank)

    (2) For redemption at par. The endorsement placed on a bearer 
security presented for redemption at par in payment of Federal estate 
taxes should be in the following form:

For presentation to the Federal Reserve Bank of ________________, Fiscal 
Agent of the United States, for redemption at par in payment of Federal 
estate taxes, in accordance with written instructions submitted by 
________________________________. (Insert name of presenting bank)

    (b) For conversion to book-entry securities. The endorsement placed 
on a bearer security presented for conversion to a book-entry security 
shall be in the following form:

For presentation to the Federal Reserve Bank of __________________, 
Fiscal Agent of the United States, for conversion to book-entry 
securities by __________________. (Insert name of presenting bank)

    (c) When presented by Service Center Directors or District 
Directors, Internal Revenue Service. The endorsement placed on a bearer 
security by a Service Center Director or a District Director, Internal 
Revenue Service, should be in the following form:

For presentation to the Federal Reserve Bank of ______________;, Fiscal 
Agent of the United States, for redemption, the proceeds to be credited 
to the account of the Service Center Director, Internal Revenue Service, 
at __________, for credit on the Federal __________________ (Income, 
gifts, or other)

[[Page 216]]

taxes due from __________________. (Name and address)



Sec. 328.6  Requirements for endorsement.

    (a) On bearer securities. The endorsement must be imprinted in the 
lefthand portion of the face of each security with the first line 
thereof parallel to the left edge of the security and in such manner as 
to be clearly legible and in such position that it will not obscure the 
serial number, series designation, or other identifying data, and cover 
the smallest possible portion of the text on the face of the security. 
The dimensions of the endorsement should be approximately 4 inches in 
width and 1\1/2\ inches in height, and must be imprinted by stamp or 
plate of such character as will render the endorsement substantially 
ineradicable. The name of the Federal Reserve bank of the district must 
appear on the plate or stamp used for the imprinting of the endorsement, 
and presentation to the appropriate branch of the Federal Reserve bank 
named will be considered as presentation to the bank. When securities 
are to be presented to the Bureau of the Public Debt, the words ``United 
States Treasury'' should be used in lieu of the words ``Federal Reserve 
Bank of ______________, Fiscal Agent of the United States.'' No 
subsequent endorsement will be recognized. If the form of endorsement on 
a security is different than that prescribed in Sec. 328.5, the 
provisions of Secs. 328.7 and 328.8 shall not apply to the security.
    (b) On coupons. Unmatured coupons attached to restrictively endorsed 
securities should be canceled by imprinting the prescribed endorsement 
in such manner that a substantial portion of the endorsement will appear 
on each such coupon. If any such coupons are missing, deduction of their 
face amount will be made in cases of redemption, and in cases of 
exchange, remittance equal to the face amount of the missing coupons 
must accompany the securities. All matured coupons, including coupons 
which will mature on or before the date of redemption or exchange 
(except as otherwise specifically provided in an announcement of an 
exchange offering), should be detached from securities upon which 
restrictive endorsements are to be imprinted.



Sec. 328.7  Shipment of securities.

    Securities bearing restrictive endorsements may be shipped, at the 
risk and expense of the shipper, by registered mail, messenger, armored 
car service, or express to the Federal Reserve bank of the district in 
which the presenting bank, the Service Center Director, or the District 
Director, Internal Revenue Service, is located, or to the appropriate 
branch of such Federal Reserve bank, shipments to the Bureau of the 
Public Debt, Washington, DC, should be made by messenger or armored car.



Sec. 328.8  Loss, theft, or destruction of securities bearing restrictive endorsements.

    (a) General. Relief will be provided on account of securities 
bearing restrictive endorsements proved to have been lost, stolen or 
destroyed, upon the owner's application, in the same manner as 
registered securities which have not been assigned. (See subpart N of 
the current revision of Department Circular No. 300, the general 
regulations governing United States securities.) Except for bearer 
securities submitted for redemption at par in payment of Federal estate 
taxes, a bank will be considered the owner of securities handled on 
behalf of customers unless it otherwise requests. The application for 
relief (Form PD 2211) and instructions will be furnished by the Federal 
Reserve banks.
    (b) Bond of indemnity. Where securities bearing restrictive 
endorsements shipped by a bank have been lost, stolen, or destroyed, a 
bond of indemnity with surety satisfactory to the Secretary of the 
Treasury will be required from the owner. If such bond is executed by a 
bank or other corporation, the execution must be authorized by general 
or special resolution of the board of directors, or other body 
exercising similar functions under its bylaws. Ordinarily, no surety 
will be required on a bond executed by a presenting bank. The Secretary 
of the Treasury reserves the right, however, to require a surety in any 
case in

[[Page 217]]

which he considers such action necessary for the protection of the 
United States.



Sec. 328.9  Miscellaneous.

    The provisions of this circular are subject to the current revision 
of Department Circular No. 300. The Secretary of the Treasury reserves 
the right at any time to amend, supplement, or withdraw any or all of 
the provisions of these regulations.



PART 330--REGULATIONS GOVERNING PAYMENT UNDER SPECIAL ENDORSEMENT OF UNITED STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES (FREEDOM SHARES)--Table of Contents




Sec.
330.0  Purpose.
330.1  Definition of terms.
330.2  Qualification for use of special endorsement.
330.3  Special endorsement of securities.
330.4  Guaranty given to the United States.
330.5  Evidence of owner's or beneficiary's authorization to affix 
          special endorsement.
330.6  Securities eligible for special endorsement.
330.7  Payment or redemption--exchange by agent.
330.8  Payment or redemption--exchange by Federal Reserve Bank.
330.9  Fiscal agents.
330.10  Modifications of other circulars.
330.11  Supplements, amendments, or revisions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 3105.

    Source: 53 FR 37519, Sept. 26, 1988, unless otherwise noted.



Sec. 330.0  Purpose.

    The regulations in this part establish a procedure under which 
qualified paying agents may specially endorse United States Savings 
Bonds of certain series and United States Savings Notes (Freedom 
Shares), and either redeem the securities so endorsed, or forward them 
to a Federal Reserve Bank for redemption, with or without the owner's 
signature to the requests for payment.



Sec. 330.1  Definition of terms.

    As used in this part:
    (a) Federal Reserve Bank or Bank refers to the Federal Reserve Bank 
providing savings bond services to the district in which a paying agent 
is located. See Sec. 330.9.
    (b) Owner(s) means the person(s) named as registered owner or 
coowners on a bond or note, or as the designated beneficiary who has 
succeeded to ownership of the bond or note upon the death of the owner. 
For the purposes of special endorsement, but not payment, by a qualified 
agent, the term may also include fiduciaries, corporations, 
partnerships, associations, and other entities named on a security, 
where such registration is authorized.
    (c) Paying agent(s) or agent(s) refers to an eligible financial 
institution qualified under the provisions of this part to specially 
endorse securities and qualified, under the provisions of Department of 
the Treasury Circular No. 750, current revision (31 CFR part 321), to 
redeem eligible savings bonds and notes. The term includes the branches 
of a qualified agent that redeem bonds and notes and are themselves 
directly accountable for such redemptions.
    (d) Redemption and payment are used interchangeably for payment of a 
bond or note in accordance with the terms of its offering and the 
regulations governing it, and include redemption-exchange.
    (e) Redemption-exchange means any authorized redemption of eligible 
securities for the purpose of applying the proceeds in payment for other 
securities offered in exchange by the Treasury.
    (f) Savings bond(s) or bond(s) means a United States Savings Bond of 
Series A, B, C, D, E, EE, or I.
    (g) Savings notes(s) or notes(s) means a United States Savings Note 
(Freedom Share).
    (h) Security or securities means a savings bond or note, as defined 
in paragraphs (f) and (g) of this section.
    (i) Special endorsement means a procedure under which a security is 
redeemed by an agent, qualified under the provisions of this part, for 
cash or on redemption-exchange (or forwarded for redemption to a 
designated Federal

[[Page 218]]

Reserve Bank, where appropriate), utilizing a special stamp placed on 
the security in lieu of a request for payment signed by the owner.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10538, 10539, Mar. 4, 
1994; 63 FR 38044, July 14, 1998]



Sec. 330.2  Qualification for use of special endorsement.

    (a) Application for authority. Any financial institution qualified 
as a paying agent of savings bonds and notes under the provisions of 
Department of the Treasury Circular No. 750, current revision, may 
establish its eligibility to employ the special endorsement procedure by 
executing and submitting the appropriate application-agreement form to 
the designated Federal Reserve Bank. In executing the form, the agent 
certifies that, by duly executed resolution of its governing board or 
committee, it has been authorized to apply for the privilege of paying 
and processing securities in accordance with the provisions and 
conditions of this part (Circular No. 888, including all supplements, 
amendments, and revisions, and any related instructions). If the 
application is approved, the designated Federal Reserve Bank will issue 
a certificate of qualification.
    (b) Agents previously qualified. Paying agents qualified under 
previous revisions of this part are authorized to continue to act 
without requalification. They shall, however, be subject to the terms 
and conditions of the previously executed application and these 
regulations in the same manner and to the same extent as though they had 
requalified hereunder.
    (c) Termination of qualification. The Secretary of the Treasury 
reserves the right to withdraw the special endorsement authority from 
any paying agent at any time. Such authority will also be terminated at 
any time at the request of the paying agent. In either event, formal 
notice of the termination shall be given to the agent in writing by the 
designated Federal Reserve Bank.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.3  Special endorsement of securities.

    (a) Form of endorsement. Each security processed under the 
provisions of this part shall bear the following endorsement:

    Request by owner and validity of transaction guaranteed in 
accordance with T.D. Circular No. 888, as revised. (Name, location, and 
paying agent code number assigned by designated Federal Reserve Bank.)


This endorsement must be legibly impressed in black or other dark-
colored ink on the back of the security in the space provided for the 
owner to request payment.
    (b) Endorsement stamps. Endorsement stamps may be obtained from the 
designated Federal Reserve Bank or, with its approval, purchased by the 
agent. Requests for stamps to be furnished or approved by the Bank must 
be made in writing by an officer of the paying agent. Stamps procured by 
an agent may not exceed a space bounded by 1\3/4\ inches vertically and 
3 inches horizontally. They must follow exactly the wording prescribed. 
They may also include space for the transaction date and the initials or 
signature of the officer or employee authorized to approve the 
transaction.
    (c) Securities registered in coownership or beneficiary form. In the 
case of securities registered in coownership or beneficiary form, the 
agent shall indicate which person, whose name is inscribed thereon, 
requested payment or exchange by encircling in black or other dark-
colored ink the name of that person (or both coowners, if the request is 
joint) in the inscription on the face of the securities.
    (d) Restrictions. Under no circumstances shall the special 
endorsement procedure be used to give effect to a transfer, 
hypothecation or pledge of a security, or to permit payment to any 
person other than the owner, coowner, or, where appropriate, 
beneficiary. Violation of these provisions will be cause for withdrawal 
of an agent's authority to process securities

[[Page 219]]

under the special endorsement procedure, and may involve additional 
penalties if the circumstances warrant such action.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.4  Guaranty given to the United States.

    By the act of paying or presenting to a designated Federal Reserve 
Bank, for payment or exchange, a security on which it has affixed the 
special endorsement, a payment agent shall be deemed to have:
    (a) Unconditionally guaranteed to the United States the validity of 
the transaction, including the identification of the owner and the 
disposition of the proceeds or the new bonds, as the case may be, in 
accordance with the presenter's instruction;
    (b) Assumed complete and unconditional liability to the United 
States for any loss which may be incurred by the United States as a 
result of the transaction; and
    (c) Unconditionally agreed to make prompt reimbursement for the 
amount of any loss, upon request of the Department of the Treasury.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.5  Evidence of owner's or beneficiary's authorization to affix special endorsement.

