[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2006 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



          31


          Parts 200 to 499

                         Revised as of July 1, 2006


          Money and Finance: Treasury
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2006
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 31:
    Subtitle B--Regulations Relating to Money and Finance 
      (Continued)
          Chapter II--Fiscal Service, Department of the 
          Treasury                                                   5
          Chapter IV--Secret Service, Department of the 
          Treasury                                                 517
  Finding Aids:
      Material Approved for Incorporation by Reference........     529
      Table of CFR Titles and Chapters........................     531
      Alphabetical List of Agencies Appearing in the CFR......     549
      List of CFR Sections Affected...........................     559

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 31 CFR 202.1 refers 
                       to title 31, part 202, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
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    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Code a note has been inserted to reflect the future effective date. In 
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inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
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January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
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Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
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the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call 202-741-6010.

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the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2006.

[[Page ix]]



                               THIS TITLE

    Title 31--Money and Finance: Treasury is composed of three volumes. 
The parts in these volumes are arranged in the following order: parts 0-
199, parts 200-499, and parts 500 to end. The contents of these volumes 
represent all current regulations codified under this title of the CFR 
as of July 1, 2006.

    For this volume, Robert J. Sheehan was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page 1]]



                  TITLE 31--MONEY AND FINANCE: TREASURY




                  (This book contains parts 200 to 499)

  --------------------------------------------------------------------
                                                                    Part

    SUBTITLE B--Regulations Relating to Money and Finance (Continued)

chapter ii--Fiscal Service, Department of the Treasury......         202

chapter iv--Secret Service, Department of the Treasury......         401

[[Page 3]]

    Subtitle B--Regulations Relating to Money and Finance (Continued)

[[Page 5]]



         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------

               SUBCHAPTER A--FINANCIAL MANAGEMENT SERVICE
Part                                                                Page
202             Depositaries and financial agents of the 
                    Federal Government......................           9
203             Payment of Federal taxes and the Treasury 
                    Tax and Loan Program....................          11
204             [Reserved]
205             Rules and procedures for efficient Federal-
                    State funds transfers...................          23
206             Management of Federal agency receipts, 
                    disbursements, and operation of the Cash 
                    Management Improvements Fund............          39
208             Management of Federal agency disbursements..          45
210             Federal Government participation in the 
                    Automated Clearing House................          50
211             Delivery of checks and warrants to addresses 
                    outside the United States, its 
                    territories and possessions.............          60
215             Withholding of District of Columbia, State, 
                    city and county income or employment 
                    taxes by Federal agencies...............          61
223             Surety companies doing business with the 
                    United States...........................          65
224             Federal process agents of surety companies..          72
225             Acceptance of bonds secured by Government 
                    obligations in lieu of bonds with 
                    sureties................................          74
226             Recognition of insurance covering Treasury 
                    tax and loan depositaries...............          78
235             Issuance of settlement checks for forged 
                    checks drawn on designated depositaries.          80
240             Indorsement and payment of checks drawn on 
                    the United States Treasury..............          81
245             Claims on account of Treasury checks........          96

[[Page 6]]

248             Issue of substitutes of lost, stolen, 
                    destroyed, mutilated and defaced checks 
                    of the United States drawn on accounts 
                    maintained in depositary banks in 
                    foreign countries or United States 
                    territories or possessions..............          97
250             Payment on account of awards of the Foreign 
                    Claims Settlement Commission of the 
                    United States...........................          99
256             Payments under judgments and private relief 
                    acts....................................         102
270             Availability of records.....................         103
281             Foreign exchange operations.................         103
285             Debt collection authorities under the Debt 
                    Collection Improvement Act of 1996......         106
                 SUBCHAPTER B--BUREAU OF THE PUBLIC DEBT
306             General regulations governing U.S. 
                    securities..............................         146
308             General regulations governing full-paid 
                    interim certificates....................         174
309             Issue and sale of Treasury bills............         175
312             Federal savings and loan associations and 
                    Federal credit unions as fiscal agents 
                    of the United States....................         178
315             Regulations governing U.S. Savings Bonds, 
                    Series A, B, C, D, E, F, G, H, J, and K, 
                    and U.S. Savings Notes..................         179
316             Offering of United States Savings Bonds, 
                    Series E................................         205
317             Regulations governing agencies for issue of 
                    United States Savings Bonds.............         212
321             Payments by banks and other financial 
                    institutions of United States Savings 
                    Bonds and United States Savings Notes 
                    (Freedom Shares)........................         217
323             Disclosure of records.......................         234
328             Restrictive endorsements of U.S. bearer 
                    securities..............................         236
330             Regulations governing payment under special 
                    endorsement of United States Savings 
                    Bonds and United States Savings Notes 
                    (Freedom Shares)........................         239
332             Offering of United States Savings Bonds, 
                    Series H................................         243
337             Supplemental regulations governing Federal 
                    Housing Administration debentures.......         246
339             Exchange offering of United States Savings 
                    Bonds, Series H.........................         250
340             Regulations governing the sale of Treasury 
                    bonds through competitive bidding.......         252
341             Regulations governing United States 
                    Retirement Plan Bonds...................         255
342             Offering of United States Savings Notes.....         265

[[Page 7]]

343             Regulations governing the offering of United 
                    States Mortgage Guaranty Insurance 
                    Company Tax and Loss Bonds..............         270
344             U.S. Treasury securities--State and Local 
                    Government Series.......................         272
345             Regulations governing 5 percent Treasury 
                    Certificates of Indebtedness--R.E.A. 
                    Series..................................         297
346             Regulations governing United States 
                    Individual Retirement Bonds.............         298
348             Regulations governing depositary 
                    compensation securities.................         308
351             Offering of United States Savings Bonds, 
                    Series EE...............................         309
352             Offering of United States Savings Bonds, 
                    Series HH...............................         325
353             Regulations governing United States Savings 
                    Bonds, Series EE and HH.................         330
354             Regulations governing book-entry securities 
                    of the Student Loan Marketing 
                    Association (Sallie Mae)................         357
355             Regulations governing fiscal agency checks..         362
356             Sale and issue of marketable book-entry 
                    Treasury bills, notes, and bonds 
                    (Department of the Treasury Circular, 
                    Public Debt Series No. 1-93)............         365
357              Regulations governing book-entry treasury 
                    bonds, notes and bills held in Legacy 
                    Treasury Direct.........................         399
358             Regulations governing book-entry conversion 
                    of bearer corpora and detached bearer 
                    coupons Regulations governing book-entry 
                    conversion of detached bearer coupons 
                    and bearer corpora......................         436
359             Offering of United States Savings Bonds, 
                    Series I................................         440
360             Regulations governing definitive United 
                    States Savings Bonds, Series I..........         452
361             Claims pursuant to the Government Losses in 
                    Shipment Act............................         471
362             Declaration of valuables under the 
                    Government Losses in Shipment Act.......         473
363             Regulations governing securities held in 
                    TreasuryDirect..........................         474
370             Electronic transactions and funds transfers 
                    relating to United States securities....         503
375             Marketable treasury securities redemption 
                    operations..............................         510
380             Collateral acceptability and valuation......         513
391             Waiver of interest, administrative costs, 
                    and penalties...........................         514

[[Page 9]]



                SUBCHAPTER A_FINANCIAL MANAGEMENT SERVICE





PART 202_DEPOSITARIES AND FINANCIAL AGENTS OF THE FEDERAL GOVERNMENT \1\
--Table of Contents



---------------------------------------------------------------------------

    \1\ The regulations, which previously appeared in this part, 
governing payment of checks drawn on the United States Treasury now 
appear in revised form in part 240 of this chapter (Department Circular 
21 (Second Revision)).
---------------------------------------------------------------------------

Sec.
202.1 Scope of regulations.
202.2 Designations.
202.3 Authorization.
202.4 Agreement of deposit.
202.5 Previously designated depositaries.
202.6 Collateral security.
202.7 Maintenance of balances within authorizations.

    Authority: 12 U.S.C. 90, 265-266, 391, 1452(d), 1464(k), 1789a, 
2013, 2122 and 3101-3102; 31 U.S.C. 3303 and 3336.



Sec. 202.1  Scope of regulations.

    The regulations in this part govern the designation of Depositaries 
and Financial Agents of the Federal Government (hereinafter referred to 
as depositaries), and their authorization to accept deposits of public 
money and to perform other services as may be required of them. Public 
money includes, but is not limited to, revenue and funds of the United 
States, and any funds the deposit of which is subject to the control or 
regulation of the United States or any of its officers, agents, or 
employees. The designation and authorization of Treasury Tax and Loan 
depositaries for the receipt of deposits representing Federal taxes are 
governed by the regulations in part 203 of this chapter.

[62 FR 45520, Aug. 27, 1997]



Sec. 202.2  Designations.

    (a) Financial institutions of the following classes are designated 
as Depositaries and Financial Agents of the Government if they meet the 
eligibility requirements stated in paragraph (b) of this section:
    (1) Financial institutions insured by the Federal Deposit Insurance 
Corporation.
    (2) Credit unions insured by the National Credit Union 
Administration.
    (3) Banks, savings banks, savings and loan, building and loan, and 
homestead associations, credit unions created under the laws of any 
State, the deposits or accounts of which are insured by a State or 
agency thereof or by a corporation chartered by a State for the sole 
purpose of insuring deposits or accounts of such financial institutions, 
United States branches of foreign banking corporations authorized by the 
State in which they are located to transact commercial banking business, 
and Federal branches of foreign banking corporations, the establishment 
of which has been approved by the Comptroller of the Currency.
    (b) In order to be eligible for designation, a financial institution 
is required to possess, under its charter and the regulations issued by 
its chartering authority, either general or specific authority to 
perform the services outlined in Sec. 202.3(b). A financial institution 
is required also to possess the authority to pledge collateral to secure 
public funds.

[44 FR 53066, Sept. 11, 1979, as amended at 46 FR 28152, May 26, 1981; 
62 FR 45521, Aug. 27, 1997]



Sec. 202.3  Authorization.

    (a) To accept deposits covered by the appropriate Federal or State 
insurer. Every depositary is authorized to accept a deposit of public 
money in an official account, other than an account in the name of the 
United States Treasury, in which the maximum balance does not exceed the 
``Recognized Insurance Coverage.'' ``Recognized Insurance Coverage'' 
means the insurance provided by the Federal Deposit Insurance 
Corporation, the National Credit Union Administration, and by insurance 
organizations specifically qualified by the Secretary of the Treasury.
    (b) To perform other services. (1) The Secretary of the Treasury may 
authorize a depositary to perform other services including, but not 
limited to:

[[Page 10]]

    (i) The maintenance of official accounts in which balances will be 
in excess of the applicable Federal or State insurance coverage;
    (ii) The maintenance of accounts in the name of the United States 
Treasury;
    (iii) The acceptance of deposits for credit of the United States 
Treasury;
    (iv) The furnishing of bank drafts in exchange for collections.
    (2) To obtain authorization to perform services, a depositary must:
    (i) File with the Secretary of the Treasury an appropriate agreement 
and resolution of its board of directors authorizing the agreement (both 
on forms prescribed by the Financial Management Service and available 
from Federal Reserve Banks), and
    (ii) Pledge collateral security as provided for in Sec. 202.6.

[32 FR 14215, Oct. 13, 1967, as amended at 44 FR 53066, Sept. 11, 1979; 
49 FR 47001, Nov. 30, 1984; 62 FR 45521, Aug. 27, 1997]



Sec. 202.4  Agreement of deposit.

    A depositary which accepts a deposit under this part enters into an 
agreement of deposit with the Treasury Department. The terms of this 
agreement include:
    (a) All of the provisions of this part.
    (b) Any instructions issued pursuant to this part by the Treasury or 
by Federal Reserve Banks as Fiscal Agents of the United States or by any 
other Government agency.
    (c) The provisions prescribed in Executive Order 11246, entitled 
``Equal Employment Opportunity,'' as amended by Executive Orders 11375 
and 12086, and regulations issued thereunder at 41 CFR chapter 60, as 
amended.
    (d) The requirements of section 503 of the Rehabilitation Act of 
1973, as amended, and the regulations issued thereunder at 41 CFR part 
60-741, requiring Federal contractors to take affirmative action to 
employ and advance in employment qualified individuals with 
disabilities.
    (e) The requirements of section 503 of the Vietnam Era Veterans' 
Readjustment Assistance Act of 1972, as amended, 38 U.S.C. 4212, 
Executive Order 11701, and the regulations issued thereunder at 41 CFR 
parts 60-250 and 61-250, requiring Federal contractors to take 
affirmative action to employ and advance in employment qualified special 
disabled and Vietnam Era veterans.

[44 FR 53067, Sept. 11, 1979, as amended at 62 FR 45521, Aug. 27, 1997]



Sec. 202.5  Previously designated depositaries.

    A depositary previously designated will, by the acceptance or 
retention of deposits, be presumed to have assented to all the terms and 
provisions of this part and to the retention of collateral security 
theretofore pledged.

[32 FR 14215, Oct. 13, 1967]



Sec. 202.6  Collateral security.

    (a) Requirement. Prior to receiving deposits of public money, a 
depositary authorized to perform services under Sec. 202.3(b) must 
pledge collateral security in the amount required by the Secretary of 
the Treasury.
    (b) Acceptable security. Types and valuations of acceptable 
collateral security are addressed in 31 CFR part 380. For a current list 
of acceptable classes of securities and instruments described in 31 CFR 
part 380 and their valuations, see the Bureau of the Public Debt's web 
site at www.publicdebt.treas.gov.
    (c) Deposits of securities. Unless the Secretary of the Treasury 
provides otherwise, collateral security under this part must be 
deposited with the Federal Reserve Bank or Branch of the district in 
which the depositary is located (depositaries located in Puerto Rico and 
the Virgin Islands will be considered as being located in the New York 
Federal Reserve district), or with a custodian or custodians within the 
United States designated by the Federal Reserve Bank, under terms and 
conditions prescribed by the Federal Reserve Bank. Securities deposited 
with a Federal Reserve Bank must be accompanied by a letter stating 
specifically the purpose for which the securities are being deposited.
    (d) Assignment. A depository that pledges securities which are not 
negotiable without its endorsement or assignment may, in lieu of placing 
its unqualified endorsement on each security, furnish an appropriate 
resolution and irrevocable power of attorney authorizing the Federal 
Reserve Bank to

[[Page 11]]

assign the securities. The resolution and power of attorney shall 
conform to such terms and conditions as the Federal Reserve Banks shall 
prescribe.
    (e) Disposition of principal and interest payments of the pledged 
securities after a depositary is declared insolvent--(1) General. In the 
event of the depositary's insolvency or closure, or in the event of the 
appointment of a receiver, conservator, liquidator, or other similar 
officer to terminate its business, the depositary agrees that all 
principal and interest payments on any security pledged to protect 
public money due as of the date of the insolvency or closure, or 
thereafter becoming due, shall be held separate and apart from any other 
assets and shall constitute a part of the pledged security available to 
satisfy any claim of the United States, including those not arising out 
of the depositary relationship.
    (2) Payment procedures. (i) Subject to the waiver in paragraph 
(e)(2)(iii) of this section, each depositary (including, with respect to 
such depositary, an assignee for the benefit of creditors, a trustee in 
bankruptcy, or a receiver in equity) shall immediately remit each 
payment of principal and/or interest received by it with respect to 
collateral pledged pursuant to this section to the Federal Reserve Bank 
of the district, as fiscal agent of the United States, and in any event 
shall so remit no later than ten days after receipt of such a payment.
    (ii) Subject to the waiver in paragraph (e)(2)(iii) of this section, 
each obligor on a security pledged by a depositary pursuant to this 
section shall make each payment of principal and/or interest with 
respect to such security directly to the Federal Reserve Bank of the 
district, as fiscal agent of the United States.
    (iii) The requirements of paragraphs (e)(2) (i) and (ii) of this 
section are hereby waived for only so long as a pledging depositary 
remains solvent. The foregoing waiver is terminated without further 
action immediately upon the involvency of a pledging depositary or, if 
earlier, upon notice by the Treasury of such termination. For purposes 
of this paragraph, a depositary is insolvent when, voluntarily or by 
action of competent authority, it is closed because of present or 
prospective inability to meet the demands of its depositors or 
shareholders.

[32 FR 14216, Oct. 13, 1967, as amended at 36 FR 6748, Apr. 8, 1971; 36 
FR 17995, Sept. 8, 1971; 39 FR 30832, Aug. 26, 1974; 44 FR 53067, Sept. 
11, 1979; 46 FR 28152, May 26, 1981; 62 FR 45521, Aug. 27, 1997; 65 FR 
55428, Sept. 13, 2000]



Sec. 202.7  Maintenance of balances within authorizations.

    (a) Federal Government agencies shall contact the Department of the 
Treasury, Financial Management Service, before making deposits with a 
financial institution insured by a State or agency thereof or by a 
corporation chartered by a State for the sole purpose of insuring 
deposits or accounts. The contact should be directed to the Cash 
Management Policy and Planning Division, Federal Finance, Financial 
Management Service, Department of the Treasury, Washington, DC 20227.
    (b) Government agencies having control or jurisdiction over public 
money on deposit in accounts with depositaries are responsible for the 
maintenance of balances in such accounts within the limits of the 
authorizations specified by the Secretary of the Treasury.

[44 FR 53067, Sept. 11, 1979, as amended at 49 FR 47001, Nov. 30, 1984; 
62 FR 45521, Aug. 27, 1997]



PART 203_PAYMENT OF FEDERAL TAXES AND THE TREASURY TAX AND LOAN PROGRAM
--Table of Contents




                      Subpart A_General Information

Sec.
203.1 Scope.
203.2 Definitions.
203.3 Financial institution eligibility for designation as a Treasury 
          Tax and Loan depositary.
203.4 Designation of financial institutions as Treasury Tax and Loan 
          depositaries.
203.5 Obligations of the depositary.
203.6 Compensation for services.
203.7 Termination of agreement or change of election or option.
203.8 Application of part and procedural instructions.

                Subpart B_Electronic Federal Tax Payments

203.9 Scope of the subpart.

[[Page 12]]

203.10 Enrollment.
203.11 Electronic payment methods.
203.12 Future-day reporting and payment mechanisms.
203.13 Same-day reporting and payment mechanisms.
203.14 Electronic Federal Tax Payment System interest assessments.
203.15 Prohibited debits through the Automated Clearing House.
203.16 Appeal and dispute resolution.

                     Subpart C_Federal Tax Deposits.

203.17 Scope of the subpart.
203.18 Tax deposits using Federal Tax Deposit coupons.
203.19 Note option.
203.20 Remittance option.

 Subpart D_Investment Program and Collateral Security Requirements for 
                   Treasury Tax and Loan Depositaries

203.21 Scope of the subpart.
203.22 Sources of balances.
203.23 Note balance.
203.24 Collateral security requirements.

    Authority: 12 U.S.C. 90, 265-266, 332, 391, 1452(d), 1464(k), 1767, 
1789a, 2013, 2122, and 3102; 26 U.S.C. 6302; 31 U.S.C. 321, 323 and 
3301-3304.

    Source: 63 FR 5650, Feb. 3, 1998, unless otherwise noted.



                      Subpart A_General Information



Sec. 203.1  Scope.

    The regulations in this part govern the processing of Federal tax 
payments by financial institutions and the Federal Reserve Banks (FRB) 
using electronic payment or paper methods; the designation of Treasury 
Tax and Loan (TT&L) depositaries; and the operation of the Department of 
the Treasury's (Treasury) investment program.



Sec. 203.2  Definitions.

    As used in this part:
    (a) Advice of credit means the Treasury form used in the Federal Tax 
Deposit system that is supplied to depositaries to summarize and report 
Federal tax deposits. The current form is Treasury Form 2284. Advice of 
credit information also may be delivered electronically.
    (b) Automated Clearing House (ACH) credit entry means a transaction 
originated by a financial institution in accordance with applicable ACH 
formats and applicable laws, regulations, and procedural instructions.
    (c) Automated Clearing House (ACH) debit entry means a transaction 
originated by a Treasury Financial Agent (TFA), in accordance with 
applicable ACH formats and applicable laws, regulations, and 
instructions.
    (d) Business day means any day on which the FRB of the district is 
open.
    (e) Direct Access transaction means same-day Federal tax payment 
information transmitted by a financial institution directly to the 
Electronic Tax Application at an FRB using the Fedline Taxpayer Deposit 
Application.
    (f) Direct investment means placement of Treasury funds with a 
depositary and a corresponding increase in a depositary's note balance.
    (g) Direct investment means placement of Treasury funds with a 
depositary and a corresponding increase in a depositary's main note 
balance.
    (h) Electronic Tax Application (ETA) means a sub-system of EFTPS 
that receives, processes, and transmits same-day Federal tax payment 
information for taxpayers. ETA activity is comprised of Fedwire value 
transfers, Fedwire non-value transactions, and Direct Access 
transactions.
    (i) Electronic Tax Application (ETA) reference number means the 
unique number assigned to each ETA transaction by an FRB.
    (j) Federal funds rate means the Federal funds rate published weekly 
by the Board of Governors of the Federal Reserve System.
    (k) Federal Reserve account means an account with reserve or 
clearing balances held by a financial institution at an FRB.
    (l) Federal Reserve Bank of the district means the FRB that services 
the geographical area in which the financial institution is located, or 
such other FRB that may be designated in an FRB operating circular.
    (m) Federal Tax Deposit (FTD) means a tax deposit or payment made 
using an FTD coupon.
    (n) Federal Tax Deposit coupon (FTD coupon) means a paper form 
supplied to a taxpayer by the Treasury for use in the FTD system to 
accompany deposits of Federal taxes. The current paper form is Form 
8109.

[[Page 13]]

    (o) Federal Tax Deposit system (FTD system) means the paper-based 
system through which taxpayers remit Federal tax payments by presenting 
an FTD coupon and payment to a depositary or an FRB. The depositary 
prepares an advice of credit summarizing all FTDs.
    (p) Federal taxes means those Federal taxes or other payments 
specified by the Secretary of the Treasury as eligible for payment 
through the procedures prescribed in this part.
    (q) Fedwire means the funds transfer system owned and operated by 
the FRBs.
    (r) Fedwire non-value transaction means the same-day Federal tax 
payment information transmitted by a financial institution to an FRB 
using a Fedwire type 1090 message to authorize a payment.
    (s) Fedwire value transfer means a Federal tax payment made by a 
financial institution using a Fedwire type 1000 message.
    (t) Financial institution means any bank, savings bank, savings and 
loan association, credit union, or similar institution.
    (u) Fiscal Agent means the Federal Reserve acting as agent for the 
Treasury.
    (v) Input Message Accountability Data (IMAD) means a unique number 
assigned to each Fedwire transaction by the financial institution 
sending the transaction to an FRB.
    (w) Main note balance means an open-ended interest-bearing note 
balance maintained at the FRB of the district.
    (x) Note option means that program available to a TT&L depositary 
under which Treasury invests in obligations of the depositary. The 
amount of such investments will be evidenced by interest-bearing note 
balances maintained at the FRB of the district.
    (y) Procedural instructions means the procedures contained in the 
Treasury Financial Manual, Volume IV (IV TFM), other Treasury 
instructions issued through the TFAs, and FRB operating circulars issued 
consistent with this part.
    (z) Recognized insurance coverage means the insurance provided by 
the Federal Deposit Insurance Corporation, the National Credit Union 
Administration, and by insurance organizations specifically qualified by 
the Secretary.
    (aa) Remittance option means that program available to a depositary 
that processes FTD payments, under which the amount of deposits credited 
by the depositary to the TT&L account will be withdrawn by the FRB for 
deposit to the Treasury General Account on the day that the FRB receives 
the advices of credit supporting such deposits.
    (bb) Same-day payment means the following ETA payment options:
    (1) Direct Access transaction;
    (2) Fedwire non-value transaction; and
    (3) Fedwire value transfer.
    (cc) Secretary means the Secretary of the Treasury, or the 
Secretary's delegate.
    (dd) Special direct investment means the placement of Treasury funds 
with a depositary and a corresponding increase in a depositary's main 
note balance, where the investment specifically is identified as a 
``special direct investment'' and may be secured by collateral retained 
in the possession of the depositary pursuant to the terms of Sec. 
203.24(c)(2)(i).
    (ee) Tax due date means the day on which a tax payment is due to 
Treasury, as determined by statute and Internal Revenue Service (IRS) 
regulations.
    (ff) Term investment option means the program available to financial 
institutions that offers the ability to borrow excess Treasury operating 
funds for a predetermined period of time.
    (gg) Term note balance means an interest-bearing note balance 
maintained at the FRB of the district for a predetermined period of 
time.
    (hh) Transaction trace number means an identifying number assigned 
by the taxpayer's financial institution to each ACH credit transaction.
    (ii) Treasury Financial Agent (TFA) means a financial institution 
designated as an agent of Treasury for processing EFTPS enrollments, 
receiving EFTPS tax payment information, and originating ACH debit 
entries on behalf of Treasury as authorized by the taxpayer.
    (jj) Treasury General Account (TGA) means an account maintained in 
the

[[Page 14]]

name of the United States Treasury at an FRB.
    (kk) Treasury Tax and Loan (TT&L) account means the Treasury account 
maintained by a depositary in which funds are credited by the depositary 
after receiving and collateralizing FTDs.
    (ll) Treasury Tax and Loan depositary (depositary) means a financial 
institution designated as a depositary by the FRB of the district for 
the purpose of maintaining a TT&L account and/or note balance.
    (mm) Treasury Tax and Loan (TT&L) Program means the program for 
collecting Federal taxes and investing the Government's excess operating 
funds.
    (nn) Treasury Tax and Loan (TT&L) rate of interest means the 
interest charged on the main note balance. The TT&L rate of interest is 
the rate prescribed by the Secretary taking into consideration 
prevailing market interest rates. The rate and any rate changes will be 
announced through a TT&L Special Notice to Depositaries and will be 
published in the Federal Register and on a web site maintained by 
Treasury's Financial Management Service at http://www.fms.treas.gov.

[63 FR 5650, Feb. 3, 1998, as amended at 67 FR 11575, Mar. 15, 2002]



Sec. 203.3  Financial institution eligibility for designation as a 
Treasury Tax and Loan depositary.

    (a) To be designated as a TT&L depositary, a financial institution 
shall be insured as a national banking association, state bank, savings 
bank, savings and loan, building and loan, homestead association, 
Federal home loan bank, credit union, trust company, or a U.S. branch of 
a foreign banking corporation, the establishment of which has been 
approved by the Comptroller of the Currency.
    (b) A financial institution shall possess the authority to pledge 
collateral to secure TT&L account balances and/or a note balance.
    (c) In order to be designated as a TT&L depositary for the purposes 
of processing tax deposits in the FTD system, a financial institution 
shall possess under its charter either general or specific authority 
permitting the maintenance of the TT&L account, the balance of which is 
payable on demand without previous notice of intended withdrawal. In 
addition, note option depositaries shall possess either general or 
specific authority permitting the maintenance of a note balance. In the 
case of note option depositaries maintaining main note balances, the 
authority shall permit the maintenance of a main note balance which is 
payable on demand without previous notice of intended withdrawal.

[63 FR 5650, Feb. 3, 1998, as amended at 67 FR 11576, Mar. 15, 2002]



Sec. 203.4  Designation of financial institutions as Treasury Tax and 
Loan depositaries.

    (a) Parties to the agreement. To be designated as a TT&L depositary, 
a financial institution shall enter into a depositary agreement with 
Treasury's fiscal agent, the FRB. By entering into this agreement, the 
financial institution agrees to be bound by this part, and procedural 
instructions issued pursuant to this part.
    (b)(1) Application procedures. An eligible financial institution 
seeking designation as a depositary and, thereby, the authority to 
maintain a TT&L account and/or a note balance shall file with the FRB, 
Financial Management Service Form 458, ``Financial Institution Agreement 
and Application for Designation as a TT&L Depositary,'' and Financial 
Management Service Form 459, ``Resolution Authorizing the Financial 
Institution Agreement and Application for Designation as a TT&L 
Depositary,'' certified by its board of directors. Financial Management 
Service Forms 458 and 459 are available upon request from the FRB of the 
district.
    (2) Depositaries processing tax payments in the FTD system are 
required to elect either the remittance or the note option.
    (c) Designation. Each financial institution satisfying the 
eligibility requirements and the application procedures will receive 
from the FRB notification of its specific designation as a TT&L 
depositary. A financial institution is not authorized to maintain a TT&L 
account or note balance until it has been designated as a TT&L 
depositary by the FRB.

[[Page 15]]



Sec. 203.5  Obligations of the depositary.

    A depositary shall:
    (a) Administer a note balance, if not participating in the FTD 
System.
    (b) Administer a TT&L account and, if applicable, a note balance, if 
participating in the FTD System.
    (c) Comply with the requirements of Section 202 of Executive Order 
11246, entitled ``Equal Employment Opportunity'' (3 CFR, 1964-1965 Comp. 
p. 339) as amended by Executive Orders 11375 and 12086 (3 CFR, 1966-1970 
Comp., p. 684; 3 CFR, 1978 Comp. p. 230), and the regulations issued 
thereunder at 41 CFR Chapter 60.
    (d) Comply with the requirements of Section 503 of the 
Rehabilitation Act of 1973, as amended, and the regulations issued 
thereunder at 41 CFR part 60-741, requiring Federal contractors to take 
affirmative action to employ and advance in employment qualified 
individuals with disabilities.
    (e) Comply with the requirements of Section 503 of the Vietnam Era 
Veterans' Readjustment Assistance Act of 1972, as amended, 38 U.S.C. 
4212, Executive Order 11701 (3 CFR 1971-1975 Comp. p. 752), and the 
regulations issued thereunder at 41 CFR parts 60-250 and 61-250, 
requiring Federal contractors to take affirmative action to employ and 
advance in employment qualified special disabled veterans and Vietnam-
era veterans.



Sec. 203.6  Compensation for services.

    Except as provided in the procedural instructions, Treasury will not 
compensate financial institutions for servicing and maintaining the TT&L 
account, or for processing tax payments through the EFTPS or the FTD 
system.



Sec. 203.7  Termination of agreement or change of election or option.

    (a) Termination by Treasury. The Secretary may terminate the 
agreement of a depositary at any time upon notice to that effect to that 
depositary, effective on the date set forth in the notice.
    (b) Termination or change of election or option by the depositary. A 
depositary may terminate its depositary agreement, or change its option 
or election, consistent with this part and the procedural instructions, 
by submitting notice to that effect in writing to the FRB effective at a 
prospective date set forth in the notice.



Sec. 203.8  Application of part and procedural instructions.

    The terms of this part and procedural instructions issued pursuant 
to this part shall be binding on financial institutions that process tax 
payments and/or maintain a note balance under this part. By accepting or 
originating Federal tax payments, the financial institution agrees to be 
bound by this part and by procedural instructions issued pursuant to 
this part.



                Subpart B_Electronic Federal Tax Payments



Sec. 203.9  Scope of the subpart.

    This subpart prescribes the rules by which financial institutions 
shall process Federal tax payment transactions electronically. A 
financial institution does not need to be designated as a TT&L 
depositary in order to process electronic Federal tax payments. In 
addition, a financial institution that does process electronic Federal 
tax payments under this subpart does not thereby become a Federal 
Government depositary and shall not advertise itself as one because of 
that fact.



Sec. 203.10  Enrollment.

    (a) General. Taxpayers shall complete an enrollment process with the 
TFA prior to making their first electronic Federal tax payment.
    (b) Enrollment forms. The TFA shall provide financial institutions 
and taxpayers with enrollment forms upon request. The taxpayer is 
responsible for completing the enrollment form, obtaining the 
verifications required on the form, and returning the enrollment form to 
the TFA.
    (c) Verification. If the taxpayer elects the ACH debit entry method 
of paying taxes, an authorized representative of the financial 
institution shall verify the accuracy of the financial institution 
routing number, taxpayer account number, and taxpayer account type at 
the request of the taxpayer.

[[Page 16]]



Sec. 203.11  Electronic payment methods.

    (a) General. Electronic payment methods for Federal tax payments 
available under this subpart include ACH debit entries, ACH credit 
entries, and same-day payments. Any financial institution that is 
capable of originating and/or receiving transactions for these payment 
methods, by itself or through a correspondent financial institution, may 
do so on behalf of a taxpayer.
    (b) Conditions to making an electronic payment. Nothing contained in 
this part shall affect the authority of financial institutions to enter 
into contracts with their customers regarding the terms and conditions 
for processing payments, provided that such terms and conditions are not 
inconsistent with this subpart and applicable law governing the 
particular transaction type.
    (c) Payment of interest for time value of funds held. Treasury will 
not pay interest on any payments erroneously paid to Treasury and 
subsequently refunded to the financial institution.



Sec. 203.12  Future-day reporting and payment mechanisms.

    (a) General. A financial institution may receive an ACH debit entry, 
originated by the TFA at the direction of the taxpayer; or, a financial 
institution may originate an ACH credit entry, at the direction of the 
taxpayer. Taxpayers will be credited for the actual amount received by 
Treasury.
    (b) ACH debit. A financial institution receiving an ACH debit entry 
originated by the TFA shall, as applicable:
    (1) Timely verify the account number and account type contained in 
an ACH prenotification entry;
    (2) Timely and properly return a prenotification entry that contains 
an invalid account number or account type, or otherwise is erroneous or 
unprocessable;
    (3) Timely and accurately notify the TFA of incorrect information on 
entries received, using a Notification of Change entry; and
    (4) Timely and accurately return an entry not posted, including but 
not limited to, a return or a contested dishonored return for acceptable 
return reasons, as set forth in the procedural instructions.
    (c) ACH credit. A financial institution originating an ACH credit 
entry at the direction of a taxpayer shall:
    (1) At the request of the taxpayer, originate either an ACH 
prenotification containing the taxpayer's identification number or a 
zero dollar ACH entry with the appropriate addenda record. Additional 
format information is contained in the procedural instructions;
    (2) Format the ACH credit entry in the ACH format approved by 
Treasury for Federal tax payments;
    (3) Originate an ACH credit entry by the appropriate deadline, as 
specified by the FRB or Treasury, whichever is earlier, in order to meet 
the tax due date specified by the taxpayer; and
    (4) Provide the taxpayer, upon request, a transaction trace number, 
or some other method to trace the tax payment.
    (d) ACH credit reversals. Reversals may be initiated for a duplicate 
or erroneous file or entry. No advance approval from, or notification 
to, the IRS is required when originating an ACH credit reversal. 
Documentation of reversals shall be made available as set forth in the 
procedural instructions.



Sec. 203.13  Same-day reporting and payment mechanisms.

    (a) General. A financial institution or its authorized correspondent 
may initiate same-day reporting and payment transactions on behalf of 
taxpayers. A same-day payment must be received by the FRB of the 
district by the deadline established by the Treasury in the procedural 
instructions. Taxpayers will be credited for the actual amount received 
by Treasury.
    (b) Fedwire value transfer. To initiate a Fedwire value tax payment, 
the financial institution shall be a Fedwire participant and shall 
comply with the FRB's Fedwire format for tax payments. The taxpayer's 
financial institution shall provide the taxpayer, upon request, the IMAD 
and the ETA reference numbers for a Fedwire value transfer. The 
financial institution may obtain the ETA reference number for Fedwire 
value transfers from its FRB

[[Page 17]]

by supplying the related IMAD number. Fedwire value transfers settle 
immediately to the TGA and thus are not credited to a depositary's main 
note balance.
    (c) Fedwire non-value transaction. By initiating a Fedwire non-value 
transaction, a financial institution authorizes the FRB of the district 
to debit its Federal Reserve account or, for a TT&L depositary, to debit 
the Federal Reserve account of the depositary or its designated 
correspondent financial institution, for the amount of the tax payment 
specified in the transaction. To initiate a Fedwire non-value 
transaction, the financial institution shall be a Fedwire participant 
and shall comply with the FRB's Fedwire format for tax payments. The 
taxpayer's financial institution shall provide the taxpayer, upon 
request, the IMAD and ETA reference numbers for the Fedwire non-value 
transaction. The financial institution may obtain the ETA reference 
number for Fedwire non-value transactions from its FRB by supplying the 
related IMAD number.
    (1) For a note option depositary using a Fedwire non-value 
transaction, the tax payment amount will be credited to the depositary's 
main note balance on the day of the transaction.
    (2) For a remittance option depositary using a Fedwire non-value 
transaction, the tax payment amount will be debited from the Federal 
Reserve account of the depositary or the depositary's designated 
correspondent and credited to the TGA on the day of the transaction.
    (3) For a non-TT&L depositary financial institution using a Fedwire 
non-value transaction, the tax payment amount will be debited from the 
financial institution's Federal Reserve account and credited to the TGA 
on the day of the transaction.
    (d) Direct Access transaction. By initiating a Direct Access 
transaction, a financial institution authorizes the FRB of the district 
to debit its Federal Reserve account or, for a TT&L depositary, to debit 
the Federal Reserve account of the depositary or its designated 
correspondent financial institution for the amount of the tax payment 
specified in the transaction. The taxpayer's financial institution shall 
provide the taxpayer, upon request, the ETA reference number for the 
Direct Access transaction.
    (1) For a note option depositary using a Direct Access transaction, 
the tax payment amount will be credited to the depositary's main note 
balance on the day of the transaction.
    (2) For a remittance option depositary or a non-TT&L depositary 
financial institution using a Direct Access transaction, the tax payment 
amount will be debited from the Federal Reserve account of the financial 
institution or its designated correspondent financial institution, and 
credited to the TGA on the day of the transaction.
    (e) Cancellations and reversals. In addition to cancellations due to 
insufficient funds in the financial institution's Federal Reserve 
account, the FRB may reverse a same-day transaction:
    (1) If the transaction:
    (i) Is originated by a financial institution after the deadline 
established by the Treasury in the procedural instructions;
    (ii) Has an unenrolled taxpayer identification number; or
    (iii) Does not meet the edit and format requirements set forth in 
the procedural instructions; or,
    (2) At the direction of the IRS, for the following reasons:
    (i) Incorrect taxpayer name;
    (ii) Overpayment; or
    (iii) Unidentified payment; or,
    (3) At the request of the financial institution that sent the same-
day transaction, if the request is made prior to the deadline 
established by Treasury in the procedural instructions on the day the 
payment was made.
    (f) Other than as stated in paragraph (e) of this section, Treasury 
is not obligated to reverse all or any part of a payment.

