[Federal Register Volume 75, Number 223 (Friday, November 19, 2010)]
[Rules and Regulations]
[Pages 70814-70817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28853]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 363


Securities Held in Treasury Direct

AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: Treasury is enhancing TreasuryDirect to permit automatic 
purchases of savings bonds through a payroll savings plan.

DATES: Effective date: November 19, 2010.

ADDRESSES: You can download this Final Rule at the following Internet 
addresses: http:[bsol][bsol]www.publicdebt.treas.gov, 
http:[bsol][bsol]www.gpo.gov, or http:[bsol][bsol]www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Elisha Whipkey, Director, Division of 
Program Administration, Office of Retail Securities, Bureau of the 
Public Debt, at

[[Page 70815]]

(304) 480-6319 or <a href="/cdn-cgi/l/email-protection#6e0b02071d060f401906071e050b172e0c1e0a401a1c0b0f1d40090118"><span class="__cf_email__" data-cfemail="76131a1f051e1758011e1f061d130f3614061258020413170558111900">[email protected]</span></a>.
    Susan Sharp, Attorney-Adviser, Ann Fowler, Attorney-Adviser, Dean 
Adams, Assistant Chief Counsel, Edward Gronseth, Deputy Chief Counsel, 
Office of the Chief Counsel, Bureau of the Public Debt, at (304) 480-
8692 or <a href="/cdn-cgi/l/email-protection#92e1e7e1f3fcbce1faf3e0e2d2f0e2f6bce6e0f7f3e1bcf5fde4"><span class="__cf_email__" data-cfemail="5a292f293b347429323b282a1a382a3e742e283f3b29743d352c">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: United States Savings Bonds are non-
marketable Treasury securities which have been sold continuously since 
March 1935. Savings bonds were introduced as a means of encouraging 
broad public participation in government financing by making Treasury 
securities available in small denominations specially tailored to the 
small investor. Today, savings bonds continue to be an important 
savings and investment tool for individuals, and Treasury is committed 
to offering savings bonds to the public as efficiently as possible.
    In order to reduce costs, enhance customer service, and minimize 
environmental impact, Treasury is discontinuing the issuance of 
definitive (paper) savings bonds through payroll savings plans. In 
order to provide a more efficient, electronic, automatic method for the 
purchase of savings bonds through payroll savings, Treasury is 
enhancing its TreasuryDirect system by adding a payroll savings 
function. TreasuryDirect is an online account system in which investors 
may hold and conduct transactions in eligible book-entry Treasury 
securities. The new payroll savings function will permit employees, 
through their employer or a financial institution, to credit funds on a 
recurring basis to purchase a payroll zero-percent certificate of 
indebtedness. When the payroll zero-percent certificate of indebtedness 
balance is sufficient, a savings bond will be automatically purchased 
in the amount, series, and registration previously selected by the 
employee.

Procedural Requirements

    Executive Order 12866. This rule is not a significant regulatory 
action pursuant to Executive Order 12866.
    Administrative Procedure Act (APA). Because this rule relates to 
United States securities, which are contracts between Treasury and the 
owner of the security, this rule falls within the contract exception to 
the APA, 5 U.S.C. 553(a)(2). As a result, the notice, public comment, 
and delayed effective date provisions of the APA are inapplicable to 
this rule.
    Regulatory Flexibility Act. The provisions of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this rule 
because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be 
issued with notice and opportunity for public comment.
    Paperwork Reduction Act (PRA). There is no new collection of 
information contained in this final rule that would be subject to the 
PRA, 44 U.S.C. 3501 et seq. Under the PRA, an agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a valid OMB control number. The Office 
of Management and Budget already has approved all collections of 
information in 31 CFR Part 363 under OMB control number 1535-0138.
    Congressional Review Act (CRA). This rule is not a major rule 
pursuant to the CRA, 5 U.S.C. 801 et seq., because it is a minor 
amendment that is expected to decrease costs for employers 
participating in a payroll savings plan; therefore, this rule is not 
expected to lead to any of the results listed in 5 U.S.C. 804(2). This 
rule may take immediate effect after we submit a copy of it to Congress 
and the Comptroller General.

List of Subjects in 31 CFR Part 363

    Bonds, Electronic funds transfer, Federal Reserve system, 
Government securities, Securities.