    (a) Form of authorization. The Treasury does not prescribe the form 
or type of instructions an agent must obtain from each owner, co-owner 
or beneficiary in order to use the special endorsement procedure. In the 
case of eligible Series E and EE savings bonds and savings notes 
presented for a redemption-exchange, the owner, coowner or beneficiary 
authorized to request the exchange (as specified in Circular No. 750, 
Sec. 321.8(b)), must sign the exchange subscription even though the 
eligible Series E and EE savings bonds and savings notes are specially 
endorsed.
    (b) Securities in coownership or beneficiary form. Securities 
registered in coownership or beneficiary form should be accepted for 
special endorsement only for immediate payment or exchange. Acceptance 
of bonds and notes for processing at some future date should be avoided 
as authority to utilize such endorsement generally expires upon the 
death of the owner or coowner on whose behalf securities were to be 
paid. Requests for payment of securities present by the surviving 
beneficiary must be supported by a certificate of death for the owner 
named thereon, as required by Circular No. 750, part 321 and the 
appendix to that part.
    (c) Record of authorization. Agents should maintain such records as 
may be necessary to establish the receipt of, and compliance with, 
instructions supporting the special endorsement. If the agent elects to 
make notations on the backs of the securities to serve as a record, the 
Bureau of the Public Debt will undertake to produce, on request, 
photocopies of such securities at any time up to ten years after the 
redemption date. However, the Bureau does not not assume responsibility 
for the adequacy of such notations, for the legibility of any photocopy, 
or for failure to produce a photocopy from its records.

[53 FR 37519, Sept. 26, 1988, as amended at 63 FR 38044, July 14, 1998]



Sec. 330.6  Securities eligible for special endorsement.

    (a) General authority. A qualified agent is authorized to affix the 
special endorsement to:
    (1) Savings bonds of Series A, B, C, D, E, EE, and I and savings 
notes to be redeemed for cash; and
    (2) Eligible savings bonds of Series E and EE and savings notes to 
be redeemed in exchange for Series HH bonds under the provisions of 
Circular No. 2-80 (31 CFR part 352).
    (b) Securities which may not be specially endorsed. The special 
endorsement procedure may not be used in any case in which payment or 
exchange:
    (1) Is requested by a parent on behalf of a minor child named on the 
security, or
    (2) Requires documentary evidence, under regulations contained in 
Circulars Nos. 530 and 3-80 (31 CFR parts 315 and 353, respectively), 
except as indicated in Sec. 330.5.

[[Page 220]]

    (c) Securities owned by nonresident aliens. As securities owned by a 
nonresident alien individual, or a nonresident foreign corporation, 
partnership, or association, may be subject to the nonresident alien 
withholding tax, bonds and notes held or received by an agent for the 
account of such owners must be forwarded to the designated Federal 
Reserve Bank for redemption, even though the agent may specially endorse 
the securities.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994; 
63 FR 38044, July 14, 1998]



Sec. 330.7  Payment or redemption--exchange by agent.

    Specially endorsed securities may be paid in cash or, if they are 
eligible Series E and EE savings bonds or savings notes, redeemed in 
exchange for Series HH bonds pursuant to the authority and subject, in 
all other respects, to the provisions of Circular No. 750, current 
revision (31 CFR part 321), its appendix, and any other instructions 
issued under its authority. Each specially endorsed bond or note paid by 
an agent must have the agent's payment stamp imprinted on its face and 
show the date and amount paid. Securities so paid should be combined 
with other securities paid under that Circular and presented for 
settlement through EZ CLEAR. Securities redeemed by an agent in an 
exchange must be presented for settlement through EZ CLEAR separately 
from, but at the same times as, an exchange subscription and any 
remittance are forwarded to the Fiscal Agency Department of the 
appropriate Federal Reserve Bank.

[63 FR 38044, July 14, 1998]



Sec. 330.8  Payment or redemption--exchange by Federal Reserve Bank.

    Specially endorsed securities which an agent is not authorized to 
redeem for cash or on exchange should be forwarded to the Fiscal Agency 
Department of the designated Federal Reserve Bank. The transmittals must 
be accompanied by appropriate instructions governing the transaction and 
the disposition of the redemption proceeds or new bonds, as the case may 
be. The securities must be kept separate from others the agent has paid 
and must be submitted in accordance with instructions issued by the 
Bank.

[63 FR 38044, July 14, 1998]



Sec. 330.9  Fiscal agents.

    (a) The Federal Reserve Banks referred to below, as fiscal agents of 
the United States, are authorized to perform such services as may be 
requested by the Secretary of the Treasury, or his or her delegate, in 
connection with this part.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

[59 FR 10539, Mar. 4, 1994, as amended at 63 FR 38044, July 14, 1998]

[[Page 221]]



Sec. 330.10  Modifications of other circulars.

    The provisions of this part shall be considered as amending and 
supplementing: Department of the Treasury Circulars Nos. 530, 653, and 
750 (31 CFR parts 315, 316, and 321, respectively), and Department of 
the Treasury Circulars, Public Debt Series Nos. 1-80, 2-80, 3-80, 3-67, 
1-98, and 2-98 (31 CFR parts 351, 352, 353, 342, 359, and 360 
respectively), and any revisions thereof or amendments or supplements 
thereto, and those Circulars are hereby modified to the extent necessary 
to accord with the provisions of this part.

[63 FR 38044, July 14, 1998]



Sec. 330.11  Supplements, amendments, or revisions.

    The Secretary of the Treasury may, at any time, or from time to 
time, revise, supplement, amend or withdraw, in whole or in part, the 
provisions of this part.



PART 332--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES H--Table of Contents




Sec.
332.1  Offering of bonds.
332.2  Description of bonds.
332.3  Governing regulations.
332.4  Registration.
332.5  Limitation on holdings.
332.6  Purchase of bonds.
332.7  Delivery of bonds.
332.8  Extended terms and yield for outstanding bonds.
332.9  Taxation.
332.10  Payment or redemption.
332.11  Reservation as to issue of bonds.
332.12  Fiscal agents.
332.13  Reservation as to terms of offering.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 57 FR 14281, Apr. 17, 1992, unless otherwise noted.



Sec. 332.1  Offering of bonds.

    The Secretary of the Treasury offered for sale to the people of the 
United States, Unites States Savings Bonds of Series H, hereinafter 
generally referred to as ``Series H bonds'' or ``bonds''. This offer was 
terminated on December 31, 1979.



Sec. 332.2  Description of bonds.

    (a) General. Series H bonds bear a facsimile of the signature of the 
Secretary of the Treasury and of the Seal of the Department of the 
Treasury. They were issued only in registered form and are 
nontransferable.
    (b) Denominations and prices. Series H bonds were issued at face 
(par) amount and were available in denominations of $500, $1,000, $5,000 
and $10,000.
    (c) Inscription and issue. A bond is valid only if an authorized 
issuing agent received payment therefore and duly inscribed, dated, and 
imprinted validated indicia on the bond. The face of each bond was to be 
inscribed as set forth below:
    (1) The name, social security account number and address of the 
owner, and the name of the beneficiary, if any, or the name, social 
security account number, and address of the first-named coowner and the 
name of the other coowner. The inscription of the social security number 
was required for bonds issued on or after January 29, 1963.
    (2) The issue date in the upper right-hand portion of the bond; and
    (3) The imprint of the agent's validation indicia in the lower 
right-hand portion to show the date the bond was actually inscribed.



Sec. 332.3  Governing regulations.

    Series H bonds are subject to the regulations of the Department of 
the Treasury, now or hereafter prescribed, governing United States 
Savings bonds of Series A, B, C, D, E, F, G, H, J and K, contained in 31 
CFR part 315, also published as Department of the Treasury Circular No. 
530, current revisions, except as otherwise specifically provided 
herein.



Sec. 332.4  Registration.

    Series H bonds were permitted to be registered as set forth in 
subpart B of 31 CFR part 315, also published as Department of the 
Treasury Circular No. 530.



Sec. 332.5  Limitation on holdings.

    The amount of Series H bonds, originally issued during any one 
calendar year, that could be held by any one person, at any one time, 
computed in

[[Page 222]]

accordance with the governing regulations, was limited as follows:
    (a) General limitation. From $5,000 to $30,000 depending upon the 
issue date.
    (b) Special limitation for gifts to exempt organizations under 26 
CFR 1.501(c)(3)-1. $200,000 for bonds received as gifts by an 
organization which at the time of purchase was an exempt organization 
under the terms of 26 CFR 1.501(c)(3)-1.
    (c) Exchange pursuant to 31 CFR part 339. Series H bonds issued in 
an exchange pursuant to the provisions of 31 CFR part 339, also 
published as Department of the Treasury Circular No. 1036, were exempt 
from the annual limitation.



Sec. 332.6  Purchase of bonds.

    (a) Issuing agents. Only Federal Reserve Banks and Branches, as 
fiscal agents of the United States, and the Department of the Treasury 
were authorized to issue Series H bonds. However, financial institutions 
were permitted to forward applications for purchase of the bonds to the 
Federal Reserve Bank of their district. The date of receipt, by the 
Reserve Bank or the Department of the Treasury, of the application and 
payment governed the issue date of the bond purchased.
    (b) Application for purchase and remittance. (1) The applicant for 
purchase of Series H Bonds furnished.
    (i) Instructions for registration of the bonds to be issued, which 
must have been in an authorized form;
    (ii) The appropriate social security or employer identification 
number;
    (iii) The post office address of the owner or first-named coowner; 
and
    (iv) The address(es) for delivery of the bonds and for mailing 
checks in payment of interest, if other than that of the owner or first-
named coowner.
    (2) The application was to be forwarded to a Federal Reserve Bank or 
Branch, or the Department of the Treasury, accompanied by a remittance 
to cover the purchase price. Any form of exchange, including personal 
checks, was acceptable, subject to collection. Checks or other forms of 
exchange were to be drawn to the order of the Federal Reserve Bank or 
the United States Treasury. Checks payable by endorsement were not 
acceptable. Any depositary qualified pursuant to 31 CFR part 203, also 
published as Department of the Treasury Circular No. 92, current 
revision, was permitted to make payment by credit for bonds applied for 
on behalf of its customers, up to any amount for which it was qualified 
in excess of existing deposits, when so notified by the Federal Reserve 
Bank of its district.



Sec. 332.7  Delivery of bonds.

    Authorized issuing agents delivered Series H bonds, either over-the-
counter in person or by mail, at the risk and expense of the United 
States, to the address given by the purchaser, but only within the 
United States, its territories and possessions, and the Commonwealth of 
Puerto Rico. No mail deliveries elsewhere were made. If purchased by 
citizens of the United States temporarily residing abroad, the bonds 
were delivered at such address in the United States as the purchaser 
directed.



Sec. 332.8  Extended terms and yield for outstanding bonds.

    (a) Extended maturity period--(1) General. The terms extended 
maturity period, and second extended maturity period, when used herein, 
refer to 10-year intervals after the original maturity dates during 
which owners may retain their bonds and continue to earn interest 
thereon. No special action is required of owners desiring to take 
advantage of any extensions heretofore or herein granted.
    (2) Two extensions. All Series H bonds may be retained for two 
extended maturity periods of 10 years each. All Series H bonds cease to 
earn interest upon reaching final maturity. Final maturities are shown 
below:

------------------------------------------------------------------------
                                     Life of bonds
      Issue dates--1st day of      ----------------    Final maturity
                                     yrs.    mos.     dates--1st day of
------------------------------------------------------------------------
Jun. 1952-Jan. 1957...............      29       8  Feb. 1982-Sep. 1986.
Feb. 1957-Dec. 1979...............      30  ......  Feb. 1987-Dec. 2009.
------------------------------------------------------------------------

    (b) Investment yields for outstanding bonds--General--interest 
rates. The investment yields on outstanding Series H bonds are as set 
out below:
    (1) For Series H bonds that were in original or extended maturity 
periods

[[Page 223]]

prior to November 1, 1982, the investment yield was 8.5 percent per 
annum, paid semiannually, effective for the period from the first 
semiannual interest payment date occurring on or after May 1, 1981, 
through the end of such periods. For bonds that entered extensions, see 
paragraphs (b)(2) through (b)(4) of this section.
    (2) For Series H bonds that entered extended maturity periods from 
November 1, 1982, through October 1, 1986, the investment yield was 7.5 
percent per annum, paid semiannually, for such periods, including bonds 
that entered into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Nov. 1962-Oct. 1966.............  2nd (final).......  Nov. 1982-Oct.
                                                       1986.
Nov. 1972-Oct. 1976.............  1st...............  Nov. 1982-Oct.
                                                       1986.
------------------------------------------------------------------------

    (3) For Series H bonds that entered extended maturity periods from 
November 1, 1986, through February 1, 1993, the investment yield was 6 
percent per annum, paid semiannually, for such periods, including bonds 
that entered into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Nov. 1966-Feb. 1973.............  2nd (final).......  Nov. 1986-Feb.
                                                       1993.
Nov. 1976-Dec. 1979.............  1st...............  Nov. 1986-Dec.
                                                       1989.
------------------------------------------------------------------------

    (4) For Series H bonds that entered or enter extended maturity 
periods on or after March 1, 1993, the guaranteed minimum investment 
yield is 4 percent per annum, paid semiannually, or the investment yield 
in effect at the beginning of such periods, including bonds that enter 
into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Mar. 1973-Dec. 1979.............  2nd (final).......  Mar. 1993-Dec.
                                                       1999.
------------------------------------------------------------------------

    (c) Tables of interest payments and investment yields. Tables of 
interest payments and investment yields are available from the Bureau of 
Public Debt and Federal Reserve Banks and Branches.