[63 FR 5650, Feb. 3, 1998, as amended at 67 FR 11576, Mar. 15, 2002]



Sec. 203.14  Electronic Federal Tax Payment System interest assessments.

    (a) Circumstances subject to interest assessments. Treasury may 
assess interest on a financial institution in instances where a taxpayer 
that failed to meet a tax due date proves to the IRS that the delivery 
of tax payment instructions to

[[Page 18]]

the financial institution was timely and that the taxpayer satisfied the 
conditions imposed by the financial institution pursuant to Sec. 
203.11(b). Treasury also may assess interest where a financial 
institution failed to respond to an ACH prenotification entry on an ACH 
debit as required in Sec. 203.12(b) or failed to originate an ACH 
prenotification or zero dollar entry on an ACH credit as described in 
Sec. 203.12(c) which then resulted in a late payment.
    (b) Calculation of interest assessment. Any interest assessed under 
this section will be at the TT&L rate. The interest will be assessed 
from the day the taxpayer specified that its payment should settle to 
the Treasury until the receipt of the payment by Treasury, subject to 
the following limitations: For ACH debit transactions, interest will be 
limited to no more than seven calendar days; for ACH credit and same-day 
transactions, interest will be limited to no more than 45 calendar days. 
The limitation of liability in this paragraph does not apply to any 
interest assessment in which there is an indication of fraud, the 
presentation of a false claim, or misrepresentation or embezzlement on 
the part of the financial institution or any employee or agent of the 
financial institution.
    (c) Authorization to assess interest. A financial institution that 
processes Federal tax payments made by electronic payment methods under 
this subpart is deemed to authorize the FRB to debit its Federal Reserve 
account or the account of its designated correspondent financial 
institution for any interest assessed under this section. Upon the 
direction of Treasury, the FRB shall debit the Federal Reserve account 
of the financial institution or the account of its designated 
correspondent financial institution for the amount of the assessed 
interest.
    (d) Circumstances not subject to the assessment of interest. (1) 
Treasury will not assess interest on a taxpayer's financial institution 
if a taxpayer fails to meet a tax due date because the taxpayer has not 
satisfied conditions imposed by the financial institution pursuant to 
Sec. 203.11(b) and the financial institution has not contributed to the 
delay. The burden is on the financial institution to establish, pursuant 
to the procedures in Sec. 203.16, that the taxpayer has not satisfied 
the conditions and that the financial institution has not contributed to 
the delay.
    (2) Treasury will not assess interest on a financial institution if 
the delay causing the interest assessment is due to the FRB or the TFA 
and the financial institution did not contribute to the delay. The 
burden is on the financial institution to establish, pursuant to the 
procedures in Sec. 203.16, that it did not cause or contribute to the 
delay.



Sec. 203.15  Prohibited debits through the Automated Clearing House.

    (a) General. The Treasury has instituted operational safeguards to 
scrutinize all entries that remove funds from the TGA. In the event 
funds are removed from the TGA without authority, this section sets 
forth the liability of financial institutions originating such entries. 
Accordingly, a financial institution shall not originate an ACH 
transaction to debit the TGA without the prior written permission of 
Treasury. Unauthorized entries under this section do not include 
reversal entries of previously initiated ACH credits authorized in Sec. 
203.12(d).
    (b) Liability. A financial institution that originates an 
unauthorized ACH entry that debits the TGA shall be liable to Treasury 
for the amount of the transaction and shall be liable for interest 
charges as specified in paragraph (d) of this section.
    (c) Authorization to recover principal and assess interest charge. 
By initiating unauthorized debits to the TGA through the ACH, a 
financial institution is deemed to authorize the FRB to debit its 
Federal Reserve account or the account of its designated correspondent 
financial institution for any principal and, if applicable, an interest 
charge assessed by Treasury under this section.
    (d) Interest charge calculation. The interest charge shall be at a 
rate equal to the Federal funds rate plus two percent. The interest 
charge shall be assessed for each calendar day from the day the TGA was 
debited to the day the TGA is recredited with the full amount of 
principal due.

[[Page 19]]



Sec. 203.16  Appeal and dispute resolution.

    (a) Contest. A financial institution may contest any interest 
assessed under Sec. 203.14, any principal or interest assessed under 
Sec. 203.15, or any late fees assessed under Sec.  203.20. The 
financial institution shall submit information supporting its position 
and the relief sought. The information must be received, in writing, by 
the Treasury officer or fiscal agent identified in the procedural 
instructions, no later than 90 calendar days after the date the FRB 
debits the reserve account of the financial institution under Sec. Sec. 
203.14, 203.15, or 203.20. The Treasury officer or fiscal agent will: 
uphold the assessment, or reverse the assessment, or modify the 
assessment, or mandate other action.
    (b) Appeal. The financial institution may appeal the decision to 
Treasury as set forth in the procedural instructions. No further 
administrative review of the Treasury's decision is available under this 
Part.
    (c) Recoveries. In the event of an over or under recovery of either 
interest, principal, or late fees, Treasury will instruct the FRB to 
credit or debit the Federal Reserve account of the financial institution 
or its designated correspondent financial institution, as appropriate.



                     Subpart C_Federal Tax Deposits



Sec. 203.17  Scope of the subpart.

    This subpart applies to all depositaries that accept FTD coupons and 
governs the acceptance and processing of those coupons.



Sec. 203.18  Tax deposits using Federal Tax Deposit coupons.

    (a) FTD coupons. A depositary that accepts FTD coupons, through any 
of its offices that accept demand and/or savings deposits, shall:
    (1) Accept from a taxpayer, cash, a postal money order drawn to the 
order of the depositary, or a check or draft drawn on and to the order 
of the depositary, covering an amount to be deposited as Federal taxes 
when accompanied by an FTD coupon on which the amount of the deposit has 
been properly entered in the space provided. A depositary may accept, at 
its discretion, a check drawn on another financial institution, but it 
does so at its option and absorbs for its own account any float and 
other costs involved.
    (2) Issue a counter receipt when requested to do so by a taxpayer 
that makes an FTD deposit over the counter.
    (3) Place a stamp impression on the face of each FTD coupon in the 
space provided. The stamp shall reflect the date on which the tax 
deposit was received and the name and location of the depositary. The 
timeliness of the tax payment will be determined by reference to the 
date stamped by the depositary on the FTD coupon.
    (4) Credit, on the date of receipt, all FTD deposits to the TT&L 
account and administer that account pursuant to the provisions of this 
part.
    (5) Forward, each day, to the IRS Center servicing the geographical 
area in which the depositary is located, the FTD coupons for all FTD 
deposits received that day. The FTD coupons shall be accompanied by an 
advice of credit reflecting the total amount of all FTD coupons.
    (6) Establish an adequate record of all FTD deposits prior to 
transmittal to the IRS Center so that the depositary will be able to 
identify deposits in the event tax deposit coupons are lost in shipment. 
For tracking purposes, a record shall be made of each FTD deposit 
showing, at a minimum, the date of deposit, the taxpayer identification 
number, and the amount of the deposit. The depositary's copy of the 
advice of credit may be used to provide the necessary information if 
individual deposits are listed separately, showing date, taxpayer 
identification number, and amount.
    (7) Deliver its advices of credit to the FRB by the cutoff hour 
designated by the FRB for receipt of advices.
    (8) Not accept compensation from taxpayers for accepting FTDs and 
handling them as required by this section.
    (b) FTD deposits with Federal Reserve Banks. An FRB shall:
    (1) Accept an FTD directly from a taxpayer when such tax deposit is:
    (i) Mailed or delivered by a taxpayer; and

[[Page 20]]

    (ii) Provided in the form of cash or a check or postal money order 
payable to the order of that FRB; and,
    (iii) Accompanied by an FTD coupon on which the amount of the tax 
deposit has been properly entered in the space provided.
    (2) Issue a counter receipt, when requested to do so by a taxpayer 
that makes an FTD over the counter; and,
    (3) Place, in the space provided on the face of each FTD coupon 
accepted directly from a taxpayer, a stamp impression reflecting the 
name of the FRB and the date on which the tax deposit will be credited 
to the TGA. Timeliness of the Federal tax payment will be determined by 
this date. However, if a deposit is mailed to an FRB, it shall be 
subject to the ``Timely mailing treated as timely filing and paying'' 
clause of the Internal Revenue Code, 26 U.S.C. 7502; and,
    (4) Credit the TGA with the amount of the tax payment;
    (i) On the date the payment is received, if payment is made in cash; 
or,
    (ii) On the date the proceeds of the tax payment are collected, if 
payment is made by postal money order or check.



Sec. 203.19  Note option.

    (a) Late delivery of advices of credit. If an advice of credit does 
not arrive at the FRB before the designated cutoff hour for receipt of 
such advices, the FRB will post the funds to the main note balance as of 
the next business day after the date on the advice of credit. This is 
the date on which funds will begin to earn interest for Treasury.
    (b) Transfer of funds from TT&L account to the main note balance. 
For a depositary selecting the note option, funds equivalent to the 
amount of deposits credited by a depositary to the TT&L account shall be 
withdrawn by the depositary and credited to the main note balance on the 
business day following the receipt of the tax payment.

[67 FR 11576, Mar. 15, 2002]



Sec. 203.20  Remittance option.

    (a) FTD late fee. If an advice of credit does not arrive at the FRB 
before the designated cutoff hour for receipt of such advices, an FTD 
late fee in the form of interest at the TT&L rate will be assessed for 
each day's delay in receipt of such advice. Upon the direction of 
Treasury, the FRB shall debit the Federal Reserve account of the 
financial institution or the account of its designated correspondent 
financial institution for the amount of the late fee.
    (b) Withdrawals. For a depositary selecting the Remittance Option, 
the amount of deposits credited by a depositary to the TT&L account will 
be withdrawn upon receipt by the FRB of the advices of credit. The FRB 
will charge the depositary's Federal Reserve account or the account of 
the depositary's designated correspondent financial institution.



 Subpart D_Investment Program and Collateral Security Requirements for 
                   Treasury Tax and Loan Depositaries



Sec. 203.21  Scope of the subpart.

    This subpart provides rules for TT&L depositaries on crediting main 
note balances under the various payment methods; debiting main note 
balances; maintaining term note balances; and pledging collateral 
security.

[67 FR 11576, Mar. 15, 2002]



Sec. 203.22  Sources of balances.

    Depositaries electing to participate in the investment program can 
receive Treasury's investments in obligations of the depositary from the 
following sources:
    (a) FTDs that have been credited to the TT&L account pursuant to 
subpart C of this part;
    (b) EFTPS ACH credit and debit transactions, Fedwire non-value 
transactions, and Direct Access transactions pursuant to subpart B of 
this part;
    (c) Direct investments and special direct investments pursuant to 
subpart D of this part; and
    (d) Other excess Treasury operating funds.

[63 FR 5650, Feb. 3, 1998, as amended at 67 FR 11576, Mar. 15, 2002]

[[Page 21]]



Sec. 203.23  Note balance.

    (a) Additions. Treasury will invest funds in obligations of 
depositaries selecting the note option. Such obligations shall be in the 
form of open-ended, interest-bearing notes; and additions and reductions 
will be reflected on the books of the FRB of the district.
    (1) FTD system. A depositary processing tax deposits using the FTD 
system and electing the note option shall debit the TT&L account and 
credit its main note balance as stated in Sec. 203.19(b).
    (2) EFTPS--(i) ACH debit and ACH credit. A note option depositary 
processing EFTPS ACH debit entries and/or ACH credit entries shall 
credit its main note balance for the value of the transactions on the 
date that an exchange of funds is reflected on the books of the Federal 
Reserve Bank of the district. Financial institutions may refer to the 
procedural instructions for information on how to ascertain the amount 
of the credit to the main note balance.
    (ii) Fedwire non-value and Direct Access. A note option depositary 
processing Fedwire non-value and/or Direct Access transactions pursuant 
to subpart B of this part shall credit its main note balance and debit 
its customer's account for the value of the transactions on the date ETA 
receives and processes the transactions.
    (b) Other additions. Other funds from Treasury may be offered from 
time to time to certain note option depositaries through direct 
investments, special direct investments, or other investment programs.
    (c) Main note balance withdrawals. The amount of the main note 
balance shall be payable on demand without prior notice. Calls for 
payment on the note will be by direction of the Secretary through the 
FRBs. On behalf of Treasury, the FRB shall charge the reserve account of 
the depositary or the depositary's designated correspondent on the day 
specified in the call for payment.
    (d) Interest. A main note balance shall bear interest at the TT&L 
rate. Such interest is payable by a charge to the Federal Reserve 
account of the depositary or its designated correspondent in the manner 
prescribed in the procedural instructions.
    (e) Maximum balance--(1) Note option depositaries. A depositary 
selecting the note option shall establish a maximum for its main note 
balance by providing notice to that effect in writing to the FRB of the 
district. The maximum balance is the amount of funds for which a main 
note option depositary is willing to provide collateral in accordance 
with Sec. 203.24(c)(1). The depositary shall provide the advance notice 
required in the procedural instructions before reducing the established 
maximum balance unless it is a reduction resulting from a collateral re-
evaluation as determined by the depositary's FRB. That portion of any 
advice of credit or EFTPS tax payment, which, when posted at the FRB, 
would cause the main note balance to exceed the maximum balance amount 
specified by the depositary, will be withdrawn by the FRB that day.
    (2) Direct investment depositaries. A main note option depositary 
that participates in direct investment shall set a maximum for its main 
note balance for direct investment purposes which is higher than its 
peak balance normally generated by the depositary's advices of credit 
and EFTPS tax payment inflow. The direct investment note option 
depositary shall provide the advance notice required in the procedural 
instructions before reducing the established maximum balance.
    (3) Special direct investment depositaries. Special direct 
investments, when credited to the main note balance, shall not be 
considered in setting the amount of the maximum balance or in 
determining the amounts to be withdrawn where a depositary's maximum 
balance is exceeded.
    (f) Term investment option. Treasury may, from time to time, invest 
excess operating funds in obligations of depositaries selecting the term 
investment option. Such obligations shall be in the form of interest-
bearing notes payable upon a predetermined period of time not to exceed 
90 days. Such notes shall bear interest at a rate prescribed by the 
Secretary by auction or otherwise taking into consideration prevailing 
market interest rates.

[63 FR 5650, Feb. 3, 1998, as amended at 67 FR 11576, Mar. 15, 2002]

[[Page 22]]



Sec. 203.24  Collateral security requirements.

    Financial institutions that process EFTPS tax payments, but are not 
TT&L depositaries, have no collateral requirements under this part. 
Financial institutions that are note option depositaries or remittance 
option depositaries have collateral security requirements, as follows:
    (a) Note option--main note balance--(1) FTD deposits and EFTPS tax 
payments. A depositary shall pledge collateral security in accordance 
with the requirements of paragraphs (d)(1), (e), and (f) of this section 
in an amount that is sufficient to cover the pre-established maximum 
balance for the main note balance, and, if applicable, the closing 
balance in the TT&L account which exceeds recognized insurance coverage. 
Depositaries shall pledge collateral for the full amount of the maximum 
balance at the time the maximum balance is established. If the 
depositary maintains a TT&L account, the depositary shall pledge 
collateral security before crediting deposits to the TT&L account.
    (2) Direct investments. A note option depositary that participates 
in direct investment is not required to pledge collateral continuously 
in the amount of the pre-established maximum balance. However, each note 
option depositary participating in direct investment shall pledge, no 
later than the day the direct investment is placed, the additional 
collateral in accordance with paragraphs (d)(1), (e), and (f) of this 
section to cover the total main note balance including those funds 
received through direct investment. If a direct investment depositary 
has a history of frequent collateral deficiencies, it shall fully 
collateralize its maximum balance at all times.
    (3) Special direct investments. Before special direct investments 
are credited to a depositary's main note balance, the note option 
depositary shall pledge collateral security, in accordance with the 
requirements of paragraphs (d)(2) and (f) of this section, to cover 100 
percent of the amount of the special direct investments to be received.
    (b) Note option--term note balance. Each note option depositary 
participating in the term investment program shall pledge, prior to the 
time the term investment is placed, collateral in accordance with 
paragraphs (d)(1), (e), and (f) of this section sufficient to cover the 
total term note balance.
    (c) Remittance option. Prior to crediting FTD deposits to the TT&L 
account, a remittance option depositary shall pledge collateral security 
in accordance with the requirements of paragraph (c)(1), (d), and (e) of 
this section in an amount which is sufficient to cover the balance in 
the TT&L account at the close of business each day, less recognized 
insurance coverage.
    (d) Deposits of securities. (1) Collateral security required under 
paragraphs (a)(1), (2), (b), and (c) of this section shall be deposited 
with the FRB of the district, or, where appropriate, with a custodian or 
custodians within the United States designated by the FRB, under terms 
and conditions prescribed by the FRB.
    (2)(i) Collateral security required under paragraph (a)(3) of this 
section shall be pledged under a written security agreement on a form 
provided by the FRB of the district. The collateral security pledged to 
satisfy the requirements of paragraph (a)(3) of this section may remain 
in the pledging depositary's possession and the fact that it has been 
pledged shall be evidenced by advices of custody to be incorporated by 
reference in the written security agreement. The written security 
agreement and all advices of custody covering collateral security 
pledged under that agreement shall be provided by the depositary to the 
FRB of the district. Collateral security pledged under the agreement 
shall not be substituted for or released without the advance approval of 
the FRB of the district, and any collateral security subject to the 
security agreement shall remain so subject until an approved 
substitution is made. No substitution or release shall be approved until 
an advice of custody containing the description required by the written 
security agreement is received by the FRB of the district.
    (ii) Treasury's security interest in collateral security pledged by 
a depositary in accordance with paragraph (c)(2)(i) of this section to 
secure special direct investments is perfected without

[[Page 23]]

Treasury taking possession of the collateral security for a period not 
to exceed 21 calendar days from the day of the depositary's receipt of 
the special direct investment.
    (e) Acceptable securities. Types and valuations of acceptable 
collateral security are addressed in 31 CFR part 380. For a current list 
of acceptable classes of securities and instruments described in 31 CFR 
part 380 and their valuations, see the Bureau of the Public Debt's web 
site at www.publicdebt.treas.gov.
    (f) Assignment of securities. A TT&L depositary that pledges 
acceptable securities which are not negotiable without its endorsement 
or assignment may furnish, in lieu of placing its unqualified 
endorsement on each security, an appropriate resolution and irrevocable 
power of attorney authorizing the FRB to assign the securities. The 
resolution and power of attorney shall conform to such terms and 
conditions as the FRB shall prescribe.
    (g) Effecting payments of principal and interest on securities 
pledged as collateral--(1) General. If the depositary fails to pay, when 
due, the whole or any part of the funds received by it for credit to the 
TT&L account, and/or if applicable, its note balance; or otherwise 
violates or fails to perform any of the terms of this part, or fails to 
pay when due amounts owed to the United States or the United States 
Treasury; or if the depositary is closed for business by regulatory 
action or by proper corporate action, or in the event that a receiver, 
conservator, liquidator or any other officer is appointed; then the 
Treasury, without notice or demand, may sell, or otherwise collect the 
proceeds of all or part of the collateral, including additions and 
substitutions; and apply the proceeds, to satisfy any claims of the 
United States against the depositary. All principal and interest 
payments on any security pledged to protect the note balance (if 
applicable) and/or the TT&L account (if applicable), due as of the date 
of the insolvency or closure, or thereafter becoming due, shall be held 
separate and apart from any other assets and shall constitute a part of 
the pledged security available to satisfy any claim of the United 
States.
    (2) Payment procedures. (i) Subject to the waiver in paragraph 
(f)(2)(iii) of this section, each depositary (including, with respect to 
such depositary, an assignee for the benefit of creditors, a trustee in 
bankruptcy, or a receiver in equity) shall immediately remit each 
payment of principal and/or interest received by it with respect to 
collateral pledged pursuant to this section to the FRB of the district, 
as fiscal agent of the United States, and in any event shall so remit no 
later than 10 days after receipt of such a payment.
    (ii) Subject to the waiver in paragraph (f)(2)(iii) of this section, 
each obligor on a security pledged by a depositary pursuant to this 
section, upon notification that the Treasury is entitled to any payment 
associated with that pledged security, shall make each payment of 
principal and/or interest due with respect to such security directly to 
the FRB of the district, as fiscal agent of the United States.
    (iii) The requirements of paragraphs (f)(2)(i) and (ii) of this 
section are hereby waived for only so long as a pledging depositary 
avoids both termination from the program under Sec. 203.7; and also, 
those circumstances identified in paragraph (f)(1) which may lead to the 
collection of the proceeds of collateral or the waiver is otherwise 
terminated by Treasury.

[63 FR 5650, Feb. 3, 1998, as amended at 65 FR 55429, Sept. 13, 2000; 67 
FR 11577, Mar. 15, 2002]

                           PART 204 [RESERVED]



PART 205_RULES AND PROCEDURES FOR EFFICIENT FEDERAL-STATE FUNDS TRANSFERS
--Table of Contents




Sec.
205.1 What Federal assistance programs are covered by this part?
205.2 What definitions apply to this part?

Subpart A_Rules Applicable to Federal Assistance Programs Included in a 
                        Treasury-State Agreement

205.3 What Federal assistance programs are subject to this subpart A?
205.4 Are there any circumstances where a Federal assistance program 
          that meets the criteria of Sec. 205.3 would not be subject to 
          this subpart A?
205.5 What are the thresholds for major Federal assistance programs?
205.6 What is a Treasury-State agreement?

[[Page 24]]

205.7 Can a Treasury-State agreement be amended?
205.8 What if there is no Treasury-State agreement in effect?
205.9 What is included in a Treasury-State agreement?
205.10 How do you document funding techniques?
205.11 What requirements apply to funding techniques?
205.12 What funding techniques may be used?
205.13 How do you determine when State or Federal interest liability 
          accrues?
205.14 When does Federal interest liability accrue?
205.15 When does State interest liability accrue?
205.16 What special rules apply to Federal assistance programs and 
          projects funded by the Federal Highway Trust Fund?
205.17 Are funds transfers delayed by automated payment systems 
          restrictions based on the size and timing of the drawdown 
          request subject to this part?
205.18 Are administrative costs subject to this part?
205.19 How is interest calculated?
205.20 What is a clearance pattern?
205.21 When may clearance patterns be used?
205.22 How are accurate clearance patterns maintained?
205.23 What requirements apply to estimates?
205.24 How are accurate estimates maintained?
205.25 How does this part apply to certain Federal assistance programs 
          or funds?
205.26 What are the requirements for preparing Annual Reports?
205.27 How are Interest Calculation Costs calculated?
205.28 How are interest payments exchanged?
205.29 What are the State oversight and compliance responsibilities?
205.30 What are the Federal oversight and compliance responsibilities?
205.31 How does a State or Federal Program Agency appeal a determination 
          made by us and resolve disputes?

 Subpart B_Rules Applicable to Federal Assistance Programs Not Included 
                      in a Treasury-State Agreement

205.32 What Federal assistance programs are subject to this subpart B?
205.33 How are funds transfers processed?
205.34 What are the Federal oversight and compliance responsibilities?
205.35 What is the result of Federal Program Agency or State non-
          compliance?

Subpart C [Reserved]

    Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3332, 3335, 6501, 6503.

    Source: 67 FR 31885, May 10, 2002, unless otherwise noted.



Sec. 205.1  What Federal assistance programs are covered by this part?

    (a) This part prescribes rules for transferring funds between the 
Federal government and States for Federal assistance programs. This part 
applies to:
    (1) All States as defined in Sec. 205.2; and
    (2) All Federal program agencies, except the Tennessee Valley 
Authority (TVA) and its Federal assistance programs.
    (b) Only programs listed in the Catalog of Federal Domestic 
Assistance, as established by Chapter 61 of Title 31, United States Code 
(U.S.C) are covered by this part.
    (c) This part does not apply to:
    (1) Payments made to States acting as vendors on Federal contracts, 
which are subject to the Prompt Payment Act of 1982, as amended, 31 
U.S.C. 3901 et seq., 5 CFR part 1315, and 48 CFR part 32; or
    (2) Direct loans from the Federal government to States.



Sec. 205.2  What definitions apply to this part?

    For purposes of this part:
    Administrative costs means expenses incurred by a State associated 
with managing a Federal assistance program. This term includes indirect 
costs.
    Auditable means records must be retained to allow for calculations 
outlined in the Treasury-State agreements to be reviewed and replicated 
for compliance purposes. States must maintain these records to be 
readily available, fully documented, and verifiable.
    Authorized State official means a person with the authority under 
the laws of a State to make commitments on behalf of the State for the 
purposes of this part, or that person's official designee as certified 
in writing.
    Business day means a day when Federal Reserve Banks are open.
    Catalog of Federal Domestic Assistance (CFDA) means the government-
wide list of Federal assistance programs, projects, services, and 
activities which provide assistance or benefits to the

[[Page 25]]

American public. The listing includes financial and non-financial 
Federal assistance programs administered by agencies of the Federal 
government.
    Clearance pattern means a projection showing the daily amount 
subtracted from a State's bank account each day after the State makes a 
disbursement. For example, a State mailing out benefit checks may 
project that the percentage of checks cashed each day will be 0% for the 
first day, 10% for the second day, 80% on the third day, and 10% on the 
fourth day following issuance. Clearance patterns are used to schedule 
the transfer of funds with various funding techniques and to support 
interest calculations.
    Compensating balance means funds maintained in State bank accounts 
and/or State Treasurer bank accounts to offset the costs of bank 
services.
    Current project cost means a cost for which the State has recorded a 
liability on or after the day that the State last requested funds for 
the project.
    Day means a calendar day unless otherwise specified.
    Default procedures means efficient cash management practices that we 
prescribe for Federal funds transfers to a State if a Treasury-State 
agreement is not in place.
    Disburse means to issue a check or initiate an electronic funds 
transfer payment, or to provide access to benefits through an electronic 
benefits transfer.
    Discretionary grant project means a project for which a Federal 
Program Agency is authorized by law to exercise judgment in awarding a 
grant and in selecting a grantee, generally through a competitive 
process.
    Dollar-weighted average day of clearance means the day when, on a 
cumulative basis, 50 percent of funds have been paid out. To calculate 
the dollar-weighted average day of clearance for a clearance pattern:
    (1) For each day, multiply the percentage of dollars paid out that 
day by the number of days that have elapsed since the payments were 
issued. For example, on the first day payments were issued, multiply the 
percentage of dollars paid out on that day by zero, since zero days have 
elapsed. On the day after payments were issued, multiply the percentage 
of dollars paid out on that day by one, since one day has elapsed; and 
so forth.
    (2) Total the results from paragraph (1) of this definition. Round 
to the nearest whole number. This is the dollar-weighted average day of 
clearance.
    Draw down (verb) means a process in which a State requests and 
receives Federal funds.
    Drawdown (noun) means Federal funds requested and received by a 
State.
    Electronic Funds Transfer (EFT) means any transfer of funds, other 
than a transaction originated by cash, check, or similar paper 
instrument, that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape, for the purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit an account.
    Estimate means a projection of the needs of a Federal Assistance 
Program.
    Federal assistance program means a program included in the Catalog 
of Federal Domestic Assistance where funds are transferred from the 
Federal government to a State. Federal assistance programs include 
cooperative agreements, but do not include vendor payments or direct 
loans.
    Federal Program Agency means an executive agency as defined by 31 
U.S.C. 102, except the Tennessee Valley Authority (TVA), that issues and 
administers Federal assistance programs to States or cooperative 
agreements with States.
    Federal-State agreement means an agreement between a State and a 
Federal Program Agency specifying terms and conditions for carrying out 
a Federal assistance program or group of programs. This is different 
than a Treasury-State agreement.
    Financial management service (we or us) means the Bureau of the U.S. 
Department of the Treasury responsible for implementation of this part.
    Fiscal year means the twelve-month period that a State designates as 
its budget year.
    Grant means, for purposes of this part, a funds transfer by the 
Federal government associated with a Federal assistance program listed 
in the Catalog of Federal Domestic Assistance.

[[Page 26]]

    Indirect cost rate means a formula that identifies the amount of 
indirect costs based on the amount of accrued direct costs. The 
applicable indirect cost rate shall be described in the Treasury-State 
agreement.
    Indirect costs means costs a State incurs that are necessary to the 
operation and performance of its Federal assistance programs, but that 
are not readily identifiable with a particular project or Federal 
assistance program.
    Interest calculation costs means those costs a State incurs in 
performing the actual calculation of interest liabilities, including 
those costs a State incurs in developing and maintaining clearance 
patterns in support of interest calculations.
    Maintenance-of-effort means a requirement that a State spend at 
least a specified amount of State funds for Federal assistance program 
purposes.
    Major Federal assistance program means a Federal assistance program 
which receives Federal funding in excess of the dollar thresholds found 
in Table A to Sec. 205.5.
    Obligational authority means the existence of a definite commitment 
on the part of the Federal government to provide appropriated funds to a 
State to carry out specified programs, whether the commitment is 
executed before or after a State pays out funds for Federal assistance 
program purposes.
    Pay out means to debit the State's bank account.
    Pay out funds for Federal Assistance Program Purposes means, in the 
context of State payments, to debit a State account for the purpose of 
making a payment to:
    (1) A person or entity that is not considered part of the State 
pursuant to the definition of ``State'' in this section; or
    (2) A State entity that provides goods or services for the direct 
benefit or use of the payor State entity or the Federal government to 
further Federal assistance program goals.
    Rebate means funds returned to a State by third parties after a 
State has paid out those funds for Federal assistance program purposes.
    Refund means funds that a State recovers that it previously paid out 
for Federal assistance program purposes. Refunds include rebates 
received from third parties.
    Refund transaction means an entry to the record of a State bank 
account representing a single deposit of refunds. A refund transaction 
may consist of a single check or item, or a bundle of accumulated 
checks.
    Related banking costs means separately identified costs which are 
necessary and customary for maintaining an account in a financial 
institution, whether a commercial account or a State Treasurer account. 
Investment service fees and fees for credit-related services are not 
related banking costs.
    Request for funds means a State's request for funds that the State 
completes and submits in accordance with Federal Program Agency 
guidelines.
    Reverse flow program means a Federal assistance program, such as 
Supplemental Security Income (SSI), for which the Federal government 
makes payments to recipients on behalf of a State.
    Revolving loan fund means a pool of program funds managed by a 
State. States may loan funds from the pool to other entities in support 
of Federal assistance program goals. Investment income is earned on the 
funds that remain in the pool and on loans made from pool funds. A 
Federal Program Agency may require that all income derived from a 
revolving loan fund be used for Federal assistance program purposes.
    Secretary means the Secretary of the United States Department of the 
Treasury. We are the Secretary's representative in all matters 
concerning this part, unless otherwise specified.
    State means a State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Mariana Islands, American Samoa, Guam, and the Virgin Islands. It 
includes any agency, instrumentality, or fiscal agent of a State that is 
legally and fiscally dependent on the State Executive, State Treasurer, 
or State Comptroller.
    (1) A State agency or instrumentality is any organization of the 
primary government of the State financial reporting entity, as defined 
by generally accepted accounting principles.

[[Page 27]]

    (2) A fiscal agent of a State is an entity that pays, collects, or 
holds Federal funds on behalf of the State in furtherance of a Federal 
assistance program, excluding private nonprofit community organizations.
    (3) Local governments, Indian Tribal governments, institutions of 
higher education, hospitals, and nonprofit organizations are excluded 
from the definition of State.
    Treasury-State agreement means a document describing the accepted 
funding techniques and methods for calculating interest and identifying 
the Federal assistance programs governed by this subpart A.
    Trust fund for which the Secretary is the trustee means a trust fund 
administered by the Secretary.
    Vendor payment means a funds transfer by a Federal Program Agency to 
a State to compensate the State for acting as a vendor on a Federal 
contract.
    We and Us means Financial Management Service.



Subpart A_Rules Applicable to Federal Assistance Programs Included in a 
                        Treasury-State Agreement



Sec. 205.3  What Federal assistance programs are subject to this 
subpart A?

    (a) Generally, this subpart prescribes the rules that apply to 
Federal assistance programs which:
    (1) Are listed in the Catalog of Federal Domestic Assistance;
    (2) Meet the funding threshold for a major Federal assistance 
program; and
    (3) Are included in a Treasury-State agreement or default 
procedures.
    (b) Upon a State's request, we will make additional Federal 
assistance programs subject to subpart A by lowering the funding 
threshold in the Treasury-State agreement. All of a State's programs 
that meet this lower threshold would be subject to this subpart A.
    (c) We may make additional Federal assistance programs subject to 
subpart A if a State or Federal Program Agency fails to comply with 
subpart B of this part.



Sec. 205.4  Are there any circumstances where a Federal assistance 
program that meets the criteria of Sec. 205.3 would not be subject 
to this subpart A?

    (a) A Federal assistance program that meets or exceeds the threshold 
for major Federal assistance programs in a State is not subject to this 
subpart A until it is included in a Treasury-State agreement or in 
default procedures.
    (b) We and a State may agree to exclude components of a major 
Federal assistance program from interest calculations if the State 
administers the program through several State agencies and meets the 
following requirements:
    (1) The dollar amount of the exempted cash flow does not exceed 5% 
of the State's major Federal assistance program threshold and the total 
amount excluded under a single program by all State agencies 
administering the program does not exceed 10% of that Federal assistance 
program's total expenditures;
    (2) If less than the total amount of Federal assistance program 
funding is subject to interest calculation procedures, the interest 
liabilities should be pro-rated to 100% of the Federal assistance 
program funding;
    (3) A State may not use this exclusion if a Federal assistance 
program is administered by only one State agency; and
    (4) We may request Federal assistance program specific data on 
funding levels to determine exemptions.
    (c) We and a State may exclude a Federal assistance program from 
this subpart A if the Federal assistance program has been discontinued 
since the most recent Single Audit and the remaining funding is below 
the threshold, or if the Federal assistance program is funded by an 
award not limited to one fiscal year and the remaining Federal 
assistance program funding is below the State's threshold.



Sec. 205.5  What are the thresholds for major Federal assistance 
programs?

    (a) Table A of this section defines major Federal assistance 
programs based on the dollar amount of an individual Federal assistance 
program and

[[Page 28]]

the dollar amount of all Federal assistance being received by a State 
for all Federal assistance programs including non-cash programs. A State 
must locate the appropriate row in Column A based upon the total amount 
of Federal assistance received. In that same row, a State must apply the 
percentage from Column B to the dollar value of all its Federal 
assistance programs to determine the State's threshold for major Federal 
assistance programs. For example, if the total amount received by a 
State for all Federal assistance programs is $50 million, then that 
State's threshold for major Federal assistance programs is 6% of $50 
million or $3 million. A State which receives more than $10 billion 
under Federal assistance programs will have a minimum default threshold 
of $60 million.
    (b) To ensure adequate coverage of all State programs, a State must, 
on an annual basis, compare its program coverage using the percentage 
obtained from Table A to the program coverage which would result using a 
percentage which is half of the percentage obtained from Table A. For 
example, a State receiving $1 billion in Federal Assistance would use 
Table A to learn that its threshold level would be .60 percent of $1 
billion. A State would compare program coverage at .60 percent of $1 
billion to program coverage at .30 percent of $1 billion.
    (c) If the comparison conducted under paragraph (b) of this section 
results in a reduction of program coverage that is greater than 10%, a 
State must lower its threshold, or add programs, until the difference is 
less than or equal to 10%.
    (d) In accordance with Sec. 205.3(b), a State may lower its 
threshold to include additional programs. All of a State's programs that 
meet this lower threshold would be subject to this subpart A.
    (e) Unless specified otherwise, major Federal assistance programs 
must be determined from the most recent Single Audit data available.

                         Table A to Sec.  205.5
------------------------------------------------------------------------
                                             Column B  Major Federal
   Column A  Total amount of Federal       Assistance Program means any
 Assistance for all programs per State:  Federal assistance program that
                                               exceed these levels:
------------------------------------------------------------------------
Between zero and $100 million inclusive  6.00 percent of the total
                                          amount of Federal assistance.
Over $100 million but less than or       0.60 percent of the total
 equal to $10 billion.                    amount of Federal assistance.
Over $10 billion.......................  The greater of 0.30 percent of
                                          the total Federal assistance
                                          of $60 million.
------------------------------------------------------------------------



Sec. 205.6  What is a Treasury-State agreement?

    (a) A Treasury-State agreement documents the accepted funding 
techniques and methods for calculating interest agreed upon by us and a 
State and identifies the Federal assistance programs governed by this 
subpart A. If anything in a Treasury-State agreement is inconsistent 
with this subpart A, that part of the Treasury-State agreement will not 
have any effect and this subpart A will govern.
    (b) A Treasury-State agreement will be effective until terminated 
unless we and a State agree to a specific termination date. We or a 
State may terminate a Treasury-State agreement on 30 days written 
notice.



Sec. 205.7  Can a Treasury-State agreement be amended?

