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FEDERAL RESERVE BANK OF N E W YORK Fiscal .Agent of the United States r Circular No. 7 2 7 6 "1 L November 23, 1973 -I Offering of April and June Tax Anticipation Treasury Bills To A ll In corporated Banlcs and Trust Companies, and Others Concerned, in the Second Federal R eserve D istrict: The following statement was issued November 21 by the Treasury Department: The Treasury is selling $3.0 billion of tax anticipation bills, $1.0 billion of which are an additional amount of those maturing in April 1974 and $2.0 billion to mature in June 1974. The bills will be auctioned on Wednesday, November 28, for payment on December 3. Commercial banks may make payment for 50% of their own and their customers’ accepted tenders by credit to Treasury Tax and Loan Accounts. The bills will mature on April 19 and June 21, but may be used at face value in payment of Federal income taxes due on April 15 and June 15, 1974, respectively. The Treasury noted that a somewhat larger financing at this time than it had earlier anticipated is prudently required to offset actual or potential redemption of Treasury securities held by foreign mone tary authorities and to afford adequate flexibility in the absence of authority to borrow directly from Federal Reserve Banks. Following is the text of the notice offering the bills referred to above: The Treasury Department, by this public notice, invites tenders fo r two series o f Treasury bills to the aggregate amount o f $3,000,000,000, or thereabouts, as follow s: 137-day bills (to maturity date) to be issued December 3, 1973, in the amount o f $1,000,000,000, or there abouts, representing an additional amount o f bills dated Novem ber 1, 1973, and to mature A pril 19, 1974 (C U S IP N o. 912793 UC8) originally issued in the amount o f $2,006,685,000, the .additional and original bills to be freely interchangeable. The bills will be accepted at face value in paym ent o f income taxes due on A pril 15, 1974. 200-day bills, fo r $2,000,000,000, or thereabouts, to be dated Decem ber 3, 1973, and to mature June 21, 1974 (C U S IP No. 912793 V N 3 ). The bills will be accepted at fa ce value in payment o f income taxes due on June 15, 1974. The bills o f both series will be issued on a discount basis under com petitive and noncom petitive bidding as hereinafter provided and at maturity, to the extent they are not presented in payment o f income taxes, their face amount will be payable without interest. They will be issued in bearer form only, and in denominations o f $10,000, $15,000, $50,000, $100,000, $500,000 and $1,000,000 (m aturity valu e). Taxpayers desiring to apply these bills in paym ent o f income taxes may subm it the bills to a Federal Reserve Bank or Branch or to the Office o f the Treasurer o f the United States, W ashington, not more than fifteen days before the appropriate income tax paym ent date. In the case o f bills submitted in payment o f income taxes o f a corporation they shall be accom panied by a duly com pleted Form 503 and the office receiving these items will effect the deposit on the date the taxes are due. In the case o f bills submitted in payment o f income taxes o f all other taxpayers, the office receiving the bills will issue receipts therefor, the original o f which the taxpayer shall submit on or b efore the date the taxes are due to the D istrict D irector o f Internal Revenue fo r the D istrict in which such taxes are payable. Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern Standard time, W ednesday, Novem ber 28, 1973. Tenders will not be received at the Treasury Department, W ashington. Each tender must be fo r a minimum o f $10,000. Tenders over $10,000 must be in multiples o f $5,000. In the case o f com peti tive tenders the price offered must be expressed on the basis o f 100, with not more than three decimals, e.g., 99.925. F ra c tions may not be used. I t is urged that tenders be made on the printed form s and forw arded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on applica tion therefor. Banking institutions generally may submit tenders fo r account o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions will not be perm itted to submit tenders except fo r their own account. Tenders will be received wihout deposit from in corpo rated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accom panied by paym ent o f 2 percent o f the fa ce amount o f Treasury bills applied for, unless the tenders are accom panied by an express guaranty o f paym ent b y an incorporated bank or trust company. A ll bidders are required to agree n ot to purchase or to sell, or to make any agreements with respect to the purchase or sale or other disposition o f any bills bid fo r under this offering at a specific rate or price, until after one-thirty p.m., Eastern Standard time, W ednesday, Novem ber 28, 1973. Im m ediately after the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, follow in g which public announcement will be made b y the Treasury D epartment o f the amount and price range o f accepted bids. Only those subm itting com petitive tenders will be advised o f the acceptance or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. S u b ject to these reservations, noncom petitive tenders fo r $250,000 or less fo r the 137-day bills and (over) $500,000 or less fo r the 200-day bills, w ithout stated price from any one bidder will be accepted in fu ll at the average price (in three decim als) o f accepted com petitive bids fo r the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or com pleted at the Federal Reserve Bank in cash or other im m ediately available funds on Decem ber 3, 1973. A n y qualified depositary w ill be per m itted to make settlement b y credit in its Treasury tax and loan account fo r n ot more than 50 percent o f the amount of Treasury bills allotted to it fo r itself and its customers. Under Sections 4 5 4 (b ) and 1 2 2 1 (5 ) o f the Internal Revenue Code o f 1954, the amount o f discount at which bills issued hereunder are sold is considered to accrue when the bills are sold, redeemed or otherwise disposed o f, and the bills are excluded from consideration as capital assets. A ccordin gly, the owner o f Treasury bills (other than life insurance com panies) issued hereunder must include in his income tax return, as ordinary gain or loss, the difference between the price paid fo r the bills, whether on original issue or on subsequent pur chase, and the amount actually received either upon sale or redemption at m aturity during the taxable year fo r which the return is made. Treasury Department Circular No. 418 (current revision) and this notice prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies o f the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders up to 1 :30 p.m., Eastern Standard time, Wednesday, November 28, 1973, at the Securities Department of its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate forms to submit tenders and return them in the enclosed envelope marked “ Tender for Treasury Bills.” Tenders not requiring a deposit may be submitted by telegraph, subject to written confirmation; no tenders may be submitted by telephone. Settlement for accepted tenders must be made in cash or other immediately available funds on December 3, 1973, except that any qualified depositary may make settlement by credit in its Treasury Tax Loan Account for not more than 50 percent of the amount of Treasury bills allotted to it for itself and its customers. A lfred H ayes, President.