The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK OF DALLAS F IS C A L A G E N T O F TH E U N ITED STATE S Dallas, Texas, May 24, 1952 SPECIAL HANDLING OF LARGE INCOME TAX PAYMENTS AND TREASURY BILLS, TAX ANTICIPATION SERIES To Treasury Tax and Loan Depositaries and Others Concerned: The Treasury Department has announced that the procedure which prevailed during the first quarterly tax payment period of 1952, with respect to the handling of large payments of individual and corporate income taxes, will be effective also for June, 1952 tax collections. During the period from June 2, 1952 through July 3, 1952, (1) collectors of internal rev enue will deposit directly with the several Federal Reserve Banks checks representing tax remittances of $10,000 or over covering payments of individual and corporate income and excess profits taxes, (2) Federal Reserve Banks will prepare daily a “ Special Draft for Credit in Treas ury Tax and Loan Account” in an amount not to exceed the aggregate amount of such checks, subject to the usual reservations, drawn on each Special Depositary, and (3) in accordance with the conditions set forth on the face of the Special Draft, Special Depositaries may exercise their option to accept for deposit in their Treasury Tax and Loan Accounts funds in an amount equal to the amount of the Special Draft. With respect to the reestablishment of this procedure for June, 1952 payments, the atten tion of special depositaries is directed to the enclosed circular letter signed by the Secretary of the Treasury and dated May 20, 1952, relating to the redemption of Treasury Bills, Tax Anticipation Series maturing June 15, 1952, and unmatured Treasury Savings Notes. Accordingly, in preparing the special drafts, the Treasury has instructed the Federal Reserve Banks to reduce the amount which a depositary may accept for credit in its Treasury Tax and Loan Account by the amount of Treasury Bills, Tax Anticipation Series, maturing June 15, 1952, which such depositary presents for cash redemption for its own account, unless the bills are accompanied by the depositary’s certification that the bills were acquired for its account by purchase prior to May 24, 1952, and were held continuously until date of maturity, or that they were acquired on or after May 24, 1952, and payment of the purchase price was not credited in a customer’s deposit account on its books. A certification in essentially the above form will be acceptable. A similar reduction in the amounts of the special drafts will also be made for Treasury Bills, Tax Anticipation Series and unmatured Treasury Savings Notes which are presented by banks for cash redemption for the account of their customers, or directly by the customers, the proceeds of which are disbursed as tax payments. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Depositaries presenting Treasury Bills, Tax Anticipation Series, maturing June 15, 1952, for account of their customers, should indicate the names of the customers and amounts sub mitted for each account. It is not the purpose to invoke the above described restrictions against special depositaries for bona fide redemptions but only to reduce Treasury Tax and Loan Deposits in those cases where depositaries have acquired the Tax Anticipation Series bills other than as specified above, and where proceeds of redemption of the bills or Treasury Savings Notes have been credited to customers’ accounts and have been subsequently disbursed as tax payments. Treasury Bills, Tax Anticipation Series, to be handled in accordance with the letter of May 20 from the Secretary of the Treasury, should be presented to this bank or appropriate branch with complete information as to the name and address of the taxpayer involved and as to the Collector of Internal Revenue to whom the taxes are payable. Banks which desire that this series of bills held by this bank or one of its branches in safekeeping or as collateral be withdrawn and applied in payment of their income taxes should furnish appropriate instruc tions to the office where the bills are held. The bills or instructions relating to bills held in safe keeping or as collateral by this bank and branches should be received in sufficient time to permit the return of the copies of the receipts to be attached to the income tax returns. This bank will be glad to furnish any additional information in this connection that