    (a) We or a State may amend a Treasury-State agreement at any time 
if both we and the State agree in writing.
    (b) The effective date of an amendment shall be the date both 
parties agree to the amendment in writing unless otherwise agreed to by 
both parties.
    (c) We and a State must amend a Treasury-State agreement as needed 
to change or clarify its language when the terms of the existing 
agreement are either no longer correct or no longer applicable. A State 
must notify us in writing within 30 days of the time the State becomes 
aware of a change, describing the Federal assistance program change. The 
notification must include a proposed amendment for our review and a 
current list of all programs included in the Treasury-State agreement. 
Amendments may address, but are not limited to:

[[Page 29]]

    (1) Additions or deletions of Federal assistance programs subject to 
this subpart A;
    (2) Changes in funding techniques; and
    (3) Changes in clearance patterns.
    (d) Additions or deletions to the list of Federal assistance 
programs subject to this subpart A take effect when a Treasury-State 
agreement is amended, unless otherwise agreed to by the parties.
    (e) Federal assistance programs that are to be added to a Treasury-
State agreement are not subject to this subpart A until the Treasury-
State agreement is amended, except when a Federal assistance program 
subject to this subpart A is being replaced by a Federal assistance 
program governed by subpart B of this part, in which case the 
replacement program is immediately subject to this subpart A.
    (f) Notwithstanding any other provision of this section, if no 
changes to the Treasury-State agreement are required, States must notify 
us annually.



Sec. 205.8  What if there is no Treasury-State agreement in effect?

    When a State does not have a Treasury-State agreement in effect, we 
will prescribe default procedures to implement this subpart A. The 
default procedures will prescribe efficient funds transfer procedures 
consistent with State and Federal law and identify the covered Federal 
assistance programs and designated funding techniques. When we and a 
State reach agreement on some but not all Federal assistance programs 
administered by the State, we and the State may enter into a Treasury-
State agreement for all programs on which we are in agreement and we may 
prescribe default procedures governing those programs on which we are 
unable to reach agreement.



Sec. 205.9  What is included in a Treasury-State agreement?

    We will prescribe a uniform format for all Treasury-State 
agreements. A Treasury-State agreement must include, but is not limited 
to, the following:
    (a) State agencies, instrumentalities, and fiscal agents that 
administer the Federal assistance programs subject to this subpart A.
    (b) Federal assistance programs subject to this subpart A, 
consistent with Sec. Sec. 205.3 and 205.4. A State must use its most 
recent Single Audit report as a basis for determining the funding 
thresholds for major Federal assistance programs, unless otherwise 
specified in the Treasury-State agreement. A State may use budget or 
appropriations data for a more recent period instead of Single Audit 
data, if specified in the Treasury-State agreement.
    (c) Funding techniques to be applied to Federal assistance programs 
subject to this subpart A.
    (d) Methods the State will use to develop and maintain clearance 
patterns and estimates, consistent with Sec. 205.11. The method must 
include, at a minimum, a clear indication of:
    (1) The data used;
    (2) The sources of the data;
    (3) The development process;
    (4) For estimates, when and how the State will update the estimate 
to reflect the most recent data available;
    (5) For estimates, when and how the State will make adjustments, if 
any, to reconcile the difference between the estimate and the State's 
actual cash needs; and
    (6) Any assumptions, standards, or conventions used in converting 
the data into the clearance pattern or estimate.
    (e) Federal Program Agency provisions requiring reconciliation of 
estimates to actual outlays may be included in a Treasury-State 
agreement. The supporting documentation must be retained by the State 
for three years.
    (f) States must include the results of the clearance pattern process 
in the Treasury-State agreement for programs where the timing of 
drawdowns is based on clearance patterns. For programs where the timing 
of drawdowns is not based on clearance patterns, the results of the 
clearance pattern process may be provided with the annual report 
required under Sec. 205.26. The supporting documentation must be 
retained by the State for three years.
    (g) Methods used by the State and Federal agencies to calculate 
interest liabilities pursuant to this subpart A.

[[Page 30]]

The method must include, but is not limited to, a clear indication of:
    (1) The data used;
    (2) The sources of the data;
    (3) The calculation process; and
    (4) Any assumptions, standards, or conventions used in converting 
the data into the interest liability amounts.
    (h) Treasury-State agreements must include language describing how a 
State and Federal Program Agency will address a State request for 
supplemental funding. This language must include, but is not limited to, 
the following provisions:
    (1) What constitutes a timely request for supplemental funds for 
Federal assistance program purposes by a State; and
    (2) What constitutes a timely transfer of supplemental funds for 
Federal assistance program purposes from a Federal Program Agency to a 
State.



Sec. 205.10  How do you document funding techniques?

    The Treasury-State agreement must include a concise description for 
each funding technique that a State will use. The description must 
include the following:
    (a) What constitutes a timely request for funds;
    (b) How the State determines the amount of funds to request;
    (c) What procedures are used to project or reconcile estimates with 
actual and immediate cash needs;
    (d) What constitutes the timely receipt of funds; and
    (e) Whether a State or Federal interest liability accrues when the 
funding technique, including any associated procedure for projection or 
reconciliation, is properly applied.



Sec. 205.11  What requirements apply to funding techniques?

    (a) A State and a Federal Program Agency must minimize the time 
elapsing between the transfer of funds from the United States Treasury 
and the State's payout of funds for Federal assistance program purposes, 
whether the transfer occurs before or after the payout of funds.
    (b) A State and a Federal Program Agency must limit the amount of 
funds transferred to the minimum required to meet a State's actual and 
immediate cash needs.
    (c) A State must not draw down funds from its account in the 
Unemployment Trust Fund (UTF) or from a Federal account in the UTF in 
advance of actual immediate cash needs for any purpose including 
maintaining a compensating balance.
    (d) A Federal Program Agency must allow a State to submit requests 
for funds daily. This requirement should not be construed as a change to 
Federal Program Agency guidelines defining a properly completed request 
for funds.
    (e) In accordance with the electronic funds transfer provisions of 
the Debt Collection Improvement Act of 1996 (31 U.S.C. 3332), a Federal 
Program Agency must use electronic funds transfer methods to transfer 
funds to States unless a waiver is available.



Sec. 205.12  What funding techniques may be used?

    (a) We and a State may negotiate the use of mutually agreed upon 
funding techniques. We may deny interest liability if a State does not 
use a mutually agreed upon funding technique. Funding techniques should 
be efficient and minimize the exchange of interest between States and 
Federal agencies.
    (b) We and a State may base our agreement on the sample funding 
techniques listed in paragraphs (b)(1) through (b)(5) of this section, 
or any other technique upon which both parties agree.
    (1) Zero balance accounting means that a Federal Program Agency 
transfers the actual amount of Federal funds to a State that are paid 
out by the State each day.
    (2) Projected clearance means that a Federal Program Agency 
transfers to a State the projected amount of funds that the State pays 
out each day. The projected amount paid out each day is determined by 
applying a clearance pattern to the total amount the State will 
disburse.
    (3) Average clearance means that a Federal Program Agency, on the 
dollar-weighted average day of clearance of a disbursement, transfers to 
a State a lump sum equal to the actual amount

[[Page 31]]

of funds that the State is paying out. The dollar-weighted average day 
of clearance is the day when, on a cumulative basis, 50 percent of the 
funds have been paid out. The dollar-weighted average day of clearance 
is calculated from a clearance pattern, consistent with Sec. 205.20.
    (4) Cash advance (pre-issuance or post-issuance) funding means that 
a Federal Program Agency transfers the actual amount of Federal funds to 
a State that will be paid out by the State, in a lump sum, not more than 
three business days prior to the day the State issues checks or 
initiates EFT payments.
    (5) Reimbursable funding means that a Federal Program Agency 
transfers Federal funds to a State after that State has already paid out 
the funds for Federal assistance program purposes.



Sec. 205.13  How do you determine when State or Federal interest 
liability accrues?

    (a) State or Federal interest liability may or may not accrue when 
mutually agreed to funding techniques are applied, depending on the 
terms of the Treasury-State agreement.
    (b) We and a State may agree in a Treasury-State agreement that no 
State or Federal interest liability will accrue for indirect costs or 
indirect allocated costs based on an indirect cost rate. This indirect 
cost must be consistent with OMB Circular A-87 (For availability, see 5 
CFR 1310.3.) and be in accordance with this subpart A. The indirect cost 
rate may be a Statewide indirect cost rate or a public assistance cost 
rate, where appropriate.



Sec. 205.14  When does Federal interest liability accrue?

    (a) Federal interest liabilities may accrue in accordance with the 
following provisions:
    (1) The Federal Program Agency incurs interest liability if a State 
pays out its own funds for Federal assistance program purposes with 
valid obligational authority under Federal law, Federal regulation, or 
Federal-State agreement. A Federal interest liability will accrue from 
the day a State pays out its own funds for Federal assistance program 
purposes to the day Federal funds are credited to a State bank account.
    (2) If a State pays out its own funds for Federal assistance program 
purposes without obligational authority, the Federal Program Agency will 
incur an interest liability if obligational authority subsequently is 
established. However, if the lack of obligational authority is the 
result of the failure of the State to comply with a Federal Program 
Agency requirement established by statute, regulation, or agreement, 
interest liability may be denied. A Federal interest liability will 
accrue from the day a State pays out its own funds for Federal 
assistance program purposes to the day Federal funds are credited to a 
State bank account.
    (3) If a State pays out its own funds prior to the day a Federal 
Program Agency officially notifies the State in writing that a 
discretionary grant project is approved, the Federal Program Agency does 
not incur an interest liability, notwithstanding any other provision of 
this section.
    (4) If a State pays out its own funds prior to the availability of 
Federal funds authorized or appropriated for a future Federal fiscal 
year, the Federal Program Agency does not incur an interest liability, 
notwithstanding any other provision of this section.
    (5) If a State fails to request funds timely as set forth in Sec. 
205.29, or otherwise fails to apply a funding technique properly, we may 
deny any resulting Federal interest liability, notwithstanding any other 
provision of this section.
    (b) Federal Program Agency programs that have specific payment dates 
set by the Federal Program Agency that create interest liabilities are 
subject to this part.
    (c) States must adhere to Federal Program Agency disbursement 
schedules when requesting funds. Notwithstanding any other provision of 
this section, we may deny a State's claim for Federal interest liability 
for the period prior to a late drawdown request. States must time their 
funds drawdown so that it does not create Federal interest liability. 
The drawdown request

[[Page 32]]

must allow the Federal Program Agency sufficient time to meet its 
disbursement schedule. If the Federal Program Agency does not make a 
timely payout in accordance with the terms of the Treasury-State 
agreement, a State may submit a claim for interest liability.



Sec. 205.15  When does State interest liability accrue?

    (a) General rule. State interest liability may accrue if Federal 
funds are received by a State prior to the day the State pays out the 
funds for Federal assistance program purposes. State interest liability 
accrues from the day Federal funds are credited to a State account to 
the day the State pays out the Federal funds for Federal assistance 
program purposes.
    (b) Refunds. (1) A State incurs interest liability on refunds of 
Federal funds from the day the refund is credited to a State account to 
the day the refund is either paid out for Federal assistance program 
purposes or credited to the Federal government.
    (2) We and a State may agree, in a Treasury-State agreement, that a 
State does not incur an interest liability on refunds in refund 
transactions under $50,000.
    (c) Exception to the general rule. A State does not incur an 
interest liability to the Federal government if a Federal statute 
requires the State to retain or use for Federal assistance program 
purposes the interest earned on Federal funds, notwithstanding any other 
provision in this section.
    (d) Mandatory matching of Federal funds. In programs utilizing 
mandatory matching of Federal funds with State funds, a State must not 
arbitrarily assign its earliest costs to the Federal government. A State 
incurs interest liabilities if it draws Federal funds in advance and/or 
in excess of the required proportion of agreed upon levels of State 
contributions in programs utilizing mandatory matching of Federal funds 
with State funds.



Sec. 205.16  What special rules apply to Federal assistance programs 
and projects funded by the Federal Highway Trust Fund?

    The following applies to Federal assistance programs and projects 
funded out of the Federal Highway Trust Fund, notwithstanding any other 
provision of this part:
    (a) A State must request funds at least weekly for current project 
costs, or Federal interest liability will not accrue prior to the day a 
State submits a request for funds.
    (b) If a State pays out its own funds in the absence of a project 
agreement or in excess of the Federal obligation in a project agreement, 
the Federal Program Agency will not incur an interest liability.



Sec. 205.17  Are funds transfers delayed by automated payment systems 
restrictions based on the size and timing of the drawdown request subject 
to this part?

    Funds transfers delayed due to payment processes that automatically 
reject drawdown requests that fall outside a pre-determined set of 
parameters are subject to this part.



Sec. 205.18  Are administrative costs subject to this part?

    (a) A State and FMS may agree, in a Treasury-State agreement, to the 
following funding conventions for indirect costs and administrative 
costs:
    (1) The State will draw down a prorated amount of administrative 
costs on the date of the State payday. For example, the State would draw 
one-third of its quarterly administrative costs if payroll is monthly, 
or one-sixth of its quarterly administrative costs if payroll is semi-
monthly.
    (2) If an indirect cost rate is applied to a program, the State will 
include a proportionate share of the indirect cost allowance on each 
drawdown by applying the indirect cost rate to the appropriate direct 
costs on each drawdown.
    (3) If costs must be allocated to various programs pursuant to a 
labor distribution or other system under an approved cost allocation 
plan, the State will draw down funds to meet cash outlay requirements 
based on the most recent, certified cost allocations, with

[[Page 33]]

subsequent adjustments made pursuant to the actual allocation of costs.
    (b) Notwithstanding any other provision of this part, no interest 
liabilities will be incurred or calculated for indirect costs and 
administrative costs, provided the funding conventions described in 
paragraph (a) of this section are properly applied.



Sec. 205.19  How is interest calculated?

    (a) A State must calculate Federal interest liabilities and State 
interest liabilities for each Federal assistance program subject to this 
subpart A.
    (b) The interest rate for all interest liabilities for each Federal 
assistance program subject to this subpart A is the annualized rate 
equal to the average equivalent yields of 13-week Treasury Bills 
auctioned during a State's fiscal year. We provide this rate to each 
State.
    (c) A State must calculate and report interest liabilities on the 
basis of its fiscal year. A State must ensure that its interest 
calculations are auditable and retain a record of the calculations.
    (d) As set forth in Sec. 205.9, a Treasury-State agreement must 
include the method a State uses to calculate and document interest 
liabilities.
    (e) A State may use actual data, a clearance pattern, or statistical 
sampling to calculate interest. A clearance pattern used to calculate 
interest must meet the standards of Sec. 205.20. If a State uses 
statistical sampling to calculate interest, the State must sample 
transactions separately for each Federal assistance program subject to 
this subpart A. Each sample must be representative of the pool of 
transactions and be of sufficient size to accurately represent the flow 
of Federal funds under the Federal assistance program, including 
seasonal or other periodic variations.
    (f) For the first year in which a Federal assistance program is 
covered in a Treasury-State agreement, funds transfers that occur prior 
to the first day of the State's fiscal year must not be included in 
interest calculations and are not subject to the interest liability 
provisions of this part.



Sec. 205.20  What is a clearance pattern?

    States use clearance patterns to project when funds are paid out, 
given a known dollar amount and a known date of disbursement. A State 
must ensure that clearance patterns meet the following standards:
    (a) A clearance pattern must be auditable.
    (b) A clearance pattern must accurately represent the flow of 
Federal funds under the Federal assistance programs to which it is 
applied.
    (c) A clearance pattern must include seasonal or other periodic 
variations in clearance activity.
    (d) A clearance pattern must be based on at least three consecutive 
months of disbursement data, unless additional data is required to 
accurately represent the flow of Federal funds.
    (e) If a State uses statistical sampling to develop a clearance 
pattern, the sample size must be sufficient to ensure a 96 percent 
confidence interval no more than plus or minus 0.25 weighted days above 
or below the estimated mean.
    (f) A clearance pattern must extend, at a minimum, until 99 percent 
of the dollars in a disbursement have been paid out for Federal 
assistance program purposes.
    (g) We and a State may agree to other procedures, such as estimates 
to project when funds are paid out when the dollar amount and/or the 
timing of disbursements are not known.



Sec. 205.21  When may clearance patterns be used?

    (a) A State may develop a clearance pattern for:
    (1) An individual Federal assistance program;
    (2) A logical group of Federal assistance programs that have the 
same disbursement method and type of payee;
    (3) A bank account;
    (4) A specific type of payment, such as payroll or vendor payments; 
or
    (5) Anything that is agreed upon by us and a State. If a clearance 
pattern is used for multiple Federal assistance programs, a State must 
apply the clearance pattern separately to each Federal assistance 
program when scheduling funds transfers or calculating interest.

[[Page 34]]

    (b) As set forth in Sec. 205.9, a Treasury-State agreement must 
include the method a State uses to develop and maintain clearance 
patterns.



Sec. 205.22  How are accurate clearance patterns maintained?

    (a) If a State has knowledge, at any time, that a clearance pattern 
no longer reflects a Federal assistance program's actual clearance 
activity, or if a Federal assistance program undergoes operational 
changes that may affect clearance activity, the State must notify us, 
develop a new clearance pattern, and certify that the new pattern 
corresponds to the Federal assistance program's clearance activity. 
Clearance patterns will remain in effect until a new clearance pattern 
is certified.
    (b) An authorized State official must certify that a clearance 
pattern corresponds to the clearance activity of the Federal assistance 
program to which it is applied. An authorized State official must re-
certify the accuracy of a clearance pattern at least every five years. 
If a State develops a clearance pattern for a bank account or a specific 
type of payment, or on another basis, as set forth in Sec. 205.21, we 
may prescribe other requirements for re-certifying the accuracy of the 
clearance pattern. A State can begin to use a new clearance pattern on 
the date the new clearance pattern is certified.



Sec. 205.23  What requirements apply to estimates?

    The following requirements apply when we and a State negotiate a 
mutually agreed upon funds transfer procedure based on an estimate of 
the State's immediate cash needs:
    (a) The State must ensure that the estimate reasonably represents 
the flow of Federal funds under the Federal assistance program or 
program component to which the estimate applies. The estimate must take 
into account seasonal or other periodic variations in activity 
throughout the period for which the Federal funds are available.
    (b) As set forth in Sec. Sec. 205.9 and 205.10, a Treasury-State 
agreement must include the method a State uses to develop, maintain, and 
document the estimate.



Sec. 205.24  How are accurate estimates maintained?

    (a) If a State has knowledge that an estimate does not reasonably 
correspond to the State's cash needs for a Federal assistance program or 
program component, or if a Federal assistance program undergoes 
operational changes that may affect cash needs, the State must 
immediately notify us in writing. We and the State will amend the 
funding technique provisions in the Treasury-State agreement or take 
other mutually agreed upon corrective action.
    (b) When estimates are properly updated and applied, a State or 
Federal interest liability may or may not accrue, depending on the terms 
of the Treasury-State agreement.
    (c) We may require a State to justify in writing that it is not 
feasible to use a more efficient basis for determining the amount of 
funds to be transferred under the Federal assistance program or program 
component to which an estimate is applied. We may prescribe requirements 
for certifying the reasonableness of an estimate.



Sec. 205.25  How does this part apply to certain Federal assistance 
programs or funds?

    (a) Special rules apply to certain Federal assistance programs or 
funds described in this section. To the extent the provisions of this 
section are inconsistent with other provisions of this part, this 
section applies.
    (b) A State's interest liability on funds withdrawn from its account 
in the UTF equals the actual interest earned on such funds less the 
related banking costs. Actual interest earned does not include non-cash 
bank earnings. If funds withdrawn from the State account in the UTF are 
commingled with other funds, a proportionate share of interest earnings 
and banking costs must be allocated to the funds withdrawn from the 
State account. Interest liabilities on funds withdrawn from a Federal 
account in the UTF, except the Federal Unemployment Account, are 
calculated in accordance with Sec. 205.19.
    (c) Supplemental Security Income. (1) Except as provided in 42 
U.S.C. 1382e(d), the Federal government incurs an interest liability 
from the day State

[[Page 35]]

funds are credited to the Federal government's account to the day a 
Federal Program Agency pays out the State funds for Federal assistance 
program purposes. A State incurs an interest liability from the day a 
Federal Program Agency pays out Federal funds for Federal assistance 
program purposes to the day State funds are credited to the Federal 
government's account.
    (2) Interest liability must be calculated on the difference between 
a State's monthly Supplemental Security Income payment and the State's 
actual liability for the month.
    (3) The Federal government will not incur interest liabilities on 
refunds of State funds under the Supplemental Security Income Program.
    (4) Administrative fees charged by the Social Security 
Administration to States under the Supplemental Security Income program 
are not subject to this part.
    (5) Supplemental State payments made in conjunction with 
Supplemental Security Income are not subject to this part.
    (d) Funds collected under the Child Support Enforcement Program. (1) 
Funds collected by States from absent parents pursuant to Title IV-D of 
the Social Security Act are not subject to this part.
    (2) Interest earned by States on undistributed collections must be 
treated as Federal assistance program income under 45 CFR 304.50(b) and 
is not subject to this part.
    (3) Late payment fees collected by States from absent parents are 
not subject to interest liabilities under this part and are not subject 
to this part. However, such fees must be treated as Federal assistance 
program income in accordance with 45 CFR 302.75(b)(6).
    (e) A State that earns interest on Special Supplemental Food Program 
for Women, Infants, and Children rebates is not subject to interest 
liability if the funds earned are used for Federal assistance program 
purposes.
    (f) Revolving Loan Funds. (1) This part applies to any transfer of 
funds from the Federal Program Agency to the State for the Revolving 
Loan Fund.
    (2) This part does not apply to interest a State earns on Revolving 
Loan Funds when Federal Program Agency regulations require that all 
interest earned on invested funds be used for Federal assistance program 
purposes.



Sec. 205.26  What are the requirements for preparing Annual Reports?

    (a) A State must submit to us an Annual Report accounting for State 
and Federal interest liabilities of the State's most recently completed 
fiscal year. Adjustments to the Annual Report must be limited to the two 
State fiscal years prior to the State fiscal year covered by the report. 
The authorized State official must certify the accuracy of a State's 
Annual Report. A signed original of the Annual Report must be received 
by December 31 of the year in which the State's fiscal year ends. We 
will provide copies of Annual Reports to Federal agencies. We will 
prescribe the format of the Annual Report, and may prescribe that the 
Annual Report be submitted by electronic means.
    (b) A State must submit a description and supporting documentation 
for liability claims greater than $5,000. This information must include 
the following:
    (1) The amount of funds requested;
    (2) The date the funds were requested;
    (3) The date the funds were paid out for Federal assistance program 
purposes;
    (4) The date the funds were received by the State; and
    (5) The date of award.
    (c) A State claiming reimbursement of Interest Calculation Costs 
must submit its claim with its Annual Report in accordance with Sec. 
205.27. An authorized State official must certify the accuracy of a 
State's claim for Interest Calculation Costs.



Sec. 205.27  How are Interest Calculation Costs calculated?

    (a) We will compensate a State annually for the costs of calculating 
interest, including the cost of developing and maintaining clearance 
patterns in support of interest calculations, pursuant to this subpart 
A, subject to the conditions and limitations of this section.
    (b) We may deny an interest calculation cost claim if a State does 
not:

[[Page 36]]

    (1) Have a Treasury-State agreement with us, as set forth in 
Sec. Sec. 205.6 through 205.9;
    (2) Submit timely a Treasury-State agreement, as set forth in 
Sec. Sec. 205.6 through 205.9;
    (3) Submit timely an updated list of Federal assistance programs 
subject to this subpart A, as set forth in Sec. Sec. 205.6 through 
205.9;
    (4) Submit timely a claim for Interest Calculation Costs with its 
Annual Report, as set forth in Sec. 205.26; or
    (5) Submit timely its Annual Report, as set forth in Sec. 205.26.
    (c) A State must maintain documentation to substantiate its claim 
for Interest Calculation Costs. We may require a State to provide 
documentation to support its interest calculation cost claims. We will 
review all interest calculation cost claims for reasonableness. If we 
determine that a cost claim is unreasonable, we will not reimburse a 
State for that cost, notwithstanding any other provision of this 
section.
    (d) Eligibility and treatment of Interest Calculation Costs. (1) 
Interest Calculation Costs do not include expenses for normal disbursing 
services, such as processing checks or maintaining records for 
accounting and reconciliation of cash accounts, or expenses for 
upgrading or modernizing accounting systems.
    (2) Interest Calculation Costs in excess of $50,000 in any year are 
not eligible for reimbursement, unless a State can justify to us that 
the State is unable to develop and maintain clearance patterns in 
support of interest calculations, or perform the actual calculation of 
interest, without incurring such costs. Supporting documentation must 
accompany State requests for reimbursement in excess of $50,000.
    (3) Interest Calculation Costs that a State incurs in fiscal years 
prior to its most recently completed Annual Report are not eligible for 
reimbursement.
    (4) A State must not include Interest Calculation Costs in its 
Statewide cost allocation plan, as defined and provided for in OMB 
Circular A-87. All costs incurred by a State to implement this subpart 
A, other than Interest Calculation Costs, are subject to the procedures 
and principles of OMB Circular A-87.
    (e) The payments from the Federal government to individual States to 
offset Interest Calculation Costs incurred are funded from the aggregate 
interest payments States make to the Federal government. The following 
limitations apply:
    (1) We will not reduce or adjust interest liabilities for Federal 
assistance programs funded out of trust funds for which the Secretary is 
trustee. These programs include, but are not limited to, Unemployment 
Insurance Trust Fund (CFDA 17.225); Highway & Planning Trust Fund (CFDA 
20.205); Airport Improvement Trust Fund (CFDA 20.106); Federal Transit 
Capital Improvement Trust Fund (CFDA 20.500); Federal Transit Capital & 
Operating Assistance Trust Fund (CFDA 20.507); and Social Security--
Disability Insurance Trust Fund (CFDA 96.001); and
    (2) The aggregate payments from the Federal government to States to 
offset Interest Calculation Costs will not be greater than the aggregate 
interest payments States make to the Federal government.



Sec. 205.28  How are interest payments exchanged?

    (a) We offset the adjusted total State interest liability and the 
adjusted total Federal interest liability for each State to determine 
the net interest payable to or from each specific State. The payment of 
net interest and any Interest Calculation Costs, as set forth in Sec. 
205.27, for the most recently completed fiscal year must occur no later 
than March 31. We will notify a State of the final net interest 
liability. A State must submit a claim to receive payment.
    (b) A State may appeal a decision by us on interest liabilities and 
interest calculation cost claims in accordance with Sec. 205.31.
    (c) If a State appeals the amount of interest payable in accordance 
with the provisions of Sec. 205.31, payment must occur by March 31 for 
any portions not subject to the appeal.
    (d) The Federal government will not be liable for interest on any 
payment of interest to a State.

[[Page 37]]



Sec. 205.29  What are the State oversight and compliance responsibilities?

    (a) A State must designate an official representative with the 
statutory or administrative authority to coordinate all interaction with 
the Federal government concerning this subpart A, and must notify us in 
writing of the representative's name and title. A State must notify us 
immediately of any change in the official representative.
    (b) A State must maintain records supporting interest calculations, 
clearance patterns, Interest Calculation Costs, and other functions 
directly pertinent to the implementation and administration of this 
subpart A for audit purposes. A State must retain the records for each 
fiscal year for three years from the date the State submits its Annual 
Report, or until any pending dispute or action involving the records and 
documents is completed, whichever is later. We, the Comptroller General, 
and the Inspector General or other representative of a Federal Program 
Agency must have the right of access to, and may require submission of, 
all records for the purpose of verifying interest calculations, 
clearance patterns, interest calculation cost claims, and the State's 
accounting for Federal funds.
    (c) A State's implementation of this subpart A is subject to audit 
in accordance with 31 U.S.C. Chapter 75, ``Requirements for Single 
Audits.''
    (d) If a State repeatedly or deliberately fails to request funds in 
accordance with the procedures established for its funding techniques, 
as set forth in Sec. 205.11, Sec.  205.12, or a Treasury-State 
agreement, we may deny the State payment or credit for the resulting 
Federal interest liability, notwithstanding any other provision of this 
part.
    (e) If a State materially fails to comply with this subpart A, we 
may, in addition to the action described in paragraph (d) of this 
section, take one or more of the following actions, as appropriate under 
the circumstances:
    (1) Deny the reimbursement of all or a part of the State's interest 
calculation cost claim;
    (2) Send notification of the non-compliance to the affected Federal 
Program Agency for appropriate action, including, where appropriate, a 
determination regarding the impact of non-compliance on program funding;
    (3) Request a Federal Program Agency or the General Accounting 
Office to conduct an audit of the State to determine interest owed to 
the Federal government, and to implement procedures to recover such 
interest;
    (4) Initiate a debt collection process to recover claims owed to the 
United States; or
    (5) Take other remedies legally available.



Sec. 205.30  What are the Federal oversight and compliance responsibilities?

    (a) A Federal Program Agency must designate an official 
representative to coordinate all interaction with us and the States 
concerning this subpart A, and must notify us in writing of the 
representative's name and title. A Federal Program Agency must notify us 
immediately of any change in the official representative.
    (b) A Federal Program Agency's implementation of this subpart A is 
subject to review pursuant to procedural instructions that we issue.
    (c) We will consult with Federal agencies as necessary and 
appropriate before entering into or amending a Treasury-State agreement.
    (d) We will distribute Annual Reports to Federal agencies, as set 
forth in Sec. 205.26. Upon our request, a Federal Program Agency must 
review a State's Annual Report for reasonableness and must report its 
findings to us within 30 days.
    (e) A Federal Program Agency must notify us in writing if the 
program agency has knowledge, at any time, that:
    (1) A State's clearance pattern does not correspond to a Federal 
assistance program's clearance activity; or
    (2) Corrective action needs to be taken by a State, us, or another 
Federal Program Agency, with respect to the implementation of this 
subpart. We will notify the State or Federal Program Agency as 
appropriate in writing with a description of the Federal Program 
Agency's assertion.

[[Page 38]]

    (f) A Federal Program Agency must notify us in writing of new 
Federal assistance programs listed in the Catalog of Federal Domestic 
Assistance.
    (g) If a Federal Program Agency causes an interest liability by 
failing to comply with this subpart A, we may collect a charge from the 
Federal Program Agency. A Federal interest liability resulting from 
circumstances beyond the control of a Federal Program Agency does not 
constitute noncompliance. We will determine the charge using the 
following procedures:
    (1) We will issue a Notice of Assessment to the Federal Program 
Agency, indicating the nature of the noncompliance, the amount of the 
charge, the manner in which it was calculated, and the right to file an 
appeal.
    (2) To the maximum extent practicable, a Federal Program Agency must 
pay a charge for noncompliance out of appropriations available for the 
Federal Program Agency's operations and not from the Federal Program 
Agency's program funds.
    (3) If a Federal Program Agency does not pay a charge for 
noncompliance within 45 days after receiving a Notice of Assessment, we 
will debit the appropriate Federal Program Agency account.
    (4) In the event a Federal Program Agency appeals a charge imposed 
under the Notice of Assessment, we will defer the charge until we decide 
the appeal. If we deny the appeal, the effective date of the charge may 
be retroactive to the date indicated in the Notice of Assessment.



Sec. 205.31  How does a State or Federal Program Agency appeal a 
determination made by us and resolve disputes?

    (a) This section documents the procedures for:
    (1) A State to appeal the net interest charge that we have assessed;
    (2) A State to appeal a determination we have made regarding the 
State's claim for Interest Calculation Costs in accordance with Sec. 
205.27;
    (3) A Federal Program Agency to appeal a charge for noncompliance 
that we have assessed in accordance with Sec. 205.30; or
    (4) A State or a Federal Program Agency to resolve other disputes 
with us or between or among each other concerning the implementation of 
this subpart A.
    (b) A State or Federal Program Agency must submit a written petition 
(Petition) to the Assistant Commissioner, Federal Finance, Financial 
Management Service, (Assistant Commissioner), within 90 days of the date 
of the notice of assessment or the event that initiated the appeal or 
dispute. The Petition must include a concise factual statement, not to 
exceed 15 pages, with supporting documentation in the appendices, of the 
conditions forming the basis of the Petition and the action requested of 
the Assistant Commissioner. In the case of a dispute, the party 
submitting the petition to us must concurrently provide a copy of the 
petition to the other concerned parties. The other concerned parties may 
submit to the Assistant Commissioner a rebuttal within 90 days of the 
date of the petition. The rebuttal must include a concise factual 
statement, not to exceed 15 pages, with supporting documentation in the 
appendices.
    (c) The Assistant Commissioner will review the Petition, any 
rebuttal, and all supporting documentation. As part of the review 
process, the Assistant Commissioner may request to meet with any or all 
parties and may request additional information.
    (d) The Assistant Commissioner will issue a written decision within 
the later of 120 days of the date of the Petition or the rebuttal, in 
case of a dispute, or 120 days from receipt of any additional 
information. The Assistant Commissioner's decision will be the final 
program agency action on our part for purposes of judicial review 
procedures under the Administrative Procedures Act, 5 U.S.C. 701-706 
(APA), unless either the State or Federal Program Agency invokes the 
provisions of the Administrative Dispute Resolution Act of 1990 (ADRA), 
5 U.S.C. 581-593.
    (e) Either a State or Federal Program Agency may seek to invoke the 
provisions of the ADRA within 45 days after the date of the Assistant 
Commissioner's written decision.

[[Page 39]]

    (1) The party invoking the ADRA must notify the Assistant 
Commissioner and any other concerned parties in writing. If all parties, 
including the Assistant Commissioner, agree in writing, a neutral party 
appointed under the provisions of the ADRA may assist in resolving the 
dispute through the use of alternate means of dispute resolution as 
defined in the ADRA.
    (2) If the party invoking the ADRA is unable to reach a satisfactory 
resolution, the Assistant Commissioner's decision will be the final 
agency action on our part for purposes of the judicial review procedures 
under the APA.
    (f) Any amount due as a result of an appeal or dispute must be paid 
within 30 days of the date of the decision of the Assistant Commissioner 
or the date of the resolution under the ADRA. If a State fails to pay, 
the State will be subject to collection techniques under 31 U.S.C. 3701 
et seq., including accrual of interest on outstanding balances and 
administrative offset.



 Subpart B_Rules Applicable to Federal Assistance Programs Not Included 
                      in a Treasury-State Agreement



Sec. 205.32  What Federal assistance programs are subject to this subpart 
B?

    This subpart B applies to all Federal assistance programs listed in 
the Catalog of Federal Domestic Assistance that are not subject to 
subpart A of this part.



Sec. 205.33  How are funds transfers processed?

    (a) A State must minimize the time between the drawdown of Federal 
funds from the Federal government and their disbursement for Federal 
program purposes. A Federal Program Agency must limit a funds transfer 
to a State to the minimum amounts needed by the State and must time the 
disbursement to be in accord with the actual, immediate cash 
requirements of the State in carrying out a Federal assistance program 
or project. The timing and amount of funds transfers must be as close as 
is administratively feasible to a State's actual cash outlay for direct 
program costs and the proportionate share of any allowable indirect 
costs. States should exercise sound cash management in funds transfers 
to subgrantees in accordance with OMB Circular A-102 (For availability, 
see 5 CFR 1310.3.).
    (b) Neither a State nor the Federal government will incur an 
interest liability under this part on the transfer of funds for a 
Federal assistance program subject to this subpart B.



Sec. 205.34  What are the Federal oversight and compliance responsibilities?

    (a) A Federal Program Agency must review the practices of States as 
necessary to ensure compliance with this subpart B.
    (b) A Federal Program Agency must notify us if a State demonstrates 
an unwillingness or inability to comply with this subpart B.
    (c) A Federal Program Agency must formulate procedural instructions 
specifying the methods for carrying out the responsibilities of this 
section.



Sec. 205.35  What is the result of Federal Program Agency or State 
non-compliance?

    We may require a State and a Federal Program Agency to make the 
affected Federal assistance programs subject to subpart A of this part, 
consistent with Federal assistance program purposes and regulations, 
notwithstanding any other provision of this part, if:
    (a) A State demonstrates an unwillingness or inability to comply 
with this subpart B; or
    (b) A Federal Program Agency demonstrates an unwillingness or 
inability to make Federal funds available to a State as needed to carry 
out a Federal assistance program.

Subpart C [Reserved]



PART 206_MANAGEMENT OF FEDERAL AGENCY RECEIPTS, DISBURSEMENTS, AND 
OPERATION OF THE CASH MANAGEMENT IMPROVEMENTS FUND--Table of Contents




Sec.
206.1 Scope and application.
206.2 Definitions.
206.3 Billing policy and procedures.
206.4 Collection and payment mechanisms.

[[Page 40]]

206.5 Collection and deposit procedure exceptions.
206.6 Cash management planning and review.
206.7 Compliance.
206.8 Appeals.
206.9 Charges.
206.10 Operation of and payments from the Cash Management Improvements 
          Fund.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3301, 3302, 3321, 3327, 
3328, 3332, 3335, 3720, and 6503.

    Source: 59 FR 4538, Jan. 31, 1994, unless otherwise noted.



Sec. 206.1  Scope and application.

    (a) This subpart applies to all Government departments and agencies 
in the executive branch (except the Tennessee Valley Authority) and all 
monies collected and disbursed by these departments and agencies. This 
subpart does not apply to interagency transfers of funds, except that 
agencies are to use the Treasury's On-Line Payment and Collection (OPAC) 
system for interagency payments between executive agencies, when cost-
effective.
    (b) Policies and guidelines are prescribed for promoting efficient, 
effective cash management through improved billing, collection, deposit, 
and payment of funds. These objectives seek to improve funds 
availability and the efficiency and effectiveness with which funds are 
transferred.
    (c) Authority to implement this regulation has been delegated within 
the Department of the Treasury (hereinafter, ``Treasury'') to the 
Commissioner (hereinafter, ``the Commissioner'') of the Financial 
Management Service (hereinafter, ``the Service).'' The Service maintains 
the final authority as granted under the Deficit Reduction Act of 1984 
to specify use of a particular method or mechanism of collection and 
deposit and to recover costs that result from noncompliance. Authority 
is also granted to the Service, under the Cash Management Improvement 
Act of 1990, as amended by the Cash Management Improvement Act 
Amendments of 1992, to provide for the timely disbursement of funds. An 
agency will require the collection or disbursement of funds by the 
agency via EFT as a provision of new contractual agreements or renewal 
of existing contracts that impact agency collection or payment 
mechanisms.