[57 FR 14281, Apr. 17, 1992, as amended at 58 FR 60937, Nov. 18, 1993]



Sec. 332.9  Taxation.

    The income derived from Series H bonds is subject to all taxes 
imposed under the Internal Revenue Code of 1986, as amended. The bonds 
are subject to estate, inheritance, gift, or other excise taxes, whether 
Federal or State, but are exempt from all other taxation now or 
hereafter imposed on the principal or interest thereof by any State, or 
any of the possessions of the United States, or by any local taxing 
authority.



Sec. 332.10  Payment or redemption.

    A Series H bond became eligible for redemption at par at any time 
after six months from its issue date. To be redeemed, the bond must be 
presented and surrendered, with a duly executed request for payment, to 
a Federal Reserve Bank or Branch referred to in Sec. 332.12, or the 
Bureau of the Public Debt, Parkersburg, WV 26106-1328. In any case where 
bonds are surrendered for redemption in the month prior to an interest 
payment date, redemption will not be deferred but will be made in 
regular course, unless the presenter specifically requests that the 
transaction be delayed until that date. A request to defer redemption 
made more than one month preceding the interest payment date will not be 
accepted.

[57 FR 14281, Apr. 17, 1992, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 332.11  Reservation as to issue of bonds.

    The Secretary of the Treasury reserved the right to reject any 
application for Series H bonds, in whole or part, and to refuse to issue 
or permit to be issued hereunder any such bonds in any case or any class 
or classes of cases, if such action was deemed to be in the public 
interest. Any action in any such respect was final.



Sec. 332.12  Fiscal agents.

    (a) Federal Reserve Banks and Branches referred to below, as fiscal

[[Page 224]]

agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury, or his or her 
delegate, in connection with the reissue, redemption and payment of 
Series H bonds.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY, (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[59 FR 10539, Mar. 4, 1994]



Sec. 332.13  Reservation as to terms of offering.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of this offering of bonds, or of any 
amendments or supplements thereto.



PART 337--SUPPLEMENTAL REGULATIONS GOVERNING FEDERAL HOUSING ADMINISTRATION DEBENTURES--Table of Contents




Sec.
337.0  Scope of regulations.

                   Subpart A--Certificated Debentures

337.1  Applicability of Treasury regulations.
337.2  Transportation charges and risks.
337.3  Termination of transfers and denominational exchange 
          transactions.
337.4  Presentation and surrender.
337.5  Assignments.
337.6  Conversions to book-entry.
337.7  Servicing transactions.
337.8  Payment of mortgage insurance premiums.
337.9  Payment of final interest.
337.10  Payments.

                    Subpart B--Book-Entry Debentures

337.11  Original issue and conversions.
337.12  Applicability of TREASURY DIRECT regulations.
337.13  Payment of mortgage insurance premiums.

                    Subpart C--Additional Information

337.14  Address for further information.
337.15  General provisions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321; Sec. 516, Pub. L. 102-550, 
106 Stat. 3790.

    Source: 59 FR 42162, Aug. 17, 1994, unless otherwise noted.



Sec. 337.0  Scope of regulations.

    The United States Department of the Treasury is the agent of the 
Federal Housing Administration for transactions in any debentures which 
have been or may be issued pursuant to the authority conferred by the 
National Housing Act (48 Stat. 1246), as amended; (12 U.S.C. 1701 et 
seq.), as amended from time to time, including Mutual Mortgage Insurance 
Fund Debentures, Housing Insurance Fund Debentures, War Housing 
Insurance Fund Debentures, Military Housing Insurance Fund Debentures, 
and National Defense Housing Insurance Fund Debentures. In accordance 
with the regulations adopted by the Federal Housing Commissioner and 
approved by the Secretary of the Treasury, such transactions are

[[Page 225]]

governed by regulations of the Department of the Treasury, so far as 
applicable.



                   Subpart A--Certificated Debentures



Sec. 337.1  Applicability of Treasury regulations.

    The general regulations governing United States securities, part 306 
of this chapter, apply, as the regulations for similar transactions and 
operations in certificated debentures. To the extent that the provisions 
in this part differ from the provisions in part 306, the provisions in 
this part shall prevail.



Sec. 337.2  Transportation charges and risks.

    Debentures presented for redemption at call or maturity, or for 
authorized prior purchase, or for conversion to book-entry form, must be 
delivered at the expense and risk of the holder. Debentures bearing 
restricted assignments may be forwarded by registered mail, but for the 
owner's protection debentures bearing unrestricted assignments should be 
forwarded by insured registered mail. Debentures should be delivered to 
the Federal Reserve Bank of Philadelphia, Securities Division, Ten 
Independence Mall, P.O. Box 90, Philadelphia, Pennsylvania 19105-0090. 
Debentures delivered to any other Federal Reserve Bank or Branch, to the 
Department of Housing and Urban Development (HUD), or to the Bureau of 
the Public Debt will be forwarded to the Federal Reserve Bank of 
Philadelphia for processing.



Sec. 337.3  Termination of transfers and denominational exchange transactions.

    Debentures, which by their terms are subject to call, may be called 
for redemption, in whole or in part, at par and accrued interest, on any 
interest date on three months' notice. No transfers or denominational 
exchanges in certificated debentures covered by a given call will be 
made on the books of the Department of the Treasury on or after the 
announcement of such call. However, this does not affect the right of a 
holder of such debenture to sell and assign it on or after the 
announcement of the call date.



Sec. 337.4  Presentation and surrender.

    (a) For redemption. To facilitate the redemption of called or 
maturing debentures, they may be presented and surrendered in the manner 
prescribed in this section in advance of the call or maturity date, as 
the case may be. Early presentation by holders will insure prompt 
payment of principal and interest when due. The debentures must first be 
assigned by the registered payee or his assignee, or by his duly 
constituted representative, if required, in the form and manner 
indicated in Sec. 337.5, and should then be submitted to the Federal 
Reserve Bank of Philadelphia, accompanied by appropriate written advice. 
A transmittal advice for this purpose will accompany the notice of call.
    (b) For purchase. Debentures, the purchase of which has been 
authorized prior to call or maturity, may be assigned as instructed in 
paragraph (a) of this section and immediately submitted in accordance 
with procedures prescribed by HUD for this purpose.



Sec. 337.5  Assignments.

    (a) If the registered payee, or an assignee holding a certificated 
debenture under proper assignment from the registered payee, desires 
that payment be made to such payee or assignee, the debenture need not 
be assigned. If the owner desires for any reason that payment be made to 
another, without intermediate assignment, the debentures should be 
assigned to ``The Federal Housing Commissioner for redemption (or, 
purchase) for the account of ________,'' inserting the name and address 
of the person to whom payment is to be made. Proof of the authority of 
the individual assigning on behalf of an owner will be required in 
accordance with part 306 of this chapter.
    (b) An assignment in blank or other assignment having similar effect 
will be recognized, but in that event the debenture would be, in effect, 
payable to bearer, and payment will be made in accordance with the 
instructions received from the person surrendering the debenture for 
redemption or purchase. For the owner's protection, such

[[Page 226]]

assignments should be avoided unless the owner is willing to lose the 
protection afforded by registration.
    (c) Debentures submitted for conversion to book-entry form should be 
assigned to ``The Federal Housing Commissioner for conversion to book-
entry debentures for the account of ________.'' The registration on the 
book-entry account and/or the account number in which the debentures 
should be deposited should be indicated.
    (d) All assignments must be made on the debentures themselves unless 
otherwise authorized by the Department of Treasury.



Sec. 337.6  Conversions to book-entry.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, all new debentures will 
be issued only in book-entry form, and may not thereafter be converted 
to certificated form.
    Certificated debentures may, upon the owner's request in accordance 
with Sec. 337.5(c), be converted to book-entry. If such action is taken, 
the owner shall be deemed to have irrevocably waived the right to hold 
such debenture in certificated form.



Sec. 337.7  Servicing transactions.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, any transfer or 
denominational exchange of certificated debentures generally will be 
made in book-entry form. If certificated debentures are desired, the 
owner should so request in writing, before the book-entry debentures are 
issued.



Sec. 337.8  Payment of mortgage insurance premiums.

    When certificated debentures are tendered for purchase prior to 
maturity in order that the proceeds thereof be applied to pay for 
mortgage insurance premiums, any difference between the amount of the 
debentures purchased and the amount of the mortgage insurance premium 
will generally be issued to the owner in the form of a book-entry 
debenture in the exact amount of such difference, provided it is one 
dollar ($1.00) or more. However, if the owner so requests, such 
difference will be settled with certificated debenture(s), together with 
a cash adjustment, if any. Such request should be made in writing, 
before the book-entry debenture in the amount of the difference is 
issued.



Sec. 337.9  Payment of final interest.

    Final interest on any debenture, whether purchased prior to or 
redeemed on or after the call or the maturity date, will be paid with 
the principal. In all cases the payment of principal and final interest 
will be mailed or directed to the payment address given in the form of 
advice accompanying the debenture surrendered.



Sec. 337.10  Payments.

    Payments on certificated debentures will be made by fiscal agency 
check in accordance with part 355 of this chapter, or, upon request, by 
direct deposit (electronic funds transfer) in accordance with part 370 
of this chapter. Information as to the deposit account at the financial 
institution designated to receive a direct deposit payment shall be 
provided on the appropriate form(s) designated by the Department.



                    Subpart B--Book-Entry Debentures



Sec. 337.11  Original issue and conversions.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, all new debentures will 
be issued only in book-entry form in the exact amount payable to the 
owner. Once issued in book-entry form, a debenture may not be converted 
to certificated form.



Sec. 337.12  Applicability of TREASURY DIRECT regulations.

    The regulations governing the TREASURY DIRECT Book-Entry Securities 
System (TREASURY DIRECT) (part 357 of this chapter) apply to govern 
transactions in FHA book-entry debentures, with the following 
exceptions:
    (a) Securities account. (See Sec. 357.20 of this chapter.) An 
account in the book-

[[Page 227]]

entry debenture system may be established by the Department of the 
Treasury upon receipt of the request that a new debenture be issued or 
that a certificated debenture be converted to book-entry form. The 
statement of account shall contain information regarding the account as 
of the date of such statement. It will include a unique account number, 
but will not include price information.
    (b) Transfers. (See Sec. 357.22 of this chapter.) A book-entry 
debenture may be transferred only between accounts established in the 
FHA book-entry debenture system.
    (c) Debentures announced for call. Debentures, which by their terms 
are subject to call, may be called for redemption, in whole or in part, 
at par and accrued interest, on any interest date on three months' 
notice. For purposes of a transaction request affecting ownership and/or 
payment instructions with respect to a debenture announced for call, a 
proper request must be received not less than twenty (20) calendar days 
preceding the next payment date. If the twentieth day preceding a 
payment date falls on a Saturday, Sunday, or a Federal holiday, the last 
day set for the receipt of a transaction request will be the last 
business day preceding that date. If a transaction request is received 
less than twenty (20) calendar days preceding a payment date, the 
Department may, in its discretion, act on such request if sufficient 
time remains for processing. If a transaction request is received too 
late for completion of the requested transaction, principal and final 
interest on the called debentures will be paid to the owner of record 
and sent to the payment address of record.
    (d) Payments. (See Sec. 357.26 of this chapter.) Direct deposit 
(electronic funds transfer) payments with respect to debentures, e.g., 
principal, interest and cash adjustments, will be made without 
prenotification messages.



