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FEDERAL RESERVE BANK OF N E W YORK Fiscal Agent of the United States May 11, 1964 UNITED STATES SAVINGS BONDS Changes in Treasury Department Circulars Relating to Matured Series J and K Savings Bonds To P a yin g A g en ts fo r Savings Bonds in the Second Federal R eserve D istrict: Enclosed are copies of the following Treasury documents, all dated April 7, 1964: Department Circular No. 888, Second Revision, Memorandum of Instructions Issued in Conjunction with Department Circular No. 888, Second Revision, and First Amendment to Department Circular No. 1036. The revisions of Department Circular No. 888 and its accompanying Memorandum of Instructions reflect the Treasury’s recent action of granting to those paying agents authorized to specially endorse savings bonds under the Treasury circular the privilege of paying matured J and K savings bonds with or without the owners’ signatures to the requests for payment. Series J and K savings bonds began maturing May 1, 1964. The amendment to Department Circular No. 1036 provides that Series J bonds are eligible for exchange with the privilege of deferral of Federal income tax, provided they are received by a qualified agent not later than six months from the month of maturity. Additional copies of the enclosed documents will be furnished upon request. 19 14 A lfred H ayes, President. FIFTIETH ANNIVERSARY 19 6 4 REGULATIONS GOVERNING THE SPECIAL ENDORSEMENT OF UNITED STATES SAVINGS BONDS OF AN Y SERIES AND THE PAYMENT OF MATURED SERIES F, G, J AND K BONDS BY ELIGIBLE PAYING AGENTS 1964 Department Circular No. 888 Second Revision Fiscal Service Bureau of the Public Debt Department Circular No. 888, Revised, dated April 8 , 1953, as supplemented (31 C F R , 1963 Supp., 330), is hereby further amended and issued as a Second Revision. A u t h o r i t y : Secs. 330.1 to 330.12 issued under sec. 22 , 49 Stat. 21 , as amended; 31 U.S.C. 757c. Sec. 330.1 Purpose of regulations.— These regu lations prescribe a procedure whereby qualified paying agents may specially endorse United States Savings Bonds o f certain classes, with or with out the owners’ signatures to the requests for pay ment, and make provisions for such agents either to pay certain o f the bonds so endorsed or to forward them to the Federal Reserve Bank or Branch servicing their accounts for payment or for any authorized exchange. Section 330.3 de scribes the eligibility o f various classes o f bonds for processing under the procedure provided in this circular, and Sec. 330.8 sets out which o f these classes may be paid by such agents and which should be forwarded to a Federal Reserve Bank or Branch. U N D E R NO C IR C U M S T A N C E S S H A L L T H E P R O V IS IO N S O F T IIIS C IR C U L A R B E U S E D TO G IV E E F F E C T TO A T R A N S F E R , H Y P O T H E C A T IO N , OR P L E D G E O F A B O N D OR T O P E R M IT P A Y M E N T T O A N Y P E R SO N O T H E R T H A N T H E O W N E R OR C O O W N E R . V IO L A T IO N O F T H E S E P R O H IB IT IO N S W IL L BE C A U SE FO R T H E W IT H D R A W A L O F AN A G E N T 'S P R IV IL E G E TO PR O C E SS A N Y B O N D S U N D E R T H IS C IR C U L A R . Sec. 330.2. Agents eligible to process bands.—• Any institution qualified as a paying agent of United States Savings Bonds under the provisions 727-950c43— 64 T reasury D epartm ent, O ffic e o f t h e S e c re ta ry , Washington, April 7 ,1964. o f Department Circular No. 750, as revised, may establish its eligibility to employ the procedure authorized by this circular upon application on Treasury Department Form P I) 2291 to the Fed eral Reserve Bank o f the District in which it is located. This form provides a certification that by duly executed resolution o f its governing board or committee the institution has been authorized to apply for the privilege o f processing and pay ing bonds in accordance with the provisions and conditions o f Department Circular No. 888, in cluding all supplements, amendments, and revi sions thereof, and any instructions issued in connection therewith. I f the application is ap proved, the Federal Reserve Bank will so notify the institution on Treasury Department Form P D 2292. The Secretary o f the Treasury reserves the right to withdraw from any institution at any time the authority granted thereto under these regulations. Sec. 330.3. Bonds eligible for processing.— The procedure provided in these regulations may be employed in connection with the redemption or exchange o f any savings bond upon the request o f its registered owner or either coowner. The term “ owner” is defined to include individuals, incorporated and unincorporated bodies, execu tors, administrators, and other fiduciaries named on a bond. This procedure does not apply, how ever, to cases where payment or exchange is re quested by a parent in behalf o f a minor named on a bond as owner. Also, it does not apply to requests made by surviving beneficiaries, or to any cases requiring a death certificate or other docu mentary evidence. 2 Sec. 330.4. Guaranty given to the United States.