Sec. 206.2  Definitions.

    For the purpose of this part, the following definitions apply:
    Agency means any department, instrumentality, office, commission, 
board, service, Government corporation, or other establishment in the 
executive branch, except the Tennessee Valley Authority.
    Billing means any of a variety of means by which the Government 
places a demand for payment against an entity that is indebted to the 
Government. The term encompasses invoices, notices, initial demand 
letters, and other forms of notification.
    Cash management means practices and techniques designed to 
accelerate and control collections, ensure prompt deposit of receipts, 
improve control over disbursement methods, and eliminate idle cash 
balances. ``Cash Management Review Process'' means periodic examinations 
of collection and disbursement cash flows to ensure that the most 
effective mechanisms are used to process the funds.
    Collection means the transfer of monies from a source outside the 
Federal Government to an agency or to a financial institution acting as 
an agent of the Government.
    Collection mechanism means any one of a number of tools or systems 
by which monies are transferred to the Government from a source outside 
the Government.
    Cutoff time means a time predesignated by a financial institution 
beyond which transactions presented or actions requested will be 
considered the next banking day's business.
    Day means a calendar day unless otherwise specified.
    Deposit means as a noun, money that is being or has been presented 
for credit to the Treasury. Deposits can be made by an agency or 
directly by the remitter. All such transfers are effected through a 
Federal Reserve Bank or other financial institution. As a verb, deposit 
means the act of presenting monies for credit to the Treasury by an 
official of an agency.
    Depositary means a bank or other financial institution that has been 
authorized by the Treasury to receive monies for credit to the Treasury.

[[Page 41]]

    Disburse means the initiation of an Electronic Funds Transfer (EFT) 
transaction or other methods of drawing funds from accounts maintained 
by the Government.
    Electronic funds transfer (EFT) means any transfer of funds, other 
than a transaction originated by cash, check or similar paper 
instrument, that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape, for the purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit an account. The 
term includes, but is not limited to, Fed Wire transfers, Automated 
Clearing House (ACH) transfers, transfers made at automatic teller 
machines (ATM) and Point-of-Sale (POS) terminals (to include use of the 
Government small purchase card), and other means of credit card 
transactions.
    Fund means the Cash Management Improvements Fund.
    Monies (or ``receipts'') means EFT transactions, currency, 
negotiable instruments, and/or demand deposits owed to or collected by 
an agency.
    Next-day deposit means a deposit made before the cutoff time on the 
day following the day on which the funds were received by an agency. For 
example, if an agency receives funds for deposit at 3 p.m. on Monday and 
transmits the deposits to the depositary by 2 p.m. on Tuesday (the 
depositary's next cutoff time), then next-day deposit requirements are 
met.
    Payment means a sum of money transferred to a recipient in 
satisfaction of an obligation. A payment includes any Federal Government 
benefit or nonbenefit payment.
    (1) A benefit payment is a disbursement for a Federal Government 
entitlement program or annuity. Benefit payments may be one-time or 
recurring payments including, but not limited to, payments for Social 
Security, Supplemental Security Income, Black Lung, Civil Service 
Retirement, Railroad Retirement Board Retirement/Annuity, Department of 
Veterans Affairs Compensation/Pension, Central Intelligence Agency 
Annuity, Military Retirement Annuity, Coast Guard Retirement, and 
Worker's Compensation.
    (2) A nonbenefit payment is a Federal Government disbursement other 
than a benefit payment. Nonbenefit payments may be one-time or recurring 
payments including, but not limited to, payments for vendors, Internal 
Revenue Service tax refunds, Federal salaries and allotments therefrom, 
grants, travel disbursements and reimbursements, loans, principal and/or 
interest related to U.S. savings bonds, notes, and other savings-type 
securities, and payments of service fees to organizations qualified to 
issue and/or redeem savings bonds.
    Point-of-sale (POS) terminal means an automated credit card or debit 
card transaction device.
    Presumed EFT means that agencies will presume that new payment 
recipients will elect EFT as the means of payment delivery. Enrollment 
forms for use in establishing routine payments will be designed with 
this approach in mind, to obtain the required written consent of the 
recipient.
    Recipient means a person, corporation, or other public or private 
entity receiving benefit or nonbenefit payments from the Government.
    Same-day deposit means a deposit made before the cutoff time on the 
day on which the funds were received by an agency. For example, if an 
agency receives funds for deposit at 10 a.m. on Monday and transmits the 
deposits by 2 p.m. on Monday (the depositary's cutoff time), then a 
same-day deposit has been achieved.
    Service means the Financial Management Service, Department of the 
Treasury.
    Treasury Financial Manual (TFM) means the manual issued by the 
Service containing procedures to be observed by all Government 
departments and agencies in relation to central accounting, financial 
reporting, and other Governmentwide fiscal responsibilities of the 
Department of the Treasury. Volume I, Chapter 6-8000 (I TFM 6-8000) 
contains agency cash management procedures to be followed pertaining to 
these regulations.

Copies of the TFM are available free to Government agencies. Others who 
are interested in ordering a copy may call (202) 208-1819 or write the 
Directives

[[Page 42]]

Management Branch, Financial Management Service, Department of the 
Treasury, Liberty Center (UCP-741), Washington, DC 20227 for further 
information.



Sec. 206.3  Billing policy and procedures.

    The billing process is considered an integral part of an effective 
cash management collection program. In those situations where bills are 
required and the failure to bill would affect the cash flow, bills will 
be prepared and transmitted within 5 business days after goods have been 
shipped or released, services have been rendered, or payment is 
otherwise due. An agency may prepare and transmit bills later than the 
5-day timeframe if it can demonstrate that it is cost-effective to do 
so. In addition, the bill must include the terms and dates of payments, 
and late payment provisions, if applicable. Terms and dates of payments 
will be consistent with industry practices. I TFM 6-8000 describes 
detailed billing policies, procedures, and industry standards for 
agencies.



Sec. 206.4  Collection and payment mechanisms.

    (a) All funds are to be collected and disbursed by EFT when cost-
effective, practicable, and consistent with current statutory authority.
    (b) Collections and payments will be made by EFT when cost- 
effective, practicable, and consistent with current statutory authority. 
When consistent with these criteria, specific cash flows will utilize 
EFT as follows:
    (1) Fees/fines. EFT will be adopted as the presumed method of 
collecting fees and fines, especially when these collection cash flows 
are recurring or of large dollar amounts.
    (2) Tax collections. EFT will be adopted as the primary method for 
collecting taxes. EFT mechanisms may include ACH credit or debit cards.
    (3) Salary payment. Presumed EFT will be adopted as the method for 
paying employees, and entrance enrollment forms for establishing regular 
payments will be designed to use this approach.
    (4) Vendor and miscellaneous payments. Each department and agency 
will exercise its authority under the Federal Acquisition Regulation to 
require that all contractors are paid by EFT, unless a determination is 
made that it is not in the best interest of the Federal Government to do 
so. EFT will be adopted as the standard method of payment for all 
Federal program payments originated by agencies or their agents.
    (5) Benefit payments. EFT will be presented to new beneficiaries as 
the presumed method for receiving benefits. EFT payment methods, such as 
Electronic Benefit Transfer, will be adopted and implemented to make EFT 
accessible to all benefit recipients.
    (c)(1) Selection of the best collection and payment mechanism is a 
joint responsibility of an agency and the Service. An agency has 
responsibility for conducting cash management reviews; gathering volume 
and dollar data relative to the operation of the systems; and funding 
any implementation and operational costs above those normally funded by 
Treasury. The Service is the required approval authority when an agency 
desires to convert from one collection mechanism to another. The 
Service's written approval is required prior to an agency entering into 
new contractual agreements or renewing existing contracts for agency 
collections or payments systems. Agencies will follow guidelines for the 
cost-effective usage of collection and payment mechanisms, published in 
the TFM, Volume I, Part 6-8000, in their selection and recommendation to 
the Service of an appropriate funds transfer mechanism. The agency will 
provide the Service with a recommended mechanism for any new or modified 
cash flows. The Service will review the recommendations, approve a 
mechanism, and assist with implementation.
    (2) If an agency proposes a collection or payment mechanism other 
than EFT, it may be required to provide a cost-benefit analysis to 
justify its use. Cost/benefit analyses must include, at a minimum, known 
or estimated agency personnel costs, costs of procurement, recurring 
operational costs, equipment and system implementation and maintenance 
costs, costs to payment recipients, and costs to remitters. Agencies 
should consult with Treasury to determine the need to include interest 
costs associated with

[[Page 43]]

float in their computations of benefits and costs.
    (d) An agency will require the collection of funds by the agency to 
be made via EFT and the disbursement of funds by the agency to be made 
via EFT as a provision of new contractual agreements or renewal of 
existing contracts that impact agency collection or payment mechanisms, 
when cost-effective, practicable, and consistent with current statutory 
authority.



Sec. 206.5  Collection and deposit procedure exceptions.

    (a) The following collection and deposit timeframe requirements are 
to be followed in exception cases where EFT mechanisms are not utilized:
    (1) An agency will achieve same-day deposit of monies. Where same 
day deposit is not cost-effective or is impracticable, next day deposit 
of monies must be achieved except in those cases covered by I TFM 6-
8000.
    (2) Deposits will be made at a time of the day prior to the 
depositary's specified cutoff time, but as late as possible in order to 
maximize daily deposit amounts.
    (3) When cost-beneficial to the Government, an agency may make 
multiple deposits.
    (b) Any additional exceptions to the above policies are listed in I 
TFM 6-8000.



Sec. 206.6  Cash management planning and review.

    (a) An agency shall periodically perform cash management reviews to 
identify areas needing improvement.
    (b) As part of its cash management review process, an agency is 
expected to document cash flows in order to provide an overview of its 
cash management activities and to identify areas that will yield savings 
after cash management initiatives are implemented. The Service will 
evaluate an agency's EFT policy and application, to include mitigating 
circumstances that may prevent the use of EFT, as part of the cash 
management reviews.
    (c) An agency's cash management reviews will provide the basis for 
identification of improvements and preparation of cash flow reports for 
submission to the Service as prescribed by I TFM 6-8000. That Chapter 
provides requirements for an agency in performing periodic cash 
management reviews, identifying improvements, and preparing cash flow 
reports. In addition, the Chapter describes the timing and content of 
periodic reports that must be submitted by an agency to the Service on 
progress made in implementing cash management initiatives and associated 
savings.
    (d) The Service will periodically review an agency's cash management 
program to ensure that adequate progress is being made to improve 
overall cash management at an agency. As part of its oversight 
authority, the Service may visit an agency and review all or specific 
cash management activities of an agency. An agency will be notified in 
advance of the Service's review and will be required to provide the 
Service with documentation of the agency cash management review within 
the timeframes required by I TFM 6-8000.



Sec. 206.7  Compliance.

    (a) The Service will monitor agency cash management performance. 
Part of the monitoring process will include establishing implementation 
end dates for conversion to, or expansion of, EFT mechanisms, as well as 
the identification of mitigating circumstances that may prevent the use 
of EFT.
    (b) In cases where an agency fails to meet a scheduled date within 
its control, or where an agency converts to a less cost-effective 
transfer mechanism without prior, written Service approval as determined 
in accordance with Sec. 206.4(c), the Service will send a formal Notice 
of Deficiency to an agency's designated cash management official. A 
separate Notice will be sent for each initiative.
    (1) Collections cash flows. For collections cash flows, the Notice 
of Deficiency will include the nature of the deficiency, the amount of 
the proposed charge, the method of calculation, the right to file an 
appeal, and the date the charge will be imposed in the absence of an 
appeal. The amount of the charge will be equal to the cost of such 
noncompliance to the Treasury's General Fund.
    (2) Payments cash flows. [Reserved]

[[Page 44]]



Sec. 206.8  Appeals.

    (a) An agency that chooses to file an appeal must submit the appeal 
in writing to the Commissioner within 45 days of the date of the Notice 
of Deficiency. In the event of an appeal, the charge imposed under 
Notice of Deficiency will be deferred pending the results of the appeal. 
If an appeal is not submitted (i.e., received by the Commissioner) 
within 45 days, the amount indicated in the Notice of Deficiency will be 
charged per Sec. 206.9(a).
    (b) The appeal will contain the elements and follow the submission 
procedures specified in I TFM 6-8000. The appeal will include the 
background leading to the Notice of Deficiency, the basis of the appeal, 
and the action requested by an agency. An agency should state its 
disagreements with the Notice of Deficiency which may include cost-
benefit factors, the amount of the charge, and other items.
    (c) An agency must state what action it requests in its appeal. An 
agency may request that the Notice of Deficiency be completely 
overturned for cost-benefit or other considerations. Alternatively, an 
agency may request a reduced charge, deferral of the charge, an 
alternative solution to cash management improvement, or a combination of 
these actions.
    (d) Appeals Board. The Commissioner will refer the appeal to an 
Appeals Board. The Appeals Board will consist of three members--two 
permanent members and one temporary member. The permanent members will 
be the Deputy Chief Financial Officer, Department of the Treasury, and 
the Assistant Commissioner, Federal Finance, of the Service. The 
temporary board member will be a cash management official from an agency 
other than the agency appealing the Notice of Deficiency. The Board will 
be convened on an as-needed basis. The order of agency assignment to the 
Board will be published by Treasury in Volume I, Chapter 6-8000 of the 
TFM. The Deputy Chief Financial Officer, Department of the Treasury, the 
Assistant Commissioner, Federal Finance, and the designated agency cash 
management official may delegate their responsibility to a staff 
subordinate having sufficient experience in cash management matters. The 
Assistant Commissioner's designee may be from any area other than that 
which issued the Notice of Deficiency.
    (e) Appeal review process. The Appeals Board will review the Notice 
of Deficiency, any additional information submitted by the Service, and 
the written appeal from an agency. Based on this review, the Board may 
decide additional investigation is required. The Board may request an 
agency and/or the Service to meet with the Board as part of the review 
process.
    (f) Appeal finding. A written majority decision will be rendered by 
the Appeals Board within 30 days of receipt of the appeal. The Board may 
extend this period for an additional period, not to exceed 30 days, if 
required. The Appeals Board will notify the Commissioner and the agency 
of the decision. The decision of the Board whether to uphold the Notice 
of Deficiency, to overturn the Notice of Deficiency, or to mandate some 
other action will be stated in the finding. Other action mandated may 
include a reduced charge, a deferral of the charge, an alternate 
solution to cash management improvement, or a combination of these 
actions. The basis of the decision, the amount of the charge, and the 
effective date of the charge will be stated in the finding. The 
effective date of the charge may be retroactive to the date indicated in 
the Notice of Deficiency.
    (g) Any terms related to charge deferral shall be stated; the 
Service and an agency will be required to submit evidence of compliance 
to such terms at a future specified date. At this future time, the 
Appeals Board will review the evidence of compliance. Based on this 
evidence, the Board will decide whether to impose a charge.



Sec. 206.9  Charges.

    (a) Within 30 days of the effective date of the charge or the 
appeals decision, an agency must submit appropriate accounting 
information to the Service's Assistant Commissioner, Federal Finance. 
The charge will be calculated following procedures outlined in I TFM 6-
8000, and will be assessed for each month that noncompliance continues.

[[Page 45]]

    (b) Collection noncompliance. In the case of cash management 
collection noncompliance, an agency will absorb the charge from amounts 
appropriated or otherwise made available to carry out the program to 
which the collections relate. Charges collected from an executive agency 
in the case of cash management collection noncompliance will be 
deposited in the Cash Management Improvements Fund as outlined in Sec. 
206.10.
    (c) Payment noncompliance. [Reserved]
    (d) If an agency does not voluntarily pay the charge assessed under 
Sec. 206.9(a), the Service will debit the appropriate account 
automatically. By failing to pay voluntarily the charges as required by 
the Deficit Reduction Act of 1984, an agency will be deemed to authorize 
the automatic debit to its account.
    (e) The Commissioner will formally terminate the charge when the 
Commissioner has determined that an agency has complied. In addition, on 
an annual basis, the Commissioner will review an agency's performance 
and calculation of the charge, and will notify an agency in writing of 
any changes to the amount being charged.



Sec. 206.10  Operation of and payments from the Cash Management 
Improvements Fund.

    (a) The Cash Management Improvements Fund (Fund) will be operated as 
a revolving fund by the Service. Charges assessed under Sec. 206.9(a) 
for cash management collection noncompliance will be deposited into the 
Fund according to the Deficit Reduction Act of 1984. The Service will 
also disburse any payments from the Fund based on projects selected by a 
project selection and approval committee.
    (b) Committee composition. The committee will consist of three 
members--two permanent members and one temporary member. The permanent 
members will be the Commissioner and the Assistant Commissioner, Federal 
Finance, of the Service. The temporary committee member will be a cash 
management official from an agency other than an agency being considered 
for funds. The order of agency assignment to the Committee will be 
published in a TFM Bulletin, when funds are first deposited to the Fund. 
Decisions of the project selection and approval committee cannot be 
appealed. Agencies will be notified of any available amounts in the Fund 
and requirements to apply for such monies through a TFM bulletin.
    (c) As provided by 31 U.S.C. 3720, sums in the Fund will be 
available without fiscal year limitation for the payment of expenses 
incurred in developing improved methods of collection and deposit and 
the expenses incurred in carrying out collections and deposits using 
such methods, including the costs of personal services and the costs of 
the lease or purchase of equipment and operating facilities.
    (d) In addition to all reports required by law and regulation, for 
each fiscal year during which there is a balance in Fund, the Service 
will prepare and publish, by the 60th day following the close of the 
fiscal year, a full report on payments, receipts, disbursements, 
balances of the Fund, and full disclosure on projects financed by the 
Fund.



PART 208_MANAGEMENT OF FEDERAL AGENCY DISBURSEMENTS--Table of Contents




Sec.
208.1 Scope and application.
208.2 Definitions.
208.3 Payment by electronic funds transfer.
208.4 Waivers.
208.5 Availability of the ETA\SM\.
208.6 General account requirements.
208.7 Agency responsibilities.
208.8 Recipient responsibilities.
208.9 Compliance.
208.10 Reservation of rights.

Appendix A to Part 208--Model Disclosure for Use Until ETA\SM\ Becomes 
          Available
Appendix B to Part 208--Model Disclosure for Use After ETA\SM\ Becomes 
          Available

    Authority: 5 U.S.C. 301; 12 U.S.C. 90, 265, 266, 1767, 1789a; 31 
U.S.C. 321, 3122, 3301, 3302, 3303, 3321, 3325, 3327, 3328, 3332, 3335, 
3336, 6503; Pub. L. 104-208, 110 Stat. 3009.

    Source: 63 FR 51502, Sept. 25, 1998, unless otherwise noted.



Sec. 208.1  Scope and application.

    This part applies to all Federal payments made by an agency and, 
except as specified in Sec. 208.4, requires such payments to be made by 
electronic funds transfer. This part does not apply

[[Page 46]]

to payments under the Internal Revenue Code of 1986 (26 U.S.C.).



Sec. 208.2  Definitions.

    (a) Agency means any department, agency, or instrumentality of the 
United States Government, or a corporation owned or controlled by the 
Government of the United States.
    (b) Authorized payment agent means any individual or entity that is 
appointed or otherwise selected as a representative payee or fiduciary, 
under regulations of the Social Security Administration, the Department 
of Veterans Affairs, the Railroad Retirement Board, or other agency 
making Federal payments, to act on behalf of an individual entitled to a 
Federal payment.
    (c) Disbursement means, in the context of electronic benefits 
transfer, the performance of the following duties by a Financial Agent 
acting as agent of the United States:
    (1) The establishment of an account for the recipient that meets the 
requirements of the Federal Deposit Insurance Corporation or the 
National Credit Union Administration Board for deposit or share 
insurance;
    (2) The maintenance of such an account;
    (3) The receipt of Federal payments through the Automated Clearing 
House system or other electronic means and crediting of Federal payments 
to the account; and (4) The provision of access to funds in the account 
on the terms specified by Treasury.
    (d) Electronic benefits transfer (EBT) means the provision of 
Federal benefit, wage, salary, and retirement payments electronically, 
through disbursement by a financial institution acting as a Financial 
Agent. For purposes of this part, EBT includes disbursement through an 
ETA\SM\ and through a Federal/State EBT program.
    (e) Electronic funds transfer means any transfer of funds, other 
than a transaction originated by cash, check, or similar paper 
instrument, that is initiated through an electronic terminal, telephone, 
computer, or magnetic tape, for the purpose of ordering, instructing, or 
authorizing a financial institution to debit or credit an account. The 
term includes, but is not limited to, Automated Clearing House 
transfers, Fedwire transfers, and transfers made at automated teller 
machines and point-of-sale terminals. For purposes of this part only, 
the term electronic funds transfer includes a credit card transaction.
    (f) ETA\SM\ means the Treasury-designated electronic transfer 
account made available by a Federally-insured financial institution 
acting as a Financial Agent in accordance with Sec. 208.5 of this part.
    (g) Federal payment means any payment made by an agency.
    (1) The term includes, but is not limited to:
    (i) Federal wage, salary, and retirement payments;
    (ii) Vendor and expense reimbursement payments;
    (iii) Benefit payments; and
    (iv) Miscellaneous payments including, but not limited to: 
interagency payments; grants; loans; fees; principal, interest, and 
other payments related to U.S. marketable and nonmarketable securities; 
overpayment reimbursements; and payments under Federal insurance or 
guarantee programs for loans.
    (2) For purposes of this part only, the term ``Federal payment'' 
does not apply to payments under the Internal Revenue Code of 1986 (26 
U.S.C.).
    (h) Federal/State EBT program means any program that provides access 
to Federal benefit, wage, salary, and retirement payments and to State-
administered benefits through a single delivery system and in which 
Treasury designates a Financial Agent to disburse the Federal payments.
    (i) Federally-insured financial institution means any financial 
institution, the deposits of which are insured by the Federal Deposit 
Insurance Corporation under 12 U.S.C. Chapter 16 or, in the case of a 
credit union, the member accounts of which are insured by the National 
Credit Union Share Insurance Fund under 12 U.S.C. Chapter 14, Subchapter 
II.
    (j) Financial Agent means a financial institution that has been 
designated by Treasury as a Financial Agent for the provision of EBT 
services under any provision of Federal law, including 12 U.S.C. 90, 
265, 266, 1767, and 1789a, and 31 U.S.C. 3122 and 3303, as amended by 
the

[[Page 47]]

Omnibus Consolidated Appropriations Act, 1997, Section 664, Public Law 
104-208.
    (k) Financial institution means:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (6) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    (l) Individual means a natural person.
    (m) Recipient means an individual, corporation, or other public or 
private entity that is authorized to receive a Federal payment from an 
agency.
    (n) Secretary means Secretary of the Treasury.
    (o) Treasury means the United States Department of the Treasury.



Sec. 208.3  Payment by electronic funds transfer.

    Subject to Sec. 208.4, and notwithstanding any other provision of 
law, effective January 2, 1999, all Federal payments made by an agency 
shall be made by electronic funds transfer.



Sec. 208.4  Waivers.

    Payment by electronic funds transfer is not required in the 
following cases:
    (a) Where an individual determines, in his or her sole discretion, 
that payment by electronic funds transfer would impose a hardship due to 
a physical or mental disability or a geographic, language, or literacy 
barrier, or would impose a financial hardship. In addition, the 
requirement to receive payment by electronic funds transfer is 
automatically waived for all individuals who do not have an account with 
a financial institution and who are eligible to open an ETA\SM\ under 
Sec. 208.5, until such date as the Secretary determines that the 
ETA\SM\ is available;
    (b) Where the political, financial, or communications infrastructure 
in a foreign country does not support payment by electronic funds 
transfer;
    (c) Where the payment is to a recipient within an area designated by 
the President or an authorized agency administrator as a disaster area. 
This waiver is limited to payments made within 120 days after the 
disaster is declared;
    (d) Where either:
    (1) A military operation is designated by the Secretary of Defense 
in which uniformed services undertake military actions against an enemy, 
or
    (2) A call or order to, or retention on, active duty of members of 
the uniformed services is made during a war or national emergency 
declared by the President or Congress;
    (e) Where a threat may be posed to national security, the life or 
physical safety of any individual may be endangered, or a law 
enforcement action may be compromised;
    (f) Where the agency does not expect to make more than one payment 
to the same recipient within a one-year period, i.e., the payment is 
non-recurring, and the cost of making the payment via electronic funds 
transfer exceeds the cost of making the payment by check; and
    (g) Where an agency's need for goods and services is of such unusual 
and compelling urgency that the Government would be seriously injured 
unless

[[Page 48]]

payment is made by a method other than electronic funds transfer; or, 
where there is only one source for goods or services and the Government 
would be seriously injured unless payment is made by a method other than 
electronic funds transfer.



Sec. 208.5  Availability of the ETA \SM\.

    An individual who receives a Federal benefit, wage, salary, or 
retirement payment shall be eligible to open an ETA \SM\ at any 
Federally-insured financial institution that offers ETAs \SM\. Any 
Federally-insured financial institution shall be eligible, but not 
required, to offer ETAs \SM\ as Treasury's Financial Agent. A Federally-
insured financial institution that elects to offer ETAs \SM\ shall, upon 
entering into an ETA \SM\ Financial Agency Agreement with the Treasury, 
be designated as Treasury's Financial Agent for the offering of the 
account pursuant to Public Law 104-208. Treasury shall make publicly 
available required attributes for ETAs \SM\ and any ETA \SM\ offered by 
a Federally-insured financial institution shall comply with such 
requirements. The offering of an ETA \SM\ shall constitute the provision 
of EBT services within the meaning of Public Law 104-208.



Sec. 208.6  General account requirements.

    (a) All Federal payments made by electronic funds transfer, 
including those made through an ETA \SM\, shall be deposited into an 
account at a financial institution. For all payments other than vendor 
payments, the account at the financial institution shall be in the name 
of the recipient, except as provided in paragraph (b) of this section.
    (b)(1) Where an authorized payment agent has been selected, the 
Federal payment shall be deposited into an account titled in accordance 
with the regulations governing the authorized payment agent.
    (2) Where a Federal payment is to be deposited into an investment 
account established through a securities broker or dealer registered 
with the Securities and Exchange Commission under the Securities 
Exchange Act of 1934, or an investment account established through an 
investment company registered under the Investment Company Act of 1940 
or its transfer agent, such payment may be deposited into an account 
designated by such broker or dealer, investment company, or transfer 
agent.



Sec. 208.7  Agency responsibilities.

    (a) An agency shall disclose to each individual who is eligible to 
receive a Federal benefit, wage, salary, or retirement payment and who 
is not already receiving payment by electronic funds transfer the 
individual's rights and obligations under Sec. Sec. 208.3, 208.4(a) and 
208.5 of this part, unless payment by electronic funds transfer is not 
required pursuant to any provision of subsections (b) through (g) of 
Sec. 208.4.
    (1) Prior to the date the ETA \SM\ becomes available, the disclosure 
shall be in a form substantially similar to the model disclosure set 
forth in appendix A of this part.
    (2) On and after the date the ETA \SM\ becomes available, the 
disclosure shall be in a form substantially similar to the model 
disclosure set forth in appendix B of this part.
    (b) An agency shall put into place procedures that allow recipients 
to indicate that the recipient elects to have payment deposited by 
electronic funds transfer to an account held by the recipient at a 
financial institution. In addition, an agency may put into place 
procedures to request that individuals who are invoking a hardship 
waiver under Sec. 208.4(a) indicate, in writing or orally, that a 
hardship waiver has been invoked. However, an agency may not delay or 
withhold payment if a recipient does not respond to such a request.



Sec. 208.8  Recipient responsibilities.

    Each recipient who is required to receive payment by electronic 
funds transfer and who has an account with a financial institution must, 
within the time frame specified by the agency making the payment, 
designate a financial institution through which the payment may be made 
and provide the agency with the information requested by the agency in 
order to effect payment by electronic funds transfer.

[[Page 49]]



Sec. 208.9  Compliance.

    (a) Treasury will monitor agencies' compliance with this part. 
Treasury may require agencies to provide information about their 
progress in converting payments to electronic funds transfer.
    (b) If an agency fails to make payment by electronic funds transfer, 
as prescribed under this part, Treasury may assess a charge to the 
agency pursuant to 31 U.S.C. 3335.



Sec. 208.10  Reservation of rights.

    The Secretary reserves the right, in the Secretary's discretion, to 
waive any provision(s) of this regulation in any case or class of cases.

Appendix A to Part 208--Model Disclosure for Use Until ETA \SM\ Becomes 
                                Available

    The Debt Collection Improvement Act of 1996 requires that most 
Federal payments be made by electronic funds transfer after January 2, 
1999.
    If you are currently receiving your Federal payment by check or you 
have just become eligible to begin receiving a Federal payment, you have 
several choices:
    (1) Receive your payment by Direct Deposit through the financial 
institution of your choice.
    The Government makes payments electronically through a program 
called Direct Deposit. Direct Deposit is a safe, convenient, and 
reliable way to receive your Federal payment through a financial 
institution. (A financial institution can be a bank, credit union, 
savings bank, or thrift.) Many financial institutions offer basic, low-
cost accounts in addition to full-service checking or savings accounts.
    (2) Do nothing now and wait for a basic, low-cost account, called an 
ETA \SM\, to become available.
    If you do not have an account with a financial institution, you do 
not need to do anything now. In the future a low-cost account, called an 
ETA \SM\, will be available at many financial institutions. Like Direct 
Deposit, the ETA \SM\ (which stands for electronic transfer account) is 
a safe, convenient, and reliable way to receive your Federal payment 
through a financial institution. You are eligible to open this account, 
at a low monthly fee, if you receive a Federal benefit, wage, salary, or 
retirement payment. [Agency name] will contact you and let you know when 
the ETA \SM\ is available and which financial institutions in your area 
offer the account.
    (3) Continue to receive a check.
    If receiving your payment electronically would cause you a hardship 
because you have a physical or mental disability, or because of a 
geographic, language, or literacy barrier, you may receive your payment 
by check. In addition, if receiving your payment electronically would 
cause you a financial hardship because it would cost you more than 
receiving your payment by check, you may receive your payment by check.
    Please call [agency name] at [agency customer service number] if you 
would like more information on Direct Deposit, the ETA \SM\, or hardship 
waivers.

Appendix B to Part 208--Model Disclosure for Use After ETA \SM\ Becomes 
                                Available

    The Debt Collection Improvement Act of 1996 requires that most 
Federal payments be made by electronic funds transfer after January 2, 
1999.
    If you are currently receiving your Federal payment by check or you 
have just become eligible to begin receiving a Federal payment, you have 
several choices:
    (1) Receive your payment by Direct Deposit through the financial 
institution of your choice.
    The Government makes payments electronically through a program 
called Direct Deposit. Direct Deposit is a safe, convenient, and 
reliable way to receive your Federal payment through a financial 
institution. (A financial institution can be a bank, credit union, 
savings bank, or thrift.) Many financial institutions offer basic, low-
cost accounts in addition to full-service checking or savings accounts.
    (2) Receive your payment through a basic, low-cost account called an 
ETA \SM\.
    If you receive a Federal benefit, wage, salary, or retirement 
payment, you are eligible to open an ETA \SM\. This account is available 
for a low monthly fee at many financial institutions. Like Direct 
Deposit, the ETA \SM\ (which stands for electronic transfer account) is 
a safe, convenient, and reliable way to receive your Federal payment 
through a financial institution. Please call the customer service number 
listed below to find out which financial institutions in your area offer 
the ETA \SM\.
    (3) Continue to receive a check.
    If receiving your payment electronically would cause you a hardship 
because you have a physical or mental disability, or because of a 
geographic, language, or literacy barrier, you may receive your payment 
by check. In addition, if receiving your payment electronically would 
cause you a financial hardship because it would cost you more than 
receiving your payment by check, you may receive your payment by check.
    Please call [agency name] at [agency customer service number] if you 
would like

[[Page 50]]

more information on Direct Deposit, the ETA \SM\, or hardship waivers.



PART 210_FEDERAL GOVERNMENT PARTICIPATION IN THE AUTOMATED CLEARING HOUSE
--Table of Contents




Sec.
210.1 Scope; relation to other regulations.
210.2 Definitions.
210.3 Governing law.

                            Subpart A_General

210.4 Authorizations and revocations of authorizations.
210.5 Account requirements for Federal payments.
210.6 Agencies.
210.7 Federal Reserve Banks.
210.8 Financial institutions.

                Subpart B_Reclamation of Benefit Payments

210.9 Parties to the reclamation.
210.10 RDFI liability.
210.11 Limited liability.
210.12 RDFI's rights of recovery.
210.13 Notice to account owners.
210.14 Erroneous death information.

Appendix A to Part 210--Standard Disclosure for Point-of-Purchase 
          Conversion--Posted Notice
Appendix B to Part 210--Standard Disclosure for Point-of-Purchase 
          Conversion--Brochure or Pamphlet
Appendix C to Part 210--Standard Disclosure for Lockbox Conversion--
          Notice

    Authority: 5 U.S.C. 5525; 12 U.S.C. 391; 31 U.S.C. 321, 3301, 3302, 
3321, 3332, 3335, and 3720.

    Source: 64 FR 17487, Apr. 9, 1999, unless otherwise noted.



Sec. 210.1  Scope; relation to other regulations.

    This part governs all entries and entry data originated or received 
by an agency through the Automated Clearing House (ACH) network, except 
as provided in paragraphs (a) and (b) of this section. This part also 
governs reclamations of benefit payments.
    (a) Federal tax payments received by the Federal Government through 
the ACH system that are governed by part 203 of this title shall not be 
subject to any provision of this part that is inconsistent with part 
203.
    (b) ACH credit or debit entries for the purchase of, or payment of 
principal and interest on, United States securities that are governed by 
part 370 of this title shall not be subject to any provision of this 
part that is inconsistent with part 370.



Sec. 210.2  Definitions.

    For purposes of this part, the following definitions apply. Any term 
that is not defined in this part shall have the meaning set forth in the 
ACH Rules.
    (a) ACH Rules means the Operating Rules and the Operating Guidelines 
published by NACHA--The Electronic Payments Association (NACHA), a 
national association of regional member clearing house associations, ACH 
Operators and participating financial institutions located in the United 
States.
    (b) Actual or constructive knowledge, when used in reference to an 
RDFI's knowledge of the death or legal incapacity of a recipient or 
death of a beneficiary, means that the RDFI received information, by 
whatever means, of the death or incapacity and has had a reasonable 
opportunity to act on such information or that the RDFI would have 
learned of the death or incapacity if it had followed commercially 
reasonable business practices.
    (c) Agency means any department, agency, or instrumentality of the 
United States Government, or a corporation owned or controlled by the 
Government of the United States. The term agency does not include a 
Federal Reserve Bank.
    (d) Applicable ACH Rules means the ACH Rules with an effective date 
on or before March 18, 2005, as published in Parts II, III, and IV of 
the ``2005 ACH Rules: A Complete Guide to Rules & Regulations Governing 
the ACH Network'':
    (1) ACH Rule 1.1 (limiting the applicability of the ACH Rules to 
members of an ACH association);
    (2) ACH Rule 1.2.2 (governing claims for compensation);
    (3) ACH Rule 1.2.4; 2.2.1.12; Appendix Eight and Appendix Eleven 
(governing the enforcement of the ACH Rules, including self-audit 
requirements);
    (4) ACH Rules 2.2.1.10; 2.6; and 4.8 (governing the reclamation of 
benefit payments);

[[Page 51]]

    (5) ACH Rule 9.3 and Appendix Two (requiring that a credit entry be 
originated no more than two banking days before the settlement date of 
the entry--see definition of ``Effective Entry Date'' in Appendix Two);
    (6) ACH Rule 2.10.2.3 (requiring that originating depository 
financial institutions (ODFIs) establish exposure limits for Originators 
of Internet-initiated debit entries); and
    (7) ACH Rule 2.11.3 (requiring reporting regarding unauthorized 
Telephone-initiated entries).
    (e) Authorized payment agent means any individual or entity that is 
appointed or otherwise selected as a representative payee or fiduciary, 
under regulations of the Social Security Administration, the Department 
of Veterans Affairs, the Railroad Retirement Board, or other agency 
making Federal payments, to act on behalf of an individual entitled to a 
Federal payment.
    (f) Automated Clearing House or ACH means a funds transfer system 
governed by the ACH Rules which provides for the interbank clearing of 
electronic entries for participating financial institutions.
    (g) Beneficiary means a natural person other than a recipient who is 
entitled to receive the benefit of all or part of a benefit payment.
    (h) Benefit payment is a payment for a Federal entitlement program 
or for an annuity, including, but not limited to, payments for Social 
Security, Supplemental Security Income, Black Lung, Civil Service 
Retirement, Railroad Retirement annuity and Railroad Unemployment and 
Sickness benefits, Department of Veterans Affairs Compensation and 
Pension, and Worker's Compensation.
    (i) Federal payment means any payment made by an agency. The term 
includes, but is not limited to:
    (1) Federal wage, salary, and retirement payments;
    (2) Vendor and expense reimbursement payments;
    (3) Benefit payments; and
    (4) Miscellaneous payments including, but not limited to, 
interagency payments; grants; loans; fees; principal, interest, and 
other payments related to United States marketable and nonmarketable 
securities; overpayment reimbursements; and payments under Federal 
insurance or guarantee programs for loans.
    (j)(1) Financial institution means:
    (i) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to apply to 
become an insured bank under section 5 of such Act (12 U.S.C. 1815);
    (ii) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
apply to become an insured bank under section 5 of such Act (12 U.S.C. 
1815);
    (iii) Any savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
apply to become an insured bank under section 5 of such Act (12 U.S.C. 
1815);
    (iv) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to apply to become an insured credit union pursuant to section 
201 of such Act (12 U.S.C. 1781);
    (v) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution as defined in such Act (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (vi) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    (2) In this part, a financial institution may be referred to as an 
Originating Depository Financial Institution (ODFI) if it transmits 
entries to its ACH Operator for transmittal to a Receiving Depository 
Financial Institution (RDFI), or it may be referred to as an RDFI if it 
receives entries from its ACH Operator for debit or credit to the 
accounts of its customers.
    (k) Government entry means an ACH credit or debit entry or entry 
data originated or received by an agency.
    (l) Green Book means the manual issued by the Service which provides 
financial institutions with procedures

[[Page 52]]

and guidelines for processing Government entries.
    (m) Notice of reclamation means notice sent by electronic, paper, or 
other means by the Federal Government to an RDFI which identifies the 
benefit payments that should have been returned by the RDFI because of 
the death or legal incapacity of a recipient or death of a beneficiary.
    (n) Outstanding total means the sum of all benefit payments received 
by an RDFI from an agency after the death or legal incapacity of a 
recipient or the death of a beneficiary, minus any amount returned to, 
or recovered by, the Federal Government.
    (o) Recipient means a natural person, corporation, or other public 
or private entity that is authorized to receive a Federal payment from 
an agency.
    (p) Service means the Financial Management Service, Department of 
the Treasury.
    (q) Treasury means the United States Department of the Treasury.
    (r) Treasury Financial Manual means the manual issued by the Service 
containing procedures to be observed by all agencies and Federal Reserve 
Banks with respect to central accounting, financial reporting, and other 
Federal Government-wide fiscal responsibilities of the Treasury.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000; 66 
FR 10580, Feb. 16, 2001; 67 FR 17902, Apr. 11, 2002; 68 FR 33829, June 
5, 2003; 70 FR 67366, Nov. 7, 2005]



Sec. 210.3  Governing law.

