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Federal Reserve bank of Dallas F I S 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 75222 Circular No. 67-258 December 21, 1967 To All Banks and Others Concerned in the Eleventh Federal Reserve District: There is enclosed Treasury Departm ent Circular No. 1079, F irst Revision, relating to th e extension o f th e new Federal ta x deposit sy stem to em ploym ent and excise ta x es accruing on and a fter January 1, 1968. The sy stem is an expansion o f th e one currently in effect fo r corporation ta x es as outlined in Treasury D epartm ent Circular No. 1079, which was mailed w ith th is bank’s circular letter No. 67-54 dated March 13, 1967. Under th e new procedure, taxpayers will continue to deposit ta x es w ith an approved commercial bank depositary for Federal ta x es or w ith a Federal R eserve Bank. There will be a separate and distinct Federal ta x deposit form for each class of ta x being deposited. A supply o f prepunched and preinscribed Federal ta x deposit form s will be mailed to each taxp ayer a t th e address indicated on his ta x return in tim e to make th e first deposit required in 1968. Instructions w ith respect to th e procedure fo r m aking ta x deposits will appear on th e ta x deposit form s. Depositaries should advise taxpayers w ho inquire th at additional Federal deposit ta x form s, if needed, should be requested from th e Internal R evenue Service Center for th e region or from th e D istrict Director o f Internal R evenue w ith w hich he files his return. The ta x deposit form s will not be available a t th is bank or a t depositary banks. One of th e principal featu res of the new sy stem is th a t Federal R eserve Banks will no longer return validated depositary receipts to taxpayers. Taxpayers will claim credit fo r th eir deposits on their ta x returns on th e basis of their own record. Tax deposit credits claimed on returns will be verified by the Internal Revenue Service against deposits made w ith commercial bank depositaries and Federal R eserve Banks. It should be noted th a t th ese changes do not apply to deposits for any ta x liability accruing before January 1, 1968. Paragraph 4 of th is bank’s circular letter dated March 13, 1967, indicated th a t th e depositary bank’s stam p on th e tax deposit form m ust contain its A B A number, in addition to th e nam e o f th e depositary and the date the paym ent was received. Due to technical difficulties encountered, it has now been decided th a t the stam p m u st contain th e depositary bank’s code number instead o f th e A B A number. The number is a four-digit number assigned by th is bank, and appears in a vertical position on th e le ft edge of your Treasury Tax and Loan Advice of Credit Form FA-794. The code number also appears on th e statem en t of the account w hich is furnished to Treasury Tax and Loan depositaries sem i-m onthly. This bank will initially furnish one stam p to each depositary for th is purpose. The stam ps will be forwarded to deposi taries as expeditiously as possible. Stam ps will be furnished at no cost to depositaries on a one-tim e basis only, and depositaries should obtain additional stam ps through local sources. The stam p should be used only for stam ping ta x deposit form s, and no other stam p should be used fo r th is purpose. A s under th e present depositary receipt system , th e new deposit form s are to be listed on a trans m ittal letter Form WT-3, and transm itted to th is bank on a daily basis togeth er w ith a rem ittance in im m ediately available funds, or w ith advice th a t funds have been credited in th e Treasury Tax and Loan Account of the D epositary. The Treasury Departm ent has reem phasized the n ecessity o f tim ely rem it tance of ta x deposit funds at th e close of business on th e day th e deposits are received by the depositaries. The new tax deposit form is a sixty-six-colum n card w ith stub attached. I f th e stub is still attached when the form is received by th e depositary, it should be stam ped and returned to th e taxp ayer fo r his records. The retention of the stub will be important to th e taxpayers, inasm uch as indicated above the Federal R eserve Bank will not validate and return th e deposit form to th e taxpayers as is th e practice under the present depositary receipt system . This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) The Treasury D epartm ent regards th e cashing for a taxpayer of a check drawn on another bank to obtain cash for m aking a ta x deposit a m atter entirely between th e depositary and th e taxpayer. More specifically, th e risk of uncollectible checks and charges and fees imposed by th e depositary are not th e concern of th e Treasury Departm ent. D uring th e period of transition, depositaries will likely be receiving paym ents deposited on th e old depositary receipt form and paym ents deposited on th e new ta x deposit form. More specifically, paym ents for ta x periods ending on or before December 31, 1967, should be deposited on the eighty-colum n deposi tary receipt form now being used, while paym ents for ta x periods a fter Decem ber 31 should be deposited on the new ta x deposit