Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 59177 

V. How Does This Rule Comply With 

the Paperwork Reduction Act of 1995? 

This final rule contains no collections 

of information. Therefore, clearance by 

the Office of Management and Budget 

(OMB) under the Paperwork Reduction 

Act of 1995 is not required. Elsewhere 

in this issue of the Federal Register, 

FDA is issuing a notice announcing the 

guidance for the final rule. This 

guidance, ‘‘Class II Special Controls 

Guidance Document: Remote 

Medication Management System,’’

references previously approved 

collections of information found in FDA 

regulations. 

VI. What References Are on Display? 

The following reference has been 

placed on display in the Division of 

Dockets Management (HFA–305), Food 

and Drug Administration, 5630 Fishers 

Lane, rm. 1061, Rockville, MD 20852, 

and may be seen by interested persons 

between 9 a.m. and 4 p.m., Monday 

through Friday. 

1. Petition from INRange Systems, Inc., 

dated September 25, 2006. 

List of Subjects in 21 CFR Part 880 

Medical devices. 

■ Therefore, under the Federal Food, 

Drug, and Cosmetic Act and under 

authority delegated to the Commissioner 

of Food and Drugs, 21 CFR part 880 is 

amended as follows: 

PART 880—GENERAL HOSPITAL AND 

PERSONAL USE DEVICES 

■ 1. The authority citation for 21 CFR 

part 880 continues to read as follows: 

Authority: 21 U.S.C. 351, 360, 360c, 360e, 

360j, 371. 

■ 2. Section 880.6315 is added to 

subpart G to read as follows: 

§ 880.6315 Remote Medication 

Management System. 

(a) Identification. A remote 

medication management system is a 

device composed of clinical and 

communications software, a medication 

delivery unit, and medication 

packaging. The system is intended to 

store the patient’s prescribed 

medications in a delivery unit, to permit 

a health care professional to remotely 

schedule the patient’s prescribed 

medications, to notify the patient when 

the prescribed medications are due to be 

taken, to release the prescribed 

medications to a tray of the delivery 

unit accessible to the patient on the 

patient’s command, and to record a 

history of the event for the health care 

professional. The system is intended for 

use as an aid to health care 

professionals in managing therapeutic 

regimens for patients in the home or 

clinic. 

(b) Classification. Class II (special 

controls). The special control is: The 

FDA guidance document entitled 

‘‘Guidance for Industry and Food and 

Drug Administration Staff; Class II 

Special Controls Guidance Document: 

Remote Medication Management 

System.’’ See § 880.1(e) for availability 

of this guidance document. 

Dated: October 3, 2007. 

Linda S. Kahan, 

Deputy Director, Center for Devices and 

Radiological Health. 

[FR Doc. E7–20633 Filed 10–18–07; 8:45 am] 

BILLING CODE 4160–01–S 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 203 

RIN 1510–AB01 

Payment of Federal Taxes and the 

Treasury Tax and Loan Program 

AGENCY: Financial Management Service, 

Fiscal Service, Treasury. 

ACTION: Interim final rule. 

SUMMARY: As part of an ongoing effort to 

review and streamline its regulations, 

the Financial Management Service 

(FMS) has revised its regulation 

governing the Treasury Tax and Loan 

(TT&L) program. The changes update 

the rule to reflect the reorganization and 

enhancement of the TT&L program, 

including changes in terminology, and 

simplify the rule by deleting procedures 

and provisions that appear in other 

regulations or in the Treasury Financial 

Manual. FMS also has rewritten this 

regulation in plain language, thus 

making it clearer and easier to 

understand. 

DATES: This interim final rule is 

effective October 19, 2007. Comments 

must be received by December 18, 2007. 

ADDRESSES: The Financial Management 

Service began participating in the U.S. 

government’s eRulemaking Initiative by 

publishing rulemaking information on 

www.regulations.gov. Regulations.gov 

offers the public the ability to comment 

on, search, and view publicly available 

rulemaking materials, including 

comments received on rules. 

Comments on this rule, identified by 

docket FISCAL–FMS–2007–0007, 

should only be submitted using the 

following methods: 

• Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions on the Web site for 

submitting comments. 

• Mail: Thompson Sawyer, Director, 

Investment Management Division, 

Financial Management Service, 401 

14th Street, SW., Washington, DC 

20227. 

The fax and e-mail methods of 

submitting comments on rules to FMS 

have been retired. 

Instructions: All submissions received 

must include the agency name 

(‘‘Financial Management Service’’) and 

docket number FISCAL–FMS–2007–

0007 for this rulemaking. In general, 

comments will be published on 

Regulations.gov without change, 

including any business or personal 

information provided. Comments 

received, including attachments and 

other supporting materials, are part of 

the public record and subject to public 

disclosure. Do not enclose any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

You may also inspect and copy this 

proposed rule at: Treasury Department 

Library, Freedom of Information Act 

(FOIA) Collection, Room 1428, Main 

Treasury Building, 1500 Pennsylvania 

Avenue, NW., Washington, DC 20220. 

Before visiting, you must call (202) 622–

0990 for an appointment. 

FOR FURTHER INFORMATION CONTACT: 

Thompson Sawyer, Director, Investment 

Management Division, at (202) 874–

7150 or thompson.sawyer@fms.treas.gov 

or Ellen M. Neubauer, Senior Attorney, 

at (202) 874–6680 or 

ellen.neubauer@fms.treas.gov. 

SUPPLEMENTARY INFORMATION: 

1. Background 

The Treasury Tax and Loan (TT&L) 

program encompasses two separate 

components: A depositary component 

through which we collect Federal tax 

deposits and payments from business 

taxpayers for employee withholding and 

other types of taxes, and an investment 

component through which we invest 

short-term operating balances not 

needed for immediate cash outlays. 

Examples of the investment component 

are retention of tax deposits, direct 

investments, term investments or other 

investment programs. Approximately 

950 TT&L depositaries borrow excess 

short-term Treasury operating funds by 

participating in the investment 

component of the TT&L program. 

Through agreements executed pursuant 

to Part 203, participating depositaries 

borrow Treasury funds in the form of a 

note secured with collateral pledged to 


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59178 Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 

Treasury and pay interest to Treasury on 

these balances. 

We have revised Part 203 to reflect 

recent operational changes and changes 

in terminology to the TT&L program, 

and to streamline and simplify the 

regulation. Because the predominant 

intent of this rulemaking is to improve 

the clarity of the regulation, we have 

removed some procedural and technical 

requirements and provisions, such as 

references to specific Forms and filing 

instructions, from the existing 

regulation. All of the technical 

requirements that we have removed and 

that still apply are contained in Volume 

IV of the Treasury Financial Manual 

(see http://www.fms.treas.gov/tfm/vol4/ 

index.html). Those technical 

requirements that don’t still apply have 

been deleted. For example, current 

§ 203.10 sets forth procedures for 

financial institutions to enroll taxpayers 

in the Electronic Federal Tax Payment 

System (EFTPS) that no longer 

accurately reflect the actual process. 

Accordingly, we have deleted the 

substance of current § 203.10 from the 

regulation. The current procedures for 

enrolling taxpayers in EFTPS are found 

in Volume IV of the Treasury Financial 

Manual, Part 1, Chapter 2200. 

In addition, we have removed some of 

the existing provisions of the regulation 

because they duplicate provisions of 31 

CFR part 210, which sets forth the rules 

governing the Federal government’s 

participation in the Automated Clearing 

House (ACH) system. For example, the 

substance of current § 203.15 has been 

deleted from the interim final regulation 

because everything in current § 203.15 

is covered in 31 CFR part 210 (see 

§ 210.8(b)(1)). For the same reason, the 

substantive provisions of current 

§ 203.12, which address ACH credit and 

debit transactions, have been deleted. 

Although a number of new terms have 

been added to describe components of 

the TT&L program, most aspects of the 

operation of the program are not 

changing. For example, the new term 

‘‘Treasury Investment Program (TIP)’’ is 

the automated system within the TT&L 

program that receives tax collection 

data, invests funds, and monitors 

collateral pledged to secure invested 

funds and public money. The new term 

‘‘Paper Tax System (PATAX)’’ is the 

automated system within TIP that 

collects, adjusts, and reports paper 

Federal tax deposits (FTDs). 