    (a) Federal law. The rights and obligations of the United States and 
the Federal Reserve Banks with respect to all Government entries, and 
the rights of any person or recipient against the United States and the 
Federal Reserve Banks in connection with any Government entry, are 
governed by this part, which has the force and effect of Federal law.
    (b) Incorporation by reference--applicable ACH Rules.
    (1) This part incorporates by reference the applicable ACH Rules, 
including rule changes with an effective date on or before March 18, 
2005, as published in Parts II, III, and IV of the ``2005 ACH Rules: A 
Complete Guide to Rules & Regulations Governing the ACH Network.'' The 
Director of the Federal Register approves this incorporation by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
of the ``2005 ACH Rules'' are available from NACHA--The Electronic 
Payments Association, 13665 Dulles Technology Drive, Suite 300, Herndon, 
Virginia 20171. Copies also are available for public inspection at the 
Office of the Federal Register, 800 North Capitol Street, NW., Suite 
700, Washington, DC 20002; and the Financial Management Service, 401 
14th Street, SW., Room 401, Washington, DC 20227.
    (2) Any amendment to the applicable ACH Rules that takes effect 
after March 18, 2005, shall not apply to Government entries unless the 
Service expressly accepts such amendment by publishing notice of 
acceptance of the amendment to this part in the Federal Register. An 
amendment to the ACH Rules that is accepted by the Service shall apply 
to Government entries on the effective date of the rulemaking specified 
by the Service in the Federal Register notice expressly accepting such 
amendment.
    (c) Application of this part. Any person or entity that originates 
or receives a Government entry agrees to be bound by this part and to 
comply with all instructions and procedures issued by the Service under 
this part, including the Treasury Financial Manual and the Green Book. 
The Treasury Financial Manual is available for downloading at the 
Service's web site at http://www.fms.treas.gov/ or by calling (202) 874-
9940 or writing the Directives Management Branch, Financial Management 
Service, Department of the Treasury, 3700 East West Highway, Room 500C, 
Hyattsville, MD 20782. The Green Book is available for downloading at 
the Service's web site at http://www.fms.treas.gov/fmsnews.html or by 
calling (202) 874-6540 or writing the Product Promotion Division, 
Financial Management Service, Department of the Treasury, 401 14th 
Street, SW., Room 309, Washington, DC 20227.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000; 66 
FR 10580, Feb. 16, 2001; 67 FR 17903, Apr. 11, 2002; 68 FR 33830, June 
5, 2003; 69 FR 18803, Apr. 9, 2004; 70 FR 67367, Nov. 7, 2005]

[[Page 53]]



                            Subpart A_General



Sec. 210.4  Authorizations and revocations of authorizations.

    (a) Requirements for authorization. Each debit and credit entry 
subject to this part shall be authorized in accordance with the 
applicable ACH Rules and the following additional requirements:
    (1) The agency or the RDFI that accepts the recipient's 
authorization shall verify the identity of the recipient and, in the 
case of a written authorization requiring the recipient's signature, the 
validity of the recipient's signature.
    (2) Unless authorized in writing, or similarly authenticated, by an 
agency, no person or entity shall initiate or transmit a debit entry to 
that agency, other than a reversal of a credit entry previously sent to 
the agency.
    (b) Terms of authorizations. By executing an authorization for an 
agency to initiate entries, a recipient agrees:
    (1) To the provisions of this part;
    (2) To provide accurate information;
    (3) To verify the recipient's identity to the satisfaction of the 
RDFI or agency, whichever has accepted the authorization;
    (4) That any new authorization inconsistent with a previous 
authorization shall supersede the previous authorization; and
    (5) That the Federal Government may reverse any duplicate or 
erroneous entry or file as provided in Sec. 210.6(f) of this part.
    (c) Termination and revocation of authorizations. An authorization 
shall remain valid until it is terminated or revoked by:
    (1) With respect to a recipient of benefit payments, a change in the 
recipient's ownership of the deposit account as reflected in the deposit 
account records, including the removal of the name of the recipient, the 
addition of a power of attorney, or any action which alters the interest 
of the recipient;
    (2) The death or legal incapacity of a recipient of benefit payments 
or the death of a beneficiary;
    (3) The closing of the recipient's account at the RDFI by the 
recipient or by the RDFI. With respect to a recipient of benefit 
payments, if an RDFI closes an account to which benefit payments 
currently are being sent, it shall provide 30 calendar days written 
notice to the recipient prior to closing the account, except in cases of 
fraud; or
    (4) The RDFI's insolvency, closure by any state or Federal 
regulatory authority or by corporate action, or the appointment of a 
receiver, conservator, or liquidator for the RDFI. In any such event, 
the authorization shall remain valid if a successor is named. The 
Federal Government may temporarily transfer authorizations to a 
consenting RDFI. The transfer is valid until either a new authorization 
is executed by the recipient, or 120 calendar days have elapsed since 
the insolvency, closure, or appointment, whichever occurs first.



Sec. 210.5  Account requirements for Federal payments.

    (a) Notwithstanding ACH Rules 2.1.2, 4.1.3, and Appendix Two, 
section 2.2 (listing general ledger and loan accounts as permissible 
transaction codes), an ACH credit entry representing a Federal payment 
other than a vendor payment shall be deposited into a deposit account at 
a financial institution. For all payments other than vendor payments, 
the account at the financial institution shall be in the name of the 
recipient, except as provided in paragraph (b) of this section.
    (b)(1) Where an authorized payment agent has been selected, the 
Federal payment shall be deposited into an account titled in accordance 
with the regulations governing the authorized payment agent.
    (2) Where a Federal payment is to be deposited into an investment 
account established through a securities broker or dealer registered 
with the Securities and Exchange Commission under the Securities 
Exchange Act of 1934, or an investment account established through an 
investment company registered under the Investment Company Act of 1940 
or its transfer agent, such payment may be deposited into an account 
designated by such broker or dealer, investment company, or transfer 
agent.

[[Page 54]]

    (3) The Secretary of the Treasury may waive the requirements of 
paragraph (a) of this section in any case or class of cases.

[64 FR 17478, Apr. 9, 1999, as amended at 65 FR 18869, Apr. 7, 2000]



Sec. 210.6  Agencies.

    Notwithstanding ACH Rules 2.2.3, 2.4.5, 2.5.2, 4.2, and 8.7.2, 
agencies shall be subject to the obligations and liabilities set forth 
in this section in connection with Government entries.
    (a) Receiving entries. An agency may receive ACH debit or credit 
entries only with the prior written authorization of the Service.
    (b) Liability to a recipient. An agency will be liable to the 
recipient for any loss sustained by the recipient as a result of the 
agency's failure to originate a credit or debit entry in accordance with 
this part. The agency's liability shall be limited to the amount of the 
entry(ies).
    (c) Liability to an originator. An agency will be liable to an 
originator or an ODFI for any loss sustained by the originator or ODFI 
as a result of the agency's failure to credit an ACH entry to the 
agency's account in accordance with this part. The agency's liability 
shall be limited to the amount of the entry(ies).
    (d) Liability to an RDFI or ACH association. Except as otherwise 
provided in this part, an agency will be liable to an RDFI for losses 
sustained in processing duplicate or erroneous credit and debit entries 
originated by the agency. An agency's liability shall be limited to the 
amount of the entry(ies), and shall be reduced by the amount of the loss 
resulting from the failure of the RDFI to exercise due diligence and 
follow standard commercial practices in processing the entry(ies). This 
section does not apply to credits received by an RDFI after the death or 
legal incapacity of a recipient of benefit payments or the death of a 
beneficiary as governed by Subpart B of this part. An agency shall not 
be liable to any ACH association.
    (e) Acquittance of the agency. The final crediting of the amount of 
an entry to a recipient's account shall constitute full acquittance of 
the Federal Government.
    (f) Reversals. An agency may reverse any duplicate or erroneous 
entry, and the Federal Government may reverse any duplicate or erroneous 
file. In initiating a reversal, an agency shall certify to the Service 
that the reversal complies with applicable law related to the recovery 
of the underlying payment. An agency that reverses an entry shall 
indemnify the RDFI as provided in the applicable ACH Rules, but the 
agency's liability shall be limited to the amount of the entry. If the 
Federal Government reverses a file, the Federal Government shall 
indemnify the RDFI as provided in the applicable ACH Rules, but the 
extent of such liability shall be limited to the amount of the entries 
comprising the duplicate or erroneous file. Reversals under this section 
shall comply with the time limitations set forth in the applicable ACH 
Rules.
    (g) Point-of-purchase debit entries. An agency may convert to an ACH 
debit entry a check drawn on a consumer or business account and 
presented at a point-of-purchase. Agencies shall use the Point-of-
Purchase (POP) Standard Entry Class (SEC) code for entries to consumer 
accounts and the Cash Concentration or Disbursement (CCD) SEC code for 
entries to business accounts. The requirements of ACH Rules 2.1.2 and 
3.5 shall be met for such an entry if the Receiver presents the check at 
a location where the agency has posted a conspicuous notice at the 
point-of-purchase containing the disclosure set forth at appendix A to 
this part and makes available to the Receiver, in a form that the 
Receiver can retain, the disclosure set forth at appendix B to this 
part. For purposes of ACH Rules 3.12 and 4.1.1, authorization shall 
consist of a copy of the notice and a copy of the Receiver's source 
document.
    (h) Accounts receivable check conversion--(1) Conversion of consumer 
checks.--An agency may originate an Accounts Receivable (ARC) entry 
using a check drawn on a consumer account that is received via the mail 
or at a dropbox, or that is delivered in person in circumstances in 
which the agency cannot contemporaneously image and return the check. 
The notice and authorization requirements of ACH Rules 2.1.4 and 3.7.1 
shall be met for an ARC

[[Page 55]]

entry only if an agency has provided the Receiver with the disclosure 
set forth at appendix C to this part.
    (2) Conversion of business checks. An agency may originate an ACH 
debit using a business check that is received via the mail or at a 
dropbox, or that is delivered in person in circumstances in which the 
agency cannot contemporaneously image and return the check. The agency 
shall use the CCD SEC code for such entries, which shall be deemed to 
meet the requirements of ACH Rule 2.1.2 if the agency has provided the 
disclosure set forth at appendix C to this part. For purposes of ACH 
Rules 3.12 and 4.1.1, authorization shall
    (i) Returned item service fee. An agency may originate an ACH debit 
entry to collect a one-time service fee in connection with an ACH debit 
entry originated pursuant to paragraph (g) or (h) of this section that 
is returned due to insufficient funds. An entry originated pursuant to 
this paragraph shall meet the requirements of ACH Rules 2.1.2 and 3.5 if 
the agency has complied with the disclosure requirements of paragraph 
(g) or (h), as appropriate. For purposes of ACH Rule 3.12 and 4.1.1, 
authorization shall consist of a copy of the notice provided under 
paragraph (g) or (h), as applicable, and a copy of the Receiver's source 
document.

[64 FR 17487, Apr. 9, 1999, as amended at 67 FR 17903, Apr. 11, 2002; 69 
FR 13189, Mar. 19, 2004; 70 FR 67367, Nov. 7, 2005]



Sec. 210.7  Federal Reserve Banks.

    (a) Fiscal Agents. Each Federal Reserve Bank serves as Fiscal Agent 
of the Treasury in carrying out its duties as the Federal Government's 
ACH Operator under this part. As Fiscal Agent, each Federal Reserve Bank 
shall be responsible only to the Treasury and not to any other party for 
any loss resulting from the Federal Reserve Bank's action, 
notwithstanding Section 11.5 and Article 8 of the ACH Rules. Each 
Federal Reserve Bank may issue operating circulars not inconsistent with 
this part which shall be binding on financial institutions.
    (b) Routing numbers. All routing numbers issued by a Federal Reserve 
Bank to an agency require the prior approval of the Service.



Sec. 210.8  Financial institutions.

    (a) Status as a Treasury depositary. The origination or receipt of 
an entry subject to this part does not render a financial institution a 
Treasury depositary. A financial institution shall not advertise itself 
as a Treasury depositary on such basis.
    (b) Liability. Notwithstanding ACH Rules 2.2.3, 2.4.5, 2.5.2, 4.2, 
and 8.7.2, if the Federal Government sustains a loss as a result of a 
financial institution's failure to handle an entry in accordance with 
this part, the financial institution shall be liable to the Federal 
Government for the loss, up to the amount of the entry, except as 
otherwise provided in this section. A financial institution shall not be 
liable to any third party for any loss or damage resulting directly or 
indirectly from an agency's error or omission in originating an entry. 
Nothing in this section shall affect any obligation or liability of a 
financial institution under Regulation E, 12 CFR part 205, or the 
Electronic Funds Transfer Act, 12 U.S.C. 1693 et seq.
    (1) An ODFI that transmits a debit entry to an agency without the 
prior written or similarly authenticated authorization of the agency, 
shall be liable to the Federal Government for the amount of the 
transaction, plus interest. The Service may collect such funds using 
procedures established in the applicable ACH Rules or by instructing a 
Federal Reserve Bank to debit the ODFI's account at the Federal Reserve 
Bank or the account of its designated correspondent. The interest charge 
shall be at a rate equal to the Federal funds rate plus two percent, and 
shall be assessed for each calendar day, from the day the Treasury 
General Account (TGA) was debited to the day the TGA is recredited with 
the full amount due.
    (2) An RDFI that accepts an authorization in violation of Sec. 
210.4(a) shall be liable to the Federal Government for all credits or 
debits made in reliance on the authorization. An RDFI that transmits to 
an agency an authorization containing an incorrect account number shall 
be liable to the Federal Government for any resulting loss, up to the 
amount of the payment(s) made on the basis of the incorrect number. If

[[Page 56]]

an agency determines, after appropriate investigation, that a loss has 
occurred because an RDFI transmitted an authorization or notification of 
change containing an incorrect account number, the agency may instruct 
the Service to direct a Federal Reserve Bank to debit the RDFI's account 
for the amount of the payment(s) made on the basis of the incorrect 
number. The agency shall notify the RDFI of the results of its 
investigation and provide the RDFI with a reasonable opportunity to 
respond before initiating such a debit.
    (c) Acquittance of the financial institution. The final crediting of 
the correct amount of an entry received and processed by the Federal 
Reserve Bank and posted to the TGA shall constitute full acquittance of 
the ODFI and the originator for the amount of the entry. Full 
acquittance shall not occur if the entries do not balance, are 
incomplete, are incorrect, or are incapable of being processed. In the 
case of funds collected by an agency through origination of a debit 
entry, full acquittance shall not occur until the underlying payment 
becomes final.
    (d) Notice of misdirected payment. If an RDFI becomes aware that an 
agency has originated an ACH credit entry to an account that is not 
owned by the payee whose name appears in the ACH payment information, 
the RDFI shall promptly notify the agency. An RDFI that originates a 
Notification of Change (NOC) entry with the correct account and/or 
Routing and Transit Number information, or returns the original ACH 
credit entry to the agency with an appropriate return reason code, shall 
be deemed to have satisfied this requirement.

[64 FR 17487, Apr. 9, 1999, as amended at 69 FR 13189, Mar. 19, 2004; 70 
FR 67367, Nov. 7, 2005]



                Subpart B_Reclamation of Benefit Payments



Sec. 210.9  Parties to the reclamation.

    (a) Agreement of RDFI. An RDFI's acceptance of a benefit payment 
pursuant to this part shall constitute its agreement to this subpart. By 
accepting a benefit payment subject to this part, the RDFI authorizes 
the debiting of the Federal Reserve Bank account utilized by the RDFI in 
accordance with the provisions of Sec. 210.10(e).
    (b) The Federal Government. In processing reclamations pursuant to 
this subpart, the Service shall act pursuant to the direction of the 
agency that certified the benefit payment(s) being reclaimed.



Sec. 210.10  RDFI liability.

    (a) Full liability. An RDFI shall be liable to the Federal 
Government for the total amount of all benefit payments received after 
the death or legal incapacity of a recipient or the death of a 
beneficiary unless the RDFI has the right to limit its liability under 
Sec. 210.11 of this part. An RDFI shall return any benefit payments 
received after the RDFI becomes aware of the death or legal incapacity 
of a recipient or the death of a beneficiary, regardless of the manner 
in which the RDFI discovers such information. If the RDFI learns of the 
death or legal incapacity of a recipient or death of a beneficiary from 
a source other than notice from the agency issuing payments to the 
recipient, the RDFI shall immediately notify the agency of the death or 
incapacity. The proper use of the R15 or R14 return reason code shall be 
deemed to constitute such notice.
    (b) Notice of reclamation. Upon receipt of a notice of reclamation, 
an RDFI shall provide the information required by the notice of 
reclamation and return the amount specified in the notice of reclamation 
in a timely manner.
    (c) Exception to liability rule. An RDFI shall not be liable for 
post-death benefit payments sent to a recipient acting as a 
representative payee or fiduciary on behalf of a beneficiary, if the 
beneficiary was deceased at the time the authorization was executed and 
the RDFI did not have actual or constructive knowledge of the death of 
the beneficiary.
    (d) Time limits. An agency that initiates a request for a 
reclamation must do so within 120 calendar days after the date that the 
agency first has actual or constructive knowledge of the death or legal 
incapacity of a recipient or the death of a beneficiary. An agency may 
not reclaim any post-death or post-incapacity payment made more than six

[[Page 57]]

years prior to the date of the notice of reclamation; provided, however, 
that if the account balance at the time the RDFI receives the notice of 
reclamation exceeds the total amount of post-death or post-incapacity 
payments made by the agency during such six-year period, this limitation 
shall not apply and the RDFI shall be liable for the total amount of all 
post-death or post-incapacity payments made, up to the amount in the 
account at the time the RDFI receives the notice of reclamation and has 
had a reasonable opportunity to act on the notice (not to exceed one 
business day).
    (e) Debit of RDFI's account. If an RDFI does not return the full 
amount of the outstanding total or any other amount for which the RDFI 
is liable under this subpart in a timely manner, the Federal Government 
will collect the amount outstanding by instructing the appropriate 
Federal Reserve Bank to debit the account utilized by the RDFI. The 
Federal Reserve Bank will provide advice of the debit to the RDFI.

[64 FR 17487, Apr. 9, 1999, as amended at 69 FR 13189, Mar. 19, 2004]



Sec. 210.11  Limited liability.

    (a) Right to limit its liability. If an RDFI does not have actual or 
constructive knowledge of the death or legal incapacity of a recipient 
or the death of a beneficiary at the time it receives one or more 
benefit payments on behalf of the recipient, the RDFI's liability to the 
agency for those payments shall be limited to:
    (1) An amount equal to: (i) The amount in the account at the time 
the RDFI receives the notice of reclamation and has had a reasonable 
opportunity (not to exceed one business day) to act on the notice, plus 
any additional benefit payments made to the account by the agency before 
the RDFI responds in full to the notice of reclamation, or
    (ii) The outstanding total, whichever is less; plus
    (2) If the agency is unable to collect the entire outstanding total, 
an additional amount equal to:
    (i) The benefit payments received by the RDFI from the agency within 
45 days after the death or legal incapacity of the recipient or death of 
the beneficiary, or
    (ii) The balance of the outstanding total, whichever is less.
    (b) Qualification for limited liability. In order to limit its 
liability as provided in this section, an RDFI shall:
    (1) Certify that at the time the benefit payments were credited to 
or withdrawn from the account, the RDFI had no actual or constructive 
knowledge of the death or legal incapacity of the recipient or death of 
the beneficiary;
    (2) Certify the date the RDFI first had actual or constructive 
knowledge of the death or legal incapacity of the recipient or death of 
the beneficiary, regardless of how and where such information was 
obtained;
    (3)(i) In cases involving the reclamation of Social Security Federal 
Old-Age, Survivors, and Disability Insurance benefit payments, or 
benefit payments certified by the Railroad Retirement Board or the 
Department of Veterans' Affairs, provide the name and last known address 
of the following person(s):
    (A) The recipient and any co-owner(s) of the recipient's account;
    (B) All other person(s) authorized to withdraw funds from the 
recipient's account; and
    (C) All person(s) who withdrew funds from the recipient's account 
after the death or legal incapacity of the recipient or death of the 
beneficiary.
    (ii) If persons are not identified for any of these subcategories, 
the RDFI must certify that no such information is available and why no 
such information is available; and
    (4) Fully and accurately complete all certifications on the notice 
of reclamation and comply with the requirements of this part.
    (c) Payment of limited liability amount. If the RDFI qualifies for 
limited liability under this subpart, it shall immediately return to the 
Federal Government the amount specified in Sec. 210.11(a)(1). The 
agency will then attempt to collect the amount of the outstanding total 
not returned by the RDFI. If the agency is unable to collect that 
amount, the Federal Government will instruct the appropriate Federal

[[Page 58]]

Reserve Bank to debit the account utilized by the RDFI at that Federal 
Reserve Bank for the amount specified in Sec. 210.11(a)(2).
    (d) Violation of subpart B. An RDFI that fails to comply with any 
provision of this subpart in a timely and accurate manner, including but 
not limited to the certification requirements at Sec. 210.11(b) and the 
notice requirements at Sec. 210.13, shall be liable to the Federal 
Government for any loss resulting from its act or omission. Any such 
liability shall be in addition to the amount(s) for which the RDFI is 
liable under Sec. 210.10 or Sec.  210.11, as applicable.

[64 FR 17487, Apr. 9, 1999, as amended at 69 FR 13189, Mar. 19, 2004]



Sec. 210.12  RDFI's rights of recovery.

    (a) Matters between the RDFI and its customer. This subpart does not 
authorize or direct an RDFI to debit or otherwise affect the account of 
a recipient. Nothing in this subpart shall be construed to affect the 
right an RDFI has under state law or the RDFI's contract with a 
recipient to recover any amount from the recipient's account.
    (b) Liability unaffected. The liability of the RDFI under this 
subpart is not affected by actions taken by the RDFI to recover any 
portion of the outstanding total from any party.



Sec. 210.13  Notice to account owners.

    Provision of notice by RDFI. Upon receipt by an RDFI of a notice of 
reclamation, the RDFI immediately shall mail to the last known address 
of the account owner(s) or otherwise provide to the account owner(s) a 
copy of any notice required by the Service to be provided to account 
owners as specified in the Green Book. Proof that this notice was sent 
may be required by the Service.



Sec. 210.14  Erroneous death information.

    (a) Notification of error to the agency. If, after the RDFI responds 
fully to the notice of reclamation, the RDFI learns that the recipient 
or beneficiary is not dead or legally incapacitated or that the date of 
death is incorrect, the RDFI shall inform the agency that certified the 
underlying payment(s) and directed the Service to reclaim the funds in 
dispute.
    (b) Resolution of dispute. The agency that certified the underlying 
payment(s) and directed the Service to reclaim the funds will attempt to 
resolve the dispute with the RDFI in a timely manner. If the agency 
determines that the reclamation was improper, in whole or in part, the 
agency shall notify the RDFI and shall return the amount of the 
improperly reclaimed funds to the RDFI. Upon certification by the agency 
of an improper reclamation, the Service may instruct the appropriate 
Federal Reserve Bank to credit the account utilized by the RDFI at the 
Federal Reserve Bank in the amount of the improperly reclaimed funds.

[64 FR 17487, Apr. 9, 1999, as amended at 69 FR 13189, Mar. 19, 2004]

   Appendix A to Part 210--Standard Disclosure for Point-of-Purchase 
                        Conversion--Posted Notice

                  Notice to Customers Presenting Checks

    Conversion of Checks--If you are presenting a check to the cashier, 
your check will be converted into an electronic fund transfer. When you 
hand your completed, signed check to the cashier, your check will be 
copied. The account information from your check will be used to make an 
electronic fund transfer from your account in the amount of the check. 
The cashier will void the check and return it to you.
    Insufficient Funds--The electronic fund transfer from your account 
will usually occur within 24 hours, which is faster than a check is 
normally processed. Do not present a check to the cashier unless there 
are sufficient funds available in your checking account. If the 
electronic fund transfer cannot be completed because of insufficient 
funds, we may try to make the transfer up to two more times [and we will 
charge you a one-time fee of $----------, which we will also collect by 
electronic fund transfer].
    Authorization--By reading this notice and handing your check to the 
cashier, you authorize the conversion of your check into an electronic 
fund transfer. If the electronic fund transfer cannot be processed for 
technical reasons, you authorize us to process the copy of your original 
check.
    More Information--A pamphlet with more information about this 
process, including information about your rights under Federal law, is 
available from the cashier. [You may also call ------ or visit our 
Internet site at ------ for detailed information.]

    Note: This notice must be conspicuous. This means that the notice 
should be printed

[[Page 59]]

on a sign that is prominently posted at the location where checks are 
presented to a cashier, in such a way that it is clearly visible from 
several feet away to customers waiting to present checks.

[67 FR 17903, Apr. 11, 2002]

   Appendix B to Part 210--Standard Disclosure for Point-of-Purchase 
                    Conversion--Brochure or Pamphlet

    What is point-of-purchase check conversion? Point-of-purchase check 
conversion is the process of converting checks that customers present to 
cashiers into electronic fund transfers. ``Electronic fund transfer'' is 
the term used to refer to the process in which we electronically 
instruct your financial institution to transfer funds from your account 
to our account, rather than processing your check. When you hand a check 
to the cashier, your check is copied and the account information from 
your check is used to make an electronic fund transfer from your 
account. The cashier voids your check and returns it to you. By 
presenting your check at a location where a sign notifies you that your 
check will be converted, you authorize the conversion of your check into 
an electronic fund transfer in this manner.
    How quickly will funds be transferred from my account? The 
electronic fund transfer from your account will usually occur within 24 
hours, which is faster than a check is normally processed. Therefore, 
you should be sure that there are sufficient funds available in your 
checking account when you present your check. If the electronic fund 
transfer cannot be completed because there are insufficient funds in 
your account, we may try to make the transfer up to two more times [and 
we will impose a one-time fee of $------ against your account, which we 
will also collect by electronic fund transfer].
    Will the electronic fund transfer appear on my account statement? 
The electronic fund transfer from your account will be on the account 
statement that you receive from your financial institution. However, the 
transfer may be in a different place on your statement than the place 
where your checks normally appear. For example, it may appear under 
``other withdrawals'' or ``other transactions.'' The electronic fund 
transfer should be identified on your statement as ``[insert].''
    What if there is a problem with the electronic fund transfer? You 
should contact your financial institution immediately if you believe 
that the electronic fund transfer reported on your account statement was 
not properly authorized or is otherwise incorrect. Consumers have 
protections under a Federal law called the Electronic Fund Transfer Act 
for an unauthorized or incorrect electronic fund transfer.
    What if the electronic fund transfer cannot be processed? In rare 
instances, an electronic fund transfer cannot be processed for reasons 
other than insufficient funds. In these cases, we will process the copy 
of your original check. Different rights apply to the processing of the 
copy of the check than apply to an electronic fund transfer.
    [More detailed information about this process is available on our 
Internet site at ------ or by calling ------.]

    Note: This disclosure must be conspicuous. This means that it should 
be printed in reasonably large typeface. If this disclosure is combined 
with other information, it should be set off by contrasting color, by 
surrounding it with a box, or by using other means to ensure that it is 
prominently featured.

[67 FR 17903, Apr. 11, 2002]

  Appendix C to Part 210--Standard Disclosure for Accounts Receivable 
                           Conversion--Notice

               Notice to Customers Making Payment by Check

    If you send us a check, it will be converted into an electronic 
funds transfer (EFT). This means we will copy your check and use the 
account information on it to electronically debit your account for the 
amount of the check. The debit from your account will usually occur 
within 24 hours, and will be shown on your regular account statement.
    You will not receive your original check back. We will destroy your 
original check, but we will keep the copy of it. If the EFT cannot be 
processed for technical reasons, you authorize us to process the copy in 
place of your original check. If the EFT cannot be completed because of 
insufficient funds, we may try to make the transfer up to 2 times [and 
we will charge you a one-time fee of $--, which we will also collect by 
EFT].
    Note: This disclosure must be conspicuous. This means that it should 
be printed in reasonably large typeface. If this disclosure is combined 
with other information, it should be set off by contrasting color, by 
surrounding it with a box, or by using other means to ensure that it is 
prominently featured.

[69 FR 13189, Mar. 19, 2004]

[[Page 60]]



PART 211_DELIVERY OF CHECKS AND WARRANTS TO ADDRESSES OUTSIDE THE UNITED 
STATES, ITS TERRITORIES AND POSSESSIONS--Table of Contents




Sec.
211.1 Withholding delivery of checks.
211.2 Claims for the release of withheld checks or for the proceeds 
          thereof.
211.3 Exceptions.
211.4 Implementing instructions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321 and 3329.



Sec. 211.1  Withholding delivery of checks.

    (a) It is hereby determined that postal, transportation or banking 
facilities in general or local conditions in the Republic of Cuba and 
the Democratic People's Republic of Korea (North Korea) are such that 
there is not a reasonable assurance that a payee in those areas will 
actually receive checks or warrants drawn against funds of the United 
States, or agencies or instrumentalities thereof, and be able to 
negotiate the same for full value.
    (b) A check or warrant intended for delivery in any of the areas 
named in paragraph (a) of this section shall be withheld unless the 
check or warrant is specifically released by the Secretary of the 
Treasury.
    (c) Before a check or warrant drawn against funds blocked pursuant 
to the provisions of Executive Order No. 8389 (3 CFR, 1943 Cum. Supp.), 
as amended, and which remain blocked under the proviso clause of General 
License No. 101 of the Foreign Funds Control Regulations (31 CFR 
520.101) may be released, it will be necessary for a license authorizing 
the release to be issued by the Department of the Treasury, Office of 
Foreign Assets Control, pursuant to E.O. 8389, as amended. In this 
regard, attention is also directed to the following regulations issued 
by the Secretary of the Treasury:
    (1) The Foreign Assets Control Regulations issued on December 17, 
1950 (31 CFR part 500), pursuant to Executive Order 9193 (3 CFR, 1943 
Cum. Supp.), which prohibit transactions involving payments to nationals 
of the Democratic People's Republic of Korea (North Korea), the 
Socialist Republic of Vietnam, and Democratic Kampuchea, except to the 
extent that any such payments have been authorized by appropriate 
license,
    (2) The Cuban Assets Control Regulations issued on July 8, 1963 (31 
CFR part 515), pursuant to the same authority, which prohibit similar 
transactions with nationals of Cuba unless licensed, and
    (3) The Iranian Assets Control Regulations issued on November 14, 
1979 (31 CFR part 535), as amended on April 17, 1980, pursuant to 
Executive Orders 12170 and 12211, which prohibit transactions in 
property of the Iranian Government or its instrumentalities and 
transfers of funds to persons in Iran, except as authorized by 
appropriate license.
    (d) Powers of attorney for the receipt or collection of checks or 
warrants or for the proceeds of checks or warrants included within the 
determination of the Secretary of the Treasury set forth in paragraph 
(a) of this section will not be recognized.

[41 FR 15847, Apr. 15, 1976, as amended at 44 FR 51568, Sept. 4, 1979; 
45 FR 47678, July 16, 1980; 61 FR 41739, Aug. 12, 1996; 66 FR 63623, 
Dec. 10, 2001]



Sec. 211.2  Claims for the release of withheld checks or for the 
proceeds thereof.

    Claims for the release of checks or warrants withheld from delivery 
or for the proceeds thereof, shall be filed with the administrative 
agency which would have originally authorized such issuance, e.g., 
claims arising out of checks or warrants representing payments under 
laws administered by the Department of Veterans Affairs shall be filed 
with the Secretary of Veterans Affairs, Department of Veterans Affairs, 
Washington, DC 20420.

[61 FR 41739, Aug. 12, 1996]



Sec. 211.3  Exceptions.

    The regulations of this part do not apply to payments to foreign 
governments, nor to checks or warrants issued in payment of salaries or 
wages, or for goods or services purchased by the Government of the 
United States in foreign countries, unless such payments are subject to 
the Foreign Funds Control Regulations (31 CFR part 520), the Foreign 
Assets Control Regulations (31 CFR part 500), the Cuban Assets

[[Page 61]]

Control Regulations (31 CFR part 515), or the Iranian Assets Control 
Regulations (31 CFR part 535).

[45 FR 47678, July 16, 1980]



Sec. 211.4  Implementing instructions.

    Implementing instructions will be issued in Part IV, ``Disbursing,'' 
of the Treasury Fiscal Requirements Manual for Guidance of Departments 
and Agencies.

[41 FR 15847, Apr. 15, 1976]



PART 215_WITHHOLDING OF DISTRICT OF COLUMBIA, STATE, CITY AND COUNTY 
INCOME OR EMPLOYMENT TAXES BY FEDERAL AGENCIES--Table of Contents




                      Subpart A_General Information

Sec.
215.1 Scope of part.
215.2 Definitions.

                          Subpart B_Procedures

215.3 Procedures for entering into a Withholding Agreement.
215.4 Relationship of Withholding Agreement to prior agreements.

                     Subpart C_Withholding Agreement

215.5 In general.
215.6 Parties.
215.7 Compliance by agencies.
215.8 Withholding certificates.
215.9 Change of legal residence by members of the Armed Forces.
215.10 Agency withholding procedures.
215.11 Miscellaneous provisions.
215.12 Supersession, amendment and termination provisions.

    Authority: 5 U.S.C. 5516, 5517, 5520; E.O. 11997, 42 FR 31759.

    Source: 42 FR 33731, July 1, 1977, unless otherwise noted.



                      Subpart A_General Information



Sec. 215.1  Scope of part.

    This part relates to agreements between the Secretary of the 
Treasury and States (including the District of Columbia), cities or 
counties for withholding of State, city or county income or employment 
taxes from the compensation of civilian Federal employees, and for the 
withholding of State income taxes from the compensation of members of 
the Armed Forces. Subpart A contains general information and 
definitions. Subpart B prescribes the procedures to be followed in 
entering into an agreement for the withholding of State, city or county 
income or employment taxes. Subpart C is the Withholding Agreement which 
the Secretary will enter into with any State, city or county which 
qualifies to have the tax withheld.

[71 FR 2150, Jan. 13, 2006]



Sec. 215.2  Definitions.

    As used in this part:
    (a) Agency means each of the executive agencies and military 
departments (as defined in 5 U.S.C. 105 and 102, respectively) and the 
United States Postal Service; and in addition, for city or county 
withholding purposes only, all elements of the judicial branch.
    (b) City means any unit of general local government.
    (1) Which:
    (A) Is classified as a municipality by the United States Bureau of 
the Census, or
    (B) Is a town or township which, in the determination of the 
Secretary of the Treasury,
    (i) Possesses powers and performs functions comparable to those 
associated with municipalities,
    (ii) Is closely settled, and
    (iii) Contains within its boundaries no incorporated places as 
defined by the United States Bureau of the Census; and
    (2) Within the political boundaries of which five hundred or more 
persons are regularly employed by all agencies of the Federal 
Government.
    (c) City income or employment taxes means any form of tax for which, 
under a city ordinance:
    (1) Collection is provided by imposing on employers generally the 
duty of withholding sums from the pay of employees and making returns of 
the sums to a designated city officer, department, or instrumentality; 
and
    (2) The duty to withhold generally is imposed on the payment of 
compensation earned within the jurisdiction of the city in the case of 
employees whose regular place of employment is within such jurisdiction. 
Whether the tax is

[[Page 62]]

described as an income, wage, payroll, earnings, occupational license, 
or otherwise, is immaterial.
    (d) Compensation as applied to employees of an agency and members of 
the Armed Forces means wages as defined in 26 U.S.C. 3401(a) and 
regulations issued thereunder.
    (e) County means any unit of local general Government which is 
classified as a county by the Bureau of the Census and within the 
political boundaries of which 500 or more persons are regularly employed 
by all agencies of the Federal Government.
    (f) County income or employment taxes means any form of tax for 
which, under a county ordinance:
    (1) Collection is provided by imposing on employers generally the 
duty of withholding sums from the pay of employees and making returns of 
the sums to a designated county officer, department, or instrumentality; 
and
    (2) The duty to withhold generally is imposed on the payment of 
compensation earned within the jurisdiction of the country in the case 
of employees whose regular place of employment is within such 
jurisdiction. Whether the tax is described as an income, wage, payroll, 
earnings, occupational license, or otherwise, is immaterial.
    (g) District of Columbia income tax means the income tax imposed 
under 47 District of Columbia Code, chapter 15, subchapter II.
    (h)(1) Employees for the purpose of State income tax withholding, 
means all employees of an agency, other than members of the armed 
forces. For city and county income or employment tax withholding, it 
means:
    (i) Employees of an agency;
    (ii) Members of the National Guard, participating in exercises or 
performing duty under 32 U.S.C. 502; or
    (iii) Members of the Ready Reserve, participating in scheduled 
drills or training periods, or serving on active duty for training under 
10 U.S.C. 270(a).


