43730 Federal Register / Vol. 82, No. 180 / Tuesday, September 19, 2017 / Proposed Rules 

section 149(a), such as bonds that are 

tax-exempt under section 103. For 

purposes of determining whether an 

obligation is described in section 

4701(b)(1)(B), the rules of § 1.163–5(c) of 

this chapter apply. (4) Registered form. The term 

registered form has the same meaning as 

in § 1.163–5(b) of this chapter. (5) Issuer—(i) In general. Except as 

provided in paragraph (b)(5)(ii) of this 

section, the term issuer is the person 

whose interest deduction would be 

disallowed solely by reason of section 

163(f)(1). 

(ii) Sponsor treated as issuer. A passthrough certificate (as defined in 

§ 1.163–5(a)(3)(i)(B) of this chapter), a 

participation interest described in 

§ 1.163–5(a)(3)(ii) of this chapter, or a 

regular interest in a REMIC, as defined 

in sections 860D and 860G and the 

regulations thereunder, is considered to 

be issued solely by the recipient of the 

proceeds from the issuance of the 

certificate or interest (the sponsor). The 

sponsor is therefore liable for any excise 

tax under section 4701 that may be 

imposed with reference to the principal 

amount of the pass-through certificate, 

participation interest, or regular interest. 

* * * * * 

(e) Applicability date—(1) In general. 

* * * 

(2) Exception. Notwithstanding 

paragraph (e)(1) of this section, 

paragraphs (b)(3), (4), and (5) of this 

section apply to obligations issued after 

March 18, 2012. For the rules that apply 

to obligations issued on or before March 

18, 2012, see § 46.4701–1 as contained 

in 26 CFR part 46, revised as of the date 

of the most recent annual revision. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2017–19753 Filed 9–15–17; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

33 CFR 100 

United States Mint 

Exchange of Coin 

AGENCY: United States Mint, Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The United States Mint 

proposes to revise its regulations 

relating to the exchange of uncurrent, 

bent, partial, fused, and mixed coins. 

The proposed revisions include updates 

to redemption rates and procedures 

previously proposed in the Federal 

Register on July 16, 2014, as well as 

revisions that will enhance the integrity 

of the acceptance and processing of bent 

and partial United States coins. 

DATES: Send comments on or before 

November 3, 2017. 

ADDRESSES: The United States Mint 

invites comments on all aspects of this 

proposed revision. You may send 

comments, identified by docket number 

and/or RIN number, by any of the 

following methods: • Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for sending comments. • Mail: Submit all written comments 

to Mutilated Coin Redemption Program; 

Financial Directorate; United States 

Mint; 801 9th Street NW., Washington, 

DC 20220. • Hand Delivery/Courier: Same as 

mail address. 

Instructions: All submissions received 

must include the agency name and 

docket number or Regulatory 

Information Number (RIN) for this 

rulemaking. All comments received will 

be posted without change to 

regulations.gov, including any personal 

information provided. For additional 

information on the rulemaking process, 

see the ‘‘Public Participation’’ heading 

of the SUPPLEMENTARY INFORMATION

section of this document. 

FOR FURTHER INFORMATION CONTACT: 

Sheila Barnett, Legal Counsel, Office of 

the Chief Counsel, United States Mint, 

at (202) 354–7624 or sbarnett@

usmint.treas.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Treasury Regulations appearing 

at 31 CFR part 100, subpart C, are 

promulgated under 31 U.S.C. 5120, and 

relate to the exchange of uncurrent, 

bent, partial, fused, and mixed coins. 

The last amendment to 31 CFR part 100, 

subpart C, was on August 23, 1999. 

Since then, the United States Mint has 

identified portions of the regulations in 

need of revision to update redemption 

rates and procedures, and to enhance 

the integrity of the acceptance and 

processing of bent and partial United 

States coins. 

The first category of proposed 

revisions would update and improve the 

redemption process of bent and partial 

coins to enhance security and ensure 

the integrity of United States coinage. 

