[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Rules and Regulations]
[Pages 37490-37494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18285]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 31, and 40

[TD 8723]
RIN 1545-AS79


Federal Tax Deposits by Electronic Funds Transfer

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains final regulations relating to the 
deposit of Federal taxes by electronic funds transfer (EFT). The 
regulations provide rules regarding which taxpayers must make deposits 
by EFT, the types of Federal taxes that must be deposited by EFT, and 
when deposits by EFT must begin. The regulations affect taxpayers 
required to make deposits of Federal taxes by EFT. The final 
regulations reflect changes to the Internal Revenue Code of 1986 (Code) 
made by the North American Free Trade Agreement Implementation Act and 
the Small Business Job Protection Act of 1996.

DATES: The final regulations are effective July 14, 1997. For dates of 
applicability of these regulations, see Sec. 31.6302-1(h)(2).

FOR FURTHER INFORMATION CONTACT: Vincent G. Surabian, 202-622-6232 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Section 523 of the North American Free Trade Agreement 
Implementation Act, Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993), 
amended section 6302 of the Code by enacting a new subsection (h) 
requiring the Secretary of the Treasury to prescribe such regulations 
as may be necessary for the development and implementation of an EFT 
system to be used for the collection of depository taxes.
    On July 11, 1994, the IRS published temporary regulations (TD 8553) 
in the Federal Register (59 FR 35414) relating to the deposit of 
Federal taxes by EFT. A notice of proposed rulemaking (IA-03-94) cross-
referencing the temporary regulations was also published in the Federal 
Register for the same day (59 FR 35418). Subsequently, on March 21, 
1996, additional temporary regulations (TD 8661) were published in the 
Federal Register (61 FR 11548) as well as a notice of proposed 
rulemaking (IA-03-94, 61 FR 11595) that both cross-referenced the 
temporary regulations published that day and amended the notice of 
proposed rulemaking published July 11, 1994. Many written comments were 
received in response to these notices of proposed rulemaking. A public 
hearing on the 1994 notice was held on October 3, 1994. There were no 
requests for a public hearing on the 1996 notice and none was held.
    Section 1809 of the Small Business Job Protection Act of 1996, Pub. 
L. 104-188, 110 Stat. 1755 (August 20, 1996), delayed the date by which 
certain taxpayers must begin EFT deposits.
    After consideration of all comments, the regulations proposed by 
IA-03-94 are adopted as revised by this Treasury decision, and the 
corresponding temporary regulations are removed. The revisions are 
discussed below.

Explanation of Provisions

    Under the temporary regulations, the requirement to deposit by EFT 
is based on the taxpayer's total deposits of certain taxes during 
certain ``determination periods.'' If the taxpayer's deposits of the 
taxes during a determination period exceed a prescribed dollar 
threshold, the taxpayer must use EFT to make deposits on and after the 
date prescribed in the temporary regulations.

Delay in January 1, 1997, Start-Up Date

    The Small Business Job Protection Act of 1996 provides that 
taxpayers first required by the temporary regulations to deposit by EFT 
for return periods beginning on and after January 1, 1997, need not 
begin to deposit by EFT until July 1, 1997. The final regulations 
provide that these taxpayers must use EFT to make deposits that are due 
on or after July 1, 1997, and relate to return periods beginning on or 
after January 1, 1997. For example, a corporation to which this rule 
applies, and which files its income tax returns on a calendar year 
basis, must use EFT to make corporate and estimated income tax deposits 
that are due on or after July 1, 1997. Thus, the corporation's 
September 15, 1997,

[[Page 37491]]

and subsequent estimated tax payments must be made by EFT.

Penalty Relief

    Under Notice 97-43, (1997-30 I.R.B.), the IRS announced that no 
penalties for failure to deposit by EFT will be imposed through 
December 31, 1997, on any taxpayer first required to deposit by EFT on 
or after July 1, 1997. These taxpayers will remain liable for the 
failure-to-deposit penalty (absent reasonable cause) under section 6656 
if they fail to make a required deposit (using either EFT or paper 
coupons) in a timely manner.

