[Federal Register Volume 63, Number 102 (Thursday, May 28, 1998)]
[Rules and Regulations]
[Pages 29122-29126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14166]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 24

[T.D. 98-51]
RIN 1515-AC26


Automated Clearinghouse Credit

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Interim rule; solicitation of comments.

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SUMMARY: This document amends the Customs Regulations on an interim 
basis to provide for payments of funds to Customs by Automated 
Clearinghouse (ACH) credit. Under ACH credit, a payer

[[Page 29123]]

will be able to transmit daily statement, deferred tax, and bill 
payments electronically through a financial institution directly to a 
Customs account maintained by the Department of the Treasury. ACH 
credit allows the payer to exercise more control over the payment 
process, does not require the disclosure of bank account information to 
Customs, and expands the types of payments that may be made through 
ACH.

DATES: This interim rule is effective June 29, 1998. Comments must be 
received before July 27, 1998.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 
20229. Comments submitted may be inspected at the Regulations Branch, 
Office of Regulations and Rulings, U.S. Customs Service, 1300 
Pennsylvania Avenue, N.W., 3rd Floor, Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Ben Robbin, Financial Systems 
Division, Financial Management Services Center, Office of Finance, U.S. 
Customs Service (317-298-1520, ext. 1428).

SUPPLEMENTARY INFORMATION:

Background

    Part 206 of the Financial Management Service (FMS) Regulations (31 
CFR Part 206) concerns, among other things, the management of Federal 
agency receipts and disbursements and applies to all Government 
departments and agencies within the Executive Branch. Section 206.4(a) 
of the FMS Regulations (31 CFR 206.4(a)) sets forth the general rule 
that all funds are to be collected and disbursed by electronic funds 
transfer (EFT) when cost-effective, practicable, and consistent with 
current statutory authority. Section 206.2 of the FMS Regulations (31 
CFR 206.2) defines EFT as follows:

    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.

    Section 24.25 of the Customs Regulations (19 CFR 24.25) concerns 
``statement processing'' and ``automated clearinghouse (ACH)'' and 
thus, by virtue of the latter, in part implements the policy reflected 
in the FMS Regulations referred to above. Paragraph (a) of Sec. 24.25 
describes statement processing as a voluntary automated program which 
allows participants in the Automated Broker Interface (ABI) to group 
entry/entry summaries and entry summaries on a daily basis and to pay 
the related duties, taxes and fees with a single payment. Paragraph (a) 
of Sec. 24.25 further provides that the preferred method for such 
single payment is by ACH, except where the importer of record has 
provided (normally, to a customs broker who files the entry on behalf 
of the importer) a separate check payable to Customs for the Customs 
charges.
    The ACH payment process currently set forth in Sec. 24.25 is a 
debit payment method (hereinafter referred to as ``ACH debit'') whereby 
ABI filers provide Customs with the bank routing and account number 
from which ACH payments are to be electronically debited by a Treasury-
designated ACH processor bank upon receipt of an electronic message 
sent by Customs. However, following implementation of statement 
processing and ACH debit on January 1, 1990, Customs found that the ACH 
debit procedure did not achieve all of the intended results because 
some daily statement payers have remained reluctant to provide the U.S. 
Government with their bank account information and, therefore, such 
parties still make their daily statement payments by check. Moreover, 
the current ACH debit process is limited to daily statement payments 
and thus does not cover bill payments under Sec. 24.3 of the Customs 
Regulations (19 CFR 24.3) and deferred tax payments under Sec. 24.4 of 
the Customs Regulations (19 CFR 24.4), which are accepted primarily 
through check (through a Customs lockbox) and Fed Wire respectively, 
and for which Customs believes some payers would prefer to use the ACH 
environment.
    The FMS and Riggs National Bank of Washington, D.C. have developed 
another ACH payment procedure for the Federal Government, referred to 
herein as ``ACH credit''. This process allows the Federal Government to 
receive ACH payments initiated directly by the private sector payer. 
This process benefits payers by allowing them to effect payment without 
having to disclose bank account information to the Government and by 
allowing them to maintain more control over the origination and timing 
of their payments. The ACH credit process benefits the Government in 
that transit routing and bank account authorization does not have to be 
obtained from the remitter and the Government does not have to do 
anything to effect an individual payment.
    Customs has received authorization from the FMS to receive ACH 
credit payments, and appropriate modifications have been made to the 
Automated Commercial System (ACS) to accept the transfer of payment and 
remittance information from Riggs Bank and to apply those payments to 
the appropriate receivables. Since the ACH credit procedure represents 
a significant enhancement of the electronic entry and payment process 
and provides important benefits to both Customs and the trade 
community, Customs believes that it should be made available to the 
public, for use on a voluntary basis, at the earliest practicable date 
and that it should encompass not only daily statement payments but also 
bill payments and deferred tax payments.
    The purpose of this document is to provide an appropriate 
regulatory context for the ACH credit procedure. The ACH credit 
procedure and the regulatory changes reflected in this document are 
discussed in more detail below.