The term does not include retired personnel, pensioners, annuitants, or 
similar beneficiaries of the Federal Government, who are not performing 
active civilian service or persons receiving remuneration for services 
on a contract-fee basis.
    (2) Employees for purposes of District of Columbia income tax 
withholding, means employees as defined in 47 District of Columbia Code 
1551c(z).
    (i) Members of the Armed Forces means (1) individuals in active duty 
status (as defined in 10 U.S.C. 101(d)(1)) in regular and reserve 
components of the Army, Navy, Air Force, Marine Corps, and Coast Guard, 
and (2) members of the National Guard while participating in exercises 
or performing duty under 32 U.S.C. 502 and members of the Ready Reserve 
while participating in scheduled drills or training periods or serving 
on active duty for training under 10 U.S.C. 10147.
    (j) Ordinance means an ordinance, order, resolution, or similar 
instrument which is duly adopted and approved by a city or county in 
accordance with the constitution and statutes of the state in which it 
is located and which has the force of law within such city or county.
    (k) Regular place of Federal employment means the official duty 
station, or other place, where an employee actually and normally (i.e., 
other than in a travel or temporary duty status) performs services, 
irrespective of residence.
    (l) Secretary means Secretary of the Treasury or his designee.
    (m) State means a State, territory, possession, or commonwealth of 
the United States, or the District of Columbia.
    (n) State income tax means any form of tax for which, under a State 
status:
    (1) Collection is provided, either by imposing on employers 
generally the duty of withholding sums from the compensation of 
employees and making returns of such sums to the State or by granting to 
employers generally the authority to withhold sums from the compensation 
of employees, if any employee voluntarily elects to have such sums 
withheld; and
    (2) The duty to withhold generally is imposed, or the authority to 
withhold generally is granted, with respect to the compensation of 
employees who are residents of such State.

[42 FR 33731, July 1, 1977, as amended at 55 FR 3590, Feb. 2, 1990; 55 
FR 7494, Mar. 2, 1990; 71 FR 2150, Jan. 13, 2006]

[[Page 63]]



                          Subpart B_Procedures



Sec. 215.3  Procedures for entering into a Withholding Agreement.

    (a) Subpart C of this part is the Withholding Agreement which the 
Secretary will enter into with a State, city or county. A State, city or 
county which does not have an existing withholding agreement with the 
Secretary and wishes to enter into such an agreement shall indicate in a 
letter its consent to be bound by the provisions of Subpart C. The 
letter shall be sent to the Secretary by addressing the request to: 
Assistant Commissioner, Federal Finance, Financial Management Service, 
Department of the Treasury, 401 14th Street, SW., Washington, DC 20227. 
The letter shall be signed by an officer authorized to bind 
contractually the State, city or county. Copies of all applicable State 
laws, city or county ordinances and implementing regulations, 
instructions, and forms shall be enclosed. The letter shall also 
indicate the title and address of the official whom Federal agencies may 
contact to obtain forms and other information necessary to implement 
withholding.
    (b) Within 120 days of the receipt of the letter from the State, 
city or county official, the Secretary will, by letter, notify the 
State, city or county:
    (1) That a Withholding Agreement has been entered into as of the 
date of the Secretary's letter, or
    (2) That a Withholding Agreement cannot be entered into with the 
State, city or county and the reason for that determination.
    (c) The withholding of the State, city or county income or 
employment tax shall commence within 90 days after the effective date of 
the agreement.

[71 FR 2150, Jan. 13, 2006]



Sec. 215.4  Relationship of Withholding Agreement to prior agreements.

    Jurisdictions which requested from Treasury an agreement other than 
the Withholding Agreement set forth in Subpart C (formerly known as the 
Standard Agreement) within 90 days after July 1, 1977, which request 
Treasury subsequently approved, will continue to be governed by such 
agreement. For all other jurisdictions, the Withholding Agreement set 
forth in Subpart C replaced all prior agreements between the Secretary 
and a taxing jurisdiction for the withholding of income or employment 
taxes from the compensation of Federal employees, and any jurisdiction 
which was a party to a prior agreement is presumed to have consented to 
be bound by the Withholding Agreement set forth in Subpart C.

[71 FR 2150, Jan. 13, 2006]



                     Subpart C_Withholding Agreement



Sec. 215.5  In general.

    This subpart is the text of the Withholding Agreement between the 
Secretary and the State, city or county. The terms used in this 
agreement are defined in Sec. 215.2 of this part.

[42 FR 33731, July 1, 1977. Redesignated and amended at 71 FR 2150, Jan. 
13, 2006]



Sec. 215.6  Parties.

    The parties to this agreement are the Secretary and the State, city 
or county which has entered into this agreement pursuant to 5 U.S.C. 
5516, 5517, or 5520 and Executive Order 11997 (June 22, 1977).

[42 FR 33731, July 1, 1977. Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.7  Compliance by agencies.

    (a) In the case of an agreement with a State, the head of each 
agency is required to withhold State income taxes from the compensation 
of:
    (1) Employees of such agency who are subject to such taxes and whose 
regular place of Federal employment is within the State, and
    (2) Members of the Armed Forces who are subject to such taxes and 
who are legal residents of the State.

The foregoing is also applicable with respect to a State whose statutes 
permit but do not require withholding by employers, provided the 
employee voluntarily elects to have such tax withheld.
    (b) In the case of an agreement with a city or county, the head of 
each agency is required to withhold city or county income or employment 
taxes from

[[Page 64]]

the compensation of any employee of the agency who is subject to the 
tax, and
    (1) Whose regular place of Federal employment is within the city or 
county, or
    (2) Is a resident of the city or county.
    (c) In withholding taxes, the head of each agency, except as 
otherwise provided in this agreement, shall comply with the withholding 
provisions of the State, city or county income or employment tax 
statute, regulations, procedural instructions and reciprocal agreements 
related thereto.

(Pub. L. 95-365, 92 Stat. 599 (5 U.S.C. 5520))

[42 FR 33731, July 1, 1977, as amended at 44 FR 4670, Jan. 23, 1979. 
Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.8  Withholding certificates.

    Each agency may require employees or members of the Armed Forces 
under its jurisdiction to complete a withholding certificate in order to 
calculate the amount to be withheld. The agency shall use the 
withholding certificate which the State, city or county has prescribed. 
Where the State, city or county has not prescribed a certificate, the 
agency may use a certificate approved by the Department of the Treasury. 
The agency may rely on the information in the certificate. Copies of 
completed certificates shall be provided to the taxing authority by 
agencies upon request.

[42 FR 33731, July 1, 1977. Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.9  Change of legal residence by members of the Armed Forces.

    (a) In determining the legal residence of a member of the Armed 
Forces for tax withholding purposes, the head of an agency at all times 
may rely on the agency's current records, which may include a 
certificate of legal residence. The form of the certificate of legal 
residence shall be approved by the Department of the Treasury. A change 
of legal residence of a member of the Armed Forces shall become 
effective for tax withholding purposes only after a member of the Armed 
Forces completes a certificate indicating a new legal residence and 
delivers it to the agency.
    (b) Heads of agencies shall notify the State of prior legal 
residence of the member of the Armed Forces involved on a monthly basis 
concerning the change of the member's legal residence. The notification 
shall include the name, social security number, current mailing address 
and the new legal residence of such member of the Armed Forces. The 
effective date of the change in legal residence shall also be included 
in the notification.

[42 FR 33731, July 1, 1977. Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.10  Agency withholding procedures.

    (a) State income tax shall be withheld only on the entire 
compensation of Federal employees and members of the Armed Forces. 
Nonresident employees, who under the State income tax law are required 
to allocate at least three-fourths of their compensation to the State, 
shall be subject to withholding on their entire compensation. 
Nonresident employees, who under the State income tax law are required 
to allocate less than three-fourths of their compensation to the State, 
may elect to:
    (1) Have State income tax withheld on their entire compensation, or
    (2) Have no income tax withheld on their compensation.
    (b) In calculating the amount to be withheld from an employee's or a 
member's compensation, each agency shall use the method prescribed by 
the State income tax statute or city or county ordinance or a method 
which produces approximately the tax required to be withheld:
    (1) By the State income tax statute from the compensation of each 
employee or member of the Armed Forces subject to such income tax, or
    (2) By the city or county ordinance from the compensation of each 
employee subject to such income or employment tax.
    (c) Where it is the practice of a Federal agency under Federal tax 
withholding procedure to make returns and payment of the tax on an 
estimated basis, subject to later adjustment based on audited figures, 
this practice may be applied with respect to the

[[Page 65]]

State, city of county income or employment tax where the agency has made 
appropriate arrangements with the State, city or county income tax 
authorities.
    (d) Copies of Federal Form W-2, ``Wage and Tax Statement'', may be 
used for reporting withheld taxes to the State, city or county.
    (e) Withholding shall not be required on wages earned but unpaid at 
the date of an employee's or member's death.
    (f) Withholding of District of Columbia income tax shall not apply 
to pay of employees who are not residents of the District of Columbia as 
defined in 47 District of Columbia Code, chapter 15, subchapter II.

[42 FR 33731, July 1, 1977. Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.11  Miscellaneous provisions.

    Nothing in this agreement shall be deemed:
    (a) To require collection by agencies of the United States of 
delinquent tax liabilities of Federal employees or members of the Armed 
Forces, or
    (b) To consent to the application of any provision of law of the 
State, city or county which has the effect of:
    (1) Imposing more burdensome requirements upon the United States 
than it imposes on other employers, or
    (2) Subjecting the United States or any of its officers or employees 
to any penalty or liability, or
    (c) To consent to procedures for withholding, filing of returns, and 
payment of the withheld taxes to a State, city or county that do not 
conform to the usual fiscal practices of agencies, or
    (d) To permit withholding of a city or county tax from the pay of a 
Federal employee who is not a resident of, or whose regular place of 
Federal employment is not within, the State in which the city or county 
is located, unless the employee consents to the withholding, or
    (e) To permit the withholding of city or county income or employment 
taxes from the pay of members of the Armed Forces of the United States, 
or
    (f) To allow agencies to accept compensation from a State, city or 
county for services performed in withholding of State or city or county 
income or employment taxes.

(Pub. L. 95-365, 92 Stat. 599 (5 U.S.C. 5520))

[42 FR 33731, July 1, 1977, as amended at 44 FR 4670, Jan. 23, 1979. 
Redesignated at 71 FR 2150, Jan. 13, 2006]



Sec. 215.12  Supersession, amendment and termination provisions.

    (a) This agreement supersedes any prior agreement between the 
Secretary of the Treasury and a State or city pursuant to 5 U.S.C. 5516, 
5517, or 5520.
    (b) This agreement shall be subject to any amendment of 5 U.S.C. 
5516, 5517, 5520 or Executive Order 11997, and any rules and regulations 
issued prusuant to them and amendments thereto.
    (c) This agreement may be terminated as to a specific State or city 
or county which is a party to this agreement by providing written notice 
to that effect to the Secretary at least 90 days prior to the proposed 
termination.

[42 FR 33731, July 1, 1977. Redesignated at 71 FR 2150, Jan. 13, 2006]



PART 223_SURETY COMPANIES DOING BUSINESS WITH THE UNITED STATES--Table 
of Contents




Sec.
223.1 Certificate of authority.
223.2 Application for certificate of authority.
223.3 Issuance of certificates of authority.
223.4 Deposits.
223.5 Business.
223.6 Requirements applicable to surety companies.
223.7 Investment of capital and assets.
223.8 Financial reports.
223.9 Valuation of assets and liabilities.
223.10 Limitation of risk.
223.11 Limitation of risk: Protective methods.
223.12 Recognition as reinsurer.
223.13 Full penalty of the obligation regarded as the liability; 
          exceptions.
223.14 Schedules of single risks.
223.15 Paid up capital and surplus for Treasury rating purposes; how 
          determined.
223.16 List of certificate holding companies.
223.17 Revocation.
223.18 Performance of agency obligations.
223.19 Informal hearing on agency complaints.
223.20 Final decisions.
223.21 Reinstatement.
223.22 Fees for services of the Treasury Department.


[[Page 66]]


    Authority: 80 Stat. 379; 5 U.S.C. 301; 6 U.S.C. 8.



Sec. 223.1  Certificate of authority.

    The regulations in this part will govern the issuance by the 
Secretary of the Treasury of certificates of authority to bonding 
companies to do business with the United States as sureties on, or 
reinsurers of, recognizances, stipulations, bonds, and undertakings, 
hereinafter sometimes called obligations, under the provisions of the 
Act of July 30, 1947 (61 Stat. 646, as amended; 6 U.S.C. 6-13), and the 
acceptance of such obligations from such companies so long as they 
continue to hold said certificates of authority.

[28 FR 1039, Feb. 2, 1963, as amended at 40 FR 6499, Feb. 12, 1975; 40 
FR 8335, Feb. 27, 1975]



Sec. 223.2  Application for certificate of authority.

    Every company wishing to apply for a certificate of authority shall 
address the Assistant Commissioner, Comptroller, Financial Management 
Service, U.S. Department of Treasury, Washington, DC 20226, who will 
notify the company of the data which the Secretary of the Treasury 
determines from time to time to be necessary to make application. In 
accord with 6 U.S.C. 8 the data will include a copy of the applicant's 
charter or articles of incorporation and a statement, signed and sworn 
to by its president and secretary, showing its assets and liabilities. A 
fee shall be transmitted with the application in accordance with the 
provisions of Sec. 223.22(a)(i).

[34 FR 20188, Dec. 24, 1969, as amended at 37 FR 1232, Jan. 27, 1972; 40 
FR 6499, Feb. 12, 1975; 43 FR 12678, Mar. 27, 1978; 49 FR 47002, Nov. 
30, 1984]



Sec. 223.3  Issuance of certificates of authority.

    (a) If, from the evidence submitted in the manner and form herein 
required, subject to the guidelines referred to in Sec. 223.9 the 
Secretary of the Treasury shall be satisfied that such company has 
authority under its charter or articles of incorporation to do the 
business provided for by the Act referred to in Sec. 223.1, and if the 
Secretary of the Treasury shall be satisfied from such company's 
financial statement and from any further evidence or information he may 
require, and from such examination of the company, at its own expense, 
as he may cause to be made, that such company has a capital fully paid 
up in cash of not less than $250,000, is solvent and financially and 
otherwise qualified to do the business provided for in said Act, and is 
able to keep and perform its contracts, he will, subject to the further 
conditions herein contained, issue a certificate of authority to such 
company, under the seal of the Treasury Department, to qualify as surety 
on obligations permitted or required by the laws of the United States to 
be given with one or more sureties, for a term expiring on the last day 
of June next following. The certificate of authority shall be renewed 
annually on the first day of July, so long as the company remains 
qualified under the law and the regulations in this part, and transmits 
to the Assistant Commissioner, Comptroller by March 1 each year the fee 
in accordance with the provisions of Sec. 223.22(a)(3).
    (b) If a company meets the requirements for a certificate of 
authority as an acceptable surety on Federal bonds in all respects 
except that it is a United States branch of a company not incorporated 
under the laws of the United States or of any State, or it is limited by 
its articles of incorporation or corporate charter to reinsure business 
only, it may be issued a certificate of authority as a reinsuring 
company on Federal bonds. The fees for initial application and renewal 
of a certificate as a reinsuring company shall be the same as the fees 
for a certificate of authority as an acceptable surety on Federal bonds.

[33 FR 8390, June 6, 1968, as amended at 34 FR 20188, Dec. 24, 1969; 37 
FR 1232, Jan. 27, 1972; 40 FR 6499 Feb. 12, 1975; 40 FR 8335, Feb. 27, 
1975; 42 FR 8637, Feb. 11, 1977; 43 FR 12678, Mar. 27, 1978; 43 FR 
39089, Sept. 1, 1978; 49 FR 47002, Nov. 30, 1984]

[[Page 67]]



Sec. 223.4  Deposits.

    No such company will be granted authority to do business under the 
provisions of the act referred to in Sec. 223.1 unless it shall have 
and maintain on deposit with the Insurance Commissioner. or other proper 
financial officer, of the State in which it is incorporated, or of any 
other State of the United States, for the protection of claimants, 
including all its policyholders in the United States, legal investments 
having a current market value of not less than $100,000.

[36 FR 9630, May 27, 1971]



Sec. 223.5  Business.

    (a) The company must engage in the business of suretyship whether or 
not also making contracts in other classes of insurance, but shall not 
be engaged in any type or class of business not authorized by its 
charter or the laws of the State in which the company is incorporated. 
It must be the intention of the company to engage actively in the 
execution of surety bonds in favor of the United States.
    (b) No bond is acceptable if it has been executed (signed and/or 
otherwise validated) by a company or its agent in a State where it has 
not obtained that State's license to do surety business. Although a 
company must be licensed in the State or other area in which it executes 
a bond, it need not be licensed in the State or other area in which the 
principal resides or where the contract is to be performed. The term 
other area includes the Canal Zone, District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands.

[40 FR 6499, Feb. 12, 1975]



Sec. 223.6  Requirements applicable to surety companies.

    Every company now or hereafter authorized to do business under the 
act of Congress referred to in Sec. 223.1 shall be subject to the 
regulations contained in this part.

[38 FR 22779, Aug. 24, 1973]



Sec. 223.7  Investment of capital and assets.

    The cash capital and other funds of every such company must be 
safely invested in accordance with the laws of the State in which it is 
incorporated and will be valued on the basis set forth in Sec. 223.9. 
The Secretary of the Treasury will periodically issue instructions for 
the guidance of companies with respect to investments and other matters. 
These guidelines may be updated from time to time to meet changing 
conditions in the industry.

[42 FR 8637, Feb. 11, 1977]



Sec. 223.8  Financial reports.

    (a) Every such company will be required to file with the Assistant 
Commissioner, Comptroller on or before the last day of January of each 
year, a statement of its financial condition made up as of the close of 
the preceding calendar year upon the annual statement blank adopted by 
the National Association of Insurance Commissioners, signed and sworn to 
by its president and secretary.

On or before the last days of April, July and October of each year, 
every such company shall file a financial statement with the Assistant 
Commissioner, Comptroller as of the last day of the preceding month. A 
form is prescribed by the Treasury for this purpose. The quarterly 
statement form of the National Association of Insurance Commissioners 
when modified to conform to the Treasury's requirements, may be 
substituted for the Treasury's form. The quarterly statement will be 
signed and sworn to by the company's president and secretary or their 
authorized designees.
    (b) Every such company shall furnish such other exhibits or 
information, and in such manner as the Secretary of the Treasury may at 
any time require.

[10 FR 2348, Mar. 1, 1945, as amended at 42 FR 8637, Feb. 11, 1977; 49 
FR 47002, Nov. 30, 1984]



Sec. 223.9  Valuation of assets and liabilities.

    In determining the financial condition of every such company, its 
assets and liabilities will be computed in accordance with the 
guidelines contained in the Treasury's current Annual Letter to 
Executive Heads of Surety Companies. However, the Secretary of the

[[Page 68]]

Treasury may value the assets and liabilities of such companies in his 
discretion. Credit will be allowed for reinsurance in all classes of 
risks if the reinsuring company holds a certificate of authority from 
the Secretary of the Treasury, or has been recognized as an admitted 
reinsurer in accord with Sec. 223.12.

[42 FR 8637, Feb. 11, 1977]



Sec. 223.10  Limitation of risk.

    Except as provided in Sec. 223.11, no company holding a certificate 
of authority shall underwrite any risk on any bond or policy on behalf 
of any individual, firm, association, or corporation, whether or not the 
United States is interested as a party thereto, the amount of which is 
greater than 10 percent of the paid-up capital and surplus of such 
company, as determined by the Secretary of the Treasury. That figure is 
hereinafter referred to as the underwriting limitation.

[34 FR 20188, Dec. 24, 1969]



Sec. 223.11  Limitation of risk: Protective methods.

    The limitation of risk prescribed in Sec. 223.10 may be complied 
with by the following methods:
    (a) Coinsurance. Two or more companies may underwrite a risk on any 
bond or policy, the amount of which does not exceed their aggregate 
underwriting limitations. Each company shall limit its liability upon 
the face of the bond or policy, to a definite specified amount which 
shall be within its underwriting limitation.
    (b) Reinsurance. (1) In respect to bonds running to the United 
States, liability in excess of the underwriting limitation shall be 
reinsured within 45 days from the date of execution and delivery of the 
bond with one or more companies holding a certificate of authority from 
the Secretary of the Treasury. Such reinsurance shall not be in excess 
of the underwriting limitation of the reinsuring company. Where 
reinsurance is contemplated, Federal agencies may accept a bond from the 
direct writing company in satisfaction of the total bond requirement 
even though it may exceed the direct writing company's underwriting 
limitation. Within the 45 day period, the direct writing company shall 
furnish to the Federal agency any necessary reinsurance agreements. 
However, a Federal agency may, at its discretion, require that 
reinsurance be obtained within a lesser period than 45 days, and may 
require completely executed reinsurance agreements in hand before making 
a final determination that any bond is acceptable. Reinsurance may 
protect bonds required to be furnished to the United States by the 
Miller Act (40 U.S.C. 270a through 270d) covering contracts for the 
construction, alteration, or repair of any public building or public 
work of the United States, as well as other types of Federal bonds. Use 
of reinsurance or coinsurance to protect such bonds is at the discretion 
of the direct writing company. Reinsurance shall be executed on 
reinsurance agreement forms (Standard Form 273 for Miller Act 
Performance bonds (formerly form No. TFS 6317), Standard Form 274 for 
Miller Act Payment bonds (formerly form No. TFS 6318), and Standard Form 
275 for other types of Federal bonds (formerly form No. TFS 6319)). 
Federal bond-approving officers may obtain the forms by submitting a 
requisition in FEDSTRIP/MILSTRIP format to the General Services 
Administration regional office providing support to the requesting 
Government organization. In addition, the forms are available to 
authorized sureties and reinsurers from the Superintendent of Documents, 
Government Printing Office, Stop: SSMC, Washington, DC 20402.
    (2) In respect to risks covered by bonds or policies not running to 
the United States, liability in excess of the underwriting limitation 
shall be reinsured within 45 days from the date of execution and 
delivery of the bond or policy with:
    (i) One or more companies holding a certificate of authority from 
the Secretary of the Treasury as an acceptable surety on Federal bonds 
or one or more companies holding a certificate of authority as an 
acceptable reinsuring company on such bonds, or
    (ii) One or more companies recognized as an admitted reinsurer in 
accord with Sec. 223.12, or

[[Page 69]]

    (iii) A pool, association, etc., to the extent that it is composed 
of such companies, or
    (iv) An instrumentality or agency of the United States which is 
permitted by Federal law or regulation to execute reinsurance contracts.
    (3) No certificate-holding company may cede to a reinsuring company 
recognized under Sec. 223.12 any risk in excess of 10 percent of the 
latter company's paid-up capital and surplus.
    (c) Other methods. In respect to all risks other than Miller Act 
performance and payment bonds running to the United States, which must 
be coinsured or reinsured in accord with paragraph (a) or (b)(1) of this 
section respectively, the excess liability may otherwise be protected:
    (1) By the deposit with the company in pledge, or by conveyance to 
it in trust for its protection, of assets admitted by the Treasury the 
current market value of which is at least equal to the liability in 
excess of its underwriting limitation, or
    (2) If such obligation was incurred on behalf of or on account of a 
fiduciary holding property in a trust capacity, by a joint control 
agreement which provides that the whole or a sufficient portion of the 
property so held may not be disposed of or pledged in any way without 
the consent of the insuring company.

[34 FR 20188, Dec. 24, 1969, as amended at 40 FR 6499, Feb. 12, 1975; 41 
FR 10605, Mar. 12, 1976; 42 FR 8637, Feb. 11, 1977; 43 FR 39089, Sept. 
1, 1978]



Sec. 223.12  Recognition as reinsurer.

    (a) Application by U.S. company. Any company organized under the 
laws of the United States or of any State thereof, wishing to apply for 
recognition as an admitted reinsurer (except on excess risks running to 
the United States) of surety companies doing business with the United 
States, shall file the following data with the Assistant Comptroller for 
Auditing and shall transmit therewith the fee in accordance with the 
provisions of Sec. 223.22(a)(2):
    (1) A certified copy of its charter or articles of incorporation, 
and
    (2) A certified copy of a license from any State in which it has 
been authorized to do business, and
    (3) A copy of the latest available report of its examination by a 
State Insurance Department, and
    (4) A statement of its financial condition, as of the close of the 
preceding calendar year, on the annual statement form of the National 
Association of Insurance Commissioners, signed and sworn to by two 
qualified officers of the company, showing that it has a capital stock 
paid up in cash of not less than $250,000, in the case of a stock 
insurance company, or has net assets of not less than $500,000 over and 
above all liabilities, in the case of a mutual insurance company, and
    (5) Such other evidence as the Secretary of the Treasury may 
determine necessary to establish that it is solvent and able to keep and 
perform its contracts.
    (b) Application by a U.S. branch. A U.S. branch of an alien company 
applying for such recognition shall file the following data with the 
Assistant Commissioner, Comptroller and shall transmit therewith the fee 
in accordance with the provisions of Sec. 223.22(a)(2):
    (1) The submissions listed in paragraphs (a) (1) through (5) of this 
section, except that the financial statement of such branch shall show 
that it has net assets of not less than $250,000 over and above all 
liabilities, and
    (2) Evidence satisfactory to the Secretary of the Treasury to 
establish that it has on deposit in the United States not less than 
$250,000 available to its policyholders and creditors in the United 
States.
    (c) Financial reports. Each company recognized as an admitted 
reinsurer shall file with the Assistant Commissioner, Comptroller on or 
before the first day of March of each year its financial statement and 
such additional evidence as the Secretary of the Treasury determines 
necessary to establish that the requirements of this section

[[Page 70]]

are being met. A fee shall be transmitted with the foregoing data, in 
accordance with the provisions of Sec. 223.22(a)(4).

[34 FR 20189, Dec. 24, 1969, as amended at 37 FR 1232, Jan. 27, 1972; 40 
FR 6499, Feb. 12, 1975; 43 FR 12678, Mar. 27, 1978; 49 FR 47002, Nov. 
30, 1984]



Sec. 223.13  Full penalty of the obligation regarded as the liability; 
exceptions.

    In determining the limitation prescribed in this part, the full 
penalty of the obligation will be regarded as the liability, and no 
offset will be allowed on account of any estimate of risk which is less 
than such full penalty, except in the following cases:
    (a) Appeal bonds; in which case the liability will be regarded as 
the amount of the judgment appealed from, plus 10 percent of said amount 
to cover interest and costs.
    (b) Bonds of executors, administrators, trustees, guardians, and 
other fiduciaries, where the penalty of the bond or other obligation is 
fixed in excess of the estimated value of the estate; in which cases the 
estimated value of the estate, upon which the penalty of the bond was 
fixed, will be regarded as the liability.
    (c) Credit will also be allowed for indemnifying agreements executed 
by sole heirs or beneficiaries of an estate releasing the surety from 
liability.
    (d) Contract bonds given in excess of the amount of the contract; in 
which cases the amount of the contract will be regarded as the 
liability.
    (e) Bonds for banks or trust companies as principals, conditioned to 
repay moneys on deposit, whereby any law or decree of a court, the 
amount to be deposited shall be less than the penalty of the bond; in 
which cases the maximum amount on deposit at any one time will be 
regarded as the liability.

[Dept. Circ. 297, July 5, 1922]



Sec. 223.14  Schedules of single risks.

    During the months of January, April, July, and October of each year 
every company will be required to report to the Secretary of the 
Treasury every obligation which it has assumed during the 3 months 
immediately preceding, the penal sum of which is greater than 10 percent 
of its paid up capital and surplus, together with a full statement of 
the facts which tend to bring it within the provisions of this part, on 
a form suitable for the purpose.

[Dept. Circ. 297, July 5, 1922]



Sec. 223.15  Paid up capital and surplus for Treasury rating purposes; 
how determined.

    The amount of paid up capital and surplus of any such company shall 
be determined on an insurance accounting basis under the regulations in 
this part, from the company's financial statements and other 
information, or by such examination of the company at its own expense as 
the Secretary of the Treasury may deem necessary or proper.

[42 FR 8637, Feb. 11, 1977]



Sec. 223.16  List of certificate holding companies.

    A list of qualified companies is published annually as of July 1 in 
Department Circular No. 570, Companies Holding Certificates of Authority 
as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring 
Companies, with information as to underwriting limitations, areas in 
which licensed to transact surety business and other details. If the 
Secretary of the Treasury shall take any exceptions to the annual 
financial statement submitted by a company, he shall, before issuing 
Department Circular 570, give a company due notice of such exceptions. 
Copies of the Circular are available from the Assistant Commissioner, 
Comptroller upon request. Selection of a particular qualified company 
from among all companies holding certificates of authority is 
discretionary with the principal required to furnish bond.

[34 FR 20189, Dec. 24, 1969, as amended at 40 FR 6499, Feb. 12, 1975; 42 
FR 8637, Feb. 11, 1977; 49 FR 47002, Nov. 30, 1984]



Sec. 223.17  Revocation.

    Whenever it appears that a company is not complying with the 
requirements of 6 U.S.C. 6-13 and of the regulations in this part, the 
Secretary of the Treasury will:
    (a) In all cases notify the company of the facts or conduct which 
indicate

[[Page 71]]

such failure, and provide opportunity to the company to respond, and
    (b) In those cases where the public interest in the constant 
financial stability of such a company allows, also provide opportunity 
to the company to demonstrate or achieve compliance with those 
requirements. The Secretary shall revoke a company's certificate of 
authority with advice to it if:
    (1) The company does not respond satisfactorily to his notification 
of noncompliance, or
    (2) The company, provided an opportunity to demonstrate or achieve 
compliance, fails to do so.

[34 FR 20189, Dec. 24, 1969. Redesignated at 38 FR 22779, Aug. 24, 1973, 
as amended at 42 FR 8637, Feb. 11, 1977]



Sec. 223.18  Performance of agency obligations.

    (a) Every company shall promptly honor its bonds naming the United 
States or one of its agencies or instrumentalities as obligee. If an 
agency's demand upon a company on behalf of the agency or laborers, 
materialmen, or suppliers (on payment bonds), for payment of a claim 
against it is not settled to the agency's satisfaction, and the agency's 
review of the situation thereafter establishes that the default is clear 
and the company's refusal to pay is not based on adequate grounds, the 
agency may make a report to the Secretary of the Treasury, including a 
copy of the subject bond, the basis for the claim against the company, a 
chronological resume of efforts to obtain payment, a statement of all 
reasons offered for non-payment, and a statement of the agency's views 
on the matter.
    (b) On receipt of such report from the Federal agency the Secretary 
will, if the circumstances warrant, notify the company concerned that 
the agency report may demonstrate that the company is not keeping and 
performing its contracts and that, in the absence of satisfactory 
explanation, the company's default may preclude the renewal of the 
company's certificate of authority, or warrant prompt revocation of the 
existing certificate. This notice will provide opportunity to the 
company to demonstrate its qualification for a continuance of the 
certificate of authority.

[34 FR 20189, Dec. 24, 1969. Redesignated at 38 FR 22779, Aug. 24, 1973, 
as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.19  Informal hearing on agency complaints.

    (a) Request for informal hearing. If a company determines that the 
opportunity to make known its views, as provided for under Sec. 
223.18(b), is inadequate, it may, within 20 business days of the date of 
the notice required by Sec. 223.18(b), request, in writing, that the 
Secretary of the Treasury convene an informal hearing.
    (b) Purpose. As soon as possible after a written request for an 
informal hearing is received, the Secretary of the Treasury shall 
convene an informal hearing, at such time and place as he deems 
appropriate, for the purpose of determining whether revocation of the 
company's certificate of authority is justified.
    (c) Notice. The company shall be advised, in writing, of the time 
and place of the informal hearing and shall be directed to bring all 
documents, records and other information as it may find necessary and 
relevant to substantiate its refusal to settle the claims made against 
it by the Federal agency making the report under Sec. 223.18(a).
    (d) Conduct of hearings. The hearing shall be conducted by a hearing 
officer appointed by the Secretary. The company may be represented by 
counsel and shall have a fair opportunity to present any relevant 
material and to examine the agency's evidence. Formal rules of evidence 
will not apply at the informal hearing.
    (e) Report. Within 30 days after the informal hearing, the hearing 
officer shall make a written report to the Secretary setting forth his 
findings, the basis for his findings, and his recommendations. A copy of 
the report shall be sent to the company.

[38 FR 22779, Aug. 24, 1973]



Sec. 223.20  Final decisions.

    If, after review of the case file, it is the judgment of the 
Secretary that the complaint was unfounded, the Secretary shall dismiss 
the complaint by

[[Page 72]]

the Federal agency concerned and shall so notify the company. If, 
however, it is the judgment of the Secretary that the company has not 
fulfilled its obligations to the complainant agency, he shall notify the 
company of the facts or conduct which indicate such failure and allow 
the company 20 business days from the date of such notification to 
demonstrate or achieve compliance. If no showing of compliance is made 
within the period allowed, the Secretary shall either preclude renewal 
of a company's certificate of authority or revoke it without further 
notice.

[38 FR 22779, Aug. 24, 1973, as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.21  Reinstatement.

    If, after one year from the date of the expiration or the revocation 
of the certificate of authority, under Sec. 223.20 a company can show 
that the basis for the non-renewal or revocation has been eliminated and 
that it can comply with the requirements of 6 U.S.C. 6-13 and the 
regulations in this part, a new certificate of authority shall be issued 
without prejudice.

[38 FR 22779, Aug. 24, 1973, as amended at 42 FR 8638, Feb. 11, 1977]



Sec. 223.22  Fees for services of the Treasury Department.

    (a) Fees shall be imposed and collected, for the services listed in 
paragraphs (a) (1) through (4) of this section which are performed by 
the Treasury Department, regardless of whether the action requested is 
granted or denied. The payee of the check or other instrument shall be 
the Financial Management Service, Treasury Department. The amount of the 
fee will be based on which of the following categories of service is 
requested:
    (1) Examination of a company's application for a certificate of 
authority as an acceptable surety on Federal bonds or for a certificate 
of authority as an acceptable reinsuring company on such bonds (see 
Sec. 223.2);
    (2) Examination of a company's application for recognition as an 
admitted reinsurer (except on excess risks running to the United States) 
of surety companies doing business with the United States (see Sec. 
223.12(a) and (b));
    (3) Determination of a company's continuing qualifications for 
annual renewal of its certificate of authority (see Sec. 223.3); or
    (4) Determination of a company's continuing qualifications for 
annual renewal of its authority as an admitted reinsurer (see Sec. 
223.12(c)).
    (b) In a given year a uniform fee will be collected from every 
company requesting a particular category of service, e.g., determination 
of a company's continuing qualifications for annual renewal of its 
certificate of authority. However, the Treasury Department reserves the 
right to redetermine the amounts of fees annually. Fees are determined 
in accordance with Office of Management and Budget Circular A-25, as 
amended.
    (c) Specific fee information may be obtained from the Assistant 
Commissioner, Comptroller at the address shown in Sec. 223.2. In 
addition, a notice of the amount of a fee referred to in Sec. 223.22(a) 
(1) through (4) will be published in the Federal Register as each change 
in such fee is made.

[43 FR 12678, Mar. 27, 1978, as amended at 49 FR 47001 and 47002, Nov. 
30, 1984]



PART 224_FEDERAL PROCESS AGENTS OF SURETY COMPANIES--Table of Contents




Sec.
224.1 Statutory provision.
224.2 Appointment of process agents.
224.3 Powers of attorney appointing process agents; with whom filed.
224.4 Power of attorney; form.
224.5 Process agents; termination of authority.
224.6 United States district courts; location of divisional offices.

    Authority: 31 U.S.C. 9306.



Sec. 224.1  Statutory provision.

    The rules and regulations in this part are prescribed for carrying 
into effect 31 U.S.C. 9306.

[61 FR 26840, May 29, 1996]



Sec. 224.2  Appointment of process agents.

    (a) Generally. Companies should especially note that the law 
prohibits the doing of business under the provisions of this act beyond 
the State under whose laws it was incorporated and in which its 
principal office is located

[[Page 73]]

until an agent is appointed to accept Federal process on behalf of the 
company. An agent for the service of Federal process should be 
appointed:
    (1) In the district where the principal resides;
    (2) In the district where the obligation is to be undertaken and 
performed; and
    (3) Also in the District of Columbia where the bond is returnable 
and filed.