Sec. 337.13  Payment of mortgage insurance premiums.

    When book-entry debentures are being purchased prior to maturity to 
pay for mortgage insurance premiums, the difference between the amount 
of the debentures purchased and the mortgage insurance premiums shall be 
issued to the owner in the form of a book-entry debenture in the exact 
amount of such difference, provided it is one dollar ($1.00) or more.



                    Subpart C--Additional Information



Sec. 337.14  Address for further information.

    Further information regarding the issuance of, transactions in, and 
redemption of, FHA debentures may be obtained from the Federal Reserve 
Bank of Philadelphia, Securities Division, Ten Independence Mall, P.O. 
Box 90, Philadelphia, Pennsylvania 19105-0090, or from the Bureau of the 
Public Debt, Division of Special Investments, 200 Third Street, P.O. Box 
396, Parkersburg, West Virginia 26102-0396.



Sec. 337.15  General provisions.

    As fiscal agents of the United States, Federal Reserve Banks are 
authorized and requested to perform any necessary acts under this part. 
The Federal Reserve Bank of Philadelphia is specifically authorized to 
operate the FHA debenture computer system and to perform day-to-day 
operations and transactions relating to the debentures. The Secretary of 
the Treasury may at any time or from time to time prescribe supplemental 
and amendatory regulations governing the matters covered by this part, 
notice of which shall be communicated promptly to the registered owners 
of the debentures.



PART 339--EXCHANGE OFFERING OF UNITED STATES SAVINGS BONDS, SERIES H--Table of Contents




Sec.
339.0  Offering of Series H bonds in exchange for Series E bonds and 
          savings notes.
339.1  Definitions of words and terms as used in this circular.
339.2  Denominations.
339.3  Exchanges with privilege of deferring reporting of interest for 
          Federal income tax purposes.
339.4  Exchanges without tax deferral.
339.5  Governing regulations.
339.6  Fiscal agents.
339.7  Preservation of rights.
339.8  Reservation as to terms of offer.


[[Page 228]]


    Authority: Secs. 18, 20, and 22 of the Second Liberty Bond Act, as 
amended (40 Stat. 1309, 48 Stat. 343, 49 Stat. 21, 73 Stat. 621, all as 
amended; 31 U.S.C. 753, 754b, 757c), and 5 U.S.C. 301.

    Source: 36 FR 23856, Dec. 15, 1971, unless otherwise noted.



Sec. 339.0  Offering of Series H bonds in exchange for Series E bonds and savings notes.

    The Secretary of the Treasury, pursuant to the authority of the 
Second Liberty Bond Act, as amended, hereby offers to the people of the 
United States, U.S. Savings Bonds of Series H in exchange for 
outstanding U.S. Savings Bonds of Series E and U.S. Savings Notes 
(freedom shares) without regard to the annual limitation on holdings for 
the Series H bonds. The Series H bonds offered hereunder are those 
described in Department Circular No. 905, current revision, except as 
otherwise specifically provided herein. This offering will continue 
until terminated by the Secretary of the Treasury.

    Editorial Note: The sale of U.S. Savings Bonds, Series H, was 
terminated at the close of business Dec. 31, 1979. See 44 FR 77158, Dec. 
31, 1979.



Sec. 339.1  Definitions of words and terms as used in this circular.

    Unless the context otherwise requires or indicates:
    (a) Securities mean outstanding U.S. Savings Bonds of Series E and 
U.S. Savings Notes (freedom shares).
    (b) Owner means an owner of securities, except a commercial bank in 
its own right (as distinguished from a representative or fiduciary 
capacity) and a nonresident alien who is a resident of an area with 
respect to which the Treasury Department restricts or regulates delivery 
of checks drawn against funds of the United States or any agency or 
instrumentality thereof. The term includes a registered owner, whether 
or not a natural person, either coowner (but only the principal coowner 
if Series H bonds are requested in a form of registration different from 
that on the securities submitted), a surviving beneficiary, or any other 
person who would be entitled to reissue under the regulation governing 
U.S. Savings Bonds,1 such as, but not limited to, any person 
entitled to succeed to the estate of a deceased owner.
---------------------------------------------------------------------------

    \1\ Department Circular No. 530, current revision (31 CFR part 315). 
Copies may be obtained from any Federal Reserve Bank or Branch or the 
Bureau of the Public Debt, Washington, DC 20220.
---------------------------------------------------------------------------

    (c) Commercial bank means a bank accepting demand deposits.
    (d) Interest means the increment in value on Series E savings bonds 
and on savings notes.
    (e) Principal coowner means a coowner who purchased the securities 
submitted for exchange with his own funds or received them as a gift, 
legacy or inheritance or as a result of judicial proceedings and had 
them reissued in coownership form, provided he has received no 
contribution in money or money's worth from the other coowner for 
designating him on the securities.



Sec. 339.2  Denominations.

    Series H bonds, available for use hereunder, are in denominations of 
$500, $1,000, $5,000 and $10,000.



Sec. 339.3  Exchanges with privilege of deferring reporting of interest for Federal income tax purposes.

    (a) Tax-deferred exchanges. Pursuant to the provisions of section 
1037(a) of the Internal Revenue Code of 1954, the Secretary of the 
Treasury hereby grants to owners who have not been reporting the 
interest on their securities on an accrual basis for Federal income tax 
purposes the privilege of exchanging such securities for Series H bonds 
and of continuing to defer reporting of the interest on the securities 
exchanged (except interest referred to in paragraph (b)(5) of this 
section) for Federal income tax purposes to the taxable year in which 
the Series H bonds received in exchange are disposed of, are redeemed, 
or have reached final maturity, whichever is earlier.2
---------------------------------------------------------------------------

    2 The interest paid semiannually by check on all Series H 
bonds, whether issued in exchange under this or any other section, or 
otherwise, is subject to the Federal income tax for the taxable year in 
which it is received.
---------------------------------------------------------------------------

    (b) Rules governing the exchange. (1) Exchange subscription Form PD 
3253, completed and executed in accordance

[[Page 229]]

with the instructions thereon, the securities, any cash difference (see 
paragraph (b)(3) of this section), and any supporting evidence which may 
be required under the governing regulations 3 may be 
presented or forwarded to any authorized agency.4
---------------------------------------------------------------------------

    3 For example, a beneficiary named on Series E bonds would 
have to submit proof of the death of the registered owner in order to 
exchange such bonds for Series H bonds.
    4 Agents authorized to pay Series E bonds and savings 
notes are authorized to accept and handle exchange subscriptions 
submitted by natural persons whose names are inscribed on the face of 
the bonds and notes as owners or coowners in their own right. However, 
as agents of subscribers they may forward any exchange subscription to a 
Federal Reserve Bank or Branch or the Bureau of the Public Debt, 
Washington, DC 20226, for acceptance and handling.
---------------------------------------------------------------------------

    (2) A Series H bond issued upon exchange will be registered in the 
name of the owner of the securities submitted in any authorized form of 
registration. However, the principal coowner must be named as owner or 
coowner.
    (3) The total current redemption value of the securities submitted 
for exchange in any one transaction must amount to $500 or more. If the 
total current redemption value is in an even multiple of $500, Series H 
bonds must be requested in that exact amount. If the total current 
redemption value exceeds $500, but is not in an even multiple of $500, 
the owner has the option of furnishing cash necessary to obtain Series H 
bonds of the next higher $500 multiple, or of receiving payment of the 
difference between the total current redemption value and the next lower 
multiple of $500. For example, under the rules prescribed in this 
circular, if the securities submitted for exchange in one transaction 
total $4,253.33 current redemption value, the owner may elect to:
    (i) Receive $4,000 in Series H bonds and the amount of the 
difference, $253.33, or
    (ii) Pay the difference, $246.67, necessary to obtain $4,500 in 
Series H bonds.5
---------------------------------------------------------------------------

    5 If a paying agent accepts a subscription solely for the 
purpose of forwarding it, or if the owner forwards it direct, to a 
Federal Reserve Bank or Branch or to the Bureau of the Public Debt, the 
remittance for the difference, by check or other form of exchange (which 
will be accepted subject to collection), must be drawn to the order of 
the Federal Reserve Bank or the United States Treasury, as the case may 
be. The remittance must accompany the subscription and the securities to 
be exchanged.
---------------------------------------------------------------------------

    (4) Any amount paid to the owner as a cash adjustment (as in 
paragraph (3)(i) of this section) must be treated as income for Federal 
income tax purposes for the year in which it is received up to an amount 
not in excess of the total interest on the securities exchanged.6
---------------------------------------------------------------------------

    6 The amount, if any, paid to the owner in excess of the 
interest is a repayment on account of the purchase price of the 
securities exchanged, not income.
---------------------------------------------------------------------------

    (5) Each Series H bond issued under this section will be stamped 
``EX'' or ``EXCH'' to show that it was issued upon exchange. Each bond 
also will bear a legend showing how much of its issue price represents 
interest on the securities exchanged. This interest must be treated as 
income for Federal income tax purposes for the year in which the Series 
H bond is redeemed, is disposed of, or finally matures, whichever is 
earlier.
    (6) The Series H bonds will be dated as of the first day of the 
month in which the securities, the exchange subscription, any necessary 
cash difference and supporting evidence, if any, are accepted for 
exchange by an authorized agency.



Sec. 339.4  Exchanges without tax deferral.

    Exchanges by owners who:
    (a) Report the interest on all of their securities annually for 
Federal income tax purposes, or
    (b) Who elect to report all such interest in the year of the 
exchange, or
    (c) Who are tax-exempt under the provisions of the Internal Revenue 
Code of 1954 and the regulations issued thereunder,

Will be handled in the same manner and will be governed by the rules 
prescribed for exchanges under Sec. 339.3. However, the Series H bonds 
will not bear the legend referred to in

[[Page 230]]

Sec. 339.3(b)(5). Any part of the cash adjustment received which 
represents interest previously reported for Federal income tax purposes 
need not be accounted for. The Series H bonds may be registered in the 
name of the owner of the securities submitted in exchange in any 
authorized form of registration.



Sec. 339.5  Governing regulations.

    All Series H bonds issued under this circular are subject to the 
regulations, now or hereafter prescribed, contained in Department 
Circular No. 530, current revision (part 315 of this chapter).



Sec. 339.6  Fiscal agents.

    Federal Reserve Banks and Branches, as fiscal agents of the United 
States, are authorized to perform such services as may be requested of 
them in connection with exchanges under these regulations.



Sec. 339.7  Preservation of rights.

    The provisions of Treasury Department Circulars Nos. 530, 653, and 
905, as currently revised, are hereby modified and amended to the extent 
that they are not in accordance with this circular. However, nothing 
contained herein shall limit or restrict rights which owners of Series H 
bonds received in earlier exchanges have heretofore acquired.



Sec. 339.8  Reservation as to terms of offer.

    The Secretary of the Treasury reserves the right to reject any 
exchange subscription for Series H bonds, in whole or in part, and to 
refuse to issue or permit to be issued hereunder any such bonds in any 
case or any class or classes of cases if he deems such action to be in 
the public interest, and his action in any such respect shall be final.
    The foregoing revision and amendment is made for the purpose of 
granting to owners of savings notes the same privilege afforded owners 
of Series E savings bonds for exchanging their securities for Series H 
bonds with or without tax deferral. As good cause exists for making this 
change, which involves public property and contracts relating to the 
fiscal and monetary affairs of the United States, I find that notice and 
public procedures are unnecessary. This action is effected under the 
provisions of sections 18, 20, and 22 of the Second Liberty Bond Act, as 
amended (40 Stat. 1309, 48 Stat. 343, 49 Stat. 21, 73 Stat. 621, all as 
amended; 31 U.S.C. 753, 754b, 757c), and 5 U.S.C. 301.