These revisions were not previously 

proposed. The revisions would establish 

procedures for certifying participants 

based on submission amounts and 

frequency, sampling submissions to 

authenticate material, conducting site 

visits for certain participants, and 

requiring information on how the 

submission came to be bent or partial. 

The revisions will also inform 

submitters of required banking 

information. Lastly, the revisions would 

provide the United States Mint 

discretion to cease processing 

submissions that appear to be part of an 

illegal scheme, or contain material that 

is not identifiable as bent or partial 

United States coinage. 

The second category of proposed 

revisions, previously proposed in 79 FR 

41468, July 16, 2014, relates to the 

redemption rates for uncurrent coins 

and bent and partial coins that have 

been withdrawn from circulation. For 

uncurrent coins, the revision would 

clarify the procedure for redemption by 

instructing the public to deposit the 

uncurrent coins with a financial 

institution that will accept them, or 

with a depository institution that has a 

direct relationship with a Federal 

Reserve Bank. The revision would make 

clear that a Federal Reserve Bank will 

redeem uncurrent coins based on the 

policies described in the Federal 

Reserve’s Operating Circular 2. 

For bent or partial coins, the proposed 

revision would update the redemption 

rates of certain coins to reflect the 

current values and compositions of 

coins being redeemed. For example, in 

the existing regulation, the redemption 

rate for one-cent coins is $1.4585 per 

pound; this redemption rate was 

derived from the weight of brass onecent coins (3.11 grams or 0.1097 ounces 

each), which the United States Mint has 

not minted and issued since 1982. In 

1983, the United States Mint began 

minting and issuing only copper-plated 

zinc one-cent coins, which weigh 2.50 

grams or 0.0882 ounces each. Due to the 

weight difference, a pound (the 

minimum weight for redemption) of 

copper-plated zinc one-cent coins 

contains a higher quantity of coins than 

a pound of brass one-cent coins. The 

proposed revisions would make the 

redemption rate $1.8100 for a pound 

consisting solely of copper-plated zinc 

one-cent coins. For brass one-cent coins, 

or a mix of both brass and copper-plated 

zinc one-cent coins, the lower 

redemption rate of $1.4585 will apply. 

A similar update would be made to the 

redemption rate for $1 coins. 

The third category of proposed 

revisions, also previously proposed in 

79 FR 41468, July 16, 2014, would 

clarify that the United States Mint will 

not accept fused coins. The United 

States Mint will also not accept mixed 

coins (coins of several alloy categories 

presented together) for redemption, with 

the exception of bent or partial one-cent 

coins and $1 coins that are presented in 

mixed years. 


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Federal Register / Vol. 82, No. 180 / Tuesday, September 19, 2017 / Proposed Rules 43731 

The fourth category of proposed 

revisions puts the public on notice that 

the Director of the United States Mint 

may provide information pertaining to 

any bent or partial coin submission to 

law enforcement officials or other third 

parties for purposes of investigating 

related criminal activity or for purposes 

of seeking civil judgment. The revisions 

would also notify potential participants 

that they may be held criminally and/ 

or civilly liable, fined, and/or 

imprisoned for fraudulent submissions. 

II. Public Participation 

The United States Mint previously 

proposed updates to redemption rates 

and procedures in 79 FR 41468, July 16, 

2014, and requested comments. The 

United States Mint received one 

comment, but it was not responsive to 

the proposed updates. A final rule was 

not published. 

In 81 FR 75922, Nov. 1, 2016, the 

United States Mint issued a request for 

public comment on new ways to 

enhance the integrity of the acceptance 

and processing of bent and partial coins. 

Seventeen comments were received and 

reviewed. The majority of comments 

were submitted by individuals or 

entities that previously exchanged bent 

or partial coins with the United States 

Mint. 