The revisions to this rule reflect 

changes that have been made to the 

TT&L program over recent years. One of 

the most significant changes requires 

depositaries to have collateral in place 

before any funds are credited to their 

TIP main account balance or Special 

Direct Investment (SDI) account 

balance. Previously, a depositary had 

until the end of the day to have 

collateral in place after the funds were 

credited to its account. This change 

helps ensure that Treasury investments 

are adequately secured at all times. 

Another change, reflected in § 203.20, is 

that with the implementation of the 

Treasury Investment Program, 

transactions now post to financial 

institutions’ reserve accounts 

throughout the day. 

Another change to the TT&L program 

occurred in 2001, when the Department 

of the Treasury announced that after 

December 31, 2000, Federal Reserve 

Banks (FRBs) would no longer accept 

FTD paper coupons. The change 

affected only a small percentage (less 

than one-half of one percent) of FTD 

deposits. It was no longer cost-effective 

for the FRBs to process the small 

number of FTD paper coupons they 

received annually. We have deleted 

§ 203.18(b) of the current regulation to 

reflect this change. Financial 

institutions that are TT&L depositaries 

will still accept paper coupons. For 

those taxpayers who do not have an 

account with a TT&L depositary or who 

do not wish to pay taxes electronically 

through EFTPS, FMS has a mail-in 

option. 

Other changes to the TT&L program 

and Part 203 are discussed in the 

section-by-section analysis below. 

II. Section-by-Section Analysis 

Section 203.1 Scope 

Amended § 203.1 is substantively 

unchanged from current § 203.1, except 

that language has been added to clarify 

that there are various ways that a 

financial institution may participate in 

the TT&L program. A financial 

institution may choose to participate in 

the TT&L program by becoming an 

investor depositary, a retainer 

depositary, and/or a collector 

depositary, or by processing tax 

payments through EFTPS. Amended 

§ 203.1 clarifies that a financial 

institution does not become a TT&L 

depositary, as defined, by processing tax 

payments through EFTPS. 

Section 203.2 Definitions 

We have made a number of changes 

to the definitions set forth at § 203.2. 

Several definitions have been deleted 

because they are not used in the interim 

final regulation. These include: ‘‘Direct 

Access transaction,’’ ‘‘Electronic Tax 

Application,’’ ‘‘Electronic Tax 

Application reference number,’’ ‘‘Input 

Message Accountability Data,’’ and 

‘‘Transaction trace number.’’ Other 

terms defined in the current regulation 

are replaced by new terminology in the 

interim final regulation, including 

‘‘Federal Reserve account’’ (replaced by 

‘‘Reserve account’’), ‘‘Federal Reserve 

Bank of the district’’ (replaced by 

‘‘Federal Reserve Bank (FRB)’’), 

‘‘Federal Tax Deposit system’’ (replaced 

by ‘‘Paper Tax System (PATAX)’’), 

‘‘Note option’’ (replaced by ‘‘Retainer 

depositary’’ and ‘‘Investor depositary’’), 

and ‘‘Remittance option’’ (replaced by 

‘‘Collector depositary’’). Several new 

terms have been added to reflect 

enhancements to the TT&L program, 

including ‘‘Capacity,’’ ‘‘Dynamic 

investment,’’ ‘‘Investment program,’’

‘‘Special Direct Investment (SDI) 

account balance,’’ ‘‘Term Investment 

Option (TIO) account balance,’’

‘‘Treasury Investment Program (TIP),’’

‘‘Treasury Support Center (TSC),’’ and 

‘‘TIP main account balance.’’ A number 

of definitions have been reworded to 

make them easier to understand, but are 

substantively unchanged. Significant 

changes to specific definitions are 

discussed below. 

Balance Limit 

The new term ‘‘balance limit’’ is 

defined and replaces the term 

‘‘maximum balance’’ in current Part 

203. Although the term ‘‘maximum 

balance’’ is used in current Part 203, it 

is not defined. 

Capacity 

The new term ‘‘capacity’’ is being 

added to refer to the additional amount 

of a direct investment or special direct 

investment that a designated depositary 

is willing to receive or the additional 

amount of tax deposits that a designated 

depositary is willing to retain. The TIP 

main account balance or SDI account 

balance, current collateral value, 

pending withdrawals, and pending 

investments are considered when 

determining capacity. 

Collector Depositary 

The new term ‘‘collector depositary’’

is used to describe a depositary that 

uses the ‘‘remittance option’’ under 

current Part 203 to better reflect the 

activity performed by the depositary. 

Dynamic Investment 

The new term ‘‘dynamic investment’’

is used to describe investments placed 

throughout the day. 

Federal Reserve Bank (FRB) 

The new term ‘‘Federal Reserve Bank’’

replaces ‘‘Federal Reserve Bank of the 

district’’ in current Part 203. 


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Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 59179 

Investment Program 

The new term ‘‘investment program’’

is used to provide an all-inclusive name 

for the programs through which 

Treasury invests excess operating cash. 

Examples of the investment component 

are retention of tax deposits, direct 

investments, and term investments. 

Depositaries do not have to accept 

paper-based Federal Tax Deposit 

coupons (PATAX) to participate in the 

investment program. 

Investor Depositary 

The new term ‘‘investor depositary’’ is 

used to describe one of the two kinds of 

depositaries that are referred to as ‘‘note 

option’’ depositaries in the current 

regulation. An investor depositary is a 

depositary authorized to participate in 

the investment program. In the interim 

final regulation, the terms ‘‘investor 

depositary’’ and ‘‘retainer depositary’’

are specific terms that replace the less 

specific term ‘‘note option’’ in the 

current regulation. 

Paper Tax System (PATAX) 

The new term ‘‘PATAX’’ replaces the 

term ‘‘Federal Tax Deposit System’’ in 

current Part 203, to better reflect the 

activity performed by the system. 

Reserve Account 

The new term ‘‘Reserve account’’

replaces ‘‘Federal Reserve account’’ in 

current Part 203. The definition 

incorporates the concept that a financial 

institution’s reserve account may in 

some cases be the reserve account of the 

financial institution’s correspondent 

bank. 

Retainer Depositary 

The new term ‘‘retainer depositary’’ is 

used to describe a certain kind of 

depositary known as a ‘‘note option’’

depositary in the current regulation. A 

retainer depositary is a depositary that 

retains a portion of the Federal tax 

deposits it accepts. In the interim final 

regulation, the terms ‘‘investor 

depositary’’ and ‘‘retainer depositary’’

replace the less specific term ‘‘note 

option’’ in the current regulation. 

Retainer depositaries do not have to 

accept paper-based Federal Tax Deposit 

coupons (PATAX). 

Same-Day Payment 

The reference to direct access 

transactions in the current definition of 

‘‘same-day payment’’ has been deleted 

in the amended definition because these 

transactions are no longer available. 

These transactions have been replaced 

by Fedwire non-value transactions. 

Special Direct Investment (SDI) 

This definition has been changed to 

delete the reference to note account and 

to add a reference to Borrower-InCustody (BIC) arrangements. 

SDI Account Balance 

The new term ‘‘SDI account balance’’

is being added because there is now a 

separate account for SDI funds. In the 

current regulation, SDI funds are 

allowed to be commingled with direct 

investment funds and retained tax 

deposits. 

Term Investment Option (TIO) Account 

Balance 

The new term ‘‘TIO account balance’’

is being added to replace ‘‘Term note 

balance.’’

Treasury Investment Program (TIP) 

The new term ‘‘TIP’’ is being added to 

describe the automated system within 

the TT&L program that receives tax 

collections, invests funds, and monitors 

collateral pledged to secure invested 

funds. 

TIP Main Account Balance 

The new term ‘‘TIP main account 

balance’’ is being added to distinguish 

retained tax deposits and direct 

investments funds from SDI funds. 

Treasury Support Center (TSC) 

The new term ‘‘TSC’’ is being added 

to refer to the centralized office located 

at an FRB that is responsible for 

monitoring collateral pledged and 

managing the TT&L program 

participation for designated 

depositaries. 

Treasury Tax & Loan (TT&L) Depositary 

The definition of ‘‘TT&L depositary’’

has been changed to reflect new 

terminology. 

TT&L Program 

The definition of ‘‘TT&L program’’

has been revised to add references to 

PATAX, TIP, and EFTPS. 

Section 203.3 TT&L Depositaries 

We have added a new § 203.3 to 

clarify the different kinds of TT&L 

depositaries and the circumstances in 

which a financial institution must be a 

TT&L depositary. A financial institution 

must be a TT&L depositary in order to 

participate in either PATAX or the 

investment program, but not in order to 

participate in EFTPS alone. There are 

three kinds of TT&L depositaries: 

• Collector depositaries—depositaries 

that accept paper tax payments and may 

accept electronic tax payments, but that 

do not retain any such deposits in a TIP 

main account or accept direct or special 

direct investments. A collector 

depositary may accept term 

investments. 