Threshold for January 1, 1999 Mandate

    The temporary regulations provide that if a taxpayer's employment 
tax deposits during 1997 exceed $20,000, or, if no employment taxes are 
deposited, the other taxes deposited in 1997 exceed $20,000, the 
taxpayer must begin depositing by EFT for return periods beginning on 
and after January 1, 1999. Based on information available in 1994, the 
IRS and Treasury Department concluded that the $20,000 threshold was 
necessary to assure that 94% of employment taxes and 94% of other 
depository taxes would be collected by EFT in fiscal year 1999 and 
subsequent years as required by section 6302(h). Based on information 
currently available, the IRS and Treasury Department have concluded 
that the statutory requirement for 1999 and subsequent years will be 
satisfied without the need to reduce the threshold below $50,000. 
Accordingly, the final regulations raise the threshold for the January 
1, 1997 through December 31, 1997 determination period from $20,000 to 
$50,000.

Technical Correction--First Required Deposit

    The final regulations revise the special rule requiring taxpayers 
with no employment tax deposits to use EFT if their deposits of other 
taxes exceed a specified threshold. As revised, the requirement to 
deposit by EFT ``applies to all depository taxes due with respect to 
deposit obligations incurred for return periods beginning on and after 
the applicable effective date.'' The words ``for return periods 
beginning'' were inadvertently omitted in the temporary regulations.

Miscellaneous

    The definition of time deemed deposited has been revised solely for 
purposes of clarity.
    Certain obsolete provisions in the temporary regulations relating 
to agreements entered into by the Commissioner with third party bulk 
data processors for the period prior to January 1, 1995, have been 
deleted.
Public Comment
    Some commentators asked if the IRS intends to notify each affected 
taxpayer of the EFT requirement before the date on which the taxpayer 
must begin depositing by EFT. The IRS mailed several advance notices to 
each taxpayer that became subject to the EFT requirement in 1997, and 
plans to provide similar notices to taxpayers required to begin 
depositing by EFT in 1998.
    Other commentators stated that it would be easier for taxpayers to 
determine whether they are subject to the rules if the thresholds were 
based on deposit liabilities incurred during the calendar year rather 
than deposits made during the calendar year. Although the specific 
suggestion was not adopted, the IRS is addressing the underlying 
concern in other ways. The IRS will make the threshold determination 
for affected taxpayers and, as indicated above, notify those taxpayers, 
in advance, of their obligation to begin depositing by EFT.
    Some commentators suggested that the final regulations should 
clarify whether tax payments made with returns by check, money order, 
etc. are taken into account in threshold determinations. Payments 
submitted with a return are not ``deposits'' and are, therefore, not 
taken into account in determining if a threshold has been exceeded for 
EFT purposes.
    Other commentators stated that the determination period for EFT 
should be the same as the lookback period used in determining a 
taxpayer's deposit status (semi-weekly or monthly) for employment tax 
deposit purposes. This suggestion was not adopted because the lookback 
periods for determining a taxpayer's deposit status with respect to 
employment tax vary depending upon the type of employment tax being 
deposited (for example, Form 943 and 945 depositors have a calendar 
year lookback period whereas Form 941 depositors do not).
    Several commentators suggested employers need a safe harbor more 
generous than the current 98 percent rule because deposits by EFT must 
be initiated earlier than current paper coupon deposits. The IRS and 
Treasury Department do not believe it is necessary to change the safe 
harbor. EFT depositors may use the Same Day Payment option (Electronic 
Tax Application (ETA)) and, when using this option, are not required to 
initiate deposits any earlier than paper coupon depositors. Thus, EFT 
depositors will have as much time as they have always had to determine 
the amount they are required to deposit.
    One commentator indicated that following the ACH Holiday Schedule 
will cause problems for $100,000 next-day depositors. The IRS and 
Treasury Department believe that the availability of ETA will alleviate 
any problems caused by the ACH Holiday Schedule.
    Another commentator noted that many securities firms that have 
next-day deposits will be unable to comply with the EFT deposit 
requirement because of the nature of the securities business. The 
commentator recommends either exempting nonpayroll related income tax 
deposits from the EFT deposit requirement or allowing the use of 
Fedwire on a regular basis. Since ETA includes Fedwire value transfers, 
Fedwire non-value transfers, and Direct Access transactions, and is 
available for taxpayers to use on a regular basis, securities firms 
should be able to comply with the next-day deposit rule.
    Another commentator suggested that a deposit by EFT should be 
considered timely if initiated with the Automated Clearing House (ACH) 
in a timely and correct manner and that the taxpayer should not be 
responsible for possible ACH breakdowns. Rev. Rul. 94-46 (1994-2 C.B. 
278), has been published to address this situation. The revenue ruling 
provides guidance on establishing reasonable cause for abatement of the 
failure-to-deposit penalty in certain situations involving deposits by 
EFT.
    A commentator suggested that the regulations should allow taxpayers 
to make deposits by EFT from any institution that has the ability to 
make ACH credit or debit transfers and should not require the taxpayers 
to open accounts with a Treasury Financial Agent. A taxpayer is not 
required to open an account with a Treasury Financial Agent. The ACH 
debit and ACH credit options allow a taxpayer to make a deposit from 
any of the many institutions that have the ability to make ACH credit 
or debit transfers.
    One commentator suggested that a $500 minimum threshold should be 
provided for EFT deposits. This change would unduly complicate 
administration of the rules and has not been adopted.
    Some of the issues raised in comments on the notice of proposed 
rulemaking published on July 11, 1994, were addressed in changes made 
to the temporary regulations by TD 8661. These issues were discussed in 
the preamble to TD 8661 and will not be addressed again here. In 
addition,