0
Accordingly, for the reasons set out in the preamble, 31 CFR Chapter 
II, Subchapter B, is amended as follows:

PART 363--REGULATIONS GOVERNING SECURITIES HELD IN 
TREASURYDIRECT[supreg]

0
1. The authority citation for Part 363 continues to read as follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3102, et seq.; 
31 U.S.C. 3121, et seq.


0
2. Amend Sec.  363.6 by removing the definition of ``Certificate of 
indebtedness''.

0
3. In Part 363, revise all references to ``certificate of 
indebtedness'' to read ``zero-percent certificate of indebtedness'' 
wherever they appear.

0
4. In Part 363, revise all references to ``certificates of 
indebtedness'' to read ``zero-percent certificates of indebtedness'' 
wherever they appear.

0
5. Amend Sec.  363.6 by adding definitions of ``Payroll Savings Plan,'' 
``Payroll Zero-Percent Certificate of Indebtedness,'' and ``Zero-
Percent Certificate of Indebtedness'' in alphabetical order to read as 
follows:


Sec.  363.6  Definitions.

* * * * *
    Payroll Savings Plan is a method for the purchase of savings bonds 
using periodic ACH credits from your employer or financial institution 
to purchase a payroll zero-percent certificate of indebtedness until a 
sufficient amount of payroll zero-percent certificate of indebtedness 
is accumulated to enable the purchase of a savings bond in an amount, 
series, and registration that you previously selected using 
functionality in your TreasuryDirect account. (See also the definition 
of payroll zero-percent certificate of indebtedness.)
    Payroll Zero-Percent Certificate of Indebtedness is a restricted 
form of the zero-percent certificate of indebtedness that is held 
separately from the zero-percent certificate of indebtedness and used 
only for purchases made through the payroll savings plan. (See also the 
definition for zero-percent certificate of indebtedness.)
* * * * *
    Zero-Percent Certificate of Indebtedness is a one-day, non-
interest-bearing security that automatically matures and is rolled over 
each day until you request that it be redeemed.

0
6. Add Sec.  363.30 to read as follows:


Sec.  363.30  What actions may Treasury take if funds used to purchase 
a security were credited or debited in error or through fraud?

    (a) If Treasury sustains a loss because the funds used to purchase 
a security were debited from an account at a financial institution from 
which the TreasuryDirect account owner did not have the right to 
authorize such ACH debit entry, we reserve the right to redeem that 
security from the account and use the proceeds to reimburse Treasury 
for the loss. If such security has been transferred to another 
TreasuryDirect account, we reserve the right to reverse the transfer, 
redeem the security, and use the proceeds to reimburse Treasury for the 
loss. If such security has been redeemed or has matured and the 
proceeds paid to the account owner, we reserve the right to take any 
action that we deem appropriate, including redeeming other securities 
remaining in the account and using the proceeds to reimburse Treasury 
for the loss.
    (b) If an employer or a third-party agent acting on behalf of one 
or more employers certifies, under penalty of perjury, that it has made 
an erroneous ACH credit entry to purchase a TreasuryDirect certificate 
of indebtedness, we reserve the right to redeem securities from the 
TreasuryDirect account to which the entry was made in the amount of the 
erroneous entry and return the funds. No action will be taken if the

[[Page 70816]]

certification is not received by Treasury within 45 days of the 
erroneous entry. We will only return funds if the erroneous entry was 
made to an account that does not belong to the intended recipient, is a 
duplicate payment, is in an amount that is greater than was authorized 
by the recipient, or was made in error because the employee was not in 
a pay status. We reserve the right to refuse to return an entry. By 
requesting that Treasury correct an erroneous entry, the employer 
agrees to indemnify Treasury for any loss that Treasury may incur as a 
result of the correction of the error and agrees to provide such 
information and assistance as Treasury may require.
    (c) If a financial institution, except a financial institution 
acting on behalf of an employer, makes an erroneous ACH credit entry to 
a TreasuryDirect[supreg] account and provides a certification as to the 
circumstances of the erroneous entry within 6 months of the entry date, 
we will notify the account owner of the erroneous ACH credit entry and 
attempt to resolve the issue. We reserve the right to place a hold on 
and to redeem securities from the TreasuryDirect[supreg] account to 
which the ACH credit entry was made in the amount of the erroneous 
credit entry and return the funds to the financial institution. The 
financial institution agrees to indemnify Treasury for any loss that 
Treasury may incur as a result of the correction of the error and 
agrees to provide information and assistance as Treasury may require.

