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FEDERAL RESERVE BANK OF DALLAS
F IS C A L A G E N T O F T H E U N IT E D S T A T E S

Dallas, Texas, February 23,1952

To Treasury Tax and Loan Depositaries
and Others Concerned:
There is enclosed a copy of a letter addressed to Treasury Tax
and Loan Depositaries and others concerned by the Secretary of
the Treasury, which this bank has been requested to transmit to
all such depositaries in this district. The letter contains informa­
tion concerning the use of Treasury Bills, Tax Anticipation Series,
maturing March 15, 1952, in payment of Federal income taxes due
on that date and other related information.
Additional copies of the letter will be forwarded on request.
Yours very truly,
R. R. GILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

THE S E C R E T A R Y OF THE T R E A S U R Y
W A SH IN G T O N

F e b ru a ry 2£, 1952
TO TREASURY TAX AND LOAN DEPOSITARIES,
AND OTHERS CONCERNED:

T re a su ry B i l l s , Tax A n t ic ip a t io n S e r i e s , d a te d O ctober 23 , 1951*
m aturing March 15, 1952, a r e o u tsta n d in g in th e amount o f $ 1 ,2 3 3 *7 8 3 ,0 0 0 *
These T re a su ry b i l l s a re a c c e p ta b le in payment o f F e d e r a l income t a x e s
due on t h e i r m a tu rity d a t e , and were is s u e d t o e n a b le ta x p a y e r s to
i n v e s t t h e i r accu m u lated t a x r e s e r v e s in an in t e r e s t - b e a r i n g s e c u r i t y
which w i l l be r e c e iv e d in payment o f F e d e r a l income ta x e s ,,

The Treasury has been advised that many o f these b i l l s are held by
commercial banks in safekeeping fo r the accounts o f customers who expect
to use them in payment o f income taxes* In order to f a c i lit a t e the use
o f Treasury B ill s , Tax A nticipation S eries, by taxpayers in payment o f
th e ir income taxes, the Treasury has authorized Federal Reserve Banks
and branches, as f i s c a l agents o f the United S tates, to accept such
se cu ritie s on or before th eir maturity date, from or fo r account o f
Federal taxpayers, and to issue receip ts to C ollectors o f Internal
Revenue that such Treasury b i l l s are held fo r the purpose o f applying
the proceeds o f redemption to the payment o f Income taxes o f the
taxpayer named in the receipts*
Two copies o f each r e ce ip t w ill be delivered to the taxpayer con­
cerned, who w ill attach one copy to h is income tax return f i l e d with the
C ollector o f Internal Revenue* C ollectors o f Internal Revenue have been
instructed (A&C Mimeograph, C oll* No* 6709, Supp* 2, dated December 27,
1951) to accept tax returns to which are attached copies o f receip ts
addressed to them by Federal Reserve Banks and branches that Treasury
b i l l s due March 15, 1952 are being held fo r application o f the proceeds
o f redemption to the payment o f income taxes o f the taxpayer named in
the receipt*
The Treasury has learned that there has been an e f f o r t made by some
banks which are sp ecial depositaries f o r Treasury tax and loan accounts
to encourage th e ir customers to s e l l to them th e ir Treasury B i l l s , Tax
A nticipation S eries, maturing March 15, 1952, and to accept payment fo r
the Treasury b i l l s by a deposit cre d it in th eir checking accounts, or to
present Treasury Savings notes fo r cash redemption, with the proceeds
being deposited in th eir checking accounts, and to pay th e ir taxes by
checks drawn on the taxpayers* accounts with the banks* D epositaries
engaging in th is p ra ctice apparently are doing so in expectation that
under arrangements which have been in e ff e c t fo r quarterly tax payments

2
since March, 1951, they may obtain a 'deposit in th eir Treasury tax and
loan accounts fo r an amount equal to the taxpayers* checks (fo r checks
over $10,000 in amount) drawn on th e ir accounts with the banks, and in
regular course they can present the Treasury B ills to the Treasury f o r
cash redemption at maturity*
The Treasury does not look with favor upon transactions o f th is
character which in e f f e c t circumvent the purposes underlying the issuance
o f the Tax A nticipation Series o f Treasury B i l l s , and Treasury Savings
notes* These p ra ctices by depositaries w ill increase the amount o f such
b i l l s or Savings notes presented fo r cash redemption in advance o f the
a v a ila b ility o f Treasury receip ts from the income tax instalment due on
March 15, 1952, and w ill make i t more d i f f i c u l t fo r the Treasury and the
Federal Reserve System to handle the large income tax c o lle c tio n s during
March in a manner that w ill maintain s ta b ilit y in the money market*
Accordingly, depositaries having Treasury tax and loan accounts are
advised that to the extent they present Treasury B ills maturing March 15,
1952 fo r cash redemption fo r "their own account or fo r the account o f
th eir customers, or i f taxpayers present th e ir b i l l s or Treasury Savings
notes fo r cash redemption, and use the proceeds o f redemption through
deposit with and withdrawal from depositaries by checks in payment o f
th eir March, 1952 income taxes, an equal amount o f income tax checks
o f $10,000 and over drawn on such banks in payment o f income taxes due
March 15, 1952 w ill be withheld from deposit in th eir tax and loan
accounts.
However, i f a depositary presenting Treasury B i l l s , Tax A nticipation
S eries, due March 15, 1952, fo r cash redemption fo r i t s own account, can
c e r t ify that they were acquired by purchase p rio r to February 25, 1952,
and were held continuously u n til date o f maturity, or that they were
acquired on and a fte r February 25th, and payment o f the purchase p rice
was not cred ited in a custom ers deposit account on it s books, such
b i l l s w ill not be included in arriving at the amount o f income tax
checks o f $10,000 and over to be withheld from deposit in th eir tax
and loan accounts*


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102