[[Page 37492]]

several other comments that were outside the scope of this regulations 
project have not been addressed here.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It also has been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
does not apply to these regulations, and, because the notices of 
proposed rulemaking preceding the regulations were issued prior to 
March 29, 1996, a Regulatory Flexibility Analysis is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, the two 
notices of proposed rulemaking preceding these regulations were 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small business.

Drafting Information

    The principal author of these regulations is Vincent G. Surabian, 
Office of the Assistant Chief Counsel (Income Tax & Accounting). 
However, other personnel from the IRS and Treasury Department 
participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social Security, 
Unemployment compensation.

26 CFR Part 40

    Excise taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR parts 1, 31, and 40 are amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 is amended by 
removing the citations for ``Section 1.6302-1(a)'', and ``Sections 
1.6302-1T, 1.6302-2T and 1.6302-3T'', and ``Section 1.6302-4T'' and 
adding entries in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 1.6302-1 also issued under 26 U.S.C. 6302(c) and (h).
    Section 1.6302-2 also issued under 26 U.S.C. 6302(h).
    Section 1.6302-3 also issued under 26 U.S.C. 6302(h).
    Section 1.6302-4 also issued under 26 U.S.C. 6302(a) and (c). * 
* *

    Par. 2. Section 1.6302-1 is amended as follows:
    1. The heading for paragraph (b) is revised.
    2. The text of paragraph (b) is redesignated as paragraph (b)(1) 
and a heading for (b)(1) is added.
    3. Paragraph (b)(2) is added.
    4. The OMB parenthetical at the end of the section is removed.
    The revised and added provisions read as follows:


Sec. 1.6302-1  Use of Government depositaries in connection with 
corporation income and estimated income taxes and certain taxes of tax-
exempt organizations.

* * * * *
    (b) Manner of deposit--(1) Deposit by Federal tax deposit coupon. * 
* *
    (b)(2) Deposits by electronic funds transfer. For the requirement 
to deposit corporation income and estimated income taxes and certain 
taxes of tax-exempt organizations by electronic funds transfer, see 
Sec. 31.6302-1(h) of this chapter. A taxpayer not required to deposit 
by electronic funds transfer pursuant to Sec. 31.6302-1(h) of this 
chapter remains subject to the rules of paragraph (b)(1) of this 
section.


Sec. 1.6302-1T  [Removed]

    Par. 3. Section 1.6302-1T is removed.
    Par. 4. Section 1.6302-2 is amended as follows:
    1. The heading for paragraph (b) is revised.
    2. Paragraph (c) is redesignated as paragraph (b)(6).
    3. A new paragraph (c) is added.
    4. The OMB parenthetical at the end of the section is removed.
    The revised and added provisions read as follows:


Sec. 1.6302-2  Use of Government depositaries for payment of tax 
withheld on nonresident aliens and foreign corporations.

* * * * *
    (b) Deposits by Federal tax deposit coupon. * * *
    (c) Deposits by electronic funds transfer. For the requirement to 
deposit taxes withheld on nonresident aliens and foreign corporations 
by electronic funds transfer, see Sec. 31.6302-1(h) of this chapter. A 
taxpayer not required to deposit by electronic funds transfer pursuant 
to Sec. 31.6302-1(h) of this chapter remains subject to the rules of 
paragraph (b) of this section.
* * * * *


Sec. 1.6302-2T  [Removed]

    Par. 5. Section 1.6302-2T is removed.
    Par. 6. In Sec. 1.6302-3, paragraph (c) is revised to read as 
follows:


Sec. 1.6302-3  Use of Government depositaries in connection with 
estimated taxes of certain trusts.