• Retainer depositaries—depositaries 

that accept electronic and/or paper tax 

payments and retain a portion of the tax 

deposits in a TIP main account balance 

but do not accept direct or special direct 

investments. A retainer depositary may 

accept term investments. 

• Investor depositaries—depositaries 

that participate in the investment 

program by accepting direct 

investments, special direct investments, 

and dynamic investments. Investor 

depositaries may accept electronic and/ 

or paper tax payments and may retain 

a portion of those tax deposits. An 

investor depositary may also accept 

term investments. 

Section 203.4 Financial Institution 

Eligibility for Designation as a TT&L 

Depositary 

Amended § 203.4 sets forth the 

criteria a financial institution must meet 

to be eligible for designation as a TT&L 

depositary. The criteria in the amended 

rule are unchanged from those in the 

current § 203.3. 

Section 203.5 Designation of Financial 

Institutions as TT&L Depositaries 

Amended § 203.5 sets forth the 

substance of current § 203.4 with certain 

changes. Subsection (a) is unchanged 

except that language contained in 

current § 203.6 which provides that 

Treasury will not compensate 

depositaries for servicing and 

maintaining a TT&L account, or for 

processing tax payments through EFTPS 

or P AT AX, has been relocated to 

§ 203.5(a). 

Amended § 203.5(b) simplifies the 

current regulation by deleting references 

to specific forms, which are set forth in 

procedural instructions. 

Section 203.6 Obligations of TT&L 

Depositaries 

We have not made any substantive 

change to the obligations of TT&L 

depositaries described in current 

§ 203.5. 

Section 203.7 Termination of 

Agreement or Change of Election or 

Option 

We have not revised § 203.7 except for 

minor wording changes. 

Section 203.8 Application of Part and 

Procedural Instructions 

Amended § 203.8 is unchanged from 

current § 203.8 except that terminology 

has been updated. 


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59180 Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 

Section 203.9 Scope of the Subpart 

We have not made any substantive 

changes to § 203.9. 

Section 203.10 Electronic Payment 

Methods 

Amended § 203.10 sets forth the 

substance of current § 203.11. The 

second sentence of current § 203.11(a) is 

deleted because it restates the point 

made in amended § 203.9 that a 

financial institution need not be a TT&L 

depositary in order to process payments 

through EFTPS. 

Section 203.11 Same-Day Reporting 

and Payment Mechanisms 

Details regarding some of the 

requirements of Fedwire value 

transactions which are set forth in 

current § 203.13(b) have been 

eliminated as unnecessary. References 

to direct access transactions set forth in 

current § 203.713(d) have been deleted 

because these transactions are no longer 

available. 

Section 203.12 EFTPS Interest 

Assessments 

We have not made any substantive 

changes to the application or calculation 

of EFTPS interest assessments. 

Section 203.13 Appeal and Dispute 

Resolution 

We have not made any substantive 

changes to the appeal and dispute 

resolution procedures. 

Section 203.14 Scope of the Subpart 

We have not changed the scope of 

subpart C. 

Section 203.15 Tax Deposits Using 

FTD Coupons 

Amended § 203.15 sets forth the 

provisions of current § 203.18, with a 

number of changes. We have deleted 

entirely the substance of § 203.18(b), 

which provides that FRBs must accept 

FTDs directly from taxpayers and sets 

forth procedures governing 13 these 

transactions. FRBs no longer accept 

FTDs directly from the taxpayer. We 

also have deleted from this section 

many procedural steps that are 

adequately addressed in procedural 

instructions. 

Section 203.16 Retainer and Investor 

Depositaries 

Amended § 203.16 sets forth the 

substance of current § 203.19. The order 

of subsections (a) and (b) has been 

reversed. 

Section 203.17 Collector Depositaries 

Amended § 203.17 sets forth the 

substance of current § 203.20, except 

that the order of subsections (a) and (b) 

has been reversed. 

Section 203.18 Scope of the Subpart 

We have not revised the scope of 

subpart D. 

Section 203.19 Sources of Balances 

Amended § 203.19 sets forth the 

substance of current § 203.22 with the 

addition of dynamic investments and 

term investments. 

Section 203.20 Investment Account 

Requirements 

We have not changed the provisions 

governing TIP main account balances, 

SDI account balances, and no account 

balances. The section title was changed 

to reflect the inclusion of the no account 

balances. 

Section 203.21 Collateral Security 

Requirements 

The classes of securities or 

instruments that are acceptable 

collateral to secure deposits and 

investments, and their respective 

valuations, as described in 31 CFR part 

380, can be viewed at Treasury’s Bureau 

of the Public Debt’s Web site at 14 http: 

//www.treasurydirect.gov/instit/statreg/ 

collateral/ 

collateral_fiscalprograms.htm#ttl 

Amended § 203.21(c)(2) has been 

updated to reflect changes in the 

Uniform Commercial Code (which 

provides a private sector analogue for 

Treasury’s BIC arrangements), relative to 

perfecting security interests in BIC 

collateral. Section 203.21(e) has also 

been changed. Under current § 203.21(f), 

when a TT&L depositary pledges 

acceptable securities that are not 

negotiable without its endorsement or 

assignment, it may, in lieu of placing its 

unqualified endorsement on each 

security, provide an irrevocable power 

of attorney authorizing the FRB to 

assign the securities. Amended 

§ 203.21(e) states that by pledging 

acceptable securities which are not 

negotiable without the depositary’s 

endorsement or assignment, a TT&L 

depositary, in lieu of placing its 

unqualified endorsement on each 

security, automatically grants the FRB 

an irrevocable power of attorney to 

endorse, assign or transfer the securities. 

The purpose of this change is to relieve 

both TT&L depositaries and the FRB 

from the administrative burden 

associated with providing a power-ofattorney each time such securities are 

pledged. 

DERIVATION CHART FOR REVISED

PART 203 

Old section New section 

203.1 ....................................... 203.1 

203.2 ....................................... 203.2 

—— ......................................... 203.3 

203.3 ....................................... 203.4 

203.4 ....................................... 203.5 

203.5 ....................................... 203.6 

203.6 ....................................... 203.5 

203.7 ....................................... 203.7 

203.8 ....................................... 203.8 

203.9 ....................................... 203.9 

203.10 ..................................... Removed 

203.11 ..................................... 203.10 

203.12 ..................................... Removed 

203.13 ..................................... 203.11 

203.14 ..................................... 203.12 

203.15 ..................................... Removed 

203.16 ..................................... 203.13 

203.17 ..................................... 203.14 

203.18 ..................................... 203.15 

203.19 ..................................... 203.16 

203.20 ..................................... 203.17 

203.21 ..................................... 203.18 

203.22 ..................................... 203.19 

203.23 ..................................... 203.20 

203.24 ..................................... 203.21 

III. Regulatory Analyses 

Administrative Procedures Act 

The public is invited to submit 

comments on the interim rule which 

will be taken into account before this 

interim rule is confirmed as final. 

This interim final rule does not 

substantively change the TT&L program 

but rather describes operational changes 

that have already taken place, updates 

terminology, and removes duplicative or 

unnecessary provisions. The updates in 

this rule will avoid confusion about the 

operation of the program. Under 5 

U.S.C. 553(b), this rule is exempt from 

prior notice and comment rulemaking 

requirements on the grounds that the 

amendments are non-substantive and 

further delay in making these 

amendments is unnecessary and 

contrary to the public interest. For the 

same reasons, good cause exists to make 

the rule effective upon publication. 

Request for Comment on Plain Language 

Executive Order 12866 requires each 

agency in the Executive branch to write 

regulations that are simple and easy to 

understand. We invite comment on how 

to make this final rule clearer. For 

example, you may wish to discuss: (1) 

Whether we have organized the material 

to suit your needs; (2) whether the 

requirements of this final rule are clear; 

or (3) whether there is something else 

we could do to make this rule easier to 

understand. 


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Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 59181 

Regulatory Planning and Review 

The final rule does not meet the 

criteria for a ‘‘significant regulatory 

action’’ as defined in Executive Order 

12866. Therefore, the regulatory review 

procedures contained therein do not 

apply. 

Regulatory Flexibility Act Analysis 

Because no notice of proposed 

rulemaking is required, the provisions 

of the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) do not apply. 