may be desired. Yours very truly, R. R. GILBERT President THE S E C R E T A R Y OF THE T R E A S U R Y WASHINGTON Hay 20, 1952 TO TREASURE TAX AND LOAN DEPOSITARIES, AND OTHERS CONCERNED: Treasury B i l l s , Tax A nticipation S eries, dated November 2 7 , 1951, maturing June 15, 1952, are outstanding in the amount o f $1,21*6,825,000# These Treasury b i l l s are acceptable in payment o f Federal income taxes due on th e ir maturity date, and were issued to enable taxpayers to invest th e ir accumulated tax reserves in an in terest-bearing security which w ill be received in payment o f Federal income taxes* In order to f a c i lit a t e the use o f Treasury B ills , 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 States, to accept such s e cu ritie s on or before th e ir maturity date, from or f o 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 re ce ip ts. Two copies o f each re 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 le d with the C o lle cto r o f Internal Revenue, C ollectors o f Internal Revenue have been in structed (A&C Mimeograph, C o ll, No* 6709, Supp, 2 , dated December 27, 1951) to accept tax returns to which are attached cop ies o f receipts addressed to them by Federal Reserve Banks and Branches that Treasury b i l l s due June 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 re ce ip t. The Treasury does not look with favor upon e ffo r t s by banks which are sp ecia l depositaries fo r Treasury tax and loan accounts to encourage th eir customers to s e ll to them th eir Treasury B ill s , Tax A nticipation S eries, maturing June 15, 1952, and to accept payment fo r the Treasury b i l l s by a deposit c r e d it in th e ir checking accou n ts,'or to present Treasury Savings notes f o r cash redemption, with the proceeds being deposited in th eir checking accounts, and to pay th eir taxes by checks drawn on the taxpayers* accounts with the banks. D epositaries follow in g th is p ra ctice apparently do so in expectation that under arrangements which have been in e f f e c t fo r quarterly tax payments since March, 1951, they may obtain a deposit in th e ir Treasury Tax and loan accounts fo r an amount equal to the taxpayers* checks ( f o r checks over $10,000 In amount) drawn on th e ir accounts with the banks, and in regular course they can present the Treasury b i l l s to the Treasury fo r cash redemption at maturity. These p ra ctices by depositaries w ill increase the amount o f such b i l l s or Savings notes presented f o r cash redemption in advance o f the a v a ila b ilit y o f Treasury receip ts from the income tax instalment due on June 15, 1952, and w ill make i t more d i f f i c u l t fo r the Treasury and the Federal Re serve System to handle the large income tax c o lle c tio n s during June in a manner that w ill maintain s ta b ilit y in the money market* A c c o rd in g ly , th e T re a su ry w i l l fo llo w th e same p ro ced u re a s was ad o p te d in c o n n e c tio n w ith the March 1 5 , 1952 income t a x in s ta lm e n t* D e p o s i t a r i e s h av in g T re a su ry t a x and lo a n a c co u n ts a r e a d v is e d t h a t to th e e x t e n t th e y p r e s e n t T re a su ry b i l l s m aturing Jun e 1$, 1952 f o r c a sh red em p tio n f o r t h e i r own acco u n t o r f o r th e acco u n t o f t h e i r c u sto m e rs, o r i f t a x p a y e r s p r e s e n t t h e i r b i l l s o r T re a su ry S a v in g s n o t e s f o r c a s h re d em p tio n , and u se th e p ro c e e d s o f redem ption through d e p o s it w ith and w ith d raw al from d e p o s i t a r i e s by ch eck s in payment o f t h e i r Jun e 15, 1952 income t a x e s , an e q u a l amount o f income t a x ch eck s o f $ 1 0 ,0 0 0 and o v e r drawn on su ch ban ks in payment o f income t a x e s due Ju n e 15, 1952 w i l l be w ith h e ld from d e p o s it in t h e i r t a x and lo a n a c c o u n ts* However, i f a depositary presenting Treasury B ill s , Tax A nticipation S eries, due June 15, 1952, fo r cash redemption fo r i t s own account, can c e r t if y that they were acquired by purchase p rior to May 2i|, 1952, and were h eld continuously u n til date o f maturity, or that they were acquired on and a fte r May 2iith, and payment o f the purchase price was not cred ited in a customer !s 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# S e c re ta ry o f th e T re a su ry
@FedFRASER