* * * * *
    (c) Cross-references. For further guidance and instructions for 
certain banks and financial institutions acting as fiduciaries with 
respect to taxable trusts, see Rev. Proc. 89-49 (1989-2 C.B. 615), (see 
Sec. 601.601(d)(2) of this chapter) or any successor revenue procedure. 
For the requirement to deposit estimated tax payments of taxable trusts 
by electronic funds transfer, see Sec. 31.6302-1(h) of this chapter.


Sec. 1.6302-3T  [Removed]

    Par. 7. Section 1.6302-3T is removed.
    Par. 8. Section 1.6302-4 is added to read as follows:


Sec. 1.6302-4  Use of financial institutions in connection with 
individual income taxes.

    Voluntary payments by electronic funds transfer. An individual may 
voluntarily remit by electronic funds transfer all payments of tax 
imposed by subtitle A of the Code, including any payments of estimated 
tax. Such payments must be made in accordance with procedures to be 
prescribed by the Commissioner.


Sec. 1.6302-4T  [Removed]

    Par. 9. Section 1.6302-4T is removed.

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    Par. 10. The authority citation for Part 31 is amended by removing 
the entries for ``Section 31.6302-1T'', and ``Section 31.6302(c)-3T'' 
and revising the entry for ``Sections 31.6302-1 through 31.6302-3'' and 
by adding an entry for ``Section 31.6302(c)-3'' to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Sections 31.6302-1 through 31.6302-3 also issued under 26 U.S.C. 
6302(a), (c), and (h). * * *
    Section 31.6302(c)-3 also issued under 26 U.S.C. 6302(h).

    Par. 11. In Sec. 31.0-1, paragraph (a) is amended by adding a 
sentence at the end of the paragraph to read as follows:


Sec. 31.0-1  Introduction.

    (a) * * * The regulations in this part also provide rules relating 
to the deposit of other taxes by electronic funds transfer.
* * * * *
    Par. 12. In Sec. 31.0-3, paragraph (f) is amended by adding a 
sentence at the end of the paragraph to read as follows:

[[Page 37493]]

Sec. 31.0-3  Scope of regulations.

* * * * *
    (f) * * * Subpart G of this part also provides rules relating to 
the deposit of other taxes by electronic funds transfer.
    Par. 13. In Sec. 31.6302-1, paragraph (h) is redesignated as 
paragraph (i), and new paragraph (h) is added to read as follows:


Sec. 31.6302-1  Federal tax deposit rules for withheld income taxes and 
taxes under the Federal Insurance Contributions Act (FICA) attributable 
to payments made after December 31, 1992.

* * * * *
    (h) Time and manner of deposit--deposits required to be made by 
electronic funds transfer--(1) In general. Section 6302(h) requires the 
Secretary to prescribe such regulations as may be necessary for the 
development and implementation of an electronic funds transfer system 
to be used for the collection of the depository taxes as described in 
paragraph (h)(3) of this section. Section 6302(h)(2) provides a phase-
in schedule that sets forth escalating minimum percentages of those 
depository taxes to be deposited by electronic funds transfer. This 
paragraph (h) prescribes the rules necessary for implementing an 
electronic funds transfer system for collection of depository taxes and 
for effecting an orderly and expeditious phase-in of that system.
    (2) Threshold amounts, determination periods, and effective dates. 
(i)(A) Taxpayers whose aggregate deposits of the taxes imposed by 
Chapters 21 (Federal Insurance Contributions Act), 22 (Railroad 
Retirement Tax Act), and 24 (Collection of Income Tax at Source on 
Wages) of the Internal Revenue Code during a 12-month determination 
period exceed the applicable threshold amount are required to deposit 
all depository taxes described in paragraph (h)(3) of this section by 
electronic funds transfer (as defined in paragraph (h)(4) of this 
section) unless exempted under paragraph (h)(5) of this section. If the 
applicable effective date is January 1, 1995, or January 1, 1996, the 
requirement to deposit by electronic funds transfer applies to all 
deposits required to be made on or after the applicable effective date. 
If the applicable effective date is July 1, 1997, the requirement to 
deposit by electronic funds transfer applies to all deposits required 
to be made on or after July 1, 1997 with respect to deposit obligations 
incurred for return periods beginning on or after January 1, 1997. If 
the applicable effective date is January 1, 1998, or thereafter, the 
requirement to deposit by electronic funds transfer applies to all 
deposits required to be made with respect to deposit obligations 
incurred for return periods beginning on or after the applicable 
effective date. In general, each applicable effective date has one 12-
month determination period. However, for the applicable effective date 
January 1, 1996, there are two determination periods. If the applicable 
threshold amount is exceeded in either of those determination periods, 
the taxpayer becomes subject to the requirement to deposit by 
electronic funds transfer, effective January 1, 1996. The threshold 
amounts, determination periods and applicable effective dates for 
purposes of this paragraph (h)(2)(i)(A) are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                           Applicable effective 
        Threshold amount                           Determination period                            date         
----------------------------------------------------------------------------------------------------------------
$78 million.....................  1-1-93 to 12-31-93...................................  Jan. 1, 1995.          
$47 million.....................  1-1-93 to 12-31-93...................................  Jan. 1, 1996.          
$47 million.....................  1-1-94 to 12-31-94...................................  Jan. 1, 1996.          
$50 thousand....................  1-1-95 to 12-31-95...................................  July 1, 1997.          
$50 thousand....................  1-1-96 to 12-31-96...................................  Jan. 1, 1998.          
$50 thousand....................  1-1-97 to 12-31-97...................................  Jan. 1, 1999.          
----------------------------------------------------------------------------------------------------------------

