Full text of Federal Reserve Bank of New York Circulars : 6856. Deposit of Federal Taxes with Depositary Banks

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FEDERAL RESERVE BANK
OF NEW YORK
Fiscal Agent of the United States

r Circular No. 6 85 6 "1
L December 7, 1971 J

DEPOSIT OF FEDERAL T AXES WITH DEPOSITARY BANKS
Revision of Operating Circular No. 18

To All Banks and Trust Companies in the
Second Federal Reserve District:

Enclosed is a copy of our Operating Circular No. 18, “ Deposit of
Federal Taxes with Depositary Banks,” Revised December 7, 1971.
The operating circular has been revised (a) to include in its cover­
age deposits of Federal unemployment taxes; (b) to reflect our current
practice of adjusting errors over $1,000 in remittances o f Federal taxes
through the depositary’s Treasury Tax and Loan Account if the remit­
tance was made by credit to such account; and (c) to provide that re­
peated failure by depositaries to comply with the procedural require­
ments for handling deposits of Federal taxes may result in termination
of the agreement with the depositary.
Additional copies o f the operating circular will be furnished upon
request.




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lfred

H

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President.

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Fiscal A gen t o f the United States

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Operating Circular No. 18 "I
Revised December 7, 1971 J

DEPOSIT OF FEDERAL TAXES W IT H DEPOSITARY BANKS
To All Banks and Trust Companies in the
Second Federal Reserve District:

This circular contains information and instructions regarding the
handling and processing of deposits made with banks qualified as
“ Depositaries for Federal Taxes” of (1) withheld income and FIC A
(Social Security) taxes, (2 ) corporation income taxes, (3) excise
taxes, (4) Railroad Retirement taxes, (5) unemployment taxes, and
( 6) taxes withheld at source on nonresident aliens, foreign corpora­
tions, and tax-free covenant bonds. Such taxes are hereinafter re­
ferred to as ‘ ‘ Federal taxes. ’ ’
The material in this circular
the Treasury Department in its
and No. 92 (Second Revision).
circulars for full information as

is based on the regulations issued by
Circulars No. 1079 (First Revision)
Reference should be made to those
to their provisions.

Procedure for qualification of designated banks
as Depositaries for Federal Taxes

1. 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 U.S. branch of a foreign bank­
ing corporation authorized by the State in which it is located to trans­
act commercial banking business, is designated, subject to qualification,
as a Depositary for Federal Taxes. For this purpose, depositaries
located in Puerto Rico, the Virgin Islands, and the Panama Canal
Zone will be considered as being located in the Second Federal Reserve
District.
2. The following steps must be taken by any designated bank in
the Second Federal Reserve District in order for it to qualify as a
Depositary for Federal Taxes:
(a )
A resolu tion m ust be a d o p te d b y its b o a rd o f d irectors a u th oriz­
in g the exe cu tion o f an a p p lic a tio n an d agreem ent o f the b a n k to act as
a “ D e p o s ita ry f o r F e d e ra l T a x e s.”
( b ) A n officer o f the bank, au th orized in the resolu tion , m ust execu te
on its b e h a lf an a p p lica tio n -a g re e m e n t to act as a “ D e p o s ita ry f o r F ed era l
T a x e s .” T h e a p p lica tio n -a g re e m e n t m ust be attested b y som e oth er officer
o f the b a n k an d the seal o f the b a n k m ust be affixed.




(e) A duly executed copy o f the application-agreement together
with a duly certified copy o f the resolution must be submitted to the
Head Office o f this Bank.