form. Because of data processing requirements, th e new deposit form s m u st not be mingled w ith the old depositary receipt form s when preparing them for subm ission to th is bank. In other words, separate transm ittal letters and ta x and loan advices or rem ittances m ust be subm itted fo r (1) new deposit form s, and (2) old depositary receipts. Depositaries should not accept old sty le depositary receipt form s (80-column cards) from taxpayers a fter January 31, 1968. Such paym ents should be for warded directly to the Internal R evenue Service by taxpayers w ith ta x returns. Under th e new procedure, it is extrem ely im portant th a t ta x deposits be accompanied by appropriate prepunched and preinscribed tax deposit form s. If a taxpayer needs additional form s, he should request them from the Internal Revenue Service Center for the region, or from the D istrict Director of Internal Revenue w ith which he files his return. In the event the taxpayer is unable to obtain th e prescribed form in sufficient tim e to perm it a tim ely ta x deposit, a depositary m ay accept th e ta x paym ent and schedule it to th is bank on a transm ittal letter w ithout th e deposit form. In order for th is bank to process such a deposit, th e depositary will be required to attach a statem en t to its transm ittal letter show ing (1) com plete name and address of taxpayer, (2) em ployer’s identification number, (3) Internal R evenue Service district code, (4) amount of paym ent, (5) tax period (m onth and y ea r), (6) type of tax, and (7) paym ent date (m onth and d a y ). W ithout all of the foregoing information, th e ta x deposits can not be processed. Yours very truly, W atrous H. Irons President Enclosure REGULATIONS GOVERNING THE DEPOSIT OF FEDERAL TAXES W IT H DEPOSITARY BANKS AND FEDERAL RESERVE BANKS 1967 Department Circular No. 1079 (First Revision) Treasury Department Office of the Secretary Washington, D. C. ________________ Fiscal Service Bureau of Accounts TO FEDERAL RESERVE BANKS, INCORPORATED BANKS AND TRUST COMPANIES, AND OTHERS CONCERNED: The following regulations were published in the Federal Register on December 16, 1967. Title 31 - MONEY AND FINANCE: TREASURY CHAPTER II - FISCAL SERVICE, DEPARTMENT OF THE TREASURY Subchapter A - BUREAU OF ACCOUNTS Part 214 - DEPOSIT WITH FEDERAL RESERVE BANKS AND DEPOSITARIES FOR FEDERAL TAXES OF CORPORATION INCOME TAX UNDER THE INTERNAL REVENUE CODE OF 1954, AS AMENDED. /Department Circular No. 1079 (First Revision}/ Part 214, Subchapter A, Chapter II of Title 31 of the Code of Federal Regulations /also appearing as Treasury Depart ment Circular No. 1079, dated March 3, 1967/ is hereby revised - 2 - effective January 1, 1968,^* to read as follows: PART 214 - DEPOSITARIES FOR FEDERAL TAXES. Sec. 214.1 Scope of regulations. 214.2 Definitions. 214.3 Particular locations. 214.4 Designation of Depositaries for Federal taxes. 214.5 Qualification. 214.6 Handling of deposits of Federal taxes. 214.7 Specific instructions. Authority: The provisions of this Part 214 issued under sec. 10, 56 Stat. 356, as amended (12 U.S.C. 265); sec. 15, 38 Stat. 265 (12 U.S.C. 391); sec. 8, 40 Stat. 291, as amended (31 U.S.C. 771); and sec. 6302(c), Internal Revenue Code of 1954, as amended. Source: The provisions of this part appear at 32 F.R. 18044, December 16, 1967. § 214.1 Scope of regulations. The regulations in this part govern the designation and The procedure prescribed by this part will supersede the procedure prescribed by Part 213 of this chapter (Department Circular 848 (Second Revision)) for the deposit of Federal taxes for which the liability accrues on or after January 1, 1968. qualification of Depositaries for Federal Taxes and the handl ing by them of deposits of Federal taxes. § 214.2 Definitions. As used in this part, the term: "depositary1' means a Depositary for Federal Taxes. "Federal taxes" means those Federal taxes which have been specified by the Secretary of the Treasury or his dele gate as eligible for payment through the procedure prescribed by this part. "Federal tax deposit form" means a form, pre-inscribed with the name, address, and identification number of the tax payer, supplied to a taxpayer by the Treasury Department to accompany deposits of Federal taxes made tinder the procedure prescribed by this part. § 214.3 Particular locations. For the purposes of this part, depositaries located in Puerto Rico, the Virgin Islands, and the Panama Canal Zone will be considered as being located in the New York Federal Reserve district and those located in Guam and American Samoa will be considered as being located in the San Francisco Federal Reserve district. § 214.4 Designation of Depositaries for Federal taxes. Every incorporated bank and trust company in the United States, Puerto Rico, the Virgin Islands, the Panama Canal Zone, Guam and American Samoa, and every United States branch - 4 - of a foreign banking corporation authorized by the State in which it is located to transact commercial banking business, is designated as a Depositary for Federal Taxes. 