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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States September 11,1964 Notice of Procedures for Commercial Bank Reporting of Foreign Loans Under Interest Equalization Tax Act To All Commercial Banlcs in the Second Federal Reserve District: Following is the text of a Notice issued by the Treasury Department, dated September 8, 1964: The Interest Equalization Tax A ct provides authority to obtain from U. S. commercial banks inform a tion returns on loans and commitments to foreign obligors, as prescribed by the Secretary o f the Treasury. Pursuant to this authority, the Treasury is instituting m andatory reporting of new term loan commitments to foreigners o f $250,000 or more entered into on or after September 15, 1964. A sample o f the form s to be used fo r these reports is attached. This form will supersede, as o f that date, the voluntary reports sub mitted to the Treasury by many commercial banks engaged in foreign lending since early this year. The new form and instructions have benefited from the experience with voluntary reporting and also from comments and suggestions by members of the Banking Committee of the A dvisory Council on Federal Reports. These new form s are now being printed and will be available from the Treasury and the Federal Reserve Banks by September 15. Commercial banks should report commitments made on or after September 15 only on the new form . To assure proper handling, completed reports should be addressed to the Secretary o f the Treasury— IE T Form, in care o f the President o f the Federal Reserve Bank in the District o f the reporting bank. The President has signed an Executive Order which will permit the Federal Reserve Banks to process these reports in the same manner as they have been processing the voluntary reports made by certain banks since January 1. The Interest Equalization Tax A ct authorizes the President to apply the tax to bank loans to foreigners o f one-year or more m aturity i f he determines that such loans are materially im pairing the effectiveness o f the tax. The report of the Congressional Conference Committee which considered this provision stated that ‘ ‘ the President will follow closely the volume o f commercial bank loans and should he become convinced that they are being used to an appreciable extent as a substitute (directly or indirectly) for obligations taxed by the bill, he will exercise the authority granted to him under this provision. ’ ’ The new reporting form is designed to enable the Treasury to meet its responsibilities under the law fo r evaluating the nature of, and trends in, bank lending abroad under the current exemption from tax fo r loans made in the ordinary course o f the commercial banking business. It will elicit inform ation which will differentiate loans in support o f United States exports from other loans, and reveal characteristics and circumstances o f such other loans necessary to permit a reasonable judgm ent as to whether or not their continued exemption may be impairing the effectiveness of the tax. The new form , while similar to the voluntary form that many banks have been submitting since the beginning o f this year, has been somewhat expanded. The intent, however, is to request only inform ation which seems essential to fulfill the responsi bilities o f the Treasury for keeping track o f these loans. 19 14 ( over) FIFTIETH ANNIVERSARY 19 6 4 In accordance with the applicable law, all information furnished on these reports will be held in confidence by the Treasury Department and by the officers and employees of the Federal Reserve System authorized to inspect and process the reports. Enclosed is a copy of the new information return form ; additional copies may be obtained from our Balance o f Payments Division, together with copies of the instructions fo r preparing the form. The information returns are subject to the rules o f confidentiality in the Internal Revenue C ode; they will be examined at the Federal Reserve Banks by only those persons who have been specifically designated for this purpose in accordance with Executive Order No. 11176 and the Treasury Regulations issued thereunder. To assure such proper handling, completed reports should be filed in specially addressed envelopes prepared by the Treasury and obtainable from our Balance of Payments Division. Enclosed also is a return receipt card for acknowledging receipt of this letter. A lfred H ayes, President. T r e a s u r y D ep art me nt Inter es t E q u a l i z a t i o n T a x Form a p p r o v e d . B u d g e t Bureau N o. 4 8 - R 4 1 6 . 