In general, most comments expressed 

support for requiring participant 

certification, particularly for 

participants submitting large quantities 

of bent or partial coins. Many comments 

expressed concern with the cost and 

feasibility of coinage material 

authentication but supported sampling 

or spot testing by the United States 

Mint. 

Many comments supported the 

suggestion of requiring chain of custody 

information regarding the bent or partial 

coin submissions. Comments from 

stakeholders in the recycling industry, 

however, discussed the difficulty they 

face in tracing coins recovered by auto 

and appliance shredding, and therefore 

recommended that recyclers be 

considered the point of origin. Multiple 

comments noted the importance of 

documenting the chain of custody of 

coins that had circulated outside of the 

United States. 

The suggestion of annual limitations 

on submissions was largely disfavored 

by those who submitted comments. 

Many comments described a backlog of 

bent or partial coins from the 

suspension of the exchange program 

and a lack of alternative forums to 

redeem such coins. 

III. Procedural Analysis 

Regulatory Planning and Review 

The Office of Management and Budget 

has determined that this proposed rule 

does not constitute a ‘‘significant 

regulatory action’’ under Executive 

Order 12866 or Executive Order 13771. 

Regulatory Flexibility Act Analysis 

It is hereby certified that the proposed 

revisions will not have a significant 

economic impact on a substantial 

number of small entities. Accordingly, a 

regulatory flexibility analysis under the 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq., is not required. First, the 

regulations do not directly regulate any 

entities. The redemption of uncurrent, 

bent, or partial coins is a discretionary 

service offered to the public; 

participation is voluntary. Second, 

many of the coins presented for 

redemption in the past were submitted 

by individuals transacting with the 

United States Mint in their own names. 

The number of entities tendering 

significant quantities of coins for 

redemption is small. Even if each such 

individual or entity qualified as a 

‘‘small entity’’ within the meaning of 5 

U.S.C. 604(a), the United States Mint 

does not believe that the proposed 

revisions are likely to have a significant 

economic impact. The revisions do not 

change or limit the scope of what may 

be submitted for redemption or who 

may submit them. The revisions may 

require additional information from 

participants to deter potential fraud and 

abuse, but the added administrative 

costs for participants are expected to be 

minimal. 

IV. Request for Comment 

Before the proposed revisions to the 

Treasury Regulations at 31 CFR part 

100, subpart C, are adopted as final 

regulations, the United States Mint will 

consider any comments that are 

submitted to the bureau as prescribed in 

this preamble under the ‘‘Dates’’ and 

‘‘Addresses’’ headings. The United 

States Mint and the Department of the 

Treasury request comments on all 

aspects of the proposed revisions. 

List of Subjects in 31 CFR Part 100 

Coins. 

For the reasons set forth in the 

preamble, the United States Mint 

proposes to revise 31 CFR part 100, 

subpart C as follows: 

PART 100—EXCHANGE OF PAPER 

CURRENCY AND COIN 

Subpart C—Request for Examination of 

Coin for Possible Redemption 

Sec. 

100.10 Request for examination of 

uncurrent coin for possible redemption. 

100.11 Request for examination of bent or 

partial coin for possible redemption. 

100.12 Exchange of fused or mixed coin. 

100.13 Notices. 

PART 100—EXCHANGE OF PAPER 

CURRENCY AND COIN 

Subpart C—Request for Examination 

of Coin for Possible Redemption 

§ 100.10 Request for examination of 

uncurrent coin for possible redemption. 

(a) Definition. Uncurrent coins are 

whole U.S. coins which are merely 

worn or reduced in weight by natural 

abrasion yet are readily and clearly 

recognizable as to genuineness and 

denomination and which are machine 

countable. 

(b) Redemption process. The United 

States Mint will not accept uncurrent 

coins for redemption. Members of the 

public wishing to redeem lawfully held 

uncurrent coins must deposit the 

uncurrent coins with a bank or other 

financial institution that will accept 

them, or with a depository institution 

that has established a direct customer 

relationship with a Federal Reserve 

Bank. A Federal Reserve Bank will 

redeem uncurrent coins, based on the 

policies described in the Federal 

Reserve’s Operating Circular 2. 