— A paying agent by the act o f paying or presenting to the Federal Reserve Bank or Branch either for payment or fo r exchange a bond bear ing the special endorsement prescribed in this cir cular shall be deemed thereby (a) to have uncon ditionally guaranteed to the United States the validity o f the transaction, including the identi fication o f the owner and the disposition o f the proceeds or the new bonds, as the case may be, in accordance with his instructions, (b) to have assumed complete and unconditional liability to the United States for any loss which may be in curred by the United States as a result o f the transaction, and (c) to have unconditionally agreed to make prom pt reimbursement for the amount o f the loss upon request o f the Treasury Department. above endorsement or, in lieu thereof, will approve designs for suitable stamps to be obtained by pay ing agents. Requests for endorsement stamps to be furnished or approved by the Federal Reserve Bank shall be made in writing by an officer o f the institution. Sec. 330.7. Bonds in cooumership form.— In ad dition to the endorsement prescribed in Sec. 330.6, the paying agent shall, in the case o f bonds reg istered in cooAvnership form, indicate which coowner requested payment or exchange. This should be done by encircling in black or other dark-colored ink the name o f such coowner (or both coowners if a joint request for payment or exchange is made) as it appears in the inscription on the face o f the bond. Sec. 330.8. Payment or exchange of bonds. (a) By paying agents. Sec. 330.5. Evidence of owner’s authorization to agent.— B y the act o f paying or presenting to the (1 ) Payment of Series A -E bonds, inclusive, for cash.— Bonds o f Series A to E, inclusive, bear Federal Reserve Bank or Branch for payment or for exchange a bond bearing the special en dorsement described in Sec. 330.G, the paying agent represents to the United States that it has ob tained adequate instructions from the owner with respect to payment or exchange o f the bond and disposition o f its proceeds or the new bond, as the case may be. T o support this representation, agents should maintain such records as may be necessary to establish the receipt o f such instruc tions as well as records establishing compliance therewith. ing the special endorsement may be paid by a paying agent pursuant to the authority and sub ject, in all other respects, to the provisions and conditions o f Department Circular No. 750, as re vised, and the instructions issued pursuant thereto. Bonds so paid will be combined with other Series A to E bonds paid under that circular and for warded to the Federal Reserve Bank or Branch servicing the agent’s account. (2) Payment of MATURED Series F, G, J and K bonds.— Matured savings bonds o f Series F, G, J and K may be paid by paying agents whose eligibility lias been duly established pursuant to Sec. 330.2. No fees will be paid to the agents for making these payments. Such matured bonds may be paid only under the provisions and condi tions o f this subsection and such instructions as may be issued pursuant thereto. It will be re quired that (i) the bonds be o f a class which may be processed by special endorsement (see Sec. 330.3), (ii) the owner has requested the payment (see Sec. 330.3), (iii) the bonds bear no material alteration, irregularity, mutilation, or other defect that may be a basis for questioning payment thereof, and (iv ) the bonds bear the special en dorsement (see Sec. 330.6). The payment o f ma tured bonds o f Series F, G, J and K shall be made in accordance with the following provisions: Sec. 330.6. Endorsement of bonds.— Each bond processed under these regulations shall bear the follow ing endorsement: “ Request by owner and validity o f transaction guaranteed in accordance with T.D . Circular No. 888, Revised. (Name and location o f agent) ” This endorsement must be placed on the back of the bond in the space provided for the owner to request payment. (See Sec. 330.7 for addi tional instructions covering bonds inscribed in coownership form .) The endorsement stamp must be legihJy impressed in black or other dark-colored ink. The Federal Reserve Bank o f the District will furnish rubber stamps fo r impressing the 3 (a) A Series F or J bond shall be paid at to the authority and subject, in all other respects, to the provisions and conditions o f Department its face value. Circular No. 750, as revised, and the instructions (&) A Series G or Iv bond shall be paid at issued pursuant thereto. its face value, together with the final interest due thereon, as shown below : (b) B y Federal Reserve Banks. A uthorized Denom inations Amotint Payable ( F ace value i>lug final in terest) Scries G $100 (Series G o n ly)_________ $101. 25 $500 __________________________ 500.25 $1,000 _______________________ 1 ,0 1 2 .5 0 $5,000 _______________________ 5 ,0 0 2 .5 0 $10,000 _______________________ 1 0 ,125 .00 $100,000 ( Series K only) ________________ Bering K -----------------$506.90 1 ,0 1 3 .8 0 5,0(39.00 1 0 ,138 .00 101, 380. 00 ( c) Each bond shall bear on its face, in the upper right portion, a payment stamp set ting forth the Avord “ P A I D ” and the amount o f the payment (including the final interest on Series G and K bonds), the date o f pay ment (month, day, year), and the name and location o f the paying agent including the 1 B A transit number or other identifying code approved or assigned by the Federal Reserve Bank o f the District (the payment stamp prescribed for use under Department Circular No. 750, as revised, may be used). (d) The proceeds o f each bond shall be dis posed o f pursuant to the owner’s instructions. ( e) Each payment shall be subject to the guaranty and liability provisions o f Sec. 330.4 hereof. ( / ) Paying agents shall be subject to such other instructions governing these payments as may be issued by the Federal Reserve Bank o f the District. Immediate settlement, subject to adjustment, will be made with the paying agent by the Federal Reserve Bank or Branch servicing its account for the total amount due on the paid bonds submitted hereunder at any one time. (3) Payment of Series E, F and J bonds on re demption-exchange for Series II bonds.