The appointment of process agents pursuant to a local State statute is 
not compliance with the Federal law. Although one and the same agent may 
serve under both the State and Federal appointments, he must, 
nevertheless, be especially designated to accept Federal process. It 
should also be noted that the agent so designated must reside within the 
jurisdiction of the court for the judicial district wherein such 
suretyship is to be undertaken, and must be citizen of the State, 
Territory, or District of Columbia in which such court is held. 
Consequently an agent residing in the northern district of New York 
could not at the same time serve as the company's Federal process agent 
for the southern district of that State.
    (b) Agent required in District of Columbia. Every company must, 
immediately upon receipt of its initial authority from the Secretary of 
the Treasury, appoint a suitable person resident in the District of 
Columbia on whom may be served all lawful process issued by the Federal 
Courts in said district. This appointment is required whether or not the 
company contemplates the writing of bonds in favor of the United States 
to be undertaken within the District of Columbia.
    (c) Agent not required in State of incorporation where principal 
office is located. The law does not require the appointment of Federal 
process agents for the State under whose laws the company is 
incorporated, and in which its principal office is located.

[17 FR 2605, Mar. 26, 1952]



Sec. 224.3  Powers of attorney appointing process agents; with whom filed.

    The clerk of the United States district court at the main office in 
each judicial district must be furnished with a sufficient number of 
authenticated copies of the power of attorney appointing an agent for 
the service of process to enable him to file a copy in his office, and 
at each other place where a divisional office of the court is located 
within the judicial district for which the process agent has been 
appointed. Such copies may be authenticated at the home office of the 
company by its officers duly authorized, and sworn to before an officer 
legally authorized to administer oaths. Where the charter of bylaws of 
the corporation do not confer authority on its executive officers to 
give such powers of attorney the authenticated copy filed with the clerk 
of the court must be accompanied by a certified copy of the resolution 
duly adopted by its board of directors or other governing body showing 
that the officer making the appointment had authority to do so.

[17 FR 2606, Mar. 26, 1952]



Sec. 224.4  Power of attorney; form.

    In making such appointments a power of attorney should be used 
substantially in the following form:

    Know all men by these presents, that the ----------------a 
corporation existing under and by virtue of the laws of the State of --
-------------- and having its principal office at ------------, desiring 
to comply with section 9306 of Title 31, United States Code, hereby 
constitutes and appoints ----------, of ----------------, its true and 
lawful attorney and agent in and for the ---------- judicial district of 
--------------, upon whom all lawful process in any action or proceeding 
against the company in said district may be served in like manner and 
with the same effect as if the company existed therein, and who is 
authorized to enter an appearance in its behalf.
    In witness whereof the said company, pursuant to proper authority of 
its board of directors or other governing body, has caused these 
presents to be subscribed by its ------------ president and its 
corporate seal to be affixed hereto this ------ day of ----------, a.d. 
19--
    [Corporate Seal] --------------------------
                                                              President,
State of ------------------
    County of --------------------, ss:
    On this ------------ day of ------------, a.d. 19--, before me 
appeared --------------------, president of the -------------------- 
Company, with whom I am personally acquainted, who being duly sworn, 
says that he is -------------------- president of the ------------------
-- Company; that he knows

[[Page 74]]

the corporate seal of the company; that the seal affixed to the 
foregoing instrument is such corporate seal; that it was affixed by 
order of the board of directors or other governing body of said company, 
and that he signed said instrument as -------------- president of said 
company by like authority.
    [Notarial Seal]

[Dept. Cir. Ltr. 4, Nov. 15, 1930, as amended at 49 FR 14340, Apr. 11, 
1984]



Sec. 224.5  Process agents; termination of authority.

    Whenever the authority of a process agent is terminated by reason of 
revocation, disability, removal from the district, or any other cause, 
it shall be the duty of the company to immediately make a new 
appointment.

[40 FR 51194, Nov. 4, 1975. Redesignated at 61 FR 26840, May 29, 1996]



Sec. 224.6  United States district courts; location of divisional 
offices.

    A list of the divisional offices of the court in each judicial 
district where powers of attorney should be filed may be obtained from 
the Surety Bond Branch, Financial Management Service, Department of the 
Treasury, 3700 East-West Highway, Room 6F04, Hyattsville, MD 20782.

[61 FR 26840, May 29, 1996]



PART 225_ACCEPTANCE OF BONDS SECURED BY GOVERNMENT OBLIGATIONS IN LIEU 
OF BONDS WITH SURETIES--Table of Contents




Sec.
225.1 Scope.
225.2 Definitions.
225.3 Pledge of Government obligations in lieu of a bond with surety or 
          sureties.
225.4 Pledge of book-entry Government obligations.
225.5 Pledge of definitive Government obligations.
225.6 Payment of interest.
225.7 Custodian duties and responsibilities.
225.8 Bond official duties and responsibilities.
225.9 Return of Government obligations to obligor.
225.10 Other agency practices and authorities.
225.11 Courts.

    Authority: 12 U.S.C. 391; 31 U.S.C. 321, 9301 and 9303.

    Source: 64 FR 4763, Jan. 29, 1999, unless otherwise noted.



Sec. 225.1  Scope.

    The regulation in this part applies to Government agencies accepting 
bonds secured by Government obligations in lieu of bonds with sureties. 
The Financial Management Service (FMS) is the representative of the 
Secretary of the Treasury (Secretary) in all matters concerning this 
part unless otherwise specified. The Commissioner of the FMS may issue 
procedural instructions implementing this regulation.



Sec. 225.2  Definitions.

    For purposes of this part:
    Agency means a department, agency, or instrumentality of the United 
States Government.
    Authenticate instructions means to verify that the instructions 
received are from a bond official.
    Bearer means that ownership of a Government obligation is not 
recorded. Title to such an obligation passes by delivery without 
endorsement and without notice. A bearer obligation is payable on its 
face to the holder at either maturity or call.
    Bond means an executed written instrument, which guarantees the 
fulfillment of an obligation to the United States and sets forth the 
terms, conditions, and stipulations of the obligation.
    Bond official means an agency official having authority under 
Federal law or regulation to approve a bond with surety or sureties and 
to approve a bond secured by Government obligations.
    Book-entry means that the issuance and maintenance of a Government 
obligation is represented by an accounting entry or electronic record 
and not by a certificate.
    Custodian means a Federal Reserve Bank or an entity within the 
United States designated by such Federal Reserve Bank under terms and 
conditions prescribed by such Federal Reserve Bank, a depositary 
specifically designated by the Secretary of the Treasury for purposes of 
this part, or such other entities as the Secretary of the Treasury may 
designate for purposes of this part.

[[Page 75]]

    Definitive means that a Government obligation is issued in engraved 
or printed form.
    Depositary includes, but is not limited to:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depository institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
    (6) Any agency or branch of a foreign bank as defined in section 
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
    Federal Reserve means a Federal Reserve Bank and its branches.
    Government obligation means a public debt obligation of the United 
States Government and an obligation whose principal and interest is 
unconditionally guaranteed by the United States Government.
    Obligor includes, but is not limited to, an individual, a trust, an 
estate, a partnership, a corporation, and a sole proprietor.
    Officer authorized to certify assignment means the individual 
identified as a certifying individual at part 306, subpart F of this 
title.
    Person means an individual, a trust, an estate, a partnership, and a 
corporation.
    Pledge means a transfer of security interest in a Government 
obligation to a bond official's agency as collateral in lieu of a bond 
with a surety or sureties.
    Procedural instructions means the Treasury Financial Manual, as 
amended, published by the Financial Management Service.
    Registered means that ownership of a definitive Government 
obligation is listed in the issuer's records, and that the obligation is 
payable at maturity or call to the person in whose name the obligation 
is inscribed or to that person's assignee.
    Secretary means the Secretary of the Treasury.



Sec. 225.3  Pledge of Government obligations in lieu of a bond with 
surety or sureties.

    (a) General. An obligor required by Federal law or regulation to 
furnish a bond with surety or sureties may give in lieu thereof to a 
bond official any security acceptable under 31 U.S.C. 9301, as amended. 
The Secretary will designate classes of Government obligations 
acceptable under this part.
    (b) Bond. The bond, at a minimum, shall irrevocably authorize the 
bond official to collect, sell, assign, or transfer such Government 
obligations and any interest retained therefrom in the event of the 
obligor's default in performing any of the terms, conditions, or 
stipulations of such bond. Unless otherwise provided by law, the bond 
shall authorize the bond official to apply the proceeds from the sale, 
assignment, or transfer of such Government obligations, in whole or in 
part, to satisfy any costs incurred by the United States related to the 
default, and to apply any excess proceeds to satisfy any other claim of 
the United States against the obligor. The bond shall not include any 
obligations on custodians which are inconsistent with, or in addition 
to, the obligations in this part. The bond will provide that

[[Page 76]]

the bond official may retain any interest accruing upon any Government 
obligations, or direct that such interest be retained by the custodian.
    (c) Amount of Government obligations. The obligor shall pledge to 
the bond official Government obligations valued as required by 31 U.S.C. 
9303, as amended.
    (d) Avoiding frequent substitutions. To avoid the frequent 
substitution of Government obligations, the bond official may reject 
Government obligations which mature, or are redeemable, within one year 
from the date they are pledged to the bond official.
    (e) Acceptable Government obligations. Types and valuations of 
acceptable collateral security are addressed in 31 CFR part 380. For a 
current list of acceptable classes of securities and instruments 
described in 31 CFR part 380 and their valuations, see the Bureau of the 
Public Debt's web site at www.publicdebt.treas.gov.

[64 FR 4763, Jan. 29, 1999, as amended at 65 FR 55430, Sept. 13, 2000]



Sec. 225.4  Pledge of book-entry Government obligations.

    (a) General. Except as otherwise provided by the Secretary in 
procedural instructions, an obligor, or a depositary acting as agent or 
sub-agent for the obligor, or the bond official, shall arrange a pledge 
pursuant to the prior agreement and approval of the bond official, of 
book-entry Government obligations. The Government obligations must be 
transferred to an account for the benefit of the bond official. The 
custodian holding the Government obligations is not required to 
establish that the agreement and approval of the bond official has been 
obtained prior to such a transfer.
    (b) Receipt. Upon the transfer of Government obligations to an 
account for the benefit of the bond official, the custodian will 
promptly issue a receipt or an activity statement, or both, to the bond 
official and to the obligor or a depositary acting as agent or sub-agent 
for the obligor.
    (c) Effect of the transfer. Book-entry Government obligations 
credited to an account for the benefit of the bond official shall have 
the effect as provided in part 357 of this title, or in other applicable 
regulations.



Sec. 225.5  Pledge of definitive Government obligations.

    (a) Type and assignment. Definitive Government obligations may be in 
bearer or registered form, and shall be owned by the obligor.
    (1) Bearer Government obligations. The obligor shall pledge bearer 
Government obligations to the bond official with all unmatured interest 
coupons attached.
    (2) Registered Government obligations; assignment. The obligor shall 
pledge registered Government obligations in the obligor's name to the 
bond official by assignment in accordance with subpart F of part 306 of 
this title and other codified procedures for issuers that apply to 
assignment of the registered Government obligations, except that, when 
so authorized under such procedures, all assignments shall be made in 
blank.
    (b) Delivery to bond official; receipt. All deliveries of definitive 
Government obligations from the obligor to the bond official under this 
part shall be made at the risk and expense of the obligor. Upon receipt 
of definitive Government obligations, the bond official will issue the 
obligor a receipt.
    (c) Risk of loss; safekeeping. All definitive Government obligations 
held by the bond official will be held at the risk of the bond official. 
The bond official will keep safe all definitive Government obligations 
and may place them with a custodian.
    (d) Delivery to custodian; receipt. If the bond official is in 
receipt of definitive Government obligations, and then places those 
obligations with a custodian, the expense and risk of loss in delivery 
will rest with the bond official. Upon the placement of definitive 
Government obligations with a custodian, the custodian will issue the 
bond official a receipt. All definitive Government obligations held by 
the custodian will be held at the risk of the custodian.
    (e) Conversion to book-entry. (1) Treasury bonds, notes, 
certificates of indebtedness, or bills deposited with a Federal Reserve 
Bank under this part may be converted into book-entry Treasury 
obligations in accordance with part 306

[[Page 77]]

of this title, and the pertinent provisions of that part shall apply to 
such Treasury obligations.
    (2) When converting definitive Government obligations to book-entry 
form, a Federal Reserve Bank will act pursuant to, and in accordance 
with, book-entry procedures for issuers that apply to the definitive 
Government obligations pledged to the bond official's agency, including 
those set forth in part 306 of this title.



Sec. 225.6  Payment of interest.

    (a) General. Except as otherwise provided in this section and Sec. 
225.7(b), interest accruing upon Government obligations pledged to a 
bond official's agency in accordance with this part will be remitted to 
the obligor or a depositary acting as agent or sub-agent for the 
obligor.
    (b) Default. If the bond official determines that the obligor has 
defaulted, the bond official will retain any interest accruing upon 
Government obligations pledged to the bond official's agency or direct 
the custodian, in accordance with this part, to retain such interest. 
Unless otherwise provided by law, such interest will be available to 
satisfy any costs incurred by the United States related to the default, 
and any excess proceeds will be available to satisfy any other claim of 
the United States against the obligor.



Sec. 225.7  Custodian duties and responsibilities.

    (a) General. A custodian shall authenticate instructions received 
from a bond official and shall act in accordance with such authenticated 
instructions. The custodian assumes no liability and is without 
liability of any kind for acting in accordance with such authenticated 
instructions, except for the custodian's failure to exercise ordinary 
care. By providing a bond secured by Government obligations in lieu of a 
bond with surety or sureties, an obligor agrees not to hold either the 
custodian or the Secretary liable or responsible for the actions or 
inactions of a bond official or for carrying out a bond official's 
authenticated instructions.
    (b) Interest. Absent authenticated instructions from the bond 
official to retain interest, interest received by the custodian on 
Government obligations pledged to the bond official's agency in 
accordance with this part will be remitted in the regular course of 
business to the obligor or to a depositary acting as agent or sub-agent 
for the obligor.
    (c) Principal. Absent authenticated instructions from the bond 
official to retain the proceeds of matured Government obligations, a 
custodian will release to the obligor proceeds from matured Government 
obligations only if the obligor has deposited Government obligations 
acceptable under 31 U.S.C. 9301, as amended, in substitution for those 
which have matured.
    (d) Liquidation of Government obligations. A custodian will collect, 
sell, assign, or transfer Government obligations, including any interest 
therefrom, only in accordance with a bond official's authenticated 
instructions.
    (e) Application of proceeds of liquidated Government obligations. A 
custodian will apply the proceeds from the collection, sale, assignment, 
or transfer of Government obligations only in accordance with a bond 
official's authenticated instructions.



Sec. 225.8  Bond official duties and responsibilities.

    The bond official's duties and responsibilities are as follows:
    (a) Approving the bond secured by Government obligations after 
determining its sufficiency;
    (b) Verifying ownership of any registered definitive Government 
obligations given, and ensuring that those Government obligations are 
properly assigned;
    (c) Approving establishment of a book-entry account for the benefit 
of the bond official;
    (d) Providing the custodian, when appropriate, with clear and 
concise instructions;
    (e) Taking all reasonable and appropriate steps to ensure that all 
procedures or transactions conform with the provisions of this part; and
    (f) Notifying the Secretary of the Treasury, or his designee, upon 
an obligor's default, and, unless otherwise provided by law, applying 
any part of the proceeds in excess of the amount required to assure 
payment of any

[[Page 78]]

costs incurred by the United States related to the default to satisfy 
any claim of the United States against the obligor.



Sec. 225.9  Return of Government obligations to obligor.

    (a) General. Except as provided in paragraph (b) of this section or 
as otherwise provided in this part, the bond official will return the 
Government obligations, and any interest retained therefrom, to the 
obligor, without written application from the obligor, when the bond 
official determines that the Government obligations are no longer 
required under the terms of the bond.
    (b) Miller Act payment bonds. The bond official will not return 
Government obligations to an obligor who has furnished to the bond 
official a payment bond if:
    (1) A person, who supplied the obligor with labor or materials and 
whom the obligor has not paid, files with the United States Government 
the application and affidavit provided for in the Miller Act (Act), as 
amended (40 U.S.C. 270a-270d), and the time provided in the Act for the 
person to commence suit against the obligor on the payment bond has not 
expired; or
    (2) A person commences a suit against the obligor within the time 
provided for in the Act, in which case the bond official will hold the 
Government obligations subject to the order of the court having 
jurisdiction of the suit; or
    (3) The bond official has actual knowledge of a claim against the 
obligor on the basis of the payment bond, in which case the bond 
official may return the Government obligations to the obligor when the 
bond official deems it appropriate.
    (c) Claim of the United States unaffected. Nothing in this section 
shall affect or impair the priority of any claim of the United States 
against Government obligations, or any right or remedy granted by the 
Miller Act or by this part to the United States in the event of an 
obligor's default on any term, condition, or stipulation of a bond.
    (d) Return of definitive Government obligations; risk of loss. 
Definitive Government obligations to be returned to the obligor will be 
forwarded at the obligor's risk and expense, either by the bond 
official, or by a custodian upon receipt of a bond official's 
authenticated instructions.



Sec. 225.10  Other agency practices and authorities.

    (a) Agency practices. Nothing in this part shall be construed as 
modifying the existing practices or duties of agencies in handling 
bonds, except to the extent made necessary under the terms of this part 
by reason of the acceptance of bonds secured by Government obligations.
    (b) Agency authorities. Nothing contained in this part shall affect 
the authority of agencies to receive Government obligations for security 
in cases authorized by other provisions of law.



Sec. 225.11  Courts.

    Nothing contained in this part shall affect the authority of a court 
over a Government obligation given as security in a civil action.



PART 226_RECOGNITION OF INSURANCE COVERING TREASURY TAX AND LOAN 
DEPOSITARIES--Table of Contents




Sec.
226.1 Scope.
226.2 General.
226.3 Application--termination.
226.4 Adequacy of security--how computed.
226.5 Examinations.
226.6 Financial reports.
226.7 Effective date.

    Authority: Secs. 2 and 3, Pub. L. 95-147. 91 Stat. 1227 (31 U.S.C. 
1038).

    Source: 43 FR 18972, May 2, 1978, unless otherwise noted.



Sec. 226.1  Scope.

    The regulations in this part apply to insurance covering public 
money of the United States held by banks, savings banks, savings and 
loan associations, building and loan associations, homestead 
associations, or credit unions designated as Treasury tax and loan 
depositaries under 31 CFR part 203. Approval of the adequacy of the 
insurance coverage provided to Treasury tax and loan funds shall be 
governed by the regulations contained herein, which

[[Page 79]]

will be supplemented by guidelines issued by the Treasury and updated 
from time to time to meet changing conditions in the industry.



Sec. 226.2  General.

    (a) Deposit or account insurance provided by the Federal Deposit 
Insurance Corporation, the Federal Savings and Loan Insurance 
Corporation, and the National Credit Union Share Insurance Fund, is 
hereby recognized. Deposits or accounts which are insured by a State or 
agency thereof, or by a corporation chartered by a State for the sole 
purpose of insuring deposits or accounts of financial institutions 
eligible to be Treasury tax and loan depositaries (hereinafter referred 
to as Insurance Arrangement), shall be approved as provided herein. Such 
approval constitutes recognition for the purpose of reducing the amount 
of collateral required of a tax and loan depositary by the amount of 
recognized insurance coverage pursuant to 31 CFR 203.15.
    (b) Generally, these regulations and their associated guidelines 
require that an organization providing insurance maintain a corpus of 
sufficient value and liquidity, and/or that it have sufficient State 
borrowing authority, in relation to its liabilities and total insured 
savings (or deposits) to provide adequate security to the Government's 
deposits and that adequate monitoring of the financial condition of the 
insured institutions is conducted.



Sec. 226.3  Application--termination.

    (a) Every Insurance Organization applying for recognition as a 
qualified insurer of financial institutions designated as Treasury tax 
and loan depositaries shall address a written request to the Assistant 
Commissioner, Comptroller, Financial Management Service, Department of 
the Treasury, Washington, DC 20226, who will notify the applicant of the 
data which is necessary to make application. If the Secretary of the 
Treasury is satisfied that:
    (1) One or more institutions insured by the applicant otherwise meet 
the Secretary's requirements for designation as a Treasury tax and loan 
depositary or Federal tax depositary,
    (2) The insurance provided by the applicant covers public money of 
the United States, and
    (3) The insurance coverage provided affords adequate security to the 
Government's deposits, the Secretary shall recognize the applicant as a 
qualified insurer of financial institutions designated as Treasury tax 
and loan depositaries.
    (b) If and when the Secretary of the Treasury determines that a 
qualified insurance organization's financial condition is such that it 
no longer provides adequate security or that it is not complying with 
the regulations of this part, the Secretary will notify the Insurance 
Organization of the facts or conduct which cause him to make such 
determination, and in those cases where the safety of the Government's 
funds allows, provide the Insurance Organization with an opportunity to 
correct the deficiency. When any deficiency has not been corrected to 
his satisfaction or, where the safety of Government funds makes 
immediate revocation imperative, the Secretary will revoke the 
recognition previously granted.

    Note: For a delegation of authority to perform the functions 
described in Sec. Sec. 226.3 and 226.4, see 44 FR 19406 of the Federal 
Register of April 3, 1979.

[43 FR 18972, May 2, 1978, as amended at 44 FR 19406, Apr. 3, 1979; 49 
FR 47002, Nov. 30, 1984]



Sec. 226.4  Adequacy of security--how computed.

    (a) In qualifying Insurance Organizations, the Treasury will use a 
ratio (equity (net worth) of the insurance organization divided by 
insured accounts or deposits) to determine if the security is adequate. 
The ratio will be computed as determined by the Treasury, and is 
required to equal 0.0045 or greater for an Insurance Organization to be 
recognized (i.e., net worth is required to equal 0.45 of 1 percent of 
insured accounts or deposits).
    (b) If, in the judgment of the Secretary of the Treasury, any of the 
Insurance Organization's assets which cannot be liquidated promptly or 
are subject to restriction, encumbrance, or discredit, all or part of 
the value of

[[Page 80]]

such assets may be deducted from equity in making the computation. The 
Secretary of the Treasury may value the assets and liabilities in his 
discretion.
    (c) An Insurance Organization's unqualified borrowing authority from 
its sponsoring State will be added to its equity in making the 
computation because such authority is equivalent to additional 
capitalization. An Insurance Organization's commercial borrowing 
authority and its reinsurance will be disregarded in making the 
computation, because these are not adequate substitutes for 
undercapitalization.

    Note: For a delegation of authority to perform the functions 
described in Sec. Sec. 226.3 and 226.4, see 44 FR 19406 of the Federal 
Register of April 3, 1979.

[43 FR 18972, May 2, 1978, as amended at 44 FR 19406, Apr. 3, 1979]



Sec. 226.5  Examinations.

    (a) Examinations by State regulatory authorities or audits by CPA 
firms of Insurance Organizations shall be performed in accordance with, 
and at intervals prescribed by, State regulatory procedures. Copies of 
the reports shall be submitted to the Treasury.
    (b) Examinations by State regulatory authorities or audits by CPA 
firms of insured financial institutions shall be performed in accordance 
with, and at intervals prescribed by, State regulatory procedures. In 
addition, an adequate monitoring system shall be employed to detect 
those institutions with financial problems.



Sec. 226.6  Financial reports.

    Financial reports of Insurance Organizations shall be submitted to 
the Treasury at the same intervals they are submitted to State 
regulatory authorities. However, they need not be submitted more 
frequently than quarterly but, as a minimum, shall be submitted 
annually. The Treasury may prescribe the format of such reports.



Sec. 226.7  Effective date.

    The provisions of this part become effective November 2, 1978.

[43 FR 47506, Oct. 16, 1978]



PART 235_ISSUANCE OF SETTLEMENT CHECKS FOR FORGED CHECKS DRAWN ON 
DESIGNATED DEPOSITARIES--Table of Contents




Sec.
235.1 Scope of regulations.
235.2 Definition.
235.3 Settlement of claims.
235.4 Check Forgery Insurance Fund.
235.5 Reclamation amounts.
235.6 Implementing instructions.

    Authority: 31 U.S.C. 3343.

    Source: 40 FR 6785, Feb. 14, 1975, unless otherwise noted.



Sec. 235.1  Scope of regulations.

    This part governs the issuance of settlement checks for checks drawn 
on designated depositaries of the United States by accountable officers 
of the United States, that have been negotiated and paid on a forged or 
unauthorized indorsement.

[40 FR 6785, Feb. 14, 1975, as amended at 54 FR 35642, Aug. 29, 1989]



Sec. 235.2  Definition.

    Accountable Officers of the United States, as used in these 
regulations, means disbursing officers authorized by the Secretary of 
the Treasury to maintain official accounts of the United States in 
depositary banks located in the United States, its territories, and 
foreign countries, and to draw checks thereon in dollars or in foreign 
currencies.



Sec. 235.3  Settlement of claims.

    Upon receipt of a claim by a payee or special indorsee on a check 
determined to have been paid on a forged indorsement under conditions 
satisfying the provisions set forth in 31 U.S.C. 3343, accountable 
officers of the United States, with respect to a check drawn on 
designated depositaries of the United States, in dollars or in foreign 
currency, shall cause to be issued a settlement check in the appropriate 
currency to the payee or special indorsee.

[40 FR 6785, Feb. 14, 1975, as amended at 49 FR 47001, 47002, Nov. 30, 
1984; 54 FR 35642, Aug. 29, 1989]

[[Page 81]]



Sec. 235.4  Check Forgery Insurance Fund.

    The Check Forgery Insurance Fund, established pursuant to 31 U.S.C. 
3343, shall be available for use by the Commissioner, Financial 
Management Service, and accountable officers of the United States for 
the purpose of providing funding for settlements made to a payee or 
special indorsee pursuant to these regulations.

[40 FR 6785, Feb. 14, 1975, as amended at 49 FR 47001, 47002, Nov. 30, 
1984]



Sec. 235.5  Reclamation amounts.

    Amounts received by way of reclamation on forged checks shall be 
deposited to the credit of the Check Forgery Insurance Fund or to the 
appropriate foreign currency fund or other account charged for the 
settlement payment.



Sec. 235.6  Implementing instructions.

    Procedural instructions implementing these regulations will be 
issued by the Commissioner of the Financial Management Service in volume 
I, part 4 of the Treasury Financial Manual.

[54 FR 35642, Aug. 29, 1989]



PART 240_INDORSEMENT AND PAYMENT OF CHECKS DRAWN ON THE UNITED STATES 
TREASURY--Table of Contents




                           General Provisions

Sec.
240.1 Scope of regulations.
240.2 Definitions.
240.3 Electronic checks and substitute checks.
240.4 Presentment guarantees.
240.5 Limitations on payment; cancellation and distribution of proceeds 
          of checks.
240.6 Provisional credit; first examination; declination; final payment.
240.7 Declination protest.
240.8 Reclamation of amounts of paid checks.
240.9 Reclamation procedures; reclamation protests.
240.10 Offset.
240.11 Treasury Check Offset.
240.12 Processing of checks.

                          Indorsement of Checks

240.13 Indorsement by payees.
240.14 Checks issued to incompetent payees.
240.15 Checks issued to deceased payees.
240.16 Checks issued to minor payees.
240.17 Powers of attorney.
240.18 Lack of authority to shift liability.
240.19 Reservation of rights.

Appendix A to Part 240--Optional Forms for Powers of Attorney and Their 
          Application

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 321, 3327, 3328, 
3331, 3334, 3343, 3711, 3712, 3716, 3717; 332 U.S. 234 (1947); 318 U.S. 
363 (1943).

    Source: 69 FR 61568, Oct. 19, 2004, unless otherwise noted.

                           General Provisions



Sec. 240.1  Scope of regulations.

    (a) The regulations in this part prescribe the requirements for 
indorsement and the conditions for payment of checks drawn on the United 
States Treasury. These regulations also establish procedures for 
collection of amounts due the United States Treasury based on claims 
arising from the breach of presentment guarantees by presenting banks 
and other indorsers of Treasury checks when checks bearing material 
defects or alterations or forged disbursing officer (drawer) signatures 
are presented for payment and are paid.
    (b) Standards contained in this regulation supersede existing 
Federal common law to the extent that they are inconsistent with Federal 
common law rules relating to counterfeit checks. Under the provisions of 
this regulation, the risk of loss on certain counterfeit checks is 
placed on presenting banks and other indorsers unless Treasury fails to 
timely reclaim on a check payment in accordance with 31 U.S.C. 3712(a) 
and Sec. 240.8 of this regulation. Treasury will reclaim on counterfeit 
checks that are deemed paid under Sec. 240.6(d) of this regulation when 
a presenting bank or other indorser fails to make all reasonable efforts 
to ensure that a check is an authentic Treasury check.
    (c) Nothing in this regulation supercedes the rights or obligations 
of Treasury or any other person that are set forth in Regulation CC, 12 
CFR part 229, with respect to substitute checks, as defined therein.

[[Page 82]]



Sec. 240.2  Definitions.

    (a) Administrative offset or offset, for purposes of this section, 
has the same meaning as defined in 31 U.S.C. 3701(a)(1) and 31 CFR part 
285.
    (b) Agency means any agency, department, instrumentality, office, 
commission, board, service, or other establishment of the United States 
authorized to issue Treasury checks or for which checks drawn on the 
United States Treasury are issued.
    (c) Certifying agency means an agency authorizing the issuance of a 
payment by a disbursing official in accordance with 31 U.S.C. 3325.
    (d) Check or checks means an original check or checks; an electronic 
check or checks; or a substitute check or checks.
    (e) Check payment means the amount paid to a presenting bank by a 
Federal Reserve Bank.
    (f) Counterfeit check means a document that purports to be an 
authentic check drawn on the United States Treasury, but in fact is not 
an authentic check.
    (g) Days means calendar days. For purposes of computation, the last 
day of the period will be included unless it is a Saturday, Sunday, or 
Federal holiday; the first day is not included. For example, if a 
reclamation was issued on July 1, the 90 day protest period under Sec. 
240.9(b) would begin on July 2. If the 90th day fell on a Saturday, 
Sunday or Federal holiday, the protest would be accepted if received on 
the next business day.
    (h) Declination means the process by which Treasury refuses to make 
final payment on a check, i.e., declines payment, by instructing a 
Federal Reserve Bank to reverse its provisional credit to a presenting 
bank.
    (i) Declination date means the date on which the declination is 
issued by Treasury.
    (j) Disbursing official means an official, including an official of 
the Department of the Treasury, the Department of Defense, any 
Government corporation (as defined in 31 U.S.C. 9101), or any official 
of the United States designated by the Secretary of the Treasury, 
authorized to disburse public money pursuant to 31 U.S.C. 3321 or 
another law.
    (k) Drawer's signature means the signature of a disbursing official 
placed on the front of a Treasury check as the drawer of the check.
    (l) Electronic check means an electronic image of a check drawn on 
the United States Treasury, together with information describing that 
check, that meets the technical requirements for sending electronic 
items to a Federal Reserve Bank as set forth in the Federal Reserve 
Banks' operating circulars.
    (m) Federal Reserve Bank means a Federal Reserve Bank (FRB) or a 
branch of a Federal Reserve Bank.
    (n) Federal Reserve Processing Center means a Federal Reserve Bank 
center that images Treasury checks for archiving check information and 
transmitting such information to Treasury.
    (o) Financial institution means:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is 
eligible to make application to become an insured credit union under 
section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depositary 
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is 
eligible to apply to become an insured depositary institution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and

[[Page 83]]

    (6) Any financial institution outside of the United States if it has 
been designated by the Secretary of the Treasury as a depositary of 
public money and has been permitted to charge checks to the General 
Account of the United States Treasury.
    (p) First examination means Treasury's initial review of a check 
that has been presented for payment. The initial review procedures, 
which establish the authenticity and integrity of a check presented to 
Treasury for payment, may include reconciliation; retrieval and 
inspection of the check or the best available image thereof; and other 
procedures Treasury deems appropriate to specific circumstances.
    (q) Forged or unauthorized drawer's signature means a drawer's 
signature that has been placed on the front of a Treasury check by a 
person other than:
    (1) A disbursing official; or
    (2) A person authorized to sign on behalf of a disbursing official.
    (r) Forged or unauthorized indorsement means:
    (1) An indorsement of the payee's name by another person who is not 
authorized to sign for the payee; or
    (2) An indorsement of the payee's name made by another person who 
has been authorized by the payee, but who has not indorsed the check in 
accordance with Sec. 240.4 and Sec. Sec.  240.13 through 240.17; or
    (3) An indorsement added by a financial institution where the 
financial institution had no authority to supply the indorsement; or
    (4) A check bearing an altered payee name that is indorsed using the 
payee name as altered.
    (s) Guarantor means a financial institution that presents a check 
for payment and any prior indorser(s) of a check.
    (t) Material defect or alteration means:
    (1) The counterfeiting of a check; or
    (2) Any physical change on a check, including, but not limited to, a 
change in the amount, date, payee name, or other identifying information 
printed on the front or back of the check (but not including a forged or 
unauthorized drawer's signature); or
    (3) Any forged or unauthorized indorsement appearing on the back of 
the check.
    (u) Minor means the term minor as defined under applicable State 
law.
    (v) Monthly statement means a statement prepared by Treasury which 
includes the following information regarding each outstanding 
reclamation:
    (1) The reclamation date;
    (2) The reclamation number;
    (3) Check identifying information; and
    (4) The balance due, including interest, penalties, and 
administrative costs.
    (w) Original check means the first paper check drawn on the United 
States Treasury with respect to a particular payment transaction.
    (x) Payee means the person that the certifying agency designated to 
receive payment pursuant to 31 U.S.C. 3528.
    (y) Person means an individual, institution, including a financial 
institution, or any other type of entity; the singular includes the 
plural.
    (z) Presenting bank means:
    (1) A financial institution which, either directly or through a 
correspondent banking relationship, presents checks to and receives 
provisional credit from a Federal Reserve Bank; or
    (2) A depositary which is authorized to charge checks directly to 
Treasury's General Account and present them to Treasury for payment 
through a designated Federal Reserve Bank.
    (aa) Provisional credit means the initial credit provided to a 
presenting bank by a Federal Reserve Bank. Provisional credit may be 
reversed by Treasury until the completion of first examination or final 
payment is deemed made pursuant to Sec. 240.6(d).
    (bb) Reasonable efforts means, at a minimum, verifying the existence 
of the Treasury watermark on an original check. Based upon the facts at 
hand, including whether a check is an original check, a substitute check 
or an electronic check, reasonable efforts may require the verification 
of other security features.
    (cc) Reclamation means a demand for the amount of a check for which 
Treasury has requested an immediate refund.
    (dd) Reclamation date means the date on which a reclamation is 
issued by Treasury. Normally, demands are sent

[[Page 84]]

to presenting banks or other indorsers within two business days of the 
reclamation date.
    (ee) Reclamation debt means the amount owed as a result of 
Treasury's demand for refund of a check payment, and includes interest, 
penalties and administrative costs assessed in accordance with Sec. 
240.8.
    (ff) Reclamation debtor means a presenting bank or other indorser of 
a check from whom Treasury has demanded a refund in accordance with 
Sec. Sec. 240.8 and 240.9. The reclamation debtor does not include a 
presenting bank or other indorser who may be liable for a reclamation 
debt, but from which Treasury has not demanded a refund.
    (gg) Recurring benefit payment includes but is not limited to a 
payment of money for any Federal Government entitlement program or 
annuity.
    (hh) Substitute check means a paper reproduction of a check drawn on 
the United States Treasury that meets the definitional requirements set 
forth at 12 CFR 229.2(aaa).
    (ii) Treasury means the United States Department of the Treasury, or 
when authorized, an agent designated by the Secretary of the Treasury or 
his delegee.
    (jj) Treasury Check Offset means the collection of an amount owed by 
a presenting bank in accordance with 31 U.S.C. 3712(e).
    (kk) Truncate means to remove a paper check from the forward 
collection or return process and send to a recipient, in lieu of such 
paper check, a substitute check or an electronic check.
    (ll) U.S. securities means securities of the United States and 
securities of Federal agencies and Government corporations for which 
Treasury acts as the transfer agent.
    (mm) Writing includes electronic communications when specifically 
authorized by Treasury in implementing instructions.



Sec. 240.3  Electronic checks and substitute checks.

    (a) Legal equivalence of electronic checks. An electronic check for 
which a presenting bank has provided the guarantees described in Sec. 
240.4 is the legal equivalent of an original or substitute check for 
purposes of this part if the electronic check accurately represents all 
of the information on the front and back of the check that the 
presenting bank truncated. If a financial institution presents an 
electronic check for payment and the check is subject to return, 
Treasury may effect the return using an electronic check, but this part 
does not create any right for the presenting bank to return the check to 
the payee or any other person using an electronic check.
    (b) Safekeeping of original checks. Any financial institution that 
creates a substitute check or electronic check shall prevent 
unauthorized access to the original or substitute check that was 
truncated by storing the check, until it is destroyed, in a manner 
consistent with federal banking agency guidelines for safeguarding 
customer information.



Sec. 240.4  Presentment guarantees.

    The guarantors of a check presented to the Treasury for payment are 
deemed to guarantee to the Treasury all of the following:
    (a) Indorsements. That all prior indorsements are genuine, whether 
or not an express guarantee is placed on the check. When the first 
indorsement has been made by one other than the payee personally, the 
presenting bank and the indorsers are deemed to guarantee to the 
Treasury, in addition to other guarantees, that the person who so 
indorsed had unqualified capacity and authority to indorse the check on 
behalf of the payee.
    (b) Alterations. That the check has not been materially altered.
    (c) Drawer's signature. That the guarantors have no knowledge that 
the signature of the drawer is forged or unauthorized.
    (d) Authenticity. That the guarantors have made all reasonable 
efforts to ensure that a check is an authentic Treasury check, not a 
counterfeit check.
    (e) Electronic check. If the check is an electronic check, that--
    (1) The check accurately represents all of the information on the 
front and back of the original or substitute check that was truncated 
and meets the technical requirements for sending

[[Page 85]]

electronic items to a Federal Reserve Bank as set forth in the Federal 
Reserve Banks' operating circulars;
    (2) Treasury will not receive presentment of, or otherwise be 
charged for, the electronic check, the original check, or a substitute 
check (or a paper or electronic reproduction of any of the foregoing) 
such that Treasury will be asked to make payment based on a check it 
already has paid; and
    (3) Treasury's receipt of the electronic check instead of the 
original or substitute check will not result in the loss of Treasury's 
ability to determine whether the check contains a material defect or 
alteration.
    (f) Substitute check. If the check is a substitute check, that the 
guarantors make the warranties set forth at 12 CFR 229.52(a)(1) and (2) 
and the indemnity set forth at 12 CFR 229.53.