(c) Criteria for acceptance. Depository 

institutions that redeem uncurrent coins 

must sort the coins by denomination 

into packages in accordance with the 

Federal Reserve’s Operating Circular 2. 

The Federal Reserve Banks have the 

right to reject any shipment containing 

objects that are not U.S. coins or any 

contaminant that could render the 

uncurrent coins unsuitable for coinage 

metal. 

(d) Redemption sites. The Federal 

Reserve Banks and branches listed in 

§ 100.17 are the only authorized 

redemption sites at which a depository 

institution that has established a direct 

customer relationship with a Federal 

Reserve Bank may redeem uncurrent 

coins. 

§ 100.11 Request for examination of bent 

or partial coin for possible redemption. 

(a) General. Lawfully held bent or 

partial coins of the United States may be 

submitted to the United States Mint for 

examination in accordance with the 

provisions in this subpart. Any 

submission under this subpart shall be 

deemed an acceptance of all provisions 

of this subpart. 

(b) Definitions. (1) Bent coins are U.S. 

coins which are bent or deformed so as 

to preclude normal machine counting 


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43732 Federal Register / Vol. 82, No. 180 / Tuesday, September 19, 2017 / Proposed Rules 

but which are readily and clearly 

identifiable as to genuineness and 

denomination. 

(2) Partial coins are U.S. coins which 

are not whole; partial coins must be 

readily and clearly identifiable as to 

genuineness and denomination. 

(3) Participants are individuals or 

businesses that submit coins through 

the redemption process. 

(c) Redemption process. 

(1) Depending on submission amount 

and frequency, participants may be 

subject to a certification process by the 

United States Mint. The established 

annual weight threshold and details 

about the participant certification 

process will be published on the United 

States Mint’s Web site. If certification is 

required, it must be done prior to 

submission. 

(2) All submissions for review shall 

include an estimate of the value of the 

coins and an explanation of how the 

submission came to be bent or partial. 

The submission should also contain the 

bank account number and routing 

number for a checking or savings 

account at a bank or other financial 

institution (such as a mutual fund, 

brokerage firm, or credit union) in the 

United States. 

(3) Participants may be required to 

provide documentation for how the 

participant came into custody of the 

bent or partial coins. 

(4) The United States Mint reserves 

the right to test samples from any 

submission to authenticate the material. 

The size of the sample will be limited 

to the amount necessary for 

authentication. Testing may result in 

partial or complete destruction of the 

sample. 

(5) The United States Mint reserves 

the right to conduct site visits for 

participants over a certain volume 

threshold to verify information provided 

to the United States Mint. 

(6) No redemption will be made 

when: 

(i) A submission, or any portion of a 

submission, demonstrates a pattern of 

intentional mutilation or an attempt to 

defraud the United States; 

(ii) A submission appears to be part 

of, or intended to further, any criminal 

activity; 

(iii) A submission contains a material 

misrepresentation of facts; 

(iv) Material presented is not 

identifiable as United States coins. In 

such instances, the participant will be 

notified to retrieve the entire 

submission, at the participant’s sole 

expense, within 30 days. If the 

submission is not retrieved in a timely 

manner, the entire submission will be 

treated as voluntarily abandoned 

property, pursuant to 41 CFR 102–41.80, 

and will be retained or disposed of by 

the United States Mint; 

(v) A submission contains any 

contaminant that could render the coins 

unsuitable for coinage metal. In such 

instances, the participant will be 

notified to retrieve the entire 

submission, at the participant’s sole 

expense, within 30 days. If the 

submission is not retrieved in a timely 

manner, the entire submission will be 

treated as voluntarily abandoned 

property, pursuant to 41 CFR 102–41.80, 

and will be retained or disposed of by 

the United States Mint; or 

(vi) A submission contains more than 

a nominal amount of uncurrent coins. In 

such instances, the participant may be 

notified to retrieve the entire 

submission, at the participant’s sole 

expense, within 30 days. If the 

submission is not retrieved in a timely 

manner, the entire submission will be 

treated as voluntarily abandoned 

property, pursuant to 41 CFR 102–41.80, 

and will be retained or disposed of by 

the United States Mint. 