— A ll out standing Series E bonds, and all Series F and J bonds received not later than six months from the month o f maturity, presented for redemptionexchange under the provisions o f Department Cir cular No. 1036, which bear the special endorse ment, may be paid by a paying agent pursuant (1) General.— A ll bonds forwarded to a Fed eral Reserve Bank or Branch for payment or ex change under this circular must be accompanied by appropriate instructions governing the trans action and the disposition o f the redemption checks or the new bonds, as the case may be. The bonds must be kept separate from any bonds the agent has paid, and they must be presented in accordance with such instructions as may be issued by the Federal Reserve Bank o f the District. (2) Payment.— Savings bonds presented to an eligible paying agent for payment which it elects to process by special endorsement under the pro visions and conditions o f this circular must be fo r warded to the Federal Reserve Bank or Branch servicing the agent’s account fo r payment (i) if the bonds are not payable under (a) o f this sec tion, or (ii) if being payable thereunder, the agent does not elect to make the payment. (3) Exchange.— Series E, F and J bonds pre sented for redemption-exchange which the agent elects to process but not to pay under (a) ( 3 ) of this section, as well as any savings bonds sub mitted for exchange, in whole or in part, pursuant to an authorized exchange offering and processed by special endorsement under this circular, must be forwarded to the Federal Reserve Bank or Branch. Sec. 330.9. Functions of Federal Reserve Banks.— The Federal Reserve Banks, as fiscal agents o f the United States, are authorized and directed to perform such duties, and prepare and issue such instructions, as may be necessary to the fulfillment o f the purpose and requirements o f this circular. The Federal Reserve Banks may utilize any or all o f their Branches in the per formance o f these duties. Sec. 330.10. Modification of other circulars.— The provisions o f these regulations shall be con sidered as amendatory o f and supplementary to Department Circulars Nos. 530, 653, 654, 750, 751, 885, 905 and 906 and any revisions thereof, and those circulars are hereby modified where neces sary to accord with the provisions hereof. Sec. 330.11. Other circulars generally applica ble.— Except as provided in these regulations, the circulars referred to in the preceding section will continue to be generally applicable. /.» no ;•< ’ P ! ( J . , k ;: EO’i 1 time, or from time to time, supplement, amend or revise the terms o f these regulations. JO H N K. CAR LO CK , Fiscal Assistant Secretary of the Treasury. i -m 'A I m > j v /: \yA:W[uums o<J ! - jio i •*» j i > • I Sec. 330.12. Supplements, amendments or revi sions.— The Secretary of the Treasury may at any f . ,, } f\ - bun ’ ,.f t ’ 4,f| ,T j j;-- .... , r f .. s ! "U lA 'i" j . 7/ -> .1 • ' HI .-‘I ' ;J! U . S . C OV E RH t t£ N T PRINTI NG O F F i C E : l 9 < « IM PORTANT: This memorandum is only for use of qualified paying agents of savings bonds. It is not for general distribution. MEMORANDUM OF INSTRUCTIONS ISSUED IN CONJUNCTION WITH DEPARTMENT CIRCULAR NO. 888, SECOND REVISION Fiscal Service Bureau of the Public Debt T reasury D epartm ent, O f f ic e o f t h e S ecretary, Washington, April 7, 1964. 1. GENERAL. (A ) Purpose of Memorandum. This memoran dum is for the guidance o f paying agents which establish eligibility under Treasury Department Circular No. 888, Second Revi sion, to specially endorse savings bonds for payment or redemption-exchange, or for pres entation to Federal Reserve Banks for pay ment or exchange. The memorandum both explains and supplements the circular, and will acquaint paying agents with the objec tives o f the special endorsement procedure and its attendant risks. (B ) Liability Assumed by Agents Using Special Endorsement. A n agent endorsing savings bonds under the provisions o f Circular No. 888 (i) gives the United States an uncondi tional guarantee as to the validity o f each transaction, including the identification o f the owner and disposition o f the bond proceeds or the new bonds in the case o f an exchange; (ii) assumes complete and unconditional lia bility to the United States for any loss which may be incurred as a result o f the transaction; and (iii) unconditionally agrees to make prompt reimbursement for any loss when so requested by the Treasury Department. Agents should recognize that this undertak ing is greater than that assumed in the pay ment o f Series A -E bonds under Department Circular No. 750, Revised. (C ) Options Available to Agents. It should be borne in mind that it is entirely optional with each paying agent whether or not to become eligible to use the special endorsement, and, after establishing such eligibility, it is still optional with the agent whether or not to use the endorsement. 