8 214.5 (a) Qualification. Authorization. A depositary is not authorized to act under its designation and the procedure prescribed by this part until it has been qualified. (b) Application. To qualify a depositary must file with the Federal Reserve Bank of its district an application ac companied by a resolution of its board of directors authorizing the application, both on forms available from the Federal Re serve Bank. (c) Agreement. Receipt by a depositary of notice of approval of its application by the Federal Reserve Bank com pletes the depositary*s qualification and creates an agreement between it and the Treasury Department under which the depositary agrees to be bound by all the terms and provisions of this part and the provisions prescribed in § 202 of Executive Order 11246, entitled nEqual Employment Opportunity11 (30 F.R. 12319). (d) Existing agreements. Existing agreements between depositaries and the Treasury Department shall continue in effect without further action until terminated. A depositary which accepts a deposit of Federal taxes under an existing - 5 - agreement thereby agrees to be bound by all the terms and provisions of this part and the provisions prescribed in § 202 of Executive Order 11246, entitled "Equal Employment Opportunity" (30 F.R. 12319). (e) Termination of agreement. The Secretary of the Treasury may terminate at any time the agreement with any depositary. Failure upon the part of a depositary to comply with the terms of its agreement, or with instructions issued pursuant to this part, may, in the discretion of the Secretary of the Treasury, constitute grounds for the termination of the agreement. A depositary may terminate its agreement by notice in writing, to the Federal Reserve Bank of its district. § 214.6 Handling of deposits of Federal taxes. (a) Deposits with depositaries. A depositary shall, through any of its offices that accept demand or time- deposits (1) Accept from a taxpayer 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, which shall be without risk to the depositary, covering an amount to be deposited as Federal taxes when ac companied by a Federal tax deposit form on which the amount of the deposit has been properly entered in the space provided. - (2) 6 - When requested to do so by a taxpayer who makes a deposit of Federal taxes in cash over the counter, is sue a counter receipt, which may be accomplished by com pleting and returning to the taxpayer the stub portion of the Federal tax deposit form. (3) Place, in the space provided on the face of each Federal .tax deposit form, a stamp impression re flecting the date on which the tax deposit was received by the depositary, by reference to which the timeliness of the tax payment will be determined, and the name and location of the depositary. (4) Forward each day to the Federal Reserve Bank of its district the Federal tax deposit forms, with stubs detached, for all tax deposits received that day, together with payment in funds immediately available at the Federal Reserve Bank, or with advice that the amount has been credited in the Treasury Tax and Loan Account into which the depositary is authorized to credit funds representing the payment of taxes pursuant to its desig nation as a Special Depositary of Public Money under the provisions of Part 203 of this subchapter. Each trans mittal shall be accompanied by a transmittal letter in - 7 - the form prescribed by the Federal Reserve Bank of the district. (5) Establish, prior to transmittal to the Federal Reserve Bank, an adequate record of all deposits of Federal taxes so that it will be able to identify de posits in the event tax deposit forms are lost in ship ment between it and the Federal Reserve Bank. For this purpose a record must be made of each deposit, showing as a minimum the date ofdeposit, the taxpayer*s identi fying number, and the amount of the deposit. The de positary^ copies of transmittal letters may be used to provide the necessary information if individual deposits are listed separately showing date, taxpayer*s identifying number, and amount. (6) Not accept compensation from taxpayers for accepting deposits of Federal taxes and handling them as required by this section. (b) Deposits with Federal Reserve Banks« A Federal Reserve Bank shall, through any of its offices: (1) Accept directly from a taxpayer cash, a check or money order drawn to the order of the Bank, or Treasury bills as authorized in Part 309 of this chapter, covering an amount to be deposited as Federal taxes when accompanied 8 - by a Federal tax deposit form on which the amount of the deposit has been properly entered in the space provided. (2) When requested to do so by a taxpayer who makes a deposit of Federal taxes in cash over the counter issue a counter receipt, which may be accomplished by com pleting and returning to the taxpayer the stub portion of the Federal tax deposit form. (3) Place, in the space provided on the face of each Federal tax deposit form accepted directly from a taxpayer, a stamp impression reflecting the date on which the tax deposit was received by the Bank, by reference to which the timeliness of the tax payment will be determined, and the name of the Bank. § 214.7 Specific instructions. Federal Reserve Banks are authorized to issue instructions consistent with these regulations for carrying out the requirements of this part.