    (B) Unless exempted under paragraph (h)(5) of this section, a 
taxpayer that does not deposit any of the taxes imposed by chapters 21, 
22, and 24 during the applicable determination periods set forth in 
paragraph (h)(2)(i)(A) of this section, but that does make deposits of 
other depository taxes (as described in paragraph (h)(3) of this 
section), is nevertheless subject to the requirement to deposit by 
electronic funds transfer if the taxpayer's aggregate deposits of all 
depository taxes exceed the threshold amount set forth in this 
paragraph (h)(2)(i)(B) during an applicable 12-month determination 
period. This requirement to deposit by electronic funds transfer 
applies to all depository taxes due with respect to deposit obligations 
incurred for return periods beginning on or after the applicable 
effective date. The threshold amount, determination periods, and 
applicable effective dates for purposes of this paragraph (h)(2)(i)(B) 
are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                           Applicable effective 
        Threshold amount                           Determination period                            date         
----------------------------------------------------------------------------------------------------------------
$50 thousand....................  1-1-95 to 12-31-95...................................  Jan. 1, 1998.          
$50 thousand....................  1-1-96 to 12-31-96...................................  Jan. 1, 1998.          
$50 thousand....................  1-1-97 to 12-31-97...................................  Jan. 1, 1999.          
----------------------------------------------------------------------------------------------------------------

    (ii) Once a taxpayer is required to deposit by electronic funds 
transfer pursuant to this paragraph (h)(2), the taxpayer must continue 
to deposit by electronic funds transfer. Until such time as a taxpayer 
is required by this section to deposit by electronic funds transfer, 
the taxpayer may voluntarily make deposits by electronic funds 
transfer, but remains subject to the rules of paragraph (i) of this 
section, pertaining to deposits by Federal tax deposit (FTD) coupon, in 
making deposits other than by electronic funds transfer.
    (3) Taxes required to be deposited by electronic funds transfer. 
The requirement to deposit by electronic funds transfer under paragraph 
(h)(2) of this section applies to all the taxes required to be 
deposited under Secs. 1.6302-1, 1.6302-2, and 1.6302-3 of this chapter; 
Secs. 31.6302-1, 31.6302-2, 31.6302-3, 31.6302-4, and 31.6302(c)-3; and 
Sec. 40.6302(c)-1 of this chapter.
    (4) Definitions--(i) Electronic funds transfer. An electronic funds 
transfer is any transfer of depository taxes made in accordance with 
Revenue Procedure 97-33, (1997-30 I.R.B.), (see Sec. 601.601(d)(2)