727 0 5 1 •- 64 2. PU R PO SE OF R E G U LA TIO N S. Gener ally speaking, Circular No. 888, as revised, pre scribes a special endorsement which an eligible paying agent may place upon any series o f savings bonds, with certain limitations as to classes of bonds which may be endorsed (see section 4 hereof), so that regardless o f whether or not the owner signs the request for payment on the bond, the paying agent may (i) pay the bond ( i f the Treasury has authorized its payment by agents) ; (ii) redeem the bond in exchange for Series H bonds (if the surrendered bond is eligible for such exchange) ; or (iii) present the bond to a Federal Reserve Bank for payment or for an authorized exchange. However, the paying agent must have appropriate authority from the owner, who must l>e competent to act. Because o f the guarantee provisions of section 330.4 o f Circular No. 888, Second Revision, eligible agents should use the special endorsement only in connection with bonds owned by persons who are fully known to them. S P E C IA L A T T E N T IO N IS D IR E C T E D TO T H E L A S T T W O SEN TEN CES O F SE C TIO N 330.1 O F T H E C IR C U L A R . Use o f the endorsement procedure in any way that might give effect to a transfer, hypothecation or pledge o f a bond or payment to anyone other than an owner or coowner is prohibited. 3. M E A N IN G OF TE R M S. For the purpose o f this memorandum (unless otherwise indicated either specifically or by context) the term : (i) “ Bond (s) ” ■shall mean United States Sav ings Bonds o f any and all series which an “ eligible agent” is permitted to “ spe cially endorse” . (ii) “ O w n er(s)” shall include any coowner and shall mean a person (including nat ural persons, incorporated and unincor 2 porated bodies, executors, administrators and other fiduciaries) named as such, on a bond. (iii) “ Eligible agent ( s ) ” or “ agent(s) ” shall mean any qualified paying agent o f sav ings bonds which has been duly notified by the Federal Reserve Bank by means o f Form P D 2292 o f its eligibility to process savings bonds by special endorse ment under the provisions and conditions o f Circular No. 888, as revised. (iv) “ Special endorsement” shall mean the endorsement prescribed in section 330.6 o f Circular No. 888, Second Revision. (v ) “ Specially endorse” or “ specially en dorsed” shall mean the application by an “ eligible agent” o f the “ special endorse ment” to “ bonds” which are to be paid or exchanged. (v i) “ Exchange” shall refer only to official Treasury exchange offerings involving sa vings bonds. (v ii) “ Circular No. 888” or similar reference thereto shall be to the Second Revision o f the circular. (viii) “ Federal Reserve Bank” refers to the Federal Reserve Bank or Branch servic ing the agent’s account. (ix ) “ Nonresident alien” means any nonresi dent alien individual and any nonresident foreign corporation, association or part nership. 4. CLASSES OF BONDS WHICH M AY OR M A Y NOT BE SPECIALLY ENDORSED. A n eligible agent may, at its discretion, specially endorse a bond which the owner has requested the agent to pay or exchange (in whole or in part). A bond may not be specially endorsed if documen tary evidence is required under Department Cir cular No. 530, current revision, in support o f a request for payment. The following information, examples, and exceptions (especially item ( v ) ) should be noted: (i) Documentary evidence is not required if an owner’s name is changed by reason o f marriage. (ii) Bonds may not be specially endorsed up on a parent’s request in behalf o f a minor child named on the bond as the owner. (iii) Reference should be made to subparts O and P o f Department Circular No. 530, as currently revised, for determination as to whether bonds registered in the name o f a fiduciary, private organization (corpora tion, association, partnership, etc.), or a governmental agency, unit or officer re quire documentary evidence in support of a request for payment. (iv ) Bonds inscribed in the names o f banks which have changed their name, status or designation by merger, consolidation or otherwise may be paid upon verification that approved evidence is on file with the Treasury Department. Such verification should be obtained through the Federal Reserve Bank, which will notify the agent whether or not the bonds are eligible for payment under the provisions o f Circular No. 888. This procedure applies whether the bonds are held by the banks in their own right or in a fiduciary capacity. (v ) Notwithstanding the provisions o f C ir cular No. 888, a bond which requires docu mentary evidence to support payment may be specially endorsed and presented for exchange without such evidence if the bond is to be exchanged in the full amount and the registration o f the new bond is to be identical with that on the exchanged bond. 5. AUTHORIZATIONS AND INSTRUC TIONS FROM OWNERS. (A ) Receipt of Authorizations and Instructions. The Treasury Department will not prescribe specific rules governing the form or type of authorizations and instructions governing re quests for payment or exchange, or disposition o f proceeds or bonds, as the case may be, which an agent should obtain from owners. Such authorizations and instructions should be in a form that will enable the agent to justify the transaction subsequently and, o f course, they must be given by an owner named as such on the bond. An agent should also bear in mind that a surviving beneficiary or coowner be comes the sole and absolute owner o f a bond if it has not been presented for payment or ex change during the life o f the owner or the other coowner. Consequently any authoriza tion by an owner or coowner with respect to a bond in beneficiary or coownership form which provides for future execution rather than for immediate payment or exchange would expire upon the death o f the person giving the authorization. In view o f this, there is a risk o f loss whenever a bond is processed by special endorsement on the basis o f an authorization which is not o f recent date. ( B ) Retention of Authorizations and / instructions. Owners o f public debt obligations may present their securities, or claims for substitutes in the event o f alleged loss, destruction or theft o f the securities, at any time, and, therefore, the Treasury Department may require evi dence to support a payment or exchange o f a specially endorsed bond any time after the transaction. F or that reason, the Depart ment is not in a position to authorize agents to destroy any records they may make or ob tain to evidence the propriety o f the payment or exchange o f a specially endorsed savings bond. There is no objection, o f course, to microfilming the evidence and then destroying the original documents, if the microfilm is legible. A n agent may make notations on the back o f a bond for the purpose o f helping to reconstruct the transaction, provided that the agent understands it has the primary respon sibility for producing evidence required to support a transaction. The Department will undertake to produce any notations recorded on the back o f a bond but will not assume re sponsibility for the inadequacy o f any such notations 01* for failure to produce the bond or a photocopy thereof in any particular case where the Department’s records may have been lost, stolen or destroyed, or where the notation is not legible for any reason. 6. SPECIAL ENDORSEMENT OF BONDS. (A ) General. When an eligible agent has estab lished that a bond may be specially endorsed and has appropriate authorization and in struction to effect the bond’s payment or ex change, the agent may, entirely at its own discretion, use the special endorsement as set forth in this section. (B ) Prescribed Endorsement Stamp and Supply Thereof. The special endorsement prescribed in Circular No. 888, current revision, reads: “Request by owner and validity of transaction guaranteed in accordance with T.D. Circular No. 888, Revised. (Name and location of agent)” The Federal Reserve Bank will supply, on the agent’s requisition, an adequate number o f endorsement stamps similar to the above. However, eligible agents may obtain their own endorsement stamps at their expense, provided that (i) the size o f the stamp does not exceed a space bounded by one and threequarter inches in the vertical dimension and three inches horizontally; (ii) the wording of the stamp is exactly as specified above, plus any code number assigned to the agent by the Federal Reserve Bank; and (iii) such stamps shall not be obtained by the agent prior to notification o f eligibility by the Federal Re serve Bank. Endorsement stamps obtained by an agent may include such additional data as a code or a space for initials or signature o f the employee approving the transaction, the date o f the transaction, and other infor mation considered pertinent by the agent. It should be remembered that the misuse o f the endorsement stamp could result in losses; therefore, it is strongly suggested that a min imum number o f the stamps be obtained and that control and use thereof be carefully supervised. (C ) Use of Endorsement Stamps. Each endorse ment impression should be legibly made with black or other dark-colored ink. This is im portant to the preservation o f any data re corded 011 savings bonds, since they are micro filmed by the Department. The endorsement should be placed on the back o f the bond in the general area provided for signing the request for payment. (See section 5 (B ) o f this memorandum for additional notations which an agent may make on the back o f a bond.) Stamps obtained under Circular No. 888 should be destroyed or rendered unusable im mediately if and when an agent’s eligibility ceases. 7. DESIGNATION OF COOWNER RE QUESTING TRANSACTION. Whenever a specially endorsed bond which is registered in coownership form does not bear the signature o f the ooowner requesting its payment or exchange, as 4 the case may be, the eligible agent shall indicate which coowner made the request. This should be done by circling in black or other dark-colored ink the name o f such coowner (or both coowners if a joint request for payment or exchange is made) as it appears in the inscription on the face o f the bond. This practice should be followed whether the agent pays the bond or forwards it to the Fed eral Reserve Bank for payment or for exchange. 8. PAYM EN T OF SERIES A -E BONDS B Y PAYING AGENTS. A ny bonds o f Series A . B, C, D and E which are specially endorsed pur suant to the authority and procedure prescribed in Circular No. 888 and this memorandum may be paid by an agent if the bonds are otherwise payable under the authority and provisions o f De partment Circular No. 750, Revised, and the in structions issued in conjunction therewith. H ow ever, bonds held or received by the agent for account o f an owner known to be a nonresident alien (as defined in section 3) may not be paid by the agent (see section 12 hereof). Each spe cially endorsed Series A -E bond paid by an agent must have a payment stamp impressed on the face o f the bond and show therein the date and amount paid. A fter payment, the bonds shall be for warded to the Federal Reserve Bank with other paid bonds o f Series A -E , as prescribed in De partment Circular No. 750, and the instructions issued in conjunction therewith. Inasmuch as each eligible agent has been furnished copies o f these issuances, no further details relating to the payment and handling o f such bonds are included herein. 