Paperwork Reduction Act 

This rule contains no new collections 

of information. Therefore, the 

Paperwork Reduction Act does not 

apply. 

List of Subjects in 31 CFR Part 203 

Banks, Banking, Electronic funds 

transfers, Taxes. 

Words of Issuance 

■ For the reasons set out in the 

preamble, the Financial Management 

Service amends 31 CFR chapter II by 

revising part 203 to read as follows: 

PART 203—PAYMENT OF FEDERAL 

TAXES AND THE TREASURY TAX AND 

LOAN PROGRAM 

Subpart A—General Information 

Sec. 

203.1 Scope. 

203.2 Definitions. 

203.3 TT&L depositaries. 

203.4 Financial institution eligibility for 

designation as a TT&L depositary. 

203.5 Designation of financial institutions 

as TT&L depositaries. 

203.6 Obligations of TT&L depositaries. 

203.7 Termination of agreement or change 

of election or option. 

203.8 Application of part and procedural 

instructions. 

Subpart B—Electronic Federal Tax 

Payments 

203.9 Scope of the subpart. 

203.10 Electronic payment methods. 

203.11 Same-day reporting and payment 

mechanisms. 

203.12 EFTPS interest assessments. 

203.13 Appeal and dispute resolution. 

Subpart C—PATAX 

203.14 Scope of the subpart. 

203.15 Tax deposits using FTD coupons. 

203.16 Retainer and investor depositaries. 

203.17 Collector depositaries. 

Subpart D—Investment Program and 

Collateral Security Requirements for TT&L 

Depositaries 

203.18 Scope of the subpart. 

203.19 Sources of balances. 

203.20 Investment account requirements. 

203.21 Collateral security requirements. 

Authority: 12 U.S.C. 90,265–266, 332, 391, 

1452(d), 1464(k), 1767, 1789a, 2013, 2122, 

and 3102; 26 U.S.C. 6302; 31 U.S.C. 321, 323, 

and 3301–3304. 

Subpart A—General Information 

§ 203.1 Scope. 

The regulations in this part govern the 

processing by financial institutions of 

electronic and paper-based deposits and 

payments of Federal taxes; the operation 

of the Treasury Tax and Loan (TT&L) 

program; the designation of TT&L 

depositaries; and the operation of the 

investment program. A financial 

institution may participate in the TT&L 

program by participating in the 

investment program or by accepting 

Federal tax payments, or both. A 

financial institution that accepts Federal 

tax payments may do so through the 

paper tax system (PATAX), or Electronic 

Federal Tax Payment System (EFTPS), 

or both. However, a financial institution 

is not designated as a TT&L depositary 

if it only processes EFTPS payments. 

§ 203.2 Definitions. 

Advice of credit (AOC) means the 

paper or electronic form depositaries 

use to summarize and report Federal 

Tax Deposit (FTD) coupon deposits to 

the Internal Revenue Service (IRS) and 

the Federal Reserve Bank (FRB). 

Automated Clearing House (ACH) 

credit entry means a credit transaction 

originated by a financial institution, at 

the direction of the taxpayer, in 

accordance with applicable ACH 

formats and applicable laws, 

regulations, and procedural 

instructions. 

ACH debit entry means a debit 

transaction originated by the Treasury 

Financial Agent (TFA), at the direction 

of the taxpayer, in accordance with 

applicable ACH formats and applicable 

laws, regulations, and instructions. 

Balance limit means the highest 

amount a depositary has stated it will 

accept in its Treasury Investment 

Program (TIP) main account. 

Borrower-In-Custody (BIC) collateral 

means an arrangement by which a 

financial institution pledging collateral 

to secure special direct investments and 

certain term investments is permitted to 

retain possession of that collateral, 

subject to terms and conditions agreed 

upon between the FRB and the financial 

institution. 

Business day means any day on 

which a financial institution’s FRB is 

open. 

Capacity means a TT&L depositary’s 

ability to accept additional investments 

in its TIP main account balance and/or 

its Special Direct Investment (SDI) 

account balance. With respect to a TT&L 

depositary’s TIP main account balance, 

capacity means the balance limit or 

current collateral value, whichever is 

lower, minus the total of: the 

depositary’s current TIP main account 

balance and any pending investments, 

plus any pending withdrawals. With 

respect to an SDI account balance, 

capacity means the dollar amount of 

collateral that the depositary has 

pledged for SDIs under a BIC 

arrangement minus the total of: the 

depositary’s current SDI account 

balance and any pending investments, 

plus any pending withdrawals. 

Collector depositary means a TT&L 

depositary that accepts paper tax 

payments from business customers and 

that may also process electronic tax 

payments from customers, but that does 

not retain any such deposits as 

investments or accept dynamic, direct, 

or special direct investments. A 

collector depositary may accept term 

investments. 

Direct investment means the 

Department of the Treasury’s 

(Treasury’s) placement of funds with a 

TT&L depositary, which results in an 

increase to the depositary’s TIP main 

account balance and a credit to its 

reserve account. 

Dynamic investment means 

Treasury’s placement of funds with a 

TT&L depositary throughout the day, 

which results in an increase to the 

depositary’s TIP main account balance 

and a credit to its reserve account. 

Electronic Federal Tax Payment 

System (EFTPS) means the system 

through which taxpayers remit Federal 

tax payments electronically. 

Federal Reserve Bank (FRB) means 

the FRB of the district where the 

financial institution is located, or such 

other FRB that may be designated in an 

FRB operating circular, or such other 

FRB that may be designated by the 

Treasury. A financial institution is 

deemed located in the same district it 

would be deemed located for purposes 

of Regulation D (12 CFR 204.3(b)(2)), 

even if the financial institution is not 

otherwise subject to Regulation D. 

Federal Tax Deposit (FTD) means a 

Federal tax deposit made using an FTD 

coupon. 

FTD coupon means a paper form 

supplied to a taxpayer by Treasury to 

accompany deposits of Federal taxes 

made through PATAX. 

Federal taxes means those Federal 

taxes or other payments specified by the 

Secretary of the Treasury as eligible for 

payment through the procedures 

described in this part. 

Fedwire1 means the funds transfer 

system owned and operated by the 

FRBs. 


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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. 

Fedwire value transfer means a 

Federal tax payment made by a financial 

institution using a Fedwire type 1000 

message. 

Financial institution means any bank, 

savings bank, savings association, credit 

union, or similar institution. 

Fiscal agent means the FRB acting as 

agent for Treasury. 

Investment program is the allinclusive name given to the programs by 

which Treasury invests excess operating 

cash. 

Investor depositary means a TT&L 

depositary that is authorized to 

participate in the investment program 

by accepting funds from Treasury via 

direct investments, special direct 

investments, dynamic investments, or 

term investments. In addition, an 

investor depositary may accept 

electronic or paper Federal tax 

payments from its business customers 

and retain a portion of those tax 

deposits, depending on the capacity of 

its TIP main account balance. 

Paper Tax System (PATAX) means 

the paper-based system through which 

taxpayers remit Federal tax payments by 

presenting an FTD coupon and payment 

to a TT&L depositary. 

Procedural instructions means the 

procedures contained in the Treasury 

Financial Manual, Volume IV (IV TFM), 

other Treasury instructions issued by 

Treasury or through Treasury’s 

Financial Agents and FRB operating 

circulars, and agreements issued 

consistent with this part. 

Recognized insurance coverage means 

the insurance provided by the Federal 

Deposit Insurance Corporation, the 

National Credit Union Administration, 

and insurance organizations specifically 

qualified by the Secretary. 

Reserve account means an account at 

an FRB with reserve or clearing balances 

held by a financial institution or its 

designated correspondent financial 

institution, if applicable. 

Retainer depositary means a TT&L 

depositary that accepts electronic and/ 

or paper Federal tax payments from its 

business customers and retains a 

portion of the Federal tax deposits in its 

TIP main account balance, depending 

on its balance limit, account balance, 

and collateral value. A retainer 

depositary may also accept term 

investments. 

Same-day payment means a payment 

made by a Fedwire non-value 

transaction or a Fedwire value 

transaction. 

Secretary means the Secretary of the 

Treasury, or the Secretary’s delegate. 

Special Direct Investment (SDI) means 

the placement by Treasury of funds with 

an investor depositary secured by 

collateral pledged under a BIC 

arrangement. 

