Full text of Federal Reserve Bank of New York Circulars : 5620. Deposits of March and April Tax Collections in Treasury Tax and Loan Accounts

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FEDERAL RESERVE BANK
OF N EW YORK
Fiscal Agent of the United States

["Circular No. 5 6 2 0 T
L February 16, 1965 J

Deposits of March and April Tax Collections in Treasury Tax and Loan Accounts

To All Treasury Tax and Loan Depositaries
in the Second Federal Reserve District:

The Treasury Department has advised us that Directors of Internal Revenue will
be instructed to make special deposits with Federal Reserve Banks of checks of $10,000
or more, (a) during the period March 15 through March 31, 1965, representing payments
of corporation income taxes due March 15, 1965, and (b) during the period A pril 15
through May 7, 1965, representing payments of individual income taxes due A pril 15,
1965. Drawee banks qualified as Special Depositaries of Public Moneys may receive up
to 50 per cent of the amount of such checks for the corporation income taxes due March
15 and up to 100 per cent of the amount of such checks for the individual income taxes due
A pril 15, for deposit in Treasury Tax and Loan Accounts, subject, however, to the con­
dition that the Treasury may find it necessary to increase or decrease the percentage
amount of the checks for credit to the Tax and Loan Accounts from time to time during
these periods, if such action is required to prevent undue fluctuations in the account of the
Treasurer of the United States with Federal Reserve Banks.
W e will prepare daily a special form of cash letter, with an attached certificate form,
for the tax checks included in the special deposits of the Directors of Internal Revenue
during these periods. The amount shown in the certificate will be for up to 50 per cent
during the first period, and up to 100 per cent during the second period, of the amount
of those checks eligible for credit to Treasury Tax and Loan Accounts, or for such other
percentage as the Treasury may subsequently specify. Special depositaries wishing to
accept for deposit in Tax and Loan Accounts the amount shown in the certificate attached
to the cash letter should execute and return the certificate, in accordance with the instruc­
tions contained in the cash letter.
The Treasury will deny credit to depositaries for customers’ tax checks arising out of
sales to the depositaries of customers’ tax anticipation Treasury bills maturing March 22,
1965. As the Treasury has in the past stated, it does not look with favor upon such
transactions, inasmuch as they increase the amount of tax anticipation bills presented
for cash redemption in advance of the availability of Treasury receipts from the income
tax installment due on the 15th of the month and make it more difficult for the Treasury
and the Federal Reserve System to handle the large income tax collections during the
month in a manner that will maintain stability in the money market.
Additional copies of this circular will be furnished upon request.




A

lfred

H

ayes,

President.