9. PAYM EN T OF M ATURED SERIES F, G, J AND K BONDS BY PAYING AGENTS. (A ) General. A ny bonds o f Series F or G and any matured tx>nds o f Series J or K which are specially endorsed pursuant to the au thority and procedures prescribed in Circular No. 888 and this memorandum may be paid by an agent under the authority and provisions o f said circular and these instructions. No payments, in wdiole or in part, may be made if the bonds are to be presented fo r an ex change, other than as provided in section 10 hereof. (B ) Limitations on Payment Authority. ( 1 ) Matured bonds: Only matured bonds o f Series J and K bearing the special en dorsement may be paid by an agent. (This limitation no longer applies to Series F and G bonds, all o f which have matured.) UNM ATURED BON DS O F S E R IE S J OR K W H E T H E R OR N OT S P E C IA L L Y E N D O R SE D M U ST B E P R E S E N T E D TO T H E F E D E R A L R E S E R V E B A N K FO R P A Y M E N T . It is reiterated that agents are not required to use the special en dorsement on matured bonds o f Series J and Iv nor to pay them if they are so endorsed (see section 11 hereof for provi sions relating to the forwarding o f spe cially endorsed bonds to Federal Reserve Banks for payment). (2) Alteration, irregularity, mutilation or other defect: Section 330.8(b) of Circu lar No. 888 provides that an agent may not pay any bond bearing a material al teration, irregularity, mutilation or other defect which may be a basis for question ing payment o f the bond. This provision applies whether the alteration, irregu larity, etc., is in the bond itself or in the registration and other data inscribed or required to be inscribed thereon. It should be borne in mind that, with only a few exceptions, all Series F, G, J and K bonds were issued by the Federal Reserve Banks or the Treasury Department; con sequently, eligible agents should expect that the bonds as originally issued did not bear material alterations or other material defects. Despite the above prohibition, there may be instances in which an agent, because of its reliance upon the integrity o f a customer and the customer’s explana tion o f the situation, is willing to endorse and pay bonds wThich have minor errors or defects. In these cases an agent may, at its discretion, pay matured Series F, G, J or K bonds, with the understanding that it assumes full responsibility for any loss which may result by reason o f any such defects. Any such bonds paid by an eli gible agent may be processed by the Fed eral Reserve Bank without question, on the assumption that the agent has noted the defect and been fully satisfied as to 5 the facts. However, the Treasury D e partment reserves the right to question or have its fiscal agents question the pro priety o f any such payments and to charge the amount o f any such questioned bond back to the agent, if deemed desirable, pending further investigation o f the facts. (3) Bonds owned by nonresident aliens: In terest derived by a nonresident alien (as defined in section 3) on savings bonds o f any series is subject to tax. A n eligible agent may not pay matured Series F, G, J or K bonds in instances where the agent knows that the bonds are owned by non resident aliens. Such bonds should be forwarded to the Federal Reserve Bank for payment, as provided in section 12. (C ) Amount Payable, Series F and J. The amount payable on any matured bond o f Se ries F or Series J is its denominational or face value. The payment o f these amounts may be in such form as is mutually agreeable to the owner and the agent. (V ) Amount Payable, Series G and Iv. Any ma tured Series G or Series K bond is payable at its face value P L U S the amount o f the final interest (the last six months’ interest.) due for each denomination. The payment o f these amounts may be in such form as is mutually agreeable to the owner and the agent. The total amount payable for each denomination, including the final interest, is as follow s: Series G Denomi nation $100 500 1, 000 5, 000 10, 000 Series K Amount payable $101. 506. 1, 012. 5, 062. 10, 125. 25 25 50 50 00 Denomi nation Amount payable $500 1, 000 5, 000 10, 000 100, 000 $506. 1, 013. 5, 069. 10, 138. 101, 380. 90 80 00 00 00 (E ) Recording Payment Data an Bands. The amount paid (including final interest in the case o f matured Series G and K bonds), date o f payment, and the name, location and as signed code o f the paying agent must be re corded on each specially endorsed bond paid by an agent. This requirement is designed to : (i) facilitate accounting and settlement for paid bonds, (ii) provide permanent sup porting evidence o f the payment and (iii) prevent a second presentation o f a bond for payment in the event o f its loss or theft. The payment stamp prescribed for use in connec tion with Series A - E bonds should be used for this purpose (the design and specifica tions o f the stamp are contained in the memo randum o f instructions issued in conjunction with Department Circular No. 750). A s soon as practicable after payment, the stamp should be impressed upon the bond in the blank space that is usually available in the upper right portion o f the face o f the bond. Because o f its importance when bonds are microfilmed, each eligible agent is urged to use black or other dark-colored ink in making stamp impressions and recording the amount o f payment. C A R E SH O U L D B E T A K E N TO K E E P T H E IM P R E S S IO N A N D N O T A T IO N S L E G IB L E A N D F R E E FR O M SM E A R S A N D B LU RS. Extreme care should be taken to prevent defacing the bond's serial number, the name and address o f any owner or beneficiary, the issue date or the issuing agent’s validating