SDI account balance means an openended, interest-bearing note maintained 

on the books of the Treasury Support 

Center representing the amount of SDIs 

held by an investor depositary and 

secured by collateral pledged under a 

BIC arrangement. 

Tax due date means the day on which 

a Federal tax payment is due to 

Treasury, as determined by statute and 

IRS regulations. 

Term Investments means Treasury’s 

excess operating funds that have been 

offered for a predetermined period of 

time and accepted by depositaries 

participating in the Term Investment 

Option. 

Term Investment Option (TIO) means 

the program available to depositaries 

that offers the ability to borrow excess 

Treasury operating funds for a 

predetermined period of time. 

TIO account balance means an 

interest-bearing note maintained on the 

books of the Treasury Support Center 

for a predetermined period of time. 

Treasury Financial Agent (TFA) 

means a financial institution designated 

as an agent of Treasury for processing 

EFTPS enrollments, consolidating 

EFTPS tax payment information, and 

originating ACH debit entries on behalf 

of Treasury as authorized by the 

taxpayer. 

Treasury General Account (TGA) 

means an account maintained in the 

name of the United States Treasury at an 

FRB. 

Treasury Investment Program (TIP) 

means the automated system under the 

TT&L program that receives tax 

collections, invests funds, and monitors 

collateral pledged to secure public 

money. 

TIP main account balance means an 

open-ended interest-bearing note 

maintained on the books of the Treasury 

Support Center (TSC) representing a 

retainer or investor depositary’s current 

net amount of (i) Federal tax deposits 

retained by the depositary and/or (ii) 

Treasury investments made under the 

Direct investment program. 

Treasury Support Center (TSC) means 

the office at the FRB that, as Treasury’s 

Fiscal agent, monitors collateral pledged 

to secure Treasury funds, manages 

TT&L program participation for 

depositaries, and/or carries on its books 

depositaries’ TIP main account 

balances, SDI account balances, and/or 

Term Investment Option (TIO) account 

balances. 

Treasury Tax and Loan (TT&L) 

account means a record of transactions 

on the books of a TT&L depositary 

reflecting paper tax deposits received by 

the depositary. 

TT&L depositary or depositary means 

a financial institution designated as a 

depositary by Treasury or the FRB of St. 

Louis acting as Treasury’s Fiscal agent, 

for the purpose of participating in the 

investment program and/or PATAX. 

There are three kinds of TT&L 

depositaries: investor depositaries, 

retainer depositaries, and collector 

depositaries. 

TT&L program means the program for 

collecting Federal taxes and investing 

the Government’s excess operating 

funds. 

TT&L rate of interest means the 

interest charged on the TIP main 

account balance and the SDI account 

balance. The TT&L rate of interest is the 

rate prescribed by the Secretary taking 

into consideration prevailing market 

interest rates. The rate and any rate 

changes will be announced through a 

TT&L Special Notice to Depositaries and 

will be published in the Federal 

Register and on a Web site maintained 

by Treasury’s Financial Management 

Service at http://www.fms.treas.gov. 

§ 203.3 TT&L depositaries. 

A financial institution that 

participates in PATAX and/or the 

investment program must be a TT&L 

depositary. There are three kinds of 

TT&L depositaries. A collector 

depositary is a TT&L depositary that 

accepts paper Federal tax payments and 

also may accept electronic Federal tax 

payments, but does not accept direct 

investments or SDIs. A retainer 

depositary is a TT&L depositary that 

accepts electronic and/or paper Federal 

tax payments and retains a portion ofthe 

tax deposits in its TIP main account 

balance. An investor depositary is a 

TT&L depositary that accepts direct 

investments, SDIs, or dynamic 

investments and may accept electronic 

and/or paper Federal tax payments and 

retain a portion of those tax deposits. 

Collector, retainer, and investor 

depositaries may accept term 

investments. Retainer and investor 

depositaries do not have to participate 

in PATAX. 

§ 203.4 Financial institution eligibility for 

designation as a TT&L depositary. 

(a) To be designated as a TT&L 

depositary, a financial institution must 

be insured as a national banking 


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association, state bank, savings bank, 

savings association, 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 must 

possess the authority to pledge 

collateral to secure TT&L account 

balances, a TIP main account balance, 

an SDI account balance, or a no account 

balance as applicable. 

(c) In order to be designated as a 

TT&L depositary for the purposes of 

processing Federal tax deposits through 

PATAX, a financial institution must 

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, investor 

depositaries and retainer depositaries 

must possess either general or specific 

authority permitting the maintenance of 

a TIP main account 27 balance or an SDI 

account balance. Investor, retainer, and 

collector depositaries that accept term 

investments must possess either general 

or specific authority permitting the 

maintenance of a TIO account balance. 

In the case of investor and retainer 

depositaries maintaining a TIP main 

account balance or an SDI account 

balance, the authority must perm it the 

maintenance of a TIP main account 

balance or an SDI account balance 

which is payable on demand without 

previous notice of intended withdrawal. 

§ 203.5 Designation of financial 

institutions as TT&L depositaries. 

(a) Parties to the agreement. To be 

designated as a TT&L depositary, a 

financial institution must enter into a 

depositary agreement with Treasury or 

Treasury’s Fiscal agent. By entering into 

this agreement, the financial institution 

agrees to be bound by this part, and 

procedural instructions issued pursuant 

to this part. Treasury will not 

compensate depositaries for servicing 

and maintaining a TT&L account, or for 

processing tax payments through EFTPS 

or PATAX, unless otherwise provided 

for in procedural instructions. 

(b) Application procedures. (1) An 

eligible financial institution seeking 

designation as a TT&L depositary must 

file the forms specified in the 

procedural instructions with the TSC. A 

TT&L depositary must elect to be one or 

more of the following: 

(i) A collector depositary; 

(ii) a retainer depositary; 

(iii) an investor depositary. 

(2) A financial institution is not 

authorized to maintain a TT&L account, 

TIP main account balance, SDI account 

balance, or TIO account balance until 

the TSC designates it as a TT&L 

depository. 

§ 203.6 Obligations of TT&L depositaries. 

A TT&L depositary must: 

(a) Administer a TIP main account 

balance, SDI account balance, or TIO 

account balance, as applicable, if 

participating in the investment program. 

(b) Administer a TT&L account, if 

participating in PATAX. 

(c) Comply with the requirements of 

Section 202 of Executive Order 11246, 

entitled ‘‘Equal Employment 

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. 

(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. 

§ 203.7 Termination of agreement or 

change of election or option. 

(a) Termination by Treasury. The 

Secretary may terminate the agreement 

of a TT&L depositary at any time upon 

notice to that effect to that depositary, 

effective on the date set forth in the 

notice. 

(b) Termination or change of election 

or option by the depositary. A TT&L 

depositary may terminate its depositary 

agreement, or change its option or 

election, consistent with this part and 

the procedural instructions, by prior 

written notice to the TSC. 

§ 203.8 Application of part and procedural 

instructions. 

The terms of this part and the 

procedural instructions issued pursuant 

to this part will be binding on financial 

institutions that process Federal tax 

payments or maintain a TT&L account, 

TIP main account balance, SDI account 

balance, or a TIO account 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 

§ 203.9 Scope of the subpart. 

This subpart prescribes the rules that 

financial institutions must follow when 

they process electronic Federal tax 

payment transactions. A financial 

institution is not required to be 

designated as a TT&L depositary in 

order to process electronic Federal tax 

payments. In addition, a financial 

institution does not become a TT&L 

depositary by processing electronic 

Federal tax payments under this subpart 

and may not represent itself as a TT&L 

depositary because it does so. 

§ 203.10 Electronic payment methods. 

(a) General. Electronic payment 

methods for Federal tax payments 

available under this subpart include 

ACH debit entries, ACH credit entries, 

and same-day payments. 

(b) Conditions to making an electronic 

payment. This part does not affect the 

authority of financial institutions to 

enter into contracts with their customers 

regarding the terms and conditions for 

processing payments, as long as the 

terms and conditions of those contracts 

are not inconsistent with this part and 

with any laws that apply to the 

particular transactions. 

(c) Payment of interest for time value 

of funds held. Treasury will not pay 

interest on any payment that a financial 

institution erroneously originates and 

that subsequently is refunded. 

§ 203.11 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 by the deadline established by 

Treasury in the procedural instructions. 

(b) Fedwire non-value transaction. 

By initiating a Fedwire non-value 

transaction, a financial institution 

authorizes the TSC to debit its reserve 

account for the amount of the Federal 

tax payment specified in the 

transaction. 