PART 340--REGULATIONS GOVERNING THE SALE OF TREASURY BONDS THROUGH COMPETITIVE BIDDING--Table of Contents




Sec.
340.0  Authority for sale of Treasury bonds through competitive bidding.
340.1  Public notice--description of bonds--terms of offer.
340.2  Denominations and exchanges.
340.3  Taxation.
340.4  Acceptance as security for public deposits.
340.5  Notice of intent to bid.
340.6  Submission of bids.
340.7  Deposits--retention--return.
340.8  Acceptance of bids.
340.9  Bids--revocations--rejections--postponements--reoffers.
340.10  Payment for and delivery of bonds.
340.11  Failure to complete transaction.
340.12  Reservations as to terms of circular.

    Authority: Sec. 8, 50 Stat. 481, as amended; R.S. 3706; secs. 1, 4, 
18, 5, 40 Stat. 288, as amended, 290, as amended, 1309, as amended, 290, 
as amended; secs. 19, 20, 48 Stat. 343, as amended; 31 U.S.C. 738a, 739, 
752, 752a, 753, 754, 754a, 754b.

    Source: 27 FR 12481, Dec. 18, 1962, unless otherwise noted.



Sec. 340.0  Authority for sale of Treasury bonds through competitive bidding.

    (a) The Secretary of the Treasury may, from time to time, by public 
notice, offer Treasury bonds for sale and invite bids therefor. The 
bonds so offered and the bids made will be subject to the terms and 
conditions and the rules and regulations herein set forth, except as 
they may be modified in the public notice or notices issued by the 
Secretary in connection with particular offerings.1 The bonds 
will be subject also to the general rules and regulations of the 
Treasury Department, now or hereafter prescribed, governing United 
States securities. They

[[Page 231]]

will be issued pursuant to the authority of the Second Liberty Bond Act, 
as amended.
---------------------------------------------------------------------------

    \1\ These regulations do not apply to Treasury bills, which are 
governed by Department Circular No. 418, Revised, and do not constitute 
a specific offering of bonds.
---------------------------------------------------------------------------

    (b) The terms public notice, notices, or announcement as used in 
this part mean the Public Notice of Invitation to Bid on Treasury bonds 
and any supplementary or amendatory notices or announcements with 
respect thereto, including, but not limited to any statement released to 
the press by the Secretary of the Treasury and notices sent to those who 
have filed notices of intent to bid or who have filed bids.



Sec. 340.1  Public notice--description of bonds--terms of offer.

    When bonds are offered for sale through competitive bidding, bids 
therefor will be invited through the form of a public notice or notices 
issued by the Secretary of the Treasury. The notice or notices will 
either fix the coupon rate of interest to be borne by the bonds or 
prescribe the conditions under which bidders may specify the rate and 
will set forth the terms and conditions of the bonds, including 
maturities, call features, if any, and the terms and conditions of the 
offer, including the amount of the issue for which bids are invited, the 
date and closing hour for receipt of bids, and the date on which the 
bonds will be delivered and payment for any accepted bid must be 
completed. When so specified in the public notice, it shall be a 
condition of each bid that, if accepted by the Secretary of the 
Treasury, the bidder will make a bona fide reoffering to the investing 
public.



Sec. 340.2  Denominations and exchanges.

    Bearer bonds with interest coupons attached, and bonds registered as 
to principal and interest, will be available in denominations of $500, 
$1,000, $5,000, $10,000, $100,000, and $1,000,000. Provisions will be 
made for the interchange of bonds of different denominations and of 
bearer and registered bonds, and for the transfer of registered bonds.



Sec. 340.3  Taxation.

    The income derived from the bonds will be subject to all taxes 
imposed under the Internal Revenue Code of 1954. The bonds will be 
subject to estate, inheritance, gift or other excise taxes, whether 
Federal or State, but will be exempt from all taxation now or hereafter 
imposed on the principal or interest thereof by any State, or any of the 
possessions of the United States, or by any local taxing authority.



Sec. 340.4  Acceptance as security for public deposits.

    The bonds will be acceptable to secure deposits of public moneys.



Sec. 340.5  Notice of intent to bid.

    Any individual, or organization, syndicate, or other group which 
intends to submit a bid, must, when required by the public notice, give 
written notice of such intent on Form PD 3555 at the place and within 
the time specified in the public notice. The filing of such notice will 
not constitute a commitment to bid.



Sec. 340.6  Submission of bids.

    (a) General. Bids will be received only at the place specified and 
not later than the time designated in the public notice. Each bid must 
be submitted on the official form referred to in the public notice and 
should be enclosed and sealed in the special envelope provided by the 
Treasury Department. Forms and envelopes may be obtained from any 
Federal Reserve Bank or Branch or the Bureau of the Public Debt, 
Treasury Department, Washington, DC 20220. Bids shall be irrevocable.
    (b) Bidding. Bids, except noncompetitive bids when authorized, must 
be expressed as a percentage of the principal amount in not to exceed 
five decimals, e.g., 100.01038 percent. Provisions relating to the 
coupon rate of interest on the bonds, if not set forth in the public 
notice, will be made in a supplemental announcement. The public notice 
will indicate the timing of any such announcement. If the bidders are 
required to specify the coupon rate, each bidder shall specify a single 
coupon rate of interest, which shall be a multiple of \1/8\ of 1 percent 
but not in excess of 4\1/4\ percent. The Secretary of the Treasury may 
limit the premium above or the discount below par.
    (c) Group bids. A syndicate or other group submitting a bid must act 
through a representative who must be

[[Page 232]]

a member of the group. The representative must warrant to the Secretary 
of the Treasury that he has all necessary power and authority to act for 
each member and to bind the members jointly and severally. In addition 
to whatever other data may be required by the Secretary of the Treasury, 
in the case of a syndicate, the representative must file, within one 
hour after the time for opening of bids, at the place specified in the 
public notice for receipt of bids a final statement of the composition 
of the syndicate membership and the amount of each member's underwriting 
participation.



Sec. 340.7  Deposits--retention--return.

    Each bid must be accompanied by a deposit in the amount specified in 
the public notice. The deposit of any successful bidder will be retained 
as security for the performance of his obligation and will be applied 
toward payment of the bonds. All other deposits will be returned 
immediately. No interest will be allowed on account of any deposits.



Sec. 340.8  Acceptance of bids.

    (a) Opening of bids. Bids will be opened at the time and place 
specified in the public notice.
    (b) Method of determining accepted bids. The lowest basis cost of 
money 2 computed from the date of the bonds to the date of 
maturity will be used in determining successful bids.
---------------------------------------------------------------------------

    2 In cases where bidders are required to specify the 
coupon rate, the lowest basis cost of money will be determined by 
reference to a specially prepared table of bond yields, a copy of which 
will be made available to all prospective bidders upon written request 
to the Federal Reserve Bank of New York, or the Bureau of the Public 
Debt, Treasury Department, Washington, DC 20220. Straightline 
interpolation will be applied if necessary.
---------------------------------------------------------------------------

    (c) Acceptance of successful bid. The Secretary of the Treasury, or 
his representative, will notify any successful bidder of acceptance in 
the manner and form specified in the public notice.



Sec. 340.9  Bids--revocations--rejections-- postponements--reoffers.

    The Secretary of the Treasury, in his discretion, may (a) revoke the 
public notice of invitation to bid at any time before opening bids, (b) 
return all bids unopened either at or prior to the time specified for 
their opening, (c) reject any or all bids, (d) postpone the time for 
presentation and opening of bids, and (e) waive any immaterial or 
obvious defect in any bid. Any action the Secretary of the Treasury may 
take in these respects shall be final. In the event of a postponement, 
known bidders will be advised thereof and their bids returned unopened.



Sec. 340.10  Payment for and delivery of bonds.

    Payment for the bonds, including accrued interest, if any, must be 
made in immediately available funds on the date and at the place 
specified in the invitation. Delivery of bonds under this section will 
be made at the risk and expense of the United States at such place or 
places in the United States as may be provided in the invitation. 
Interim receipts, if necessary, will be issued pending delivery of the 
definitive bonds.



Sec. 340.11  Failure to complete transaction.

    If any successful bidder shall fail to pay in full for the bonds on 
the date and at the place specified in the invitation, the money 
deposited by or in behalf of such bidder shall be forfeited to the 
Treasury Department.



Sec. 340.12  Reservations as to terms of circular.

    The Secretary of the Treasury reserves the right, at any time, or 
from time to time, to amend, repeal, supplement, revise or withdraw all 
or any of the provisions of this part.



PART 341--REGULATIONS GOVERNING UNITED STATES RETIREMENT PLAN BONDS--Table of Contents




Sec.
341.0  Offering of bonds.
341.1  Description of bonds.
341.2  Registration.
341.3  Purchase of bonds.
341.4  Proof of purchase.
341.5  Limitation on holdings.
341.6  Nontransferability.
341.7  Judicial proceedings.

[[Page 233]]

341.8  Payment or redemption during lifetime of owner.
341.9  Payment or redemption after death of owner.
341.10  Reissue.
341.11  Use of power of attorney.
341.12  Lost, stolen, or destroyed bonds.
341.13  Taxation.
341.14  Certifying officers.
341.15  General provisions.

Appendix to Part 341--Tables of Redemption Values

    Authority: Sec. 8, 50 Stat. 481, as amended; R.S. 3706; secs. 1, 4, 
18, 40 Stat. 288, as amended, 290, as amended, 1309, as amended; secs. 
19, 20, 48 Stat. 343, as amended; 31 U.S.C. 738a, 739, 752, 752a, 753, 
754a, 754b.

    Source: 28 FR 405, Jan. 16, 1963, unless otherwise noted.



Sec. 341.0  Offering of bonds.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, and pursuant to the Self-Employed 
Individuals Tax Retirement Act of 1962, offers for sale, effective as of 
January 1, 1963, bonds of the United States, designated as United States 
Retirement Plan Bonds. The bonds will be available for investment only 
to:
    (a) Bond purchase plans and
    (b) Pension and profit-sharing plans, as described in sections 405 
and 401, respectively, of the Internal Revenue Code of 1954.

This offering of bonds will terminate on April 30, 1982.

[28 FR 405, Jan. 16, 1963, as amended at 47 FR 18596, Apr. 30, 1982]



Sec. 341.1  Description of bonds.

    (a) Investment yield (interest). United States Retirement Plan 
Bonds, hereinafter sometimes referred to as Retirement Plan Bonds, will 
be issued at par. The investment yields (interest) are as follows:
    (1) Bonds with issue dates of January 1, 1963, through May 1, 1966--
3.75 percent per annum, compounded semiannually (see Table of Redemption 
Values in the appendix).
    (2) Bonds with issue dates of June 1, 1966, through December 1, 
1969--4.15 percent per annum, compounded semiannually (see Table A in 
the appendix).
    (3) Bonds with issue dates of January 1, 1970, through January 1, 
1974--5 percent per annum, compounded semiannually (see Table B).
    (4) Bonds with issue dates of February 1, 1974, through July 1, 
1979--6 percent per annum, compounded semiannually (see Table C).
    (5) Bonds with issue dates of August 1, 1979, through October 1, 
1980--6.5 percent per annum, compounded semiannually (see Table D).
    (6) Bonds with issue dates of November 1, 1980, through September 1, 
1981--8 percent per annum, compounded semiannually (see Table E).
    (7) Bonds with issue dates of October 1, 1981, or thereafter--9 
percent per annum, compounded semiannually (see Table F).

Interest will be paid only upon redemption of the bonds. The accrual of 
interest will continue until the bonds are redeemed or have reached 
maturity, whichever is earlier, in accordance with these regulations.
    (b) Term. The maturity date of any bond issued under this circular 
shall be indeterminate, but unless sooner redeemed in accordance with 
the regulations in this part, its investment yield will cease on the 
interest accrual date coinciding with, or, where no such coincidence 
occurs, the interest accrual date next preceding, the first day of the 
sixtieth (60th) month following the date of death of the person in whose 
name it is registered.
    (c) Denominations--issue date. Retirement Plan Bonds will be 
available only in registered form and in denominations of $50, $100, 
$500, and $1,000. At the time of issue, the issuing agent will enter in 
the upper right-hand portion of the bond the issue date (which shall be 
the first day of the month and year in which payment of the purchase 
price is received by an authorized issuing agent), and will imprint the 
agent's validating stamp in the lower right-hand portion. The issue 
date, as distinguished from the date in the agent's validating stamp, 
will determine the date from which interest will begin to accrue on the 
bond. A Retirement Plan Bond shall be valid only if an authorized 
issuing agent receives payment therefor, duly inscribes, dates, stamps, 
and delivers it.