stamp. (F ) Forwarding Paid Bonds to Federal Reserve Bank.. Matured Series F, G, J and K bonds paid by an agent on the basis o f a special en dorsement under Circular No. 888 shall be grouped into batches for transmittal to the Federal Reserve Bank or Branch servicing the agent’s account. Batches shall be re stricted to bonds o f the same letter series paid in the same calendar month and year and shall contain not more than 200 bonds or $900,000 (redemption value) in amount. A Form P D 2639 shall be prepared as the con trol and transmittal document for each batch. The agent shall indicate in the space pro vided in each form : (i) the type o f bonds ( “ Paper” ) ; (ii) the letter series; (iii) the date o f transmittal; (iv) the month and year the bonds were p a id ; ( v) the number o f bonds in the batch; (v i) the amount paid on the bonds; and (v ii) the transaction ( “ Matured F, G, J or K ” ). Shipments may be made each day or less frequently, provided that all paid bonds on hand on the last business day 6 o f a month must be forwarded to the Federal Reserve Bank not later than the follow ing business day. Specially endorsed bonds sent to a Federal Reserve Bank for payment or exchange shall not be intermingled in any batch containing bonds paid by an agent. (G ) Manner of Shipment. Paid matured bonds o f Series F, G, J and Iv may be sent to the Federal Reserve Bank in the same manner or substantially the same manner in which the agent would transmit paid Series A -E bonds. The provisions o f the Government Losses in Shipment Act, as amended, and related regu lations, will be applicable to these shipments. (II) Claims for Loss, Theft, Destruction or Mu tilation of Paid Bonds. The eligible agent should promptly notify the Federal Reserve Bank o f any known or apparent loss, theft, destruction or mutilation o f paid matured bonds o f Series F, G, J or K. To obtain relief through the Treasury Department for any such bond lost, stolen, destroyed or mutilated prior to receipt by the Federal Reserve Bank, an eligible agent must (i) furnish by letter series the serial number (including prefix and suffix letters), issue date, amount paid and, if available, the registration o f such bond; (ii) certify that the prescribed endorsement and payment stamps were duly impressed; and (iii) provide satisfactoiy evidence that the loss, theft, destruction or mutilation o f the bond has occurred. The records necessary to support a request for relief may be main tained in any form suitable to the agent. In this connection, an eligible agent is authorized to microfilm the paid bonds; such film records may be projected upon a screen, but no prints, enlargements or other reproductions shall be made except by official permission, which may be given by the Federal Reserve Bank. To establish the validity o f the claim, affidavits by employees and statements by officers o f the eligible agent as to the circumstances o f the preparation and dispatch o f the bonds, and any known facts as to the loss, theft, destruc tion or mutilation are ordinarily sufficient for the Department’s purposes. Except as speci fied in this section, the regulations issued pur suant to the Government Losses in Shipment A ct are hereby waived. ( I ) Settlement for Paid Bonds. Immediate set tlement by credit will be allowed by the Fed eral Reserve Bank for the total amount of paid bonds received from an eligible paying agent, subject to adjustment following audit and examination by the Bureau o f the Public Debt. The credit will be made in the agent’s reserve account, if it is a member o f the Fed eral Reserve System. I f the agent is not a member o f the System, credit may be made in the clearing account o f the agent, in the reserve or clearing account o f a correspondent o f the agent, or, if such an account cannot be made available for credit, by check drawn by the Federal Reserve Bank 011 the Treasurer o f the United States. (J ) Adjustments for Paid Bonds. Discrepancies discovered by the Bureau o f the Public Debt in the examination and audit o f paid matured bonds o f Series F, G, J and K will be referred to the Federal Reserve Bank for adjustment, which will be made by (i) charging the reserve or clearing account which an agent has desig nated for crediting amounts due for paid ma tured Series F, G, J and K bonds or (ii) in those cases where settlement was made by check, either by reducing the amount o f the check to be issued in connection with a subse quent transmittal or by requiring the agent to reimburse the Federal Reserve Bank for the amount o f the adjustment. The Treasury Department will communicate with the eli gible agent in the event an improper payment is discovered or claimed. (K ) Service Fees. Circular Xo. 888 prov ides that 110 service fees will be allowed for matured bonds o f Series F, G, J and K paid by agents. 