(1) For an investor or retainer 

depositary using a Fedwire non-value 

transaction, the TSC will credit the 

Federal tax payment amount, up to the 

depositary’s available TIP main account 

balance capacity, to the depositary’s TIP 

main account balance on the day of the 


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transaction. Throughout the course of 

the day, the TSC will debit from the 

depositary’s reserve account, and credit 

to the TGA, any portion of a tax 

payment amount that would exceed the 

institution’s available TIP main account 

balance capacity. 

(2) For a collector depositary or a nonTT&L depositary financial institution 

using a Fedwire non-value transaction, 

the TSC will debit the financial 

institution’s reserve account for the 

Federal tax payment amount and credit 

that amount to the TGA on the day of 

the transaction. 

(c) Cancellations and reversals. In 

addition to cancellations due to 

insufficient funds in the financial 

institution’s 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 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 payment day deadline established 

by Treasury in the procedural 

instructions. 

(d) Other than as stated in paragraph 

(c) of this section, Treasury is not 

obligated to reverse all or any part of a 

payment. 

§ 203.12 EFTPS 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 Federal tax payment 

instructions to the financial institution 

was timely and that the taxpayer 

satisfied the conditions imposed by the 

financial institution pursuant to 

§ 203.10(b). Treasury also may assess 

interest where a financial institution 

fails to respond to an ACH 

prenotification entry on an ACH debit as 

required under part 210 of this title, or 

fails to originate an ACH prenotification 

or zero dollar entry on an ACH credit at 

a taxpayer’s request, which then results 

in a late payment. 

(b) Calculation of interest assessment. 

Any interest assessed under this section 

will be at the TT&L rate of interest. 

Treasury will assess the interest from 

the day the taxpayer specified that its 

payment should settle to the Treasury 

until the day Treasury receives the 

payment, 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 

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 

electronically under this subpart is 

deemed to authorize the TSC to debit its 

reserve account for any interest assessed 

under this section. Upon the direction 

of Treasury, the TSC will debit the 

financial institution’s reserve account 

for the amount of the assessed interest. 

(d) Circumstances not resulting in the 

assessment of interest. 

(1) Treasury will not assess interest on 

a taxpayer’s 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 § 203.10(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 § 203.13, 

that the taxpayer has not satisfied the 

conditions and that the financial 

institution has not caused or 

contributed to the delay. 

(2) Treasury will not assess interest on 

a financial institution if a taxpayer fails 

to meet a tax due date because the FRB 

or the TFA caused a delay and the 

financial institution did not contribute 

to the delay. The burden is on the 

financial institution to establish, 

pursuant to the procedures in § 203.13, 

that it did not cause or contribute to the 

delay. 

203.13 Appeal and dispute resolution. 

(a) Contest. A financial institution 

may contest any interest assessed under 

§ 203.12 or any late fees assessed under 

§ 203.17. To do so, the financial 

institution must submit information 

supporting its position and the relief 

sought. The information must be 

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 TSC 

debits the Federal reserve account of the 

financial institution under § 203.12 or 

§ 203.17. The Treasury officer or Fiscal 

agent will make a decision to: Uphold, 

reverse, or modify the assessment, or 

mandate other action. 

(b) Appeal. The financial institution 

may appeal the decision referenced in 

subsection (a) to Treasury as set forth in 

the procedural instructions. No further 

administrative review of Treasury’s 

decision is available under this part. 

(c) Recoveries. In the event of an over 

or under recovery of interest, principal, 

or late fees, Treasury will instruct the 

TSC to credit or debit the financial 

institution’s reserve account. 

Subpart C—PATAX 

§ 203.14 Scope of the subpart. 

This subpart applies to all TT&L 

depositaries that accept FTD coupons 

and governs the acceptance and 

processing of those coupons. 

§ 203.15 Tax deposits using FTD coupons. 

A TT&L depositary processing FTD 

coupons may choose to be designated as 

a retainer depositary, an investor 

depositary, or a collector depositary. A 

TT&L depositary that accepts FTD 

coupons through any of its offices that 

accept demand and/or savings deposits 

must: 

(a) Accept from a taxpayer that 

presents an FTD coupon: cash, a postal 

money order drawn to the order of the 

depositary, or a check or draft drawn on 

and to the order of the depositary, 

covering an amount to be deposited as 

Federal taxes. A TT&L depositary may 

accept, at its discretion, a check drawn 

on another financial institution, but it 

does so at its option and absorbs for its 

own account any float and other costs 

involved. 

(b) Place a stamp impression on the 

face of each FTD coupon in the space 

provided. The stamp must reflect the 

date on which the TT&L depositary 

received the tax deposit and the name 

and location of the depositary. The IRS 

will determine whether the tax payment 

is on time by referring to the date 

stamped on the FTD coupon. 

(c) Forward, each day, to the IRS 

Service Center serving the geographical 

area in which the TT&L depositary is 

located, the FTD coupons for all FTD 

deposits received that day and a copy of 

the AOC reflecting the total amount of 

all FTD coupons. 

(d) Establish an adequate record of all 

FTD deposits prior to transmitting them 

to 36 the IRS Service Center so that the 

TT&L depositary will be able to identify 

deposits in the event the FTD coupons 

are lost in shipment. To be adequate, the 

record must show, at a minimum for 

each deposit, the date of the deposit, the 


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taxpayer identification number, the 

amount of the deposit, the tax period 

ending date, the type of tax deposited, 

and the employer name. Alternatively, 

the TT&L depositary may retain a copy 

of each FTD coupon forwarded to the 

IRS Service Center. 

(e) On the business day following 

receipt of an FTD coupon, submit the 

AOC information electronically to the 

TSC. 

(f) Not accept compensation from 

taxpayers for accepting FTDs and 

handling them as required by this 

section. 

§ 203.16 Retainer and investor 

depositaries. 

(a) Credit to TIP main account 

balance. On the business day that the 

TSC receives an AOC from a retainer or 

investor depositary, the TSC will credit 

the depositary’s TIP main account 

balance for the amount reported on the 

AOC unless there isn’t sufficient 

capacity. In that case, any amount in 

excess of the capacity will be debited to 

the reserve account and credited to the 

TGA. 

(b) Late delivery of AOC. If an AOC 

does not arrive at the TSC before the 

designated cutoff time for receipt, the 

TSC will credit the amount of funds to 

the depositary’s TIP main account 

balance as of the date of receipt of the 

AOC. However, the date on which funds 

will begin to earn interest for Treasury 

is the next business day after the AOC 

date. 

§ 203.17 Collector depositaries. 

(a) Debit to reserve account. On the 

business day that the TSC receives an 

AOC from a collector depositary, the 

TSC will debit the depositary’s reserve 

account for the amount reported on the 

AOC and credit that amount to 

Treasury’s account. 

(b) Late delivery of AOC. If an AOC 

does not arrive at the TSC before the 

designated cutoff time on the first 

business day after the AOC date, an FTD 

late fee in the form of interest at the 

TT&L rate of interest will.be assessed for 

each day’s delay in receipt of the AOC. 

Upon the direction of Treasury, the TSC 

will debit the depositary’s reserve 

account for the amount of the late fee. 

Subpart D—Investment Program and 

Collateral Security Requirements for 

TT&L Depositaries 

§ 203.18 Scope of the subpart. 

This subpart governs the operation of 

the investment program, including the 

rules that TT&L depositaries must 

follow in crediting and debiting TIP 

main account balances, SDI account 

balances, and TIO account balances, and 

pledging collateral security. 

§ 203.19 Sources of balances. 

A financial institution must be a 

collector depositary that accepts term 

investments, an investor depositary, or 

a retainer depositary to participate in 

the investment program. 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 depositary’s TIP main account 

balance pursuant to subpart C of this 

part; 

(b) EFTPS ACH credit and debit 

transactions, Fedwire non-value 

transactions, and Fedwire value 

transfers pursuant to subpart B of this 

part; 

(c) Direct investments, SDIs, dynamic 

investments, and term investments 

pursuant to subpart D of this part; and 

(d) Other excess Treasury operating 

funds. 

§ 203.20 Investment account 

requirements. 

(a) Additions. Treasury will invest 

funds in obligations of collector 

depositaries that accept term 

investments, investor depositaries, or 

retainer depositaries. Such obligations 

will be in the form of open-ended 

interest-bearing notes, or in the case of 

term investments, interest-bearing notes 

maintained for a predetermined period 

of time, and additions and reductions 

will be reflected on the books of the 

TSC. 