[28 FR 405, Jan. 16, 1963, as amended at 46 FR 60573, Dec. 11, 1981]

[[Page 234]]



Sec. 341.2  Registration.

    (a) General. The registration of Retirement Plan Bonds is limited to 
the names of natural persons in their own right, whether adults or 
minors, in either single ownership or beneficiary form. A bond 
registered in beneficiary form will be inscribed substantially as 
follows (for example): ``John A. Doe payable on death to (or P.O.D.) 
Richard B. Roe,'' No more than one beneficiary may be designated on a 
bond.
    (b) Inscription. The inscription on the face of each bond will show 
the name, address, date of birth, and the social security account number 
of the registered owner, as well as information as to whether he is a 
self-employed individual or an employee, and the amount he contributed 
(if any) out of his own funds toward the purchase price of the bond. In 
the case of any self-employed individual (who is treated as an employee 
for the purpose of sections 405 and 401 of the Internal Revenue Code of 
1954), this amount would be that portion of the purchase price he 
contributed (if any) as an employee and which he will not take into 
account in determining the amount deductible for Federal income tax 
purposes. The name of the beneficiary, if one is to be designated, will 
also be shown in the inscription.



Sec. 341.3  Purchase of bonds.

    (a) Agencies. Retirement Plan Bonds may be purchased over-the-
counter or by mail from Federal Reserve Banks and Branches and the 
Bureau of the Public Debt, Washington, DC 20226. Customers of commercial 
banks and trust companies may be able to arrange for the purchase of the 
bonds through such institutions, but only the Federal Reserve Banks and 
Branches and the Bureau of the Public Debt are authorized to act as 
official agencies, and the date of receipt of the application and 
payment by an official agency will govern the dating of the bonds 
issued.
    (b) Application. Applications for the purchase of Retirement Plan 
Bonds should be made on Form PD 3550, accompanied by a remittance to 
cover the purchase price. Personal checks will be accepted, subject to 
collection. Checks or other forms of exchange, should be drawn to the 
Federal Reserve Bank or United States Treasury, as the case may be. 
Checks payable by endorsement are not acceptable.
    (c) Delivery. Delivery of bonds will be made in person, or by mail 
at the risk and expense of the United States, at the address given by 
the purchaser, but only within the United States, its territories and 
possessions, the Commonwealth of Puerto Rico, and the Canal Zone. No 
mail deliveries elsewhere will be made. If the registered owner 
temporarily resides abroad, the bonds will be delivered to such address 
in the United States as the purchaser directs.



Sec. 341.4  Proof of purchase.

    At the time a Retirement Plan Bond is issued, the issuing agent will 
furnish therewith to the purchaser, and in cases where the purchaser is 
different from the person in whose name the bond is inscribed, to the 
registered owner as well, proof of the purchase on Form PD 3550. The 
form will show the names and addresses of the purchaser and of the 
registered owner, the latter's date of birth, social security account 
number and his classification (i.e., self-employed individual or 
employee) the number of bonds issued, a description thereof by issue 
date, serial numbers, denominations, and registration, together with 
information as to the amount of his contributions (if any) toward the 
purchase price of the bonds.



Sec. 341.5  Limitation on holdings.

    The limit on the amount of any Retirement Plan Bonds issued during 
1974, or in any one calendar year thereafter, that may be purchased in 
the name of any one person as registered owner is $10,000 (face value).

[39 FR 36114, Oct. 8, 1974]



Sec. 341.6  Nontransferability.

    United States Retirement Plan Bonds are not transferable, and may 
not be sold, discounted or pledged as collateral for a loan or as 
security for the performance of an obligation, or for any other purpose.

[[Page 235]]



Sec. 341.7  Judicial proceedings.

    No judicial determinations will be recognized which would give 
effect to an attempted voluntary transfer inter vivos of a Retirement 
Plan Bond. Otherwise, a claim against a registered owner will be 
recognized when established by valid judicial proceedings, but in no 
case will payment be made to the purchaser at a sale under a levy or to 
the officer authorized to levy upon the property of the owner under 
appropriate process to satisfy a money judgement unless or until the 
bond has become eligible for redemption pursuant to the regulations in 
this part. Neither the Treasury Department nor any of its agencies will 
accept notices of adverse claims or of pending judicial proceedings or 
undertake to protect the interests of litigants who do not have 
possession of the bond.



Sec. 341.8  Payment or redemption during lifetime of owner.

    (a) At age 59\1/2\ or thereafter. A Retirement Plan Bond will be 
redeemable at its current redemption value upon the request of the 
registered owner (or a person recognized as entitled to act on his 
behalf), provided he is 59\1/2\ years of age or older. The owner's age 
will be determined from the date of birth shown on the face of the bond, 
provided, however, that the Secretary of the Treasury reserves the right 
in any case or class of cases to require proof, in the form of a duly 
certified copy of his birth certificate, that the owner has attained the 
age of 59\1/2\ years. If such evidence is unavailable, one of the 
following documents may be furnished in lieu thereof:
    (1) Church records of birth or baptism.
    (2) Hospital birth record or certificate.
    (3) Physician's or midwife's birth record.
    (4) Certification of Bible or other family record.
    (5) Military, naturalization or immigration records.
    (6) Other evidence of probative value. Similar documentary evidence 
will also be required to support any claim made by an owner that the 
date of birth shown on his bond is incorrect.
    (b) Prior to age 59\1/2\ years. A Retirement Plan Bond will be paid 
at its then current redemption value upon a registered owner's request 
(or by a person recognized as entitled to act on his behalf) prior to 
his attainment of age 59\1/2\ years upon submission of a physician's 
statement or any similar evidence showing that the owner has become 
disabled to such an extent that he is unable to engage in any 
substantial, gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or to be of long-continued and indefinite duration. The following are 
examples of impairments which would ordinarily be considered as 
preventing substantial, gainful activity:
    (1) Loss of use of two limbs.
    (2) Certain progressive diseases which have resulted in the physical 
loss or atrophy of a limb, such as diabetes, multiple sclerosis, or 
Buerger's disease.
    (3) Diseases of the heart, lungs, or blood vessels which have 
resulted in major loss of heart or lung reserve as evidenced by X-ray, 
electrocardiogram, or other objective findings, so that despite medical 
treatment breathlessness, pain, or fatigue is produced on slight 
exertion, such as walking several blocks, using public transportation, 
or doing small chores.
    (4) Cancer which is inoperable and progressive.
    (5) Damage to the brain or brain abnormality which has resulted in 
severe loss of judgment, intellect, orientation, or memory.
    (6) Mental diseases (e.g., psychosis or severe psychoneurosis) 
requiring continued institutionalization or constant supervision of the 
individual.
    (7) Loss or diminution of vision to the extent that the affected 
individual has a central visual acuity of no better than 20/200 in the 
better eye after best correction, or has a limitation in the fields of 
vision such that the widest diameter of the visual fields subtends an 
angle no greater than 20 degrees.
    (8) Permanent and total loss of speech.
    (9) Total deafness uncorrectible by a hearing aid.

In any case coming under the provisions of this paragraph, the evidence

[[Page 236]]

referred to above must be submitted to the Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101, for 
approval before any bonds may be paid. If, after review of the evidence, 
the Secretary of the Treasury is satisfied that the owner's disability 
has been established, a letter will be furnished authorizing payment of 
his Retirement Plan Bonds. This letter must be presented each time any 
of the owner's bonds are submitted for payment to a Federal Reserve Bank 
or Branch or to the Bureau of the Public Debt.
    (c) Requests for payment--(1) By owner. When redemption of any 
Retirement Plan Bond is desired by the registered owner under paragraph 
(a) of this section, it should be presented with the request for payment 
on the back of the bond signed and duly certified, to a Federal Reserve 
Bank or Branch or to the Bureau of the Public Debt, Securities 
Transactions Branch, Washington, DC 20226, or Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101. If payment 
is requested under paragraph (b) of this section, the letter described 
therein should accompany the bond.
    (2) By person other than owner. When redemption of any Retirement 
Plan Bond is desired by the legal guardian, committee conservator, or 
similar representative of the owner's estate under paragraph (a) of this 
section, it should be presented, with the request signed as described 
below, to a Federal Reserve Bank or Branch or to the Bureau of the 
Public Debt. If payment is requested under paragraph (b) of this 
section, the letter described therein should accompany the bond.1 
The request for payment, in either case, should be signed by the 
representative in his fiduciary capacity before an authorized certifying 
officer, and must be supported by a certificate or a certified copy of 
the letters of the appointment from the court making the appointment, 
under seal, or other proof of qualification if the appointment was not 
made by a court. Except in the case of corporate fiduciaries, such 
evidence should state that the appointment is in full force and should 
be dated not more than one year prior to the presentation of the bond 
for payment.
---------------------------------------------------------------------------

    1 In any case in which a legal representative has not 
been appointed for the estate of a registered owner who has attained the 
age of 59\1/2\ years, or who has become disabled, a person seeking 
payment of a bond on the owner's behalf should furnish a complete 
statement of the circumstances to the Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101. Appropriate 
instructions will then be furnished.
---------------------------------------------------------------------------

    (d) Partial redemption. A Retirement Plan Bond in a denomination 
greater than $50 (face value) which is otherwise eligible for redemption 
may be redeemed in part, at current redemption value, upon the request 
of the registered owner (or a person recognized as entitled to act on 
his behalf), but only in amounts corresponding to authorized 
denominations. In any case in which partial redemption is desired, 
before the request for payment is signed, the phrase ``to the extent of 
$---- (face value) and reissue of the remainder'' should be appended to 
the request. Upon partial redemption of the bond, the remainder will be 
reissued as of the original issue date. No partial redemption of a bond 
will be made after the death of the owner in whose name it is 
registered.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]



Sec. 341.9  Payment or redemption after death of owner.

    (a) Order of precedence where owner not survived by beneficiary. If 
the registered owner of a Retirement Plan Bond dies before it has been 
presented and surrendered for payment, and there is no beneficiary shown 
thereon, or if the designated beneficiary predeceased the owner, the 
bond shall be paid in the following order of precedence:
    (1) To the duly appointed executor or administrator of the estate of 
the owner, who should sign the request for payment on the back of the 
bond in his representative capacity before an authorized certifying 
officer, such request to be supported by a court certificate or a 
certified copy of his letters of appointment, under seal of the court, 
which should show that the appointment is in full force and effect, and 
be dated within six months of its presentation;

[[Page 237]]

    (2) If no legal representative of the deceased registered owner's 
estate has been or will be appointed, to the widow or widower of the 
owner;
    (3) If none of the above, to the child or children of the owner and 
the descendants of deceased children by representation;
    (4) If none of the above, to the parents of the owner, or the 
survivor of them;
    (5) In none of the above, to other next-of-kin of the owner, as 
determined by the laws of the domicile of such owner at the time of his 
death. In any case coming under the provisions of this paragraph, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary, if any, will 
be required where he predeceased the owner. Payment of bonds under 
paragraph (a)(1) of this section will be made by a Federal Reserve Bank 
or Branch or by the Bureau of the Public Debt, Securities Transactions 
Branch, Washington, DC 20226, or Bureau of the Public Debt, Division of 
Transactions and Rulings, Parkersburg, WV 26101. Payment of bonds under 
paragraphs (a)(2) to (5) of this section will be made upon receipt of 
applications on Form PD 3565, together with the bonds and supporting 
evidence, by the Bureau of the Public Debt.
    (b) Order of precedence where beneficiary survived owner. If the 
registered owner of a Retirement Plan Bond dies before it has been 
presented and surrendered for payment, and the beneficiary shown thereon 
survived the owner, the bond shall be paid in the following order of 
precedence:
    (1) To the designated beneficiary upon his presentation and 
surrender of the bond with the request for payment signed and duly 
certified, such payment to be made to the exclusion of any other person 
who may have been named beneficiary by the registered owner in a bond 
purchase plan, or under a pension or profit-sharing plan;
    (2) If the designated beneficiary survived the registered owner but 
failed to present the bond for payment during his own lifetime, payment 
will be made in the order of precedence specified in paragraphs (a) (1) 
to (5) of this section to the legal representative, surviving spouse, 
children, parents, or next-of-kin of such beneficiary, and in the manner 
provided therein.