0
7. Amend Sec.  363.37 by revising paragraphs (b) and (c) and adding 
paragraph (d) to read as follows:


Sec.  363.37  How do I purchase and make payment for eligible Treasury 
securities through my TreasuryDirect[supreg] account?

* * * * *
    (b) Payment for savings bonds and marketable Treasury securities. 
You can pay for eligible savings bonds and marketable Treasury 
securities by either a debit from your designated account at a United 
States financial institution using the ACH method, or by using the 
redemption proceeds of your zero-percent certificate of indebtedness. 
You can pay for savings bonds automatically using the redemption 
proceeds of your payroll zero-percent certificate of indebtedness 
through the payroll savings plan.
    (c) Payment for zero-percent certificate of indebtedness. You can 
pay for a zero-percent certificate of indebtedness by:
    (1) a credit from your financial institution or employer using the 
ACH method to your TreasuryDirect[supreg] account;
    (2) a debit from your designated account at a financial institution 
using the ACH method, limited to $1000 or less per transaction; or
    (3) using the proceeds of maturing securities held in your 
TreasuryDirect[supreg] account.
    (d) Payment for a payroll zero-percent certificate of indebtedness. 
The only method available to purchase a payroll zero-percent 
certificate of indebtedness is to arrange for your employer or 
financial institution to send a credit by the ACH method to purchase a 
payroll zero-percent certificate of indebtedness in your 
TreasuryDirect[supreg] account.

0
8. Amend Sec.  363.45 by revising paragraph (f) to read as follows:


Sec.  363.45  What are the rules for judicial and administrative 
actions involving securities held in TreasuryDirect[supreg]?

* * * * *
    (f) Internal Revenue Service (IRS) levy. We will honor an IRS 
notice of levy under section 6331 of the Internal Revenue Code:
    (1) Against the owner, as owner is defined in Sec.  363.6 of this 
part, including a levy against the owner in the capacity of nominee, 
transferee, or alter ego;
    (2) Against a secondary owner, if the secondary owner has the right 
to conduct transactions in a security at the date and time the notice 
of levy is delivered to Public Debt; or
    (3) Against an owner's property to which a federal tax lien is 
attached.
* * * * *

0
9. Add Sec. Sec.  363.59 and 363.60 to read as follows:


Sec.  363.59  What is a payroll savings plan?

    A payroll savings plan is an automatic method of purchasing savings 
bonds. (See the definition in Sec.  363.6.) You may open your payroll 
savings plan by selecting an amount, series, and registration for your 
savings bond purchases using functionality in your 
TreasuryDirect[supreg] account. Each bond purchase must be in a minimum 
amount of $25 with additional one-cent increments above that amount, up 
to a maximum amount of $5000, in any one transaction. The series may be 
either a Series EE or Series I savings bond. The registration may be 
any authorized form of registration for an electronic savings bond. You 
must also initiate a request to your employer or your financial 
institution to send credits on a recurring basis to your payroll 
savings plan through the ACH method to purchase a payroll zero-percent 
certificate of indebtedness. (See Subpart D for more information about 
a payroll zero-percent certificate of indebtedness.) When you have 
accumulated a sufficient amount of payroll zero-percent certificate of 
indebtedness to purchase a savings bond in the amount, series, and 
registration that you selected, the TreasuryDirect[supreg] system will 
automatically redeem your payroll zero-percent certificate of 
indebtedness and purchase your selected savings bond.


Sec.  363.60  How do I discontinue my participation in my payroll 
savings plan?

    You may discontinue your participation in your payroll savings plan 
by arranging with your employer or financial institution to discontinue 
sending funds.

0
10. Revise the heading for Subpart D to read as follows:

Subpart D--Zero-Percent Certificate of Indebtedness

0
11. Add an undesignated center heading prior to Sec.  363.130, to read 
as follows:
GENERAL

0
12. Amend Sec.  363.131 by revising the first sentence and adding a 
fifth sentence to read as follows:


Sec.  363.131  What is a TreasuryDirect[supreg] zero-percent 
certificate of indebtedness?

    A TreasuryDirect[supreg] zero-percent certificate of indebtedness 
is a non-interest-bearing security that is issued daily, with a one-day 
maturity, which automatically rolls over at maturity until you request 
redemption. * * * The payroll zero-percent certificate of indebtedness 
is a restricted form of the zero-percent certificate of indebtedness 
that is held separately from the zero-percent certificate of 
indebtedness and used only for purchases made through the payroll 
savings plan.