(1) PATAX. The TSC will credit the 

TIP main account balance as stated in 

§ 203.16(a) for an investor or retainer 

depositary processing tax deposits 

through PATAX. 

(2) EFTPS. 

(i) ACH debit and ACH credit. The 

TSC will credit a depositary’s TIP main 

account balance, and credit the 

depositary’s reserve account if capacity 

exists, for the amount of EFTPS ACH 

debit and credit entries on the day such 

entries settle. 

(ii) Fedwire reg; value and nonvalue transactions. The TSC will credit 

a depositary’s TIP main account balance 

if capacity exists, throughout the day on 

the day of settlement, for the amount of 

Fedwire reg; value and non-value 

transactions. In the case of Fedwire 

value transactions, the depositary’s 

reserve account will also be credited. 

(b) Additional offerings. Other funds 

from Treasury may be offered from time 

to time to depositaries participating in 

the investment program through direct 

investments, SDIs, term investments, or 

other investment programs. 

(c) Withdrawals. The amount of a TIP 

main account balance or SDI account 

balance is payable on demand without 

prior notice. The TSC will make calls 

for payment at the direction of the 

Secretary. On behalf of Treasury, the 

TSC will debit the depositary’s reserve 

account on the day specified in the call 

for payment. 

(d) Interest. The TIP main account 

balance and the SDI account balance 

bear interest at the TT&L rate of interest. 

Such interest is payable by a charge to 

the depositary’s reserve account in the 

manner prescribed in the procedural 

instructions. 

(e) Balance limits. 

(1) Retainer and investor depositaries. 

A retainer or investor depositary must 

establish an initial balance limit for its 

TIP main account balance by providing 

notice to that effect in writing to the 

TSC. The balance limit is the amount of 

funds for which a retainer or investor 

depositary is willing to provide 

collateral in accordance with 

§ 203.21(c)(1). The depositary must 

follow the procedural instructions 

before reducing the established balance 

limit unless the reduction results from 

a collateral revaluation as determined 

by the FRB. That portion of any PATAX 

or EFTPS tax payment which, when 

posted at the FRB, would cause the TIP 

main account balance to exceed the 

balance limit specified by the 

depositary, will be withdrawn by the 

FRB that day. 

(2) Direct investments. An investor 

depositary that participates in direct 

investments must set a balance limit for 

direct investment purposes which is 

higher than the peak balance normally 

generated by the depositary’s PATAX 

and EFTPS tax payment inflow. The 

depositary must follow the procedural 

instructions before reducing the 

established balance limit. 

(3) SDIs. SDIs are credited to the SDI 

account balance and are not considered 

in setting the amount of the TIP main 

account balance limit or in determining 

the amounts to be withdrawn where a 

depositary exceeds its TIP main account 

balance limit. 

(f) TIO. Treasury may, from time to 

time, invest excess operating funds in 

obligations of depositaries awarded 

funds under TIO. Such obligations will 

be in the form of interest-bearing notes 

payable upon a predetermined period of 

time not to exceed 90 days. Such notes 

will bear interest at a rate prescribed by 

the Secretary by auction or otherwise 

taking into consideration prevailing 

market interest rates. 


sroberts on PROD1PC70 with RULES
59186 Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 

§ 203.21 Collateral security requirements. 

Financial institutions that process 

EFTPS tax payments, but that are not 

TT&L depositaries, have no collateral 

requirements under this part. Financial 

institutions that are TT&L depositaries 

have collateral security requirements, as 

follows: 

(a) Investor and retainer depositaries. 

(1) PATAX and EFTPS tax payments. 

Investor and retainer depositaries must 

pledge collateral security in accordance 

with the requirements of paragraphs 

(c)(l), (d), and (e) of this section in an 

amount that is sufficient to cover the 

TIP main account balance and the 

balance in the TT&L account that 

exceeds the recognized insurance 

coverage. 

(2) Direct investments. An investor 

depositary is required to pledge 

collateral in accordance with the 

requirements of paragraphs (c), (d), and 

(e) of this section no later than the day 

before a direct investment is placed. 

However, each investor depositary 

participating in same-day direct 

investments must pledge, prior to the 

announcement, collateral up to its 

balance limit to obtain the depositary’s 

maximum portion of the same-day 

direct investment. 

(3) SDIs. The day before SDIs are 

credited to an investor depositary’s SDI 

account balance, the depositary must 

pledge collateral security, in accordance 

with the requirements of paragraphs 

(c)(2), (d), and (e) of this section, to 

cover the total of the SDIs to be 

received. 

(4) TIO. Each depositary participating 

in the term investment program must 

pledge, prior to the time the term 

investment is placed, collateral in 

accordance with paragraphs (c)(1), (c)(2) 

for certain term investments as 

determined by Treasury, (d), and (e) of 

this section sufficient to cover the total 

TIO account balance. 

(b) Collector depositaries. Prior to 

crediting FTD deposits to the TT&L 

account, a collector depositary must 

pledge collateral security, in accordance 

with the requirements of paragraphs 

(c)(1), (d), and (e) of this section, in an 

amount which is sufficient to cover the 

balance in the TT&L account that 

exceeds the recognized insurance 

coverage. 

(c) Deposits of securities. (1) Collateral 

security required under paragraphs 

(a)(1), (2), (4) (except as provided in 

subparagraph (2) below), and (b) of this 

section must be deposited with the 

depositary’s FRB, or with a custodian or 

custodians within the United States 

designated by the TSC or FRB, under 

terms and conditions prescribed by the 

TSC or FRB. 

(2) A depositary pledging collateral 

security as required under paragraph 

(a)(3) or paragraph (a)(4) (when 

permitted) of this section must pledge 

the collateral under a written security 

agreement on a form provided by the 

FRB. The collateral security pledged to 

satisfy the requirements of paragraphs 

(a)(3) and (a)( 4) (when permitted) of 

this section may remain in the pledging 

depositary’s possession provided that 

the pledging is evidenced by advices of 

custody incorporated by reference in the 

written security agreement. The 

depositary must provide the written 

security agreement and all advices of 

custody covering collateral security 

pledged under that agreement to the 

FRB. Collateral security pledged under 

the agreement may not be substituted 

for or released without the advance 

approval of the FRB, and any collateral 

security subject to the security 

agreement will remain so subject until 

an approved substitution is made. No 

substitution or release will be approved 

until an advice of custody containing 

the description required by the written 

security agreement is received by the 

FRB. 

(3) Treasury’s security interest in 

collateral security pledged by a 

depositary in accordance with 

paragraphs (c)(2) of this section to 

secure SDIs and certain term 

investments is perfected without 

Treasury taking possession of the 

collateral security by filing or, absent 

filing, for a period not to exceed 20 

calendar days from the day of the 

depositary’s receipt of the special direct 

or term investment. 

(d) Acceptable collateral. The types of 

securities that may be used as collateral, 

and how those securities are valued, are 

set forth in 31 CFR part 380. 

( e) Assignment of securities. By 

pledging acceptable securities which are 

not negotiable without the depositary’s 

endorsement or assignment, a TT&L 

depositary, in lieu of placing its 

unqualified endorsement on each 

security, appoints the FRB or its assigns 

as the depositary’s attorney-in-fact with 

full irrevocable power and authority to 

endorse, assign or transfer the securities, 

and represents and warrants that an 

appropriate resolution authorizing the 

granting of such irrevocable power of 

attorney has been executed and 

adopted. The powers of attorney so 

granted are coupled with an interest and 

are irrevocable, and full power of 

substitution is granted to the assignee or 

holder. 

(f) Effecting payments of principal 

and interest on securities or instruments 

pledged as collateral. (1) General. 

Treasury, without notice or demand, 

may sell or otherwise collect the 

proceeds of all or part of the collateral, 

including additions, substitutions, 

interest, and distribution of principal, 

and apply the proceeds to satisfy any 

claims of the United States against the 

depositary, if any of the following 

events occur: 

(i) The depositary fails to pay, when 

due, the whole or any part of the funds 

received by it for credit to the TT&L 

account and, if applicable, its TIP main 

account balance, SDI account balance, 

or TIO account balance; 

(ii) The depositary fails to pay when 

due amounts owed to the United States 

or the United States Treasury; 

(iii) The depositary otherwise violates 

or fails to perform any of the terms of 

this part or any of the procedural 

instructions entered into hereunder; or 

(iv) The depositary is closed for 

business by regulatory action or by 

proper corporate action, or a receiver, 

conservator, liquidator, or any other 

officer is appointed for the depositary. 