In the ease of an applying bank that has one or more branches,
the resolution and application-agreement of the parent bank will be
construed as covering its branch or branches. The resolution and
application-agreement must be on forms prescribed by the Treasury
Department, which are available from this Bank.
3. Formal notification of qualification as a Depositary for Federal
Taxes will be forwarded to the applicant upon approval of the
application-agreement. Receipt of the notification completes the de­
positary’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 Treasury Department Circular
No. 1079 (First Revision) and the provisions prescribed in § 202 of
Executive Order 11246, entitled “ Equal Employment Opportunity”
(30 F.R. 12319). Deposits of Federal taxes may not be accepted until
the formal notification is received.
4. Existing agreements between depositaries and the Treasury
Department shall continue in effect without further action until termi­
nated. The acceptance of deposits of Federal taxes by a Depositary
for Federal Taxes creates an agreement between it and the Treasury
Department under which the depositary agrees to be bound by all the
terms and provisions of Treasury Department Circular No. 1079 (First
Revision) and the provisions prescribed in § 202 of Executive Order
11246, entitled “ Equal Employment Opportunity” (30 F.R. 12319).
Procedure for handling deposits of Federal taxes

5. A Depositary for Federal Taxes shall accept a deposit of Fed­
eral taxes only when it is accompanied by the appropriate prepunched
and preinscribed tax deposit form on which the amount of the deposit
has been entered properly in the space provided. Such prescribed
forms are:
Form 501 “ Federal Tax Deposit— Withheld Income and F I C A
Taxes”
Form 503 “ Federal Tax Deposit— Corporation Income Taxes”
Form 504 “ Federal Tax Deposit— Excise Taxes”
Form 507 “ Federal Tax Deposit— Railroad Retirement Taxes”
Form 508 “ Federal Tax Deposit— Unemployment Taxes”
Form 511 “ Federal Tax Deposit— F I C A Taxes (Em ployer and
Employee Taxes) fo r Agricultural W orkers”
Form 512 “ Federal Tax Deposit— Tax Withheld at Source on
Nonresident Aliens, Foreign Corporations, Tax-Free
Covenant Bonds”




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Depositaries should advise taxpayers who inquire that supplies of the
prescribed forms, if needed, are available only from the Internal
Revenue Service center or district office at which the taxpayer files
his tax returns. A taxpayer’s request for the issuance of an identifica­
tion number should be made to the Internal Revenue Service center
of his region, or to the Director of Internal Revenue for his district.
6. Depositaries should advise taxpayers that do not have the pre­
scribed prepunched and preinscribed forms to mail their remittances
directly to the Internal Revenue Service center or district office at
which they file their tax returns, together with a letter stating the
taxpayer’s name and address, taxpayer’s identification number, type
of tax, tax-period ending date, and amount of remittance, and to
request the Internal Revenue Service office to furnish a supply of
the prescribed forms for his use in making subsequent deposits, indi­
cating the quantity needed.
7. Depositaries shall accept from a taxpayer cash or a postal
money order, check, or draft drawn to the order of the depositary
covering the amount to be deposited as Federal taxes; they shall not
accept checks payable to the Secretary of the Treasury, Director of
Internal Revenue, Federal Reserve Bank, or other Federal official, for
the purpose of making deposits of Federal taxes. Depositaries shall
not accept from taxpayers public debt securities of the United States.
The acceptance of a check drawn to the order of the depositary,
whether drawn on the depositary or on another bank, is without risk
to the depositary, and refund is guaranteed by the Treasury Depart­
ment if subsequently the check is uncollectible. Depositaries are ex­
pected to make reasonable efforts to contact the taxpayer and obtain
restitution. If the depositary is unsuccessful, a request for refund
should be forwarded to this Bank as promptly as possible, together
with (a) a reproduction of the check, with a statement of the reason
why it failed to clear and a statement of the collection efforts made,
(b) the taxpayer’s identifying number, (c) the amount of the tax
deposit involved, as described in the transmittal letter (Form W.
Tax 15) with which the deposit was forwarded to this Bank, and (d)
the date and dollar total o f that transmittal letter.
8. When requested to do so by a taxpayer who makes a deposit
of Federal taxes in cash over the counter, the depositary shall issue
a counter receipt, which may be accomplished by completing and
returning to the taxpayer the stub portion of the Federal tax deposit
form.
9. Depositaries are requested to inform taxpayers at the time they
make their deposits of Federal taxes to use extreme care in handling
the tax deposit forms so that they will not be folded, stapled, spindled,
attached to other papers by any means, or otherwise mutilated, since
this would affect their machine processing.