Sec.  363.143  [Removed]

0
13. Remove Sec.  363.143.


Sec. Sec.  363.138, 363.139, 363.140, 363.141, 363.142, 363.144, 
363.145, 363.146   [Redesignated as Sec. Sec.  363.141, 363.138, 
363.142, 363.143, 363.144, 363.145, 363.139, and 363.140]

0
14. Redesignate Sec. Sec.  363.138, 363.139, 363.140, 363.141, 363.142, 
363.144, 363.145, 363.146 as Sec. Sec.  363.141, 363.138, 363.142, 
363.143, 363.144, 363.145, 363.139, and 363.140 respectively.

0
15. Add an undesignated center heading prior to Sec.  363.141 to read 
as follows:
ZERO-PERCENT CERTIFICATE OF INDEBTEDNESS

0
16. Revise newly redesignated Sec.  363.141 to read as follows:

[[Page 70817]]

Sec.  363.141  How do I purchase a zero-percent certificate of 
indebtedness?

    (a) Primary and linked accounts. You may purchase a zero-percent 
certificate of indebtedness through one or more of the following four 
methods:
    (1) Payroll deduction, in which your employer sends funds through 
the ACH method to your TreasuryDirect[supreg] account;
    (2) deposit by your financial institution, in which your financial 
institution sends funds by the ACH method to your 
TreasuryDirect[supreg] account on a recurring or one-time basis;
    (3) through the Buy Direct function of your TreasuryDirect[supreg] 
account, in which you direct us to debit funds from your financial 
institution account to purchase a zero-percent certificate of 
indebtedness. This method is limited to an amount no greater than $1000 
per transaction. When you use the Buy Direct function to debit funds to 
purchase all or a portion of a zero-percent certificate of 
indebtedness, you will not be permitted to schedule a redemption to 
your financial institution from the zero-percent certificate of 
indebtedness within five business days after the settlement date of the 
debit entry; and
    (4) by using the proceeds from the redemption of a savings bond, 
the proceeds of a maturing security, or an interest payment from a 
security to purchase a zero-percent certificate of indebtedness.
    (b) Payroll savings plan. You may purchase a payroll zero-percent 
certificate of indebtedness for your payroll savings plan through 
payroll deduction, in which your employer sends funds through the ACH 
method to your TreasuryDirect[supreg] payroll savings plan, or through 
a credit using the ACH method by your financial institution, in which 
your financial institution sends funds by the ACH method to your 
TreasuryDirect[supreg] payroll savings plan.

0
17. Amend the heading of the newly redesignated Sec.  363.144 by 
removing the phrase ``for cash.''

0
19. Add an undesignated center heading after the newly redesignated 
Sec.  363.145, to read as follows:
PAYROLL ZERO-PERCENT CERTIFICATE OF INDEBTEDNESS

0
20. Add Sec. Sec.  363.146 through 363.148, to read as follows:


Sec.  363.146  Who may purchase a payroll zero-percent certificate of 
indebtedness?

    Only an individual TreasuryDirect[supreg] account owner may 
purchase a payroll zero-percent certificate of indebtedness, only 
through his or her primary account, and only through the payroll 
savings plan.


Sec.  363.147  How do I purchase a payroll zero-percent certificate of 
indebtedness?

    You may purchase a payroll zero-percent certificate of indebtedness 
through your TreasuryDirect[supreg] account using your payroll savings 
plan. (See Sec. Sec.  363.59 and 363.60 for more information on opening 
a payroll savings plan.) The only method of purchase for a payroll 
zero-percent certificate of indebtedness is a credit of funds from your 
employer or financial institution using the ACH method. You cannot 
purchase a payroll zero-percent certificate of indebtedness by using a 
debit from your financial institution.


Sec.  363.148  Can I redeem all or a portion of my accumulated payroll 
zero-percent certificate of indebtedness?

    You may redeem all or a portion of your accumulated payroll zero-
percent certificate of indebtedness to any financial institution that 
is of record in your TreasuryDirect[supreg] account.

Richard L. Gregg,
Fiscal Assistant Secretary.
[FR Doc. 2010-28853 Filed 11-18-10; 8:45 am]
BILLING CODE 4810-39-P


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