All principal and interest payments on 

any security pledged to protect the TIP 

main account balance, the SDI account 

balance, the TIO account balance or the 

TT&L account, as applicable, due as of 

the date of the insolvency or closure or 

thereafter becoming due, will be held 

separate and apart from any other assets 

and will constitute a part of the pledged 

security available to satisfy any claim of 

the United States. 

(2) Payment procedures. (i) Subject to 

the waiver in paragraph (f)(2)(iii) of this 

section, each depositary (including, 

with respect to such depositary, an 

assignee for the benefit of creditors, a 

trustee in bankruptcy, or a receiver in 

equity) will, as soon as possible, remit 

to the FRB, as Fiscal agent, each 

payment of principal and/or interest 

received by it with respect to collateral 

pledged pursuant to this section. The 

remittance will be made no later than 10 

days after receipt of such a payment. 

(ii) Subject to the waiver in paragraph 

(f)(2)(iii) of this section, each obligor on 

a security pledged by a depositary 

pursuant to this section, upon 

notification that Treasury is entitled to 

any payment associated with that 

pledged security, must make each 

payment of principal and/or interest 

due with respect to such security 

directly to the FRB, as Fiscal agent of 

the United States. 

(iii) The requirements of paragraphs 

(f)(2)(i) and (ii) of this section are hereby 

waived for only so long as a pledging 

depositary avoids both termination from 

the program under § 203.7 and also 

those circumstances identified in 

paragraph (f)(1) which may lead to the 

collection of the proceeds of collateral 


sroberts on PROD1PC70 with RULES
Federal Register / Vol. 72, No. 202 / Friday, October 19, 2007 / Rules and Regulations 59187 

1Letter to Mr. Secretary, 1973 WL 7905 (Comp. 

Gen.), B–177602 (1973). 

2See Appeal of Summit Contractors, 1986 WL 

19566 (AGBCA), Nos. 81–252–1, No. 83–312–1 (Jan. 

8, 1986), and Appeal of Jay Rucker, 1980 WL 2345 

(AGBCA) Nos. 79–211A, 79–211B (June 11, 1980). 

See also, Croman Corporation v. United States, 31 

Fed. Cl. 741, 746–47 (August 16, 1994). 

or the waiver is otherwise terminated by 

Treasury. 

Dated: October 11, 2007. 

Kenneth R. Papaj, 

Commissioner. 

[FR Doc. 07–5135 Filed 10–18–07; 8:45 am] 

BILLING CODE 4810–35–M 

DEPARTMENT OF AGRICULTURE 

Forest Service 

36 CFR Part 223 

RIN 0596–AB70 

Sale and Disposal of National Forest 

System Timber; Modification of Timber 

Sale Contracts in Extraordinary 

Conditions; Noncompetitive Sale of 

Timber 

AGENCY: Forest Service, USDA. 

ACTION: Final rule. 

SUMMARY: This final rule revises 

regulations at Title 36, Code of Federal 

Regulations, part 223, on 

noncompetitive disposal of timber and 

other forest products based on the 

Secretary of Agriculture’s determination 

that extraordinary conditions exist. A 

notice with request for comment on an 

interim final rule was published in the 

Federal Register on June 16, 2006. The 

Forest Service made appropriate 

changes to the rule in response to the 

public comments. 

DATE: This rule is effective November 

19, 2007. 

ADDRESSES: The public may inspect 

comments received at Office of the 

Director, Forest Management Staff, 

Forest Service, USDA, 201 14th Street, 

SW., Washington, DC 20250. Visitors 

are encouraged to call ahead to (202) 

205–1496 to facilitate entry to the 

building. 

FOR FURTHER INFORMATION CONTACT: 

Forest Management Staff personnel, 

Lathrop Smith (202) 205–0858, or 

Richard Fitzgerald (202) 205–1753. 

Individuals who use 

telecommunication devices for the deaf 

(TDD) may call the Federal Information 

Relay Service (FIRS) at 1–800–877–8339 

between 8 a.m. and 8 p.m., Eastern 

Standard Time, Monday through Friday. 

SUPPLEMENTARY INFORMATION: 

Background 

The National Forest Management Act 

(NFMA), codified in part at Title 16 

U.S.C. 472a(d), requires the Secretary of 

Agriculture to advertise all sales of 

forest products unless the appraised 

value of the sale is less than $10,000, or 

the Secretary determines that 

extraordinary conditions exist, as 

defined by regulation. The requirement 

to advertise sales unless extraordinary 

conditions exist applies to the 

substitution of timber outside a sale 

contract area. 

Prior to NFMA, the Government 

Accountability Office (formerly the 

General Accounting Office) held that 

substitution of timber outside the 

contract area for timber in the contract 

area violated the Agency’s authority to 

sell timber.1 Since the passage of 

NFMA, but in the absence of a 

regulation defining ‘‘extraordinary 

conditions,’’ the Agriculture Board of 

Contract Appeals has decided similarly 

in several cases.2

Before authorizing activities on 

National Forest System lands, the Forest 

Service must ensure compliance with 

applicable laws and regulations and 

with conditions on the ground at the 

time of the authorization. Even so, after 

entering into timber sale contracts, 

environmental changes may occur such 

as the listing of a new species on the 

endangered species list, or a 

catastrophic event may occur, such as a 

large wildfire, resulting in the need to 

modify the contracts. Also, court orders 

and decisions resulting from 

environmental litigation may require 

making changes to existing contracts 

even when those contracts are not 

specifically named in the litigation if 

they are similar to contracts that were 

named. When this occurs, it is essential 

for Forest Service officials to have 

flexibility to adjust management 

activities and contractual arrangements 

without incurring enormous financial 

liability associated with unilateral 

modifications or contract cancellations. 

At the time a sale is sold, there is no 

way to predict what future litigation or 

environmental changes may occur that 

will result in the sale contract needing 

to be changed. Each occurrence is a 

unique situation that constitutes an 

extraordinary condition. The Forest 

Service needs the ability to provide 

replacement timber or forest products 

for contracts that must be modified to 

prevent environmental degradation or 

resource damage, or as a result of 

administrative appeals, litigation, court 

orders, or catastrophic events that occur 

after contract award. Thus, the Forest 

Service promulgated an interim final 

rule, published June 16, 2006 (71 FR 

34823), on noncompetitive sale of 

timber and other forest products based 

on the Secretary of Agriculture’s 

determination that extraordinary 

conditions exist whenever a timber or 

forest products contract needs to be 

modified or canceled to address such 

unexpected changes. This benefits the 

Government by providing contracting 

officers with an opportunity to avert 

costly claims by providing replacement 

timber or forest products from outside 

the contract area when replacement 

timber is not available within the 

contract area. Replacement timber also 

helps maintain the industry 

infrastructure, which in turn will 

maintain forest management options. 

Response to Comments 

A 60-day comment period on the 

interim final rule was initiated on June 

16, 2006, (71 FR 34823). Only two 

respondents replied. One respondent is 

an individual and the other respondent 

is a timber industry association. 

Comment 1: The constraints that the 

value of replacement material may not 

exceed the value of the material it is 

replacing by more than 10% or $10,000, 

whichever is less, are too restrictive and 

will hamper implementation and use of 

this valuable tool. On small amounts of 

replacement timber, 10% may represent 

a very small amount of money, and on 

large volumes the $10,000 may 

represent a small percentage of value. If 

one or both of these numbers has some 

basis in law and cannot be removed, the 

only fair way to deal with this situation 

is to have these be upper and lower 

limits. 

Response 1: The limitations were 

intended to reduce potential impacts to 

other purchasers while making the 

purchaser of a sale that must be 

modified or terminated whole. 

Replacement timber from outside the 

sale area will most likely come from 

some other sale that would otherwise be 

offered competitively on the open 

market. Offering substantially more 

replacement timber than the amount or 

value being deleted by a unilateral 

termination goes beyond making a 

purchaser whole, circumvents fair and 

open competition and could have 

detrimental consequences to other 

purchasers, the public, and Forest 

Service program objectives. For the 

following reasons the Forest Service 

agrees that the 10% limit is unnecessary 

but disagrees that the $10,000 limit is 

overly restrictive. 

The National Forest Management Act 

(NFMA) requires advertising sales 

greater than $10,000 in appraised value 

unless the Secretary determines, as 


sroberts on PROD1PC70 with RULES