How ACH Credit Works

    Companies and other payers interested in enrolling in the ACH 
credit program must indicate such interest by providing the following 
information to Customs: Payer name and address; payer contact name(s); 
payer telephone number(s) and facsimile number; payer identification 
number (importer number, Social Security number, or Customs assigned 
number); and 3-digit filer code. This information should be sent to the 
Financial Management Services Center, U.S. Customs Service, 6026 
Lakeside Boulevard, Indianapolis, Indiana 46278, by mail or facsimile 
transmission (317-298-1013). Pre-printed enrollment forms for this 
purpose, together with detailed information regarding the ACH credit 
program, are available from the Financial Management Services Center 
contact person identified earlier in this document.
    The payer and its financial institution are responsible for 
determining the methodology used for originating the ACH credit payment 
(telephone or computer generated instructions, diskettes, etc.) and the 
methodology used for notifying the payer that its account has been 
charged. The financial institution that the payer uses must be capable 
of structuring ACH credit transactions according to the payment and 
addendum conventions prescribed by the National Automated

[[Page 29124]]

Clearinghouse Association, that is, the financial institution must use 
either the CCD+ or the CTX payment formats and must use the TXP data 
segment for the payment-related information within the addendum record 
for each daily statement or deferred tax or bill payment. Payments 
transmitted by ACH credit must be formatted as described in the format 
instructions provided by the Financial Management Services Center.
    Following receipt of the enrollment information, the Financial 
Management Services Center provides the payer with specific ACH credit 
routing and format instructions and advises the payer that the 
following information must be provided to its financial institution 
when originating its payments: Company name; company contact person 
name and telephone number; company identification number (coded 
Internal Revenue Service employer identification number or DUNS number 
or Customs assigned number); company payment description; effective 
date; receiving company name (i.e. U.S. Customs); transaction code; 
Customs transit routing number and Customs account number (provided to 
the payer by Customs); payment amount; payer identifier (importer 
number or Social Security number or Customs assigned number or filer 
code if the payer is a broker who is the importer of record); document 
number (daily statement number, entry or warehouse withdrawal number 
for a deferred tax payment, or bill number); payment type code (which 
identifies the payment as a daily statement payment or deferred tax 
payment or bill payment); settlement date (no later than the payment 
due date); and document payment amount.
    Before effecting any payments of funds through the ACH credit 
process, the payer is instructed by Customs to follow a trial run 
``prenotification'' procedure, involving a non-funds message 
transmission through its financial institution to the Customs account, 
in order to validate the routing instructions. Once the routing 
instructions are validated, the Financial Management Services Center 
notifies the payer that the prenotification transaction has been 
accepted and that payments may be originated on or after the tenth 
calendar day following the prenotification acceptance date.
    The payer obtains the source data (the document number and amount) 
for the ACH credit payment transaction from the daily statement or from 
the entry or warehouse withdrawal documentation in the case of a 
deferred tax or from the Customs bill. The payer, through its financial 
institution, originates payment information to the Customs account no 
later than one business day prior to the payment due date (daily 
statement payments are due no later than ten working days after release 
or withdrawal of the merchandise; deferred tax payments are due on the 
14th day or 29th day of the month, with special rules if the due date 
falls on a weekend or Federal holiday; bills must be paid no later than 
the late payment date appearing on the bill). The next day (the 
settlement date), the payer's account is charged by its financial 
institution and the payment is credited by Customs and applied to the 
appropriate daily statement or entry or warehouse withdrawal or bill as 
of that settlement date.
    If daily statement payments are involved, a statement filer who is 
not the importer of record (and thus will not be making or authorizing 
the payment) must still obtain the preliminary statement through ABI 
and must still present the preliminary statement and the corresponding 
entry summaries (when paper is required) to the Customs location, as 
provided in Sec. 24.25(c). However, the process differs in the case of 
payments to be made by ACH credit in that such a filer will provide the 
payer with the statement number and the statement amount at least one 
business day prior to the due date.
    The payer is responsible for following the routing and format 
instructions provided by the Financial Management Services Center, and 
for ensuring the accuracy of the information provided to its financial 
institution, when originating its payment. Erroneous information 
provided by the payer (for example, non-standard formatting, incorrect 
document number, payment amount different from the amount due) will 
delay the prompt posting of the payment to the receivable. If a payer 
repeatedly provides erroneous information when originating payments, 
the payer may be advised in writing to refrain from using ACH credit 
and to submit its payments by bank draft or check pursuant to Sec. 24.1 
or by the ACH debit payment method under Sec. 24.25.