In any case coming under the provisions of this paragraph, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary will also be 
required where he survived the owner but failed to present the bond for 
payment during his own lifetime. Payment of a bond to a designated 
beneficiary will be made by Federal Reserve Bank or Branch or by the 
Bureau of the Public Debt, Securities Transactions Branch, Washington, 
DC 20226, or Bureau of the Public Debt, Division of Transactions and 
Rulings, Parkersburg, WV 26101.
    (c) Ownership of redemption proceeds. The orders of precedence set 
forth in paragraphs (a) and (b) of this section, except in case where 
redemption is made for the account of a registered owner, are for the 
Department's convenience in discharging its obligation on a Retirement 
Plan Bond. The discharge of the obligation in accordance therewith shall 
be final so far as the Department is concerned, but those provisions do 
not otherwise purport to determine ownership of the redemption proceeds 
of a bond.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]



Sec. 341.10  Reissue.

    (a) Addition or change of beneficiary. A Retirement Plan Bond will 
be reissued to add a beneficiary in the case of a single ownership bond, 
or to eliminate or substitute a beneficiary in the case of a bond 
registered in beneficiary form upon the owner's request on Form PD 3564. 
No consent will be required to support any reissue transaction from a 
beneficiary whose name is to be removed from the registration of a 
Retirement Plan Bond. If the registered owner dies after the bond has 
been presented and surrendered for reissue, upon receipt of notice 
thereof by the agency to which the request for reissue was submitted, 
such request shall be treated as ineffective, provided the notice of 
death is received by the Federal Reserve Bank or Branch or the Bureau of 
the Public Debt, Securities Transactions Branch, Washington, DC, 20226,

[[Page 238]]

or Bureau of the Public Debt, Division of Transactions and Rulings, 
Parkersburg, WV 26101, to which the request was sent, in sufficient time 
to withhold delivery, by mail or otherwise, of the reissued bond.
    (b) Error in issue--change of name. Reissue of a Retirement Plan 
Bond will be made where an error in issue has occurred, as well as in 
cases where the owner's name has been changed by marriage, divorce, 
annulment, order of court, or in any other legal manner, upon 
appropriate request supported by satisfactory evidence. Information as 
to the procedure to be followed in securing such reissue may be obtained 
from a Federal Reserve Bank or the Bureau of the Public Debt, Securities 
Transactions Branch, Washington, DC 20226, or Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977; 42 
FR 57123, Nov. 1, 1977]



Sec. 341.11  Use of power of attorney.

    No designation of an attorney, agent, or other representative to 
request payment or reissue on behalf of the owner, beneficiary, or other 
person entitled under Sec. 341.9, other than as provided in the 
regulations in this part, will be recognized.



Sec. 341.12  Lost, stolen, or destroyed bonds.

    If a Retirement Plan Bond is lost, stolen, or destroyed, a 
substitute may be issued upon identification of the bond and proof of 
its loss, theft, or destruction. A description of the bond by 
denomination, serial number, issue date and registration should be 
furnished at the time the report of loss, theft, or destruction is made. 
Such reports should be sent to the Bureau of the Public Debt, Division 
of Transactions and Rulings, Parkersburg, WV 26101. Full instructions 
for obtaining substitute bonds will then be given.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]



Sec. 341.13  Taxation.

    The tax treatment provided under section 405 of the Internal Revenue 
Code of 1954 shall apply to all Retirement Plan Bonds. The bonds are 
subject to estate, inheritance, or other excise taxes whether Federal or 
State, but are exempt from all taxation now or hereafter imposed on the 
principal or interest thereof by any State, municipality, or any local 
taxing authority. Inquiries concerning the application of any Federal 
tax of these bonds should be directed to the District Director of 
Internal Revenue of the taxpayer's district or to the Internal Revenue 
Service, Washington, DC 20224.



Sec. 341.14  Certifying officers.

    Officers authorized to certify requests for payment or for any other 
transaction involving Retirement Plan Bonds include:
    (a) Post offices. Any postmaster, acting postmaster, or inspector-
in-charge, or other post office official or clerk designated for that 
purpose. A post office official or clerk, other than a postmaster, 
acting postmaster, or inspector-in-charge, should certify in the name of 
the postmaster or acting postmaster, followed by his own signature and 
official title. Signatures of these officers should be authenticated by 
a legible imprint of the post office dating stamp.
    (b) Banks and trust companies. Any officer of a Federal Reserve Bank 
or Branch, or of a bank or trust company chartered under the laws of the 
United States or those of any State, Commonwealth, or Territory of the 
United States, as well as any employees of such bank or trust company 
expressly authorized to act for that purpose, who should sign over the 
title ``Designated Employee.'' Certifications by any of these officers 
or designated employees should be authenticated by either a legible 
imprint of the corporate seal, or, where the institution is an 
authorized issuing agent for United States Savings Bonds, Series E, by a 
legible imprint of its dating stamp.
    (c) Issuing agents of Series E savings bonds. Any officer of a 
corporation or any other organization which is an authorized issuing 
agent for United States Savings Bonds, Series E. All certifications by 
such officers must be authenticated by a legible imprint of the issuing 
agent's dating stamp.

[[Page 239]]

    (d) Foreign countries. In a foreign country requests may be signed 
in the presence of and be certified by any United States diplomatic or 
consular representative, or the manager or other officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate seal or is 
certified to the Treasury Department. If such an officer is not 
available, requests may be signed in the presence of and be certified by 
a notary or other officer authorized to administer oaths, but his 
official character and jurisdiction should be certified by a United 
States diplomatic or consular officer under seal of his office.
    (e) Special provisions. The Commissioner of the Public Debt, the 
Chief of the Division of Securities Operations, or any Federal Reserve 
Bank or Branch is authorized to make special provision for certification 
in any particular case or class of cases where none of the officers 
authorized above is readily accessible.



Sec. 341.15  General provisions.

    (a) Regulations. All Retirement Plan Bonds shall be subject to the 
general regulations prescribed by the Secretary with respect to United 
States securities, which are set forth in Treasury Department Circular 
No. 300, current revision, to the extent applicable. Copies of the 
general regulations may be obtained upon request from any Federal 
Reserve Bank or Branch or the Bureau of the Public Debt.
    (b) Reservation as to issue of bonds. The Secretary of the Treasury 
reserves the right to reject any application for the purchase of 
Retirement Plan Bonds, in whole or in part, and to refuse to issue or 
permit to be issued any such bonds in any case or any class or classes 
of cases if he deems such action to be in the public interest, and his 
action in any such respect shall be final.
    (c) Additional requirements. In any case or any class of cases 
arising under this part the Secretary of the Treasury may require such 
additional evidence as may in his judgment be necessary, and may require 
a bond of indemnity, with or without surety, where he may consider such 
bond necessary for the protection of the United States.
    (d) Waiver of requirements. The Secretary of the Treasury reserves 
the right, in his discretion, to waive or modify any provision or 
provisions of this circular in any particular case or class of cases for 
the convenience of the United States, or in order to relieve any person 
or persons of unnecessary hardship, if such action is not inconsistent 
with law, does not impair any existing rights, and he is satisfied that 
such action would not subject the United States to any substantial 
expense or liability.
    (e) Fiscal agents. Federal Reserve Banks and Branches, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury in connection 
with the issue, delivery, redemption, reissue, and payment of Retirement 
Plan Bonds.
    (f) Reservation as to terms of circular. The Secretary of the 
Treasury may at any time, or from time to time, supplement or amend the 
terms of this part, or any amendments or supplements thereto.

            Appendix to Part 341--Tables of Redemption Values

   Table of Redemption Values Providing an Investment Yield of 3\3/4\
  Percent per Annum for Bonds Bearing Issue Dates Beginning January 1,
                                  1963
 Table shows how the Retirement Plan Bonds bearing issue dates beginning
  January 1, 1963, by denomination, increase in redemption value during
successive half-year periods following issue. The redemption values have
 been determined to provide an investment yield of 3.75 percent \1\ per
annum, compounded semiannually, on the purchase price from issue date to
    the beginning of each half-year period. The period to maturity is
  indeterminate in accordance with the provisions of Sec.  341.1(b).\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (Values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     50.94    101.88    509.38   1,018.75
1 to 1\1/2\....................     51.89    103.79    518.93   1,037.85
1\1/2\ to 2....................     52.87    105.73    528.66   1,057.31
2 to 2\1/2\....................     53.86    107.71    538.57   1,077.14
2\1/2\ to 3....................     54.87    109.73    548.67   1,097.33
3 to 3\1/2\....................     55.90    111.79    558.95   1,117.91
3\1/2\ to 4....................     56.94    113.89    569.43   1,138.87
4 to 4\1/2\....................     58.01    116.02    580.11   1,160.22
4\1/2\ to 5....................     59.10    118.20    590.99   1,181.98

[[Page 240]]

 
5 to 5\1/2\....................     60.21    120.41    602.07   1,204.14
5\1/2\ to 6....................     61.34    122.67    613.36   1,226.72
6 to 6\1/2\....................     62.49    124.97    624.86   1,249.72
6\1/2\ to 7....................     63.66    127.31    636.57   1,273.15
7 to 7\1/2\....................     64.85    129.70    648.51   1,297.02
7\1/2\ to 8....................     66.07    132.13    660.67   1,321.34
8 to 8\1/2\....................     67.31    134.61    673.06   1,346.11
8\1/2\ to 9....................     68.57    137.14    685.68   1,371.35
9 to 9\1/2\....................     69.85    139.71    698.53   1,397.07
9\1/2\ to 10...................     71.16    142.33    711.63   1,423.26
10 to 10\1/2\..................     72.50    144.99    724.97   1,449.95
10\1/2\ to 11..................     73.86    147.71    738.57   1,477.13
11 to 11\1/2\..................     75.24    150.48    752.42   1,504.83
11\1/2\ to 12..................     76.65    153.30    766.52   1,533.05
12 to 12\1/2\..................     78.09    156.18    780.90   1,561.79
12\1/2\ to 13..................     79.55    159.11    795.54   1,591.07
13 to 13\1/2\..................     81.05    162.09    810.45   1,620.91
13\1/2\ to 14..................     82.56    165.13    825.65   1,651.30
14 to 14\1/2\..................     84.11    168.23    841.13   1,682.26
14\1/2\ to 15..................     85.69    171.38    856.90   1,713.80
15 to 15\1/2\..................     87.30    174.59    872.97   1,745.94
15\1/2\ to 16..................     88.93    177.87    889.34   1,778.67
16 to 16\1/2\..................     90.60    181.20    906.01   1,812.02
16\1/2\ to 17..................     92.30    184.60    923.00   1,846.00
17 to 17\1/2\..................     94.03    188.06    940.31   1,880.61
17\1/2\ to 18..................     95.79    191.59    957.94   1,915.87
18 to 18\1/2\..................     97.59    195.18    975.90   1,951.80
18\1/2\ to 19..................     99.42    198.84    994.20   1,988.39
19 to 19\1/2\..................    101.28    202.57  1,012.84   2,025.67
19\1/2\ to 20..................    103.18    206.37  1,031.83   2,063.66
20 to 20\1/2\..................    105.12    210.23  1,051.17   2,102.35
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to January 1, 1983 (20 years after issue date
  of the first bonds) this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