(7) The Director of the United States 

Mint, or designee, shall have final 

authority with respect to all aspects of 

redemptions of bent or partial coin 

submissions. 

(d) Redemption rates. 

(1) Generally. Participants shall 

separate bent or partial coins by 

denomination in lots of at least one 

pound for each denomination category. 

The United States Mint will redeem 

bent or partial coins on the basis of their 

weight and denomination at the 

following rates: 

(i) One-Cent Coins: $1.4585 per 

pound. 

(ii) 5-Cent Coins: $4.5359 per pound. 

(iii) Dime, Quarter-Dollar, and HalfDollar Coins: $20.00 per pound. 

(iv) $1 Coins: $20.00 per pound. 

(2) Exceptions. (i) The United States 

Mint will redeem one-cent coins 

inscribed with a year after 1982 at the 

rate set forth at subparagraph (1)(i) of 

this subsection unless such one-cent 

coins are presented unmixed from onecent coins inscribed with a year before 

1983. The United States Mint will 

redeem unmixed one-cent coins 

inscribed with a year after 1982 at a rate 

of $1.8100 per pound. 

(ii) The United States Mint will 

redeem $1 coins inscribed with a year 

after 1978 at the rate set forth at 

subparagraph (1)(iv) of this subsection 

unless such $1 coins are presented 

unmixed from $1 coins inscribed with 

a year before 1979. The United States 

Mint will redeem unmixed $1 coins 

inscribed with a year after 1978 at a rate 

of $56.00 per pound. 

(e) Redemption sites. Coins are 

shipped at the sender’s risk of loss and 

expense. 

(1) Bent and partial coins submitted 

in quantities less than or equal to a 

threshold established annually will be 

redeemed only at the United States Mint 

at Philadelphia, P.O. Box 400, 

Philadelphia, PA 19105. 

(2) Bent and partial coins submitted 

in quantities greater than a threshold 

established annually should be 

scheduled with the United States Mint 

to be sent directly to the authorized 

recycler(s) of the United States Mint. 

§ 100.12 Exchange of fused or mixed coin. 

(a) Definitions. (1) Fused coins are 

U.S. coins which are melted to the 

extent that they are bonded together. 

(2) Mixed coins are U.S. coins of 

several alloy categories which are 

presented together, but are readily and 

clearly identifiable as U.S. coins. 

(b) The United States Mint will not 

accept fused coins for redemption. The 

United States Mint will not accept 

mixed coins for redemption, except as 

provided for in § 100.11(d)(2). 

§ 100.13 Notices. 

(a) Additional information and 

procedures about the United States 

Mint’s redemption of bent or partial 

coins can be found on the United States 

Mint’s Web site. 

(b) Criminal penalties connected with 

the defacement or mutilation of U.S. 

coins are provided in 18 U.S.C. 331. 

(c) The Director of the United States 

Mint may provide information 

pertaining to any bent or partial coin 

submissions to law enforcement 

officials or other third parties for 

purposes of investigating related 

criminal activity or for purposes of 

seeking a civil judgment. 

(d) Whoever intentionally files a false 

claim seeking reimbursement for 

uncurrent, bent or partial coins may be 

held criminally liable under a number 

of statutes including 18 U.S.C. 287 and 

18 U.S.C. 1341 and may be held civilly 

liable under 31 U.S.C. 3729, et seq. 

Dated: September 13, 2017. 

Jean Gentry, 

Chief Counsel, United States Mint. 

[FR Doc. 2017–19885 Filed 9–18–17; 8:45 am] 

BILLING CODE P 


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