Regulatory Implementation

    In view of the fact that ACH credit is a voluntary program intended 
to provide flexibility, efficiency and related benefits to the trade 
community and to Customs, it appears appropriate to implement the ACH 
program as an interim rule, subject to public comment procedures before 
adoption of a final rule. Moreover, since present Sec. 24.25 concerns 
only statement processing and describes ACH debit procedures whereas 
ACH credit will also apply to deferred tax and bill payments, Customs 
believes that it is preferable (1) to deal with ACH credit in a 
separate new Sec. 24.26 and (2) to make conforming changes to present 
Sec. 24.25 to reflect the adoption of the new section, including, where 
appropriate, the addition of the word ``debit'' to clarify the meaning 
of the references to ACH in that section.

Comments

    Before adopting this interim regulation as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs. Comments submitted will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552), 
Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and 
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), on normal 
business days between the hours of 9 a.m. and 4:30 p.m. at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, N.W., 3rd Floor, Washington, D.C.

Inapplicability of Prior Public Notice and Comment Procedures

    Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has 
determined that prior public notice and comment procedures on this 
regulation are unnecessary and contrary to the public interest. The ACH 
credit process implemented by this regulation is an entirely voluntary 
payment procedure that provides benefits to the public in that it 
facilitates the electronic entry and payment process, addresses some 
concerns of the public regarding existing electronic payments 
procedures, and has the overall effect of reducing the regulatory 
burden on the public.

Executive Order 12866

    This document does not meet the criteria for a ``significant 
regulatory action'' as specified in Executive Order 12866.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for interim 
regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.) do not apply.

Paperwork Reduction Act

    This regulation is being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collection of information contained in this 
regulation has been reviewed and, pending receipt and evaluation of 
public comments,

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approved by the Office of Management and Budget in accordance with the 
requirements of the Paperwork Reduction Act (44 U.S.C. 3507) under 
control number 1515-0218.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collection of information in these regulations is in 
Sec. 24.26. This information is required in connection with an election 
to use the ACH credit procedure for making electronic payments of funds 
to Customs. The information will be used by the U.S. Customs Service to 
ensure that payments to Customs are properly transmitted, received, and 
credited. The likely respondents are business organizations including 
importers, exporters and manufacturers.
    Estimated total annual reporting and/or recordkeeping burden: 17 
hours.
    Estimated average annual burden per respondent/ recordkeeper: .083 
hours.
    Estimated number of respondents and/or recordkeepers: 200.
    Estimated annual number of responses: 200.
    Comments are invited on: (a) whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; (d) ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques or other forms of information 
technology; and (e) estimates of capital or start up costs and costs of 
operations, maintenance, and purchase of services to provide 
information. Comments should be directed to the Office of Management 
and Budget, Attention: Desk Officer for the Department of the Treasury, 
Office of Information and Regulatory Affairs, Washington, D.C. 20503. A 
copy should also be sent to the Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, N.W., Washington, D.C. 20229.

List of Subjects in 19 CFR Part 24

    Accounting, Claims, Customs duties and inspection, Imports, Taxes.

Amendments to the Regulations

    For the reasons set forth above, Part 24, Customs Regulations (19 
CFR Part 24), is amended as set forth below.

PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURES

    1. The authority citation for part 24 continues to read in part as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General 
Note 20, Harmonized Tariff Schedule of the United States), 1450, 
1624; 31 U.S.C. 9701.
* * * * *


Sec. 24.25  [Amended]

    2. In Sec. 24.25:
    a. The third sentence of paragraph (a) is amended by adding after 
``(ACH)'' the words ``debit or ACH credit'';
    b. The sixth sentence of paragraph (a) is amended by adding the 
words ``debit (see paragraph (b)(2) of this section)'' after ``ACH'' 
the first time it appears and adding at the end of the sentence before 
the period the words ``; ACH credit is described in Sec. 24.26'';
    c. The heading of paragraph (b)(2) is amended by adding after 
``Clearinghouse'' the word ``debit'';
    d. The first sentence of paragraph (b)(2) is amended by adding 
after ``through ACH'' the word ``debit''; and
    e. The first sentence of paragraph (c)(4) is amended by removing 
the words ``ACH payment authorization'' and adding, in their place, the 
words ``ACH debit payment authorization or ACH credit payment''.
    3. Section 24.26 is added to read as follows:


Sec. 24.26  Automated Clearinghouse Credit.

    (a) Description. Automated Clearinghouse (ACH) credit is an 
optional payment method that allows a payer to transmit statement 
processing payments (see Sec. 24.25) or deferred tax payments (see 
Sec. 24.4) or bill payments (see Sec. 24.3) electronically, through its 
financial institution, directly to the Customs account maintained by 
the Department of the Treasury.
    (b) Enrollment procedure. A payer interested in enrolling in the 
ACH credit program must indicate such interest by providing the 
following information to the Financial Management Services Center, U.S. 
Customs Service, 6026 Lakeside Boulevard, Indianapolis, Indiana 46278: 
Payer name and address; payer contact name(s); payer telephone 
number(s) and facsimile number; payer identification number (importer 
number or Social Security number or Customs assigned number); and 3-
digit filer code.
    (c) Routing and format instructions. Following receipt of the 
enrollment information, the Financial Management Services Center will 
provide the payer with specific ACH credit routing and format 
instructions and will advise the payer that the following information 
must be provided to its financial institution when originating its 
payments: Company name; company contact person name and telephone 
number; company identification number (coded Internal Revenue Service 
employer identification number or DUNS number or Customs assigned 
number); company payment description; effective date; receiving company 
name; transaction code; Customs transit routing number and Customs 
account number; payment amount; payer identifier (importer number or 
Social Security number or Customs assigned number or filer code if the 
payer is a broker who is the importer of record); document number 
(daily statement number, entry or warehouse withdrawal number for a 
deferred tax payment, or bill number); payment type code; settlement 
date; and document payment amount.
    (d) Prenotification procedure. Before effecting any payments of 
funds through the ACH credit process, the payer must follow a 
prenotification procedure, involving a non-funds message transmission 
through its financial institution to the Customs account, in order to 
validate the routing instructions. When the routing instructions are 
validated, the Financial Management Services Center will notify the 
payer that the prenotification transaction has been accepted and that 
payments may be originated on or after the tenth calendar day following 
the prenotification acceptance date.
    (e) Payment origination procedures. (1) General. Once the payer has 
received authorization to begin originating ACH credit payments under 
paragraph (d) of this section, the payer, through its financial 
institution, must originate each payment transaction to the Customs 
account no later than one business day prior to the payment due date. 
The payer's account will be charged by the financial institution on the 
settlement date identified in the transaction. The payer is responsible 
for following the routing and format instructions provided by Customs 
and for ensuring the accuracy of the information when originating each 
payment. Improperly formatted or erroneous information provided by the 
payer will delay the prompt posting of the payment to the receivable.
    (2) Procedures for daily statement filers. The procedures set forth 
in Sec. 24.25(c) for ABI filers using statement processing remain 
applicable when payment is effected through ACH credit. However, when 
the ABI filer is a customs broker who is not the importer of record and 
thus is not responsible for the payment, the ABI filer must provide

[[Page 29126]]

the statement number and statement amount to the importer of record at 
least one business day prior to the due date so that the importer of 
record can originate the payment.
    (f) Date of collection. The date that the ACH credit payment 
transaction is received by Customs shall be the collection date which 
equates to the settlement date. The appropriate daily statement or 
entry or warehouse withdrawal or bill shall be identified as paid as of 
that collection date.
    (g) Removal from the ACH credit program. If a payer repeatedly 
provides improperly formatted or erroneous information when originating 
ACH credit payments, the Financial Management Services Center may 
advise the payer in writing to refrain from using ACH credit and to 
submit its payments by bank draft or check pursuant to Sec. 24.1 or, in 
the case of daily statement payments, to use the ACH debit payment 
method under Sec. 24.25.
Samuel H. Banks,
Acting Commissioner of Customs.

    Approved: May 5, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-14166 Filed 5-27-98; 8:45 am]
BILLING CODE 4820-02-P