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10. A depositary may accept from itself deposits of Federal taxes
and treat such deposits in the same manner as deposits from others
as herein provided.
11. Depositaries must indicate on each tax deposit form, in the
space provided, the name and location of the depositary and the date
on which the deposit was received; this date determines the timeliness
of the tax payment. Depositaries should also verify each tax deposit
form to determine that the amount of taxes inscribed on the form
agrees with the amount of the tax deposited. Depositaries will not,
however, have responsibility for determining the correctness of
amounts of Federal taxes deposited or otherwise determining whether
taxpayers have complied with the law or regulations relating to funds
deposited by them as Federal taxes.
12. Each depositary must forward daily to the Head Office of this
Bank all Federal tax deposit forms, without stubs, received that day,
together with (a) a properly completed transmittal letter on this
Bank’s Form W. Tax 15, which must contain the correct name, loca­
tion, and account number of the depositary, and (b) remittance of
the amount of taxes represented by the Federal tax deposit forms in
the form of either funds immediately available to this Bank or advice
of credit to the Treasury Tax and Loan Account of the depositary.
I f the number o f tax deposit forms exceeds 250, they should be batched
in quantities not to exceed 250, with a detailed listing and dollar total
of the items in each batch; each batch should be separated from other
batches by a rubber band or blank 66-column card. The batches
should be assembled in a block of approximately 1,000 items or less,
and each such block must be accompanied by a separate transmittal
letter showing the dollar total of the block.
13. Remittances of Federal taxes in the form of advices of credit
to Treasury Tax and Loan Accounts will be entered immediately in
the depositary’s Treasury Tax and Loan Account on our books. Any
errors later discovered will be adjusted by separate entry on our
books as follows:
(a ) E rrors o f $1,000 or less will be adjusted in the depositary’s re­
serve account ( i f the depositary is a member bank) or in the reserve
account o f a correspondent member bank o f the depositary ( i f the deposi­
tary is a nonmember bank).
(b ) Errors over $1,000 will be adjusted in the depositary’s Treasury
Tax and Loan Account.

14. Depositaries will be expected to maintain adequate records of
all deposits of Federal taxes to enable them to identify deposits in the
event tax deposit forms should be lost in shipment. For this purpose a
record must be maintained by the depositary, for each deposit, of the
date of deposit, the taxpayer’s identification number, and the amount




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of the deposit. (The depositary’s copies of its transmittal letter—
Form W. Tax 15— may be used if they contain that information.)
15. In the event a taxpayer or a depositary has occasion to in­
quire about a deposit of Federal taxes, the information described in
the above paragraph and the date and total amount shown on the
depositary’s transmittal letter must be furnished.
16. Depositaries will be informed of deposits that do not comply
with the provisions of paragraphs 11 and 12 of this circular. Re­
peated failure of a depositary to comply with those provisions may
result in the termination of the agreement with the depositary, pur­
suant to § 214.5(e) of Treasury Department Circular No. 1079 (First
Revision).
Requests for prescribed forms and Treasury
Department circulars

17. Requests for copies of Treasury Department Circular No. 92
(Second Revision) and questions relating to the provisions thereof
should be addressed to the Government Bond and Safekeeping Depart­
ment, Federal Reserve Bank of New York, New York, N. Y. 10045.
18. Requests for all prescribed forms, copies of Treasury Depart­
ment Circular No. 1079 (First Revision), and copies of this circular,
and questions relating to the handling and processing of Federal
tax deposits, should be addressed to the Federal Taxes Section, Fed­
eral Reserve Bank of New York, New York, N. Y. 10045.
Effect of this circular on previous circulars

19. This circular supersedes our Operating Circular No. 18, Re­
vised July 1, 1968, and the First Supplement thereto, dated March
7, 1969.




A

lfred

H ayes,

President.

5