1 B AN K S TAMP COMMERCIAL BANK INFORMATION RETURN LOANS AND COMMITMENTS.TO FOREIGN OBLIGORS See in stru ction s for explanation of reporting requirem ents. A d dress return to Secretary o f the Treasu ry, IE T Form, Care o f P resid e n t, F ed eral R ese rve Bank in your d istric t. A ll information furnished on this return w ill be held in strict c on fid en ce by the T reasu ry Department and the F ed eral R ese rve System . 1. T y p e o f transaction (ch e ck c o d e ) : P A R T 3 D irect term loan [ |1 Other purchased paper Docum ented by U .S . export paper 1 12 C a n c e lla tio n o f previous commitment j___ 4 2 . D ate o f commitment, purchase, or c a n c e lla tio n : ( A m p n d c nr r a n r p l s \ aorppm pnt nf ~ (Date) (Date) A 3. a . G ro ss amount of loan com m itm ent, or b. F a c e amount o f purchased p a p e r: ^ 4 . T y p e o f obligor (ch eck co d e ; i f “ other foreign ob lig o r” , s e e in s tru c tio n s ): Foreign o ffic ia l in stitution j 01 F oreign bank (other than a central bank) □ 02 P rov in cia l or lo c a l government Other foreign obligor (en ter code ^ om l i s t Pr o v i d e d in i n s t r u c t io n s ) ------------------- ' 03 5. If obligor is not an o ffic ia l institution or provincial or lo c a l governm ent, is obligor a governm ent-ow ned en terprise ( □ Yes l Z j 710 )> or su b sid iary or a ffilia te o f a U .S . person ( yes no ) ? 6 . Country o f obligor : 7 . Purpose : a . If direct ev id en ce is held that a ll or part o f loan is for purpose o f financing s p e c ific orders for U .S . goods and s e r v ic e s , indicate : Amount o f credit u sab le onlv for this purpose ft T v p e of goods or s e r v ic e s financed P A R T B D ocum entation being held by you relating to such s p e c ific export tra n saction s ( s e e in stru c tio n s ) b. If purpose in vo lv es dem onstrable fin an cin g o f U .S . exports not reportable under (a) a b o ve, indicate : Approxim ate amount bein g u sed for this purpose $ R ela tio n sh ip o f loan to fin an cin g o f U .S . exports c . T o exten t a ll or part o f loan is not reportable under either (a) or (b) a b o v e , d e sc rib e intended u se o f loan p roceed s ( s e e in s tr u c tio n s ) 8 . Do you a n ticip ate that this loan w ill have to be refinanced on or before maturity ? If answ er is " Y e s ” , d e sc rib e to extent p o s s ib le . (S ee in s tr u c tio n s . ) (O VER) [__ Y e s [____ No 9. Guarantor or second name (check code or codes): None L Eximbank or FCIA □2 Other U. S. name J j 10. a. In case of direct loan, indicate participation with other lenders b. In ca se of purchased paper, indicate seller 3 4 (check code or codes), or (check code): None (direct loans only) 1 Eximbank P A R T □ □ Foreign name j1 Other U .S . person 2 U . S . commercial bank ]'' j 3 j "| 4 O fficial int’ l organization | ___ ] 5 Foreign lender !____ 0 11. Repayment sch edu le: a. Final maturity on B (or (Date) (Years and months) after __________ takedown) (Indicate whether initial, final or other) b. If repayment in installments, first installment due (Date) (or after (Years and months) takedown) (Indicate whether initial, final or other) Number or frequency of installments Initial installment $ __________________ ; final installment $ c. If revolving credit, check here [ 12. Takedown schedule : a. Initial takedown (on ) (by (Date) (Date) ) or ( 1 I unknown ) b. Amount of initial takedown, if known $ c. Final takedown (on _____ (Date) ) (by ) or ( | j unknown ) (Date) 13* Other terms and conditions : a. Commitment fee provisions P A R T b. Interest rate provisions (check code; if loan customer, enter current loan balances and undisbursed commitments under all prior loan agreements without regard to maturity): 14. Other customer relationship in past 12 months None | |J Deposit customer only [ |2 Loan customer j3 [ Other relationship (describe briefly) Other loan balances $ _ Other commitments $ _ 15* Do the terms and conditions of this credit conform with those generally used for the type of transaction in volved ? | j Y es 1 1No 1 |No established pattern AUTH O RIZE D SIGNATURE : Under penalties o f perjury, I d eclare that I have examined this return and to the b est o f my knowledge and b e li e f it is true, correct, and com plete. DATE SIGNATURE OF O FFIC ER TITLE BANK
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