[[Page 37494]]

of this chapter), or in accordance with procedures subsequently 
prescribed by the Commissioner.
    (ii) Taxpayer. For purposes of this section, a taxpayer is any 
person required to deposit federal taxes, including not only 
individuals, but also any trust, estate, partnership, association, 
company or corporation.
    (5) Exemptions. If any categories of taxpayers are to be exempted 
from the requirement to deposit by electronic funds transfer, the 
Commissioner will identify those taxpayers by guidance published in the 
Internal Revenue Bulletin. (See Sec. 601.601(d)(2)(ii)(b) of this 
chapter.)
    (6) Separation of deposits. A deposit for one return period must be 
made separately from a deposit for another return period.
    (7) Payment of balance due. If the aggregate amount of taxes 
reportable on the applicable tax return for the return period exceeds 
the total amount deposited by the taxpayer with regard to the return 
period, then the balance due must be remitted in accordance with the 
applicable form and instructions.
    (8) Time deemed deposited. A deposit of taxes by electronic funds 
transfer will be deemed made when the amount is withdrawn from the 
taxpayer's account, provided the U.S. Government is the payee and the 
amount is not returned or reversed.
    (9) Time deemed paid. In general, an amount deposited under this 
paragraph (h) will be considered to be a payment of tax on the last day 
prescribed for filing the applicable return for the return period 
(determined without regard to any extension of time for filing the 
return) or, if later, at the time deemed deposited under paragraph 
(h)(8) of this section. In the case of the taxes imposed by chapters 21 
and 24 of the Internal Revenue Code, solely for purposes of section 
6511 and the regulations thereunder (relating to the period of 
limitation on credit or refund), if an amount is deposited prior to 
April 15th of the calendar year immediately succeeding the calendar 
year that includes the period for which the amount was deposited, the 
amount will be considered paid on April 15th.
* * * * *


Sec. 31.6302-1T  [Removed]

    Par. 14. Section 31.6302-1T is removed.
    Par. 15. Section 31.6302(c)-3 is amended as follows:
    1. The heading for paragraph (b) is revised.
    2. Paragraph (c) is revised.
    3. Paragraph (d) is added.
    The revised and added provisions read as follows:


Sec. 31.6302(c)-3  Use of Government depositaries in connection with 
tax under the Federal Unemployment Tax Act.

* * * * *
    (b) Manner of deposit--deposits required to be made by Federal tax 
deposit (FTD) coupon. * * *
    (c) Manner of deposit--deposits required to be made by electronic 
funds transfer. For the requirement to deposit tax under the Federal 
Unemployment Tax Act by electronic funds transfer, see Sec. 31.6302-
1(h). A taxpayer not required to deposit by electronic funds transfer 
pursuant to Sec. 31.6302-1(h) remains subject to the rules of paragraph 
(b) of this section.
    (d) Effective date. The provisions of paragraphs (a) and (b) of 
this section apply with respect to calendar quarters beginning after 
December 31, 1969. The provisions of paragraph (c) of this section 
apply with respect to calendar quarters beginning on or after January 
1, 1995.


Sec. 31.6302(c)-3T  [Removed]

    Par. 16. Section 31.6302(c)-3T is removed.

PART 40--EXCISE TAX PROCEDURAL REGULATIONS

    Par. 17. The authority citation for part 40 is amended by revising 
the entry for ``Sections 40.6302(c)-1, 40.6302(c)-2, 40.6302(c)-3, and 
40.6302(c)-4'' and removing the entry for ``Section 40.6302(c)-1T'' to 
read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 40.6302(c)-1 also issued under 26 U.S.C. 6302(a) and 
(h).
    Sections 40.6302(c)-2, 40.6302(c)-3, and 40.6302(c)-4 also 
issued under 26 U.S.C. 6302(a).

    Par. 18. Section 40.6302(c)-1 is amended as follows:
    1. The text of paragraph (d) is redesignated paragraph (d)(1) and a 
paragraph heading is added for (d)(1).
    2. Paragraph (d)(2) is added.
    The added provisions read as follows:


Sec. 40.6302(c)-1  Use of Government depositaries.

* * * * *
    (d) Remittance of deposits--(1) Deposits by Federal tax deposit 
coupon. * * *
    (2) Deposits by electronic funds transfer. For the requirement to 
deposit excise taxes by electronic funds transfer, see Sec. 31.6302-
1(h) of this chapter. A taxpayer not required to deposit by electronic 
funds transfer pursuant to Sec. 31.6302-1(h) of this chapter remains 
subject to the rules of this paragraph (d).
* * * * *


Sec. 40.6302(c)-1T  [Removed]

    Par. 19. Section 40.6302(c)-1T is removed.

    Dated: June 27, 1997.
Michael P. Dolan,
Acting Commissioner of Internal Revenue.

Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 97-18285 Filed 7-11-97; 8:45 am]
BILLING CODE 4830-02-U