10. PAYM ENT OF ELIGIBLE SERIES E, F AND J BONDS BY PAYING AGENTS IN EXCHANGE FOR SERIES H BONDS. Any bonds o f Series E, F or J which are eligible for redemption by a paying agent in exchange for Series II bonds, and are specially endorsed pur suant to the authority and procedure prescribed in Circular No. 888 and this memorandum, may be paid by an agent. Bonds generally eligible for exchange for Series II bonds under the provisions o f Department Circular Xo. 103G, as amended, in clude (i) all Series E bonds and (ii) all Series F and J bonds received for exchange not later than 7 the exchange offering and any instructions is six months from the month o f maturity. The sued by the Federal Reserve Bank. In each authority o f the paying agents to effect redempinstance the agent must furnish the data and tion-exchanges, as well as complete instructions instructions necessary to permit the Federal regarding the conduct o f the transactions and the Reserve Bank to effectuate the transaction and processing o f the bonds received for exchange, are dispose o f the proceeds. contained in Department Circular No. 750, Re 12. TA XA TIO N ON INTEREST PAYABLE vised, as amended, and in the instructions issued ON BONDS OWNED B Y NONRESIDENT in conjunction therewith. These issuances have ALIENS. Under the Internal Revenue Code, been furnished to all paying agents, and accord the interest derived from savings bonds by a non ingly no further details relating to the payment resident alien (as defined in section 3) is subject to and handling o f such bonds are included herein. 11. PAYM EN T OR EXCHANGE OF BONDS tax. Such interest includes the increment paid on B Y FEDERAL RESERVE B A N K S: ALL appreciation type bonds and the final interest paid SERIES. with the principal on Series G and K bonds, wheth (A ) General. A n agent must not pay any spe er the payment is made by check or otherwise. cially endorsed bonds if the payment is not The Bureau o f the Public Debt has been designated by the Commissioner o f Internal Revenue as the authorized under Department Circular No. withholding agent for all interest on public debt 750, Circular No. 888 or this memorandum. It should also be borne in mind that even securities, and the Federal Reserve Banks act as agents for the Bureau in effecting the withholding though an agent has authority to redeem spe cially endorsed bonds, it is not required to do on savings bonds which are paid or exchanged. so. A ll specially endorsed bonds which an Accordingly, all savings bonds which are known agent cannot or will not pay for cash or in to be owned by nonresident aliens should be sub exchange for Series H bonds must be fo r mitted to the Federal Reserve Bank for payment warded to the Federal Reserve Bank. This or exchange pursuant to instructions issued by includes all savings bonds known to be owned that Bank. Such bonds should be accompanied by by a nonresident alien (as defined in section 3) Ownership Certificates (Form 1001 or one o f the which must be forwarded to the Federal special variations o f that form prescribed for use Reserve Bank for payment, as provided in sec by residents o f certain countries with which tax treaties have been negotiated); such Ownership tion 12 hereof. (B ) Payment of Bonds. A ll bonds specially en Certificates are obtainable from District Directors o f Internal Revenue. The redemption proceeds dorsed by an eligible agent which are to be will ordinarily be paid by the Federal Reserve submitted to the Federal Reserve Bank for Bank by check drawn on the Treasurer o f the payment should be forwarded with appro United States to the order o f the bondowner, but priate instructions regarding disposition of the amount o f such check will be net o f any tax the check to be issued in payment o f the bonds. that may be withheld. The Federal Reserve Bank These bonds presented for payment must be kept separate from paid bonds which the agent will dispose o f the check pursuant to the instructions received with the bonds, subject to any limi may submit for settlement by credit. Pay ment will be made by check drawn on the tations that are or may be imposed on the delivery Treasurer o f the United States payable to o f the checks to addresses outside the United States, the owner. its possessions, the Commonwealth o f Puerto Rico (C ) Exchange of Bonds. Except for those Se and the Canal Zone. ries E, F and J bonds covered by section 10 13. INQUIRIES. A ny inquiry in connection hereof which are eligible for redemption by with Circular No. 888 or this memorandum should an agent in exchange for Series H bonds, all be directed to the Federal Reserve Bank o f the specially endorsed bonds which are to be ex District in which the agent is located. changed should be forwarded to the Federal Reserve Bank. Such transmittals shall be GEORGE F. STICKNEY, made in accordance with the requirements of Deputy Fiscal Assistant Secretary. U.S GOVERNMENT PRI NTING O F F l C E : 1 9 « « EXCHANGE OFFERING OF UNITED STATES SAYINGS BONDS SE R IE S H 1964 First Amendment to Department Circular No. 1036 dated December 31, 1959 Fiscal Service Bureau of the Public Debt Section 339.1 o f Department Circular No. 1036, dated December 31, 1959 (31 C F R , 1963 Supp., 339) is hereby amended as follow s: Sec. 339.1. Exchange of certain Series E y F , and J bonds with the 'privilege of deferral of Fed eral income tax. * * * * * (c ) Description of bonds and definitions.— ( 1 ) Description of bonds.— This section shall apply t o : (i) A ll outstanding Series E bonds; and 727-934 O— 64 T reasury O f f ic e D epartm ent, of th e S ecretary, Washing ton, April 7, 1964-. (ii) A ll Series F and J bonds, provided such bonds are received not later than six months from the month o f maturity by an agency authorized to accept subscriptions for exchange .1 JOHN K. CARLOCK, Fiscal Assistant Secretary of the Treasury. 1 Series J bonds which become Ineligible fo r exchange under this circular because o f failure to present them fo r that purpose not later than six months from the month o f m aturity may be exchanged under the provisions o f section 33 2.7(b) o f D epart ment Circular No. 905, Second Revision, as amended. U. S. GOVERNMENT PRINTING OFFICE; 1964 0 — 727-934
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