  Table A--Table of Redemption Values Providing an Investment Yield of
 4.15 Percent Per Annum for Bonds Bearing Issue Dates Beginning June 1,
                                  1966
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
 Bonds bearing issue dates beginning June 1, 1966. The redemption values
  have been determined to provide an investment yield of approximately
  4.15 percent \1\ per annum, compounded semiannually, on the purchase
  price from issue date to the beginning of each half-year period. The
period to maturity is indeterminate in accordance with the provisions of
                   Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................     $0.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.04    102.08    510.38   1,020.75
1 to 1\1/2\....................     52.10    104.19    520.97   1,041.93
1\1/2\ to 2....................     53.18    106.36    531.78   1,063.55
2 to 2\1/2\....................     54.28    108.56    542.81   1,085.62
2\1/2\ to 3....................     55.41    110.81    554.07   1,108.15
3 to 3\1/2\....................     56.56    113.11    565.57   1,131.14
3\1/2\ to 4....................     57.73    115.46    577.31   1,154.61
4 to 4\1/2\....................     58.93    117.86    589.28   1,178.57
4\1/2\ to 5....................     60.15    120.30    601.51   1,203.02
5 to 5\1/2\....................     61.40    122.80    613.99   1,227.99
5\1/2\ to 6....................     62.67    125.35    626.73   1,253.47
6 to 6\1/2\....................     63.97    127.95    639.74   1,279.48
6\1/2\ to 7....................     65.30    130.60    653.01   1,306.03
7 to 7\1/2\....................     66.66    133.31    666.56   1,333.13
7\1/2\ to 8....................     68.04    136.08    680.39   1,360.73
8 to 8\1/2\....................     69.45    138.90    694.51   1,389.09
8\1/2\ to 9....................     70.89    141.78    708.92   1,417.85
9 to 9\1/2\....................     72.36    144.73    723.63   1,447.27
9\1/2\ to 10...................     73.86    147.73    738.65   1,477.30
10 to 10\1/2\..................     75.40    150.80    753.98   1,507.95
10\1/2\ to 11..................     76.96    153.92    769.62   1,539.24
11 to 11\1/2\..................     78.56    157.12    785.59   1,571.18
11\1/2\ to 12..................     80.19    160.38    801.89   1,603.78
12 to 12\1/2\..................     81.85    163.71    818.53   1,637.06
12\1/2\ to 13..................     83.55    167.10    835.52   1,671.03
13 to 13\1/2\..................     85.29    170.57    852.85   1,705.71
13\1/2\ to 14..................     87.05    174.11    870.55   1,741.10
14 to 14\1/2\..................     88.86    177.72    888.61   1,777.23
14\1/2\ to 15..................     90.71    181.41    907.05   1,814.10
15 to 15\1/2\..................     92.59    185.17    925.87   1,851.75
15\1/2\ to 16..................     94.51    189.02    945.09   1,890.17
16 to 16\1/2\..................     96.47    192.94    964.70   1,929.39
16\1/2\ to 17..................     98.47    196.94    984.71   1,969.43
17 to 17\1/2\..................    100.51    201.03  1,005.15   2,010.29
17\1/2\ to 18..................    102.60    205.20  1,026.00   2,052.01
18 to 18\1/2\..................    104.73    209.46  1,047.29   2,094.58
18\1/2\ to 19..................    106.90    213.80  1,069.02   2,138.05
19 to 19\1/2\..................    109.12    218.24  1,091.21   2,182.41
19\1/2\ to 20..................    111.38    222.77  1,113.85   2,227.70
20 to 20\1/2\ 2................    113.70    227.39  1,136.96   2,273.92
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to June 1, 1986 (20 years after issue date of
  the first bonds), this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


[[Page 241]]


  Table B--Table of Redemption Values Providing an Investment Yield of
 5.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning January
                                 1, 1970
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
   Bonds bearing issue dates beginning January 1, 1970. The redemption
      values have been determined to provide an investment yield of
  approximately 5.00 percent \1\ per annum, compounded semiannually, on
  the purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
            provisions of Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.25    102.50    512.50   1,025.00
1 to 1\1/2\....................     52.53    105.06    525.31   1,050.62
1\1/2\ to 2....................     53.84    107.69    538.45   1,076.89
2 to 2\1/2\....................     55.19    110.38    551.91   1,103.81
2\1/2\ to 3....................     56.57    113.14    565.70   1,131.41
3 to 3\1/2\....................     57.98    115.97    579.85   1,159.69
3\1/2\ to 4....................     59.43    118.87    594.34   1,188.69
4 to 4\1/2\....................     60.92    121.84    609.20   1,218.40
4\1/2\ to 5....................     62.44    124.89    624.43   1,248.86
5 to 5\1/2\....................     64.00    128.01    640.04   1,280.08
5\1/2\ to 6....................     65.60    131.21    656.04   1,312.09
6 to 6\1/2\....................     67.24    134.49    672.44   1,344.89
6\1/2\ to 7....................     68.93    137.85    689.26   1,378.51
7 to 7\1/2\....................     70.65    141.30    706.49   1,412.97
7\1/2\ to 8....................     72.42    144.83    724.15   1,448.30
8 to 8\1/2\....................     74.22    148.45    742.25   1,484.51
8\1/2\ to 9....................     76.08    152.16    760.81   1,521.62
9 to 9\1/2\....................     77.98    155.97    779.83   1,559.66
9\1/2\ to 10...................     79.93    159.86    799.33   1,598.65
10 to 10\1/2\..................     81.93    163.86    819.31   1,638.62
10\1/2\ to 11..................     83.98    167.96    839.79   1,679.58
11 to 11\1/2\..................     86.08    172.16    860.79   1,721.57
11\1/2\ to 12..................     88.23    176.46    882.31   1,764.61
12 to 12\1/2\..................     90.44    180.87    904.36   1,808.73
12\1/2\ to 13..................     92.70    185.39    926.97   1,853.94
13 to 13\1/2\..................     95.02    190.03    950.15   1,900.29
13\1/2\ to 14..................     97.39    194.78    973.90   1,947.80
14 to 14\1/2\..................     99.82    199.65    998.25   1,996.50
14\1/2\ to 15..................    102.32    204.64  1,023.20   2,046.41
15 to 15\1/2\..................    104.88    209.76  1,048.78   2,097.57
15\1/2\ to 16..................    107.50    215.00  1,075.00   2,150.01
16 to 16\1/2\..................    110.19    220.38  1,101.88   2,203.76
16\1/2\ to 17..................    112.94    225.88  1,129.43   2,258.85
17 to 17\1/2\..................    115.77    231.53  1,157.66   2,315.32
17\1/2\ to 18..................    118.66    237.32  1,186.60   2,373.21
18 to 18\1/2\..................    121.63    243.25  1,216.27   2,432.54
18\1/2\ to 19..................    124.67    249.34  1,246.67   2,493.35
19 to 19\1/2\..................    127.78    255.57  1,277.84   2,555.68
19\1/2\ to 20..................    130.98    261.96  1,309.79   2,619.57
20 to 20\1/2\..................    134.25    268.51  1,342.53   2,685.06
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to January 1, 1990 (20 years after issue date
  of the first bonds) this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


 Table C--Table of Redemption Values Providing an Investment Yield of 6
  Percent Per Annum for Bonds Bearing Issue Dates Beginning February 1,
                                  1974
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
  Bonds bearing issue dates beginning February 1, 1974. The redemption
      values have been determined to provide an investment yield of
 approximately 6 percent \1\ per annum, compounded semiannually, on the
    purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
             provisions of Sec.  341.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.50    103.00    51.500   1,030.00
1 to 1\1/2\....................     53.05    106.10    530.50   1,061.00
1\1/2\ to 2....................     54.64    109.28    546.40   1,092.80
2 to 2\1/2\....................     56.28    112.56    562.80   1,125.60
2\1/2\ to 3....................     57.96    115.92    579.60   1,159.20
3 to 3\1/2\....................     59.70    119.40    597.00   1,194.00
3\1/2\ to 4....................     61.49    122.98    614.90   1,229.80
4 to 4\1/2\....................     63.34    126.68    633.40   1,266.80
4\1/2\ to 5....................     65.24    130.48    652.40   1,304.80
5 to 5\1/2\....................     67.20    134.40    672.00   1,344.00
5\1/2\ to 6....................     69.21    138.42    692.10   1,384.20
6 to 6\1/2\....................     71.29    142.58    712.90   1,425.80
6\1/2\ to 7....................     73.43    146.86    734.30   1,468.60
7 to 7\1/2\....................     75.63    151.26    756.30   1,512.60
712 to 8.......................     77.90    155.80    779.00   1,558.00
8 to 8\1/2\....................     80.24    160.48    802.40   1,604.80
8\1/2\ to 9....................     82.64    165.28    826.40   1,652.80
9 to 9\1/2\....................     85.12    170.24    851.20   1,702.40
9\1/2\ to 10...................     87.68    175.36    876.80   1,753.60
10 to 10\1/2\..................     90.31    180.62    903.10   1,806.20
10\1/2\ to 11..................     93.01    186.02    930.10   1,860.20
11 to 11\1/2\..................     95.81    191.62    958.10   1,916.20
11\1/2\ to 12..................     98.68    197.36    986.80   1,973.60
12 to 12\1/2\..................    101.64    203.28  1,016.40   2,032.80
12\1/2\ to 13..................    104.69    209.38  1,046.90   2,093.80
13 to 13\1/2\..................    107.83    215.66  1,078.30   2,156.60
13\1/2\ to 14..................    111.06    222.12  1,110.60   2,221.20
14 to 14\1/2\..................    114.40    228.80  1,144.00   2,288.00
14\1/2\ to 15..................    117.83    235.66  1,178.30   2,356.60
15 to 15\1/2\..................    121.36    242.72  1,213.60   2,427.20
15\1/2\ to 16..................    125.00    250.00  1,250.00   2,500.00
16 to 16\1/2\..................    128.75    257.50  1,287.50   2,575.00
16\1/2\ to 17..................    132.62    265.24  1,326.20   2,652.40
17 to 17\1/2\..................    136.60    273.20  1,366.00   2,732.00
17\1/2\ to 18..................    140.69    281.38  1,406.90   2,813.80
18 to 18\1/2\..................    144.91    289.82  1,449.10   2,898.20
18\1/2\ to 19..................    149.26    298.52  1,492.60   2,985.20
19 to 19\1/2\..................    153.74    307.48  1,537.40   3,074.80
19\1/2\ to 20..................    158.35    316.70  1,583.50   3,167.00
20 to 20\1/2\..................    163.10    326.20  1,631.00   3,262.00
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.


[[Page 242]]


  Table D--Table of Redemption Values Providing an Investment Yield of
 6.50 Percent Per Annum for Bonds Bearing Issue Dates Beginning Aug. 1,
                                  1979
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
   Bonds bearing issue dates beginning August 1, 1979. The redemption
      values have been determined to provide an investment yield of
 approximately 6.50 percent \1\ per annum, compounded semi-annually, on
  the purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
            provisions of Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.62    103.24    516.20   1,032.40
1 to 1\1/2\....................     53.30    106.60    533.00   1,066.00
1\1/2\ to 2....................     55.04    110.08    550.40   1,100.80
2 to 2\1/2\....................     56.82    113.64    568.20   1,136.40
2\1/2\ to 3....................     58.68    117.36    586.80   1,173.60
3 to 3\1/2\....................     60.58    121.16    605.80   1,211.60
3\1/2\ to 4....................     62.54    125.08    625.40   1,250.80
4 to 4\1/2\....................     64.58    129.16    645.80   1,291.60
4\1/2\ to 5....................     66.68    133.36    666.80   1,333.60
5 to 5\1/2\....................     68.84    137.68    688.40   1,376.80
5\1/2\ to 6....................     71.08    142.16    710.80   1,421.60
6 to 6\1/2\....................     73.40    146.80    734.00   1,468.00
6\1/2\ to 7....................     75.78    151.56    757.80   1,515.60
7 to 7\1/2\....................     78.24    156.48    782.40   1,564.80
7\1/2\ to 8....................     80.78    161.56    807.80   1,615.60
8 to 8\1/2\....................     83.40    166.80    834.00   1,668.00
8\1/2\ to 9....................     86.12    172.24    861.20   1,722.40
9 to 9\1/2\....................     88.92    177.84    8