Sec. 240.5  Limitations on payment; cancellation and distribution of 
proceeds of checks.

    (a) Limitations on payment. (1) Treasury shall not be required to 
pay any check that is not negotiated to a financial institution within 
12 months after the date on which the check was issued.
    (2) All checks shall bear a legend, stating ``Void After One Year.'' 
The legend is notice to payees and indorsers of a general limitation on 
the payment of checks. The legend, or the inadvertent lack thereof, does 
not limit, or otherwise affect, the rights of Treasury under the law.
    (b) Cancellation and distribution of proceeds of checks. (1) Any 
check that has not been paid and remains outstanding for more than 12 
months after the issue date will be canceled by Treasury.
    (2) The proceeds from checks canceled pursuant to paragraph (b)(1) 
of this section will be returned to the payment certifying or 
authorizing agency for ultimate credit to the appropriation or fund 
account initially charged for the payment.
    (3) On a monthly basis, Treasury will provide to each agency that 
authorizes the issuance of checks a list of those checks issued for such 
agency which were canceled during the preceding month pursuant to 
paragraph (b)(1) of this section.



Sec. 240.6  Provisional credit; first examination; declination; final 
payment.

    (a) Any credit issued by a Federal Reserve Bank to a financial 
institution shall be a provisional credit until Treasury completes first 
examination of the check, or as provided in paragraph (d) of this 
section.
    (b) Treasury shall have the right as a drawee to complete first 
examination of checks presented for payment, to reconcile checks, and, 
when appropriate, to make a declination on any check.
    (c) Treasury will decline payment on a check when first examination 
by Treasury establishes that:
    (1) The check has a material defect or alteration;
    (2) The check bears a forged or unauthorized drawer's signature;
    (3) Treasury has already received presentment of, and made payment 
on, a substitute check, electronic check or original check relating to 
the check being presented, such that Treasury is being requested to make 
payment on a check it has already paid;
    (4) In the case of an electronic check, Treasury cannot determine 
whether the check contains a material defect or alteration without 
examining the original check or a better quality image of the check and 
Treasury is on notice of a question of law or fact about whether the 
check is properly payable; or
    (5) In the case of a substitute check, Treasury has a warranty or 
indemnity claim arising under 12 CFR 229.52 or 229.53.
    (d) Treasury shall have a reasonable amount of time to complete 
first examination. However, except as provided in paragraph (e) of this 
section, if Treasury has not declined payment on a check within 60 days 
after the check is presented to a Federal Reserve Processing Center for 
payment, Treasury will be deemed to have made final payment on the 
check.
    (e) Notwithstanding the provisions of paragraph (d) of this section, 
in accordance with 31 U.S.C. 3328(a)(2), if, upon presentment for 
payment, Treasury is on notice of a question of law or fact about 
whether a check is properly payable, Treasury may defer final payment 
until the question is settled.

[[Page 86]]

    (f) If a Federal Reserve Bank debits a financial institution's 
reserve account as a result of an erroneous declination, Treasury will 
promptly refund the amount of the payment.



Sec. 240.7  Declination protest.

    (a) Who may protest. Only a presenting bank may protest the 
declination of a check that it has presented to a Federal Reserve Bank 
for payment.
    (b) Basis for protest. Where Treasury, in accordance with Sec. 
240.6, has made a declination of a check presented for payment and a 
Federal Reserve Bank has reversed its provisional credit to the 
presenting bank, the presenting bank may file a protest challenging the 
factual basis for such declination. Protests may be filed challenging 
the following determinations:
    (1) Counterfeit checks. The presenting bank may offer evidence that 
the check is not a counterfeit.
    (2) Altered checks. The presenting bank may offer evidence that the 
check is not altered.
    (3) Checks bearing forged or unauthorized drawer's signatures. The 
presenting bank may offer evidence that the drawer's signature was 
authentic or was authorized.
    (4) Checks bearing a forged or unauthorized indorsement. The 
presenting bank may offer evidence that an indorsement on the back of 
the check was not forged or was otherwise authorized in accordance with 
the requirements of Sec. Sec. 240.13 through 240.17.
    (5) Prior presentment. The presenting bank may offer evidence that 
the check or a paper or electronic representation thereof has not 
already been presented to, and paid by, Treasury.
    (6) Adequacy of substitute check or electronic check. The presenting 
bank may offer an original check or a copy of the check that is 
sufficient to support a determination that the check does not contain a 
material defect or alteration.
    (c) Procedures for filing a protest. A declination protest must be 
in writing, and must be sent to: Department of the Treasury, Financial 
Management Service, Branch Manager, Financial Processing Division, Check 
Reconciliation Branch, Room 700-A, 3700 East-West Highway, Hyattsville, 
MD 20782, or to such other address as Treasury may publish in the 
Treasury Financial Manual, which can be found at http://
www.fms.treas.gov. Treasury will not consider any protest unless it is 
received within 90 days from the declination date.
    (d) Review of a declination protest. The Director, Financial 
Processing Division, or an authorized designee, will make every effort 
to decide any protest properly submitted under this section within 60 
days, and will notify the presenting bank of Treasury's decision. In 
those cases where it is not possible to render a decision within 60 
days, the Director, Financial Processing Division, or an authorized 
designee, will notify the presenting bank of the delay. Neither the 
Director, Financial Processing Division, nor an authorized designee, 
will have any involvement in the decision to deny payment of a check 
under Sec. 240.6 of this part.
    (1) If, based on the evidence provided, the Director of the 
Financial Processing Division, or an authorized designee, finds that the 
presenting bank has met, by a preponderance of the evidence, the 
criteria in paragraph (b) of this section, Treasury will reverse its 
decision to decline payment on the check by directing a Federal Reserve 
Bank to provide credit in the amount of the check to the presenting 
bank.
    (2) If, based on the evidence provided, the Director of the 
Financial Processing Division, or an authorized designee, finds that the 
presenting bank has failed to meet, by a preponderance of the evidence, 
the criteria in paragraph (b) of this section, the declination will not 
be reversed.



Sec. 240.8  Reclamation of amounts of paid checks.

    (a) If, after making final payment in accordance with Sec. 240.6, 
Treasury determines that any guarantor has breached a presentment 
guarantee listed in Sec. 240.4, the guarantor shall be liable to 
Treasury for the full amount of the check payment. Treasury may reclaim 
the amount of the check payment from any such guarantor prior to:
    (1) The end of the 1-year period beginning on the date that a check 
is processed for payment by a Federal Reserve Processing Center; or

[[Page 87]]

    (2) The expiration of the 180-day period beginning on the close of 
the period described in paragraph (a)(1) of this section if a timely 
claim under 31 U.S.C. 3702 is presented to the certifying agency.
    (b) Treasury will not reclaim on a check that bears a forged or 
unauthorized drawer's signature unless it has evidence that the 
reclamation debtor had knowledge of the forged or unauthorized drawer's 
signature.
    (c) Treasury will not reclaim on a counterfeit check unless the 
reclamation debtor has failed to make all reasonable efforts to ensure 
that a check is an authentic check and not a counterfeit check. Guidance 
on the key security features found on U.S. Treasury checks is available 
on the FMS website at: http://www.fms.treas.gov/checkclaims/check--
security--new.pdf. Institutions may contact the FMS Questioned Documents 
Branch at (202) 874-7640 for additional information about these security 
features or to request training.
    (d) Reclamation debts are due to be paid upon receipt of the 
reclamation by the reclamation debtor. Interest, penalties, and 
administrative costs associated with unpaid balances will accrue as 
follows:
    (1) Interest. Treasury will assess interest on the unpaid principal 
of the reclamation debt beginning on the 61st day following the 
reclamation date, and will calculate interest based on the rate 
published annually by Treasury in accordance with 31 U.S.C. 3717. 
Interest will continue to accrue until the full amount of the 
reclamation is paid or Treasury determines that payment is not required.
    (2) Penalties. Treasury will assess a penalty beginning on the 91st 
day following the reclamation date. The penalty will be assessed in 
accordance with 31 U.S.C. 3717 on the unpaid principal of the 
reclamation debt, and will continue to accrue until the full amount of 
the reclamation debt is paid or Treasury determines that payment is not 
required.
    (3) Administrative costs. Treasury will assess administrative costs 
associated with the unpaid reclamation debt beginning on the 61st day 
following the reclamation date. Administrative costs will continue to 
accrue until the full amount of the reclamation debt is paid or Treasury 
determines that payment is not required.
    (e) If Treasury is unable to fully collect a reclamation debt from a 
reclamation debtor, after pursuing all appropriate means of collection 
(including, but not limited to, administrative offset in accordance with 
Sec. 240.10 and Treasury Check Offset in accordance with Sec.  240.11), 
Treasury will discharge the unpaid reclamation debt. See 31 CFR 903.5 
(Discharge of indebtedness; reporting requirements). Treasury or the 
certifying agency will report the amount of the unpaid reclamation debt 
to the Internal Revenue Service in accordance with the requirements of 
26 U.S.C. 6050P and 26 CFR 1.6050P-1.



Sec. 240.9  Reclamation procedures; reclamation protests.

    (a) Reclamation procedures. (1) Treasury will send a ``REQUEST FOR 
REFUND (CHECK RECLAMATION)'' to the reclamation debtor in accordance 
with Sec. 240.8(a). This request will advise the reclamation debtor of 
the amount demanded and the reason for the demand. Treasury will make 
follow-up demands by sending at least three monthly statements to the 
reclamation debtor. Monthly statements will identify any unpaid 
reclamation debts (as defined at Sec. 240.2) and will contain or be 
accompanied by notice to the reclamation debtor that:
    (i) If the reclamation debt is not paid within 120 days of the 
reclamation date, Treasury intends to collect the debt through 
administrative offset in accordance with Sec. 240.10;
    (ii) If the administrative offset is unsuccessful, Treasury intends 
to collect the debt through Treasury Check Offset in accordance with 
Sec. 240.11;
    (iii) The reclamation debtor has an opportunity to inspect and copy 
Treasury's records with respect to the reclamation debt;
    (iv) The reclamation debtor may, by filing a protest in accordance 
with Sec. 240.9(b), request Treasury to review its decision that the 
reclamation debtor is liable for the reclamation debt; and
    (v) The reclamation debtor has an opportunity to enter into a 
written

[[Page 88]]

agreement with Treasury for the repayment of the reclamation debt. A 
request for a repayment agreement must be accompanied by documentary 
proof that satisfies Treasury that the reclamation debtor is unable to 
repay the entire amount owed when due.
    (2) Requests by a reclamation debtor for an appointment to inspect 
and copy Treasury's records with respect to a reclamation debt and 
requests to enter into repayment agreements must be sent in writing to: 
Department of the Treasury, Financial Management Service, Financial 
Processing Division, Reclamation Branch, Room 700D, PO Box 1849, 
Hyattsville, MD 20788, or to such other address as Treasury may publish 
in the Treasury Financial Manual, which can be found at http://
www.fms.treas.gov.
    (3) If a reclamation debt remains unpaid for 90 days after the 
reclamation date and if there is no unresolved protest associated with 
the reclamation debt, the monthly statement will be annotated with a 
notice that the reclamation debtor has until the next billing date to 
make payment on the reclamation debt or Treasury will proceed to collect 
the reclamation debt through offset in accordance with Sec. 240.10 and 
Treasury Check Offset in accordance with Sec. 240.11.
    (4) If Treasury determines that a reclamation has been made in 
error, Treasury will abandon the reclamation. If Treasury already has 
collected the amount of the reclamation from the reclamation debtor, 
Treasury will promptly refund to the reclamation debtor the amount of 
its payment. Treasury may refund the amount either by applying the 
amount to another reclamation debt owed by the reclamation debtor in 
accordance with this Part or other applicable law, or by returning the 
amount to the reclamation debtor.
    (b) Reclamation protests--(1) Who may protest. Only a reclamation 
debtor may protest a reclamation.
    (2) Basis for protest. Where Treasury, in accordance with Sec. 
240.8 and paragraph (a) of this section, reclaims the amount of a check 
payment, the reclamation debtor may file a protest challenging such 
reclamation. Protests may be filed challenging the following 
determinations:
    (i) Counterfeit checks. The reclamation debtor may offer evidence 
that it made all reasonable efforts to ensure that a check is authentic. 
The reclamation debtor must include evidence that the check was examined 
for a watermark as required under Sec. Sec. 240.2(bb) and 240.4. 
Depending on the circumstances, FMS may require evidence that the 
reclamation debtor also examined the check for evidence of additional 
security features as described in guidance provided by Treasury or on 
Treasury's behalf.
    (ii) Altered checks. The reclamation debtor may offer evidence that 
the check is not altered.
    (iii) Checks bearing forged or unauthorized drawer's signatures. The 
reclamation debtor may offer evidence that the reclamation debtor did 
not have knowledge of the forged or unauthorized drawer's signature.
    (iv) Checks bearing a forged or unauthorized indorsement. The 
reclamation debtor may offer evidence that the indorsement was not 
forged or was otherwise authorized in accordance with the requirements 
of Sec. Sec. 240.13 through 240.17.
    (v) Prior presentment. The presenting bank may offer evidence that 
the check or a paper or electronic representation thereof has not 
already been presented to, and paid by, Treasury.
    (vi) Adequacy of substitute check or electronic check. The 
presenting bank may offer an original check or a copy of the check that 
is sufficient to support a determination that the check does not contain 
a material defect or alteration.
    (3) Procedures for filing a protest. A reclamation protest must be 
in writing, and must be sent to: Department of the Treasury, Financial 
Management Service, Financial Processing Division, Reclamation Branch, 
Room 700D, P.O. Box 1849, Hyattsville, MD 20788, or to such other 
address as Treasury may publish in the Treasury Financial Manual, which 
can be found at http://www.fms.treas.gov.
    (i) The reclamation protest must include supporting documentation 
(including, but not limited to, affidavits,

[[Page 89]]

account agreements, and signature cards) for the purpose of establishing 
that the reclamation debtor is not liable for the reclamation debt.
    (ii) Treasury will not consider reclamation protests received more 
than 90 days after the reclamation date.
    (iii) Treasury may, at its discretion, consider information received 
from a guarantor other than the reclamation debtor. However, in so 
doing, Treasury does not waive any of its rights under this part, nor 
does Treasury grant rights to any guarantor that are not otherwise 
provided in this part.
    (4) Review of a reclamation protest. The Director, Financial 
Processing Division, or an authorized designee, will make every effort 
to decide any protest properly submitted under this section within 60 
days, and will notify the reclamation debtor of Treasury's decision. In 
those cases where it is not possible to render a decision within 60 
days, the Director, Financial Processing Division, or an authorized 
designee, will notify the reclamation debtor of the delay. Neither the 
Director, Financial Processing Division, nor an authorized designee, 
will have any involvement in the process of making determinations under 
Sec. 240.8(a) of this part or sending a ``REQUEST FOR REFUND (CHECK 
RECLAMATION)'' under Sec. 240.9(a) of this part.
    (i) Treasury will refrain from the collection activities identified 
in Sec. Sec. 240.10 and 240.11 while a timely protest is being 
considered. However, interest, penalties, and administrative costs will 
continue to accrue and will be added to the reclamation debt until a 
final determination on the protest has been made.
    (ii) If, based on the evidence provided, the Director of the 
Financial Processing Division, or an authorized designee, finds that the 
reclamation debtor has met, by a preponderance of the evidence, the 
criteria in paragraph (b)(2) of this section, Treasury will notify the 
reclamation debtor, in writing, of his or her decision to terminate 
collection and will refund any amounts previously collected for the 
reclamation debt. Treasury may refund the amount either by applying the 
amount to another reclamation debt owed by the reclamation debtor in 
accordance with this Part or other applicable law, or by returning the 
amount to the reclamation debtor.
    (iii) If the Director, Financial Processing Division, or an 
authorized designee, finds, by a preponderance of the evidence, that the 
reclamation debtor is liable for the reclamation debt, Treasury will 
notify the reclamation debtor, in writing, of his or her decision. If 
the reclamation debtor has not paid the reclamation in full, the 
reclamation debtor must pay any outstanding amounts in full within 30 
days from the date of Treasury's decision. If the reclamation debtor 
fails to pay the reclamation debt in full within that time frame, 
Treasury will proceed to collect the reclamation debt through offset in 
accordance with Sec. Sec. 240.10 and 240.11.
    (5) Effect of protest decision. The notice provided to the 
reclamation debtor under paragraph (b)(4)(iii) of this section shall 
serve as the final agency determination under the Administrative 
Procedure Act (5 U.S.C. 701, et seq.). No civil suit may be filed until 
the reclamation debtor has filed a protest under this section, and 
Treasury has provided notice of its final determination.



Sec. 240.10  Offset.

    (a) If a reclamation debt remains unpaid for 120 days after the 
reclamation date, Treasury will refer the reclamation debt, if eligible, 
to Treasury's centralized offset program (see 31 CFR part 285) or 
another Federal agency for offset in accordance with 31 U.S.C. 3716. 
Prior to making a referral for offset, Treasury, in accordance with 
Sec. 240.9(a)(3), will send at least one monthly statement to the 
reclamation debtor informing the reclamation debtor that Treasury 
intends to collect the reclamation debt by administrative offset and 
Treasury Check Offset.
    (b) If a reclamation debtor wishes to make payment on a reclamation 
debt referred for offset, the reclamation debtor should contact Treasury 
at the address listed in Sec. 240.9(b) to resolve the debt and avoid 
offset.
    (c) If Treasury is unable to collect a reclamation debt by use of 
the offset described in paragraph (a) of this section, Treasury shall 
take such action

[[Page 90]]

against the reclamation debtor as may be necessary to protect the 
interests of the United States, including, but not limited to, Treasury 
Check Offset in accordance with Sec. 240.11, or referral to the 
Department of Justice.
    (d) If Treasury effects offset under this section and it is later 
determined that the reclamation debtor already had paid the amount of 
the reclamation debt, or that a reclamation debtor which had timely 
filed a protest was not liable for the amount of the reclamation, 
Treasury will promptly refund to the reclamation debtor the amount of 
its payment. Treasury may refund the amount either by applying the 
amount to another reclamation debt owed by the reclamation debtor in 
accordance with this Part or other applicable law, or by returning the 
amount to the reclamation debtor.



Sec. 240.11  Treasury Check Offset.

    (a) If Treasury is unable to effect collection pursuant to 
Sec. Sec. 240.8, 240.9, or 240.10, of this part, Treasury will collect 
the amount of the reclamation debt through Treasury Check Offset. 
Treasury Check Offset occurs when, at the direction of the Treasury, a 
Federal Reserve Bank withholds, that is, offsets, credit from a 
presenting bank. The amount of credit offset is applied to the 
reclamation debt owed by the presenting bank. By presenting Treasury 
checks for payment, the presenting bank is deemed to authorize Treasury 
Check Offset.
    (b) If Treasury effects offset under this section and it is later 
determined that the presenting bank paid the reclamation debt in full, 
or that a presenting bank was not liable for the amount of the 
reclamation debt, Treasury will promptly refund to the presenting bank 
the amount of its overpayment. Treasury may refund the amount either by 
applying the amount to another reclamation debt in accordance with this 
part or other applicable law, or by returning the amount to the 
presenting bank.
    (c) Treasury Check Offset is used for the purpose of collecting debt 
owed by a presenting bank to the Federal Government. As a consequence, 
presenting banks shall not be able to use the fact that Treasury checks 
have not been paid as the basis for a claim against Treasury, a Federal 
Reserve Bank, or other persons or entities, including payees or other 
indorsers of checks, for the amount of the credit offset pursuant to 31 
U.S.C. 3712(e) and this section.
    (d) This section does not apply to a claim based upon a reclamation 
that has been outstanding for more than 10 years from the date of 
delinquency.



Sec. 240.12  Processing of checks.

    (a) Federal Reserve Banks. (1) Federal Reserve Banks must cash 
checks for Government disbursing officials when such checks are drawn by 
the disbursing officials to their own order, except that payment of such 
checks must be refused if:
    (i) A check bears a material defect or alteration;
    (ii) A check was issued more than one year prior to the date of 
presentment; or
    (iii) The Federal Reserve Bank has been notified by Treasury, in 
accordance with Sec. 240.15(c), that a check was issued to a deceased 
payee.
    (2) Federal Reserve Banks are not required to cash checks presented 
directly to them by the general public.
    (3) As a depositary of public funds, each Federal Reserve Bank 
shall:
    (i) Receive checks from its member banks, nonmember clearing banks, 
or other depositors, when indorsed by such banks or depositors who 
guarantee all prior indorsements thereon;
    (ii) Give immediate provisional credit therefore in accordance with 
their current Time Schedules and charge the amount of the checks cashed 
or otherwise received to the General Account of the United States 
Treasury, subject to first examination and payment by Treasury;
    (iii) Forward payment records and requested checks to Treasury; and
    (iv) Release the original checks and substitute checks to a 
designated Regional Records Services Facility upon notification from 
Treasury.
    (4) If a check is to be declined under Sec. 240.6, Treasury will 
provide the Federal Reserve Bank with notice of declination upon the 
completion of first examination. Federal Reserve Banks must give 
immediate credit therefor to Treasury's General Account, thereby

[[Page 91]]

reversing the previous charge to the General Account for such check.
    (5) Treasury authorizes each Federal Reserve Bank to release a copy 
of the check to the presenting bank when payment is declined.
    (b) Treasury General Account (TGA) designated depositaries outside 
the United States. (1) Financial institutions outside the United States 
designated by Treasury as depositaries of public money in accordance 
with 31 U.S.C. 3303 and permitted to charge checks to the General 
Account of the United States Treasury in accordance with Treasury 
implementing instructions shall be governed by the operating 
instructions contained in the letter of authorization to them from 
Treasury and are, as presenting banks, subject to the provisions of 
Sec. Sec. 240.4, 240.8, and 240.9.
    (2) If a check is to be declined under Sec. 240.6, Treasury will 
provide the presenting bank with notice of declination upon the 
completion of first examination and will provide the presenting bank 
with a copy or image of the check. Such presenting bank must give 
immediate credit therefore to the General Account of the United States 
Treasury, thereby reversing the previous charge to the Account for such 
check. Treasury authorizes the designated Federal Reserve Bank to return 
to such presenting bank the original check when payment is declined in 
accordance with Sec. 240.5(a) or Sec.  240.15(c).
    (3) To ensure complete recovery of the amount due, reclamation 
refunds require payment in United States dollars with checks drawn on or 
payable through United States financial institutions located in the 
United States. Reclamation refunds initiated by financial institutions 
outside of the United States must be sent through their headquarters or 
U.S. correspondent financial institution only. The payments should be 
accompanied by documentation identifying the check that was the subject 
of the reclamation (such as a copy of the reclamation notice or the 
current monthly statement). Reclamation refunds shall not be deposited 
to Treasury's General Account.
    (4) Additional information relating to designated depositaries 
outside the United States may be found in Volume VI, Chapter 2000, of 
the Treasury Financial Manual, which can be found at http://
www.fms.treas.gov.

                          Indorsement of Checks



Sec. 240.13  Indorsement by payees.

    (a) General requirements. Checks shall be indorsed by the named 
payee or by another on behalf of such named payee as set forth in this 
part.
    (b) Acceptable indorsements. (1) A check is properly indorsed when:
    (i) The check is indorsed by the payee in a form recognized by 
general principles of law and commercial usage for negotiation, transfer 
or collection of negotiable instruments.
    (ii) The check is indorsed by another on behalf of the named payee, 
and sufficiently indicates that the indorser has indorsed the check on 
behalf of the payee pursuant to authority expressly conferred by or 
under law or other regulation. An example would be: ``John Jones by Mary 
Jones.'' This example states the minimum indication acceptable. However, 
Sec. Sec. 240.14, 240.15, and 240.17(f) specify the addition of an 
indication in specified situations of the actual capacity in which the 
person other than the named payee is indorsing.
    (iii) Absent a signature, the check is indorsed ``for collection'' 
or ``for deposit only to the credit of the within named payee or 
payees.'' The presenting bank shall be deemed to guarantee good title to 
checks without signatures to all subsequent indorsers and to Treasury.
    (iv) The check is indorsed by a financial institution under the 
payee's authorization.
    (2) Indorsement of checks by a duly authorized fiduciary or 
representative. The individual or institution accepting a check from a 
person other than the named payee is responsible for determining whether 
such person is authorized and has the capacity to indorse and negotiate 
the check. Evidence of the basis for such a determination may be 
required by Treasury in the event of a dispute.

[[Page 92]]

    (3) Indorsement of checks by a financial institution under the 
payee's authorization. When a check is credited by a financial 
institution to the payee's account under the payee's authorization, the 
financial institution may use an indorsement substantially as follows: 
``Credit to the account of the within-named payee in accordance with the 
payee's instructions. XYZ [Name of financial institution].'' A financial 
institution using this form of indorsement will be deemed to guarantee 
to all subsequent indorsers and to the Treasury that it is acting as an 
attorney-in-fact for the payee, under the payee's authorization, and 
that this authority is currently in force and has neither lapsed nor 
been revoked either in fact or by the death or incapacity of the payee.
    (4) Indorsement of checks drawn in favor of financial institutions. 
All checks drawn in favor of a financial institution, for credit to the 
account of a person designating payment so to be made, must be indorsed 
in the name of the financial institution as payee in the usual manner. 
However, no check drawn in favor of a financial institution for credit 
to the account of a payee may be negotiated by the financial institution 
after the death of the payee.
    (c) Unacceptable indorsements. (1) A check is not properly indorsed 
when the check is signed or otherwise is indorsed by a person without 
the payee's consent or authorization.
    (2) Failure to include the signature of the person signing the check 
as required by paragraph (b)(1)(ii) of this section will create a 
rebuttable presumption that the indorsement is a forgery and is 
unacceptable.
    (3) Failure to include sufficient indication of the indorser's 
authority to act on behalf of the payee as required by paragraph 
(b)(1)(ii) of this section will create a rebuttable presumption that the 
indorsing person is not authorized to indorse a check for the payee.



Sec. 240.14  Checks issued to incompetent payees.

    (a) Handling of checks when a guardian or other fiduciary has been 
appointed. (1) A guardian appointed in accordance with applicable State 
law, or a fiduciary appointed in accordance with other applicable law, 
may indorse checks issued for the following classes of payments the 
right to which under law does not terminate with the death of the payee: 
payments for the redemption of currencies or for principal and/or 
interest on U.S. securities; payments for tax refunds; and payments for 
goods and services.
    (i) A guardian or other fiduciary indorsing any such check on behalf 
of an incompetent payee, must include, as part of the indorsement, an 
indication of the capacity in which the guardian or fiduciary is 
indorsing. An example would be: ``John Jones by Mary Jones, guardian of 
John Jones.''
    (ii) When a check indorsed in this fashion is presented for payment 
by a financial institution, it will be paid by Treasury without 
submission of documentary proof of the authority of the guardian or 
other fiduciary, with the understanding that evidence of such claimed 
authority to indorse may be required by Treasury in the event of a 
dispute.
    (2) A guardian or other fiduciary may not indorse a check issued for 
any class of payment other than one specified in paragraph (a)(1) of 
this section. When a check other than one specified in paragraph (a)(1) 
of this section is received by a guardian or other fiduciary, the check 
must be returned to the certifying agency with information as to the 
incompetence of the payee and documentary evidence showing the 
appointment of the guardian or other fiduciary in order that a 
replacement check, and future checks, may be drawn in favor of the 
guardian or other fiduciary.
    (b) Handling of checks when a guardian or other fiduciary has not 
been appointed. If a guardian or other fiduciary has not been appointed, 
all checks issued to an incompetent payee must be returned to the 
certifying agency for determination as to whether, under applicable law, 
payment is due and to whom it may be made.
    (c) Handling of certain checks by an attorney-in-fact. 
Notwithstanding paragraph (a)(2) of this section, if a check was issued 
for a class of payments the right to which under law terminates

[[Page 93]]

upon the death of the beneficiary, such as a recurring benefit payment 
or annuity, the check may be negotiated under a durable special power of 
attorney or springing durable special power of attorney subject to the 
restrictions enumerated in Sec. 240.17. After the end of the six-month 
period provided in Sec. Sec. 240.17(d) and (e), such checks must be 
handled in accordance with paragraph (a)(2) of this section.



Sec. 240.15  Checks issued to deceased payees.

    (a) Handling of checks when an executor or administrator has been 
appointed. (1) An executor or administrator of an estate that has been 
appointed in accordance with applicable State law may indorse checks 
issued for the following classes of payments the right to which under 
law does not terminate with the death of the payee: payments for the 
redemption of currencies or for principal and/or interest on U.S. 
securities; payments for tax refunds; and payments for goods and 
services.
    (i) An executor or administrator indorsing any such check must 
include, as part of the indorsement, an indication of the capacity in 
which the executor or administrator is indorsing. An example would be: 
``John Jones by Mary Jones, executor of the estate of John Jones.''
    (ii) When a check indorsed in this fashion is presented for payment 
by a financial institution, it will be paid by Treasury without the 
submission of documentary proof of the authority of the executor or 
administrator, with the understanding that evidence of such claimed 
authority to indorse may be required by Treasury in the event of a 
dispute.
    (2) An executor or administrator of an estate may not indorse a 
check issued for any class of payment other than one specified in 
paragraph (a)(1) of this section. Other checks, such as recurring 
benefit payments and annuity payments, may not be negotiated after the 
death of the payee. Such checks must be returned to the certifying 
agency for determination as to whether, under applicable law, payment is 
due and to whom it may be made.
    (b) Handling of checks when an executor or administrator has not 
been appointed. If an executor or administrator has not been appointed, 
all checks issued to a deceased payee must be returned to the certifying 
agency for determination as to whether, under applicable law, payment is 
due and to whom it may be made.
    (c) Handling of checks when a certifying agency learns, after the 
issuance of a recurring benefit payment check, that the payee died prior 
to the date of issuance. (1) A recurring benefit payment check, issued 
after a payee's death, is not payable. As a consequence, when a 
certifying agency learns that a payee has died, the certifying agency 
must give immediate notice to Treasury, as prescribed at Volume I, Part 
4, Chapter 7000 of the Treasury Financial Manual, which can be found at 
http://www.fms.treas.gov. Upon receipt of such notice from a certifying 
agency, Treasury will instruct the Federal Reserve Bank to refuse 
payment of the check upon presentment. Upon receipt of such instruction 
from Treasury, the Federal Reserve Bank will make every appropriate 
effort to intercept the check. If the check is successfully intercepted, 
the Federal Reserve Bank will refuse payment, and will return the check 
unpaid to the presenting bank with an annotation that the payee is 
deceased. If a financial institution learns that a date of death 
triggering action under this section is erroneous, the financial 
institution must advise the payee to contact the payment certifying 
agency.
    (2) Nothing in this section shall limit the right of Treasury to 
institute reclamation proceedings under the provisions of Sec. Sec. 
240.8 and 240.9 with respect to a check issued to a deceased payee that 
has been negotiated and paid over a forged or unauthorized indorsement.



Sec. 240.16  Checks issued to minor payees.

    (a) Checks in payment of principal and/or interest on U.S. 
securities that are issued to minors may be indorsed by:
    (1) Either parent with whom the minor resides; or

[[Page 94]]

    (2) If the minor does not reside with either parent, by the person 
who furnishes the minor's chief support.
    (b) The parent or other person indorsing on behalf of the minor must 
present with the check the indorser's signed statement giving the 
minor's age, and stating that the payee either resides with the parent 
or receives his or her chief support from the person indorsing on the 
minor's behalf and that the proceeds of the check will be used for the 
minor's benefit.



Sec. 240.17  Powers of attorney.

    (a) Specific powers of attorney. Any check may be negotiated under a 
specific power of attorney executed in accordance with applicable State 
or Federal law after the issuance of the check and describing the check 
in full (check serial and symbol numbers, date of issue, amount, and 
name of payee).
    (b) General powers of attorney. Checks may be negotiated under a 
general power of attorney executed, in accordance with applicable State 
or Federal law, in favor of a person for the following classes of 
payments:
    (1) Payments for the redemption of currencies or for principal and/
or interest on U.S. securities;
    (2) Payments for tax refunds, but subject to the limitations 
concerning the mailing of Internal Revenue refund checks contained in 26 
CFR 601.506(c); and
    (3) Payments for goods and services.
    (c) Special powers of attorney. Checks issued for classes of 
payments other than those specified in paragraph (b) of this section, 
such as a recurring benefit payment, may be negotiated under a special 
power of attorney executed in accordance with applicable State or 
Federal law, which describes the purpose for which the checks are 
issued, names a person as attorney-in-fact, and recites that the special 
power of attorney is not given to carry into effect an assignment of the 
right to receive such payment, either to the attorney-in-fact or to any 
other person.
    (d) Durable special powers of attorney. A durable special power of 
attorney is a special power of attorney that continues despite the 
principal's later incompetency, and is created by the principal's use of 
words explicitly stating such intent. Classes of checks other than those 
specified in paragraph (b) of this section may be negotiated under a 
durable special power of attorney executed in accordance with applicable 
State or Federal law, which describes the purpose for which the checks 
are issued, names a person as attorney-in-fact, and recites that the 
special power of attorney is not given to carry into effect an 
assignment of the right to receive such payment, either to the attorney-
in-fact or to any other person. For the purpose of negotiating Treasury 
checks, durable special powers of attorney are effective only during the 
six-month period following a determination that the named payee is 
incompetent.
    (e) Springing durable special powers of attorney. A springing 
durable special power of attorney is similar to a durable power of 
attorney except that its terms do not become effective until the 
principal's subsequent incompetence. As with a durable special power of 
attorney, a springing durable special power of attorney is created by 
the principal's use of language explicitly stating that its terms become 
effective at such time as the principal is determined to be incompetent. 
Classes of checks other than those specified in paragraph (b) of this 
section may be negotiated under a springing durable special power of 
attorney executed in accordance with applicable State or Federal law, 
which describes the purpose for which the checks are issued, names a 
person as attorney-in-fact, and recites that the springing durable 
special power of attorney is not given to carry into effect an 
assignment of the right to receive payment, either to the attorney-in-
fact or to any other person. For the purpose of negotiating Treasury 
checks, springing durable special powers of attorney are effective only 
during the six-month period following a determination that the named 
payee is incompetent.
    (f) Proof of authority. Checks indorsed by an attorney-in-fact must 
include, as part of the indorsement, an indication of the capacity in 
which the attorney-in-fact is indorsing. An example would be: ``John 
Jones by Paul Smith, attorney-in-fact for John Jones.'' Such checks when 
presented for payment by

[[Page 95]]

a financial institution, will be paid by Treasury without the submission 
of documentary proof of the claimed authority, with the understanding 
that evidence of such claimed authority to indorse may be required by 
Treasury in the event of a dispute.
    (g) Revocation of powers of attorney. Notwithstanding any other law, 
for purposes of negotiating Treasury checks, all powers of attorney are 
deemed revoked by the death of the principal and may also be deemed 
revoked by notice from the principal to the parties known, or reasonably 
expected, to be acting on the power of attorney.
    (h) Optional use forms. Optional use power of attorney forms are 
listed in the appendix to this part. These forms are available on the 
FMS website at: http://www.fms.treas.gov/ checkclaims/ regulations.html.



Sec. 240.18  Lack of authority to shift liability.

    (a) This part neither authorizes nor directs a financial institution 
to debit the account of any person or to deposit any funds from any 
account into a suspense account or escrow account or the equivalent. 
Nothing in this part shall be construed to affect a financial 
institution's contract with its depositor(s) under authority of state 
law.
    (b) A financial institution's liability under this part is not 
affected by any action taken by it to recover from any person the amount 
of the financial institution's liability to the Treasury.



Sec. 240.19  Reservation of rights.

    The Secretary of the Treasury reserves the right, in the Secretary's 
discretion, to waive any provision(s) of this regulation not otherwise 
required by law.

Appendix A to Part 240--Optional Forms for Powers of Attorney and Their 
                               Application

    FMS Form 231--General Power of Attorney (Individual). This general 
power of attorney form may be executed by an individual, unincorporated 
partnership, or sole owner, for checks drawn on the United States 
Treasury, in payment: (1) For redemption of currencies or for principal 
or interest on U.S. securities; (2) for tax refunds; and (3) for goods 
and services.
    FMS Form 232--Specific Power of Attorney (Individual). This specific 
power of attorney form may be executed by an individual, unincorporated 
partnership, or sole owner to authorize the indorsement of any class of 
check drawn on the United States Treasury. To be valid, the form must be 
executed after the issuance of the check and must describe the check in 
full, including the check serial and symbol numbers, date of issue, 
amount, and name of the payee.
    FMS Form 233--Special Power of Attorney (Individual). This special 
power of attorney form may be executed by an individual, unincorporated 
partnership, or sole owner, to authorize the indorsement of payments 
other than those listed under FMS Form 231, such as recurring benefit 
payments. It may name any person (as the term person is defined in 31 
CFR part 240) as attorney-in-fact, but must describe the purpose for 
which the checks are issued and recite that it is not given to carry 
into effect an assignment of the right to receive payment, either to the 
attorney-in-fact or to any other person. A special power of attorney is 
not effective for purposes of negotiating checks issued after the payee 
is determined to be incompetent, unless the payee has indicated that the 
special power of attorney is to: (1) Remain effective following a 
determination that the principal is incompetent (a durable special power 
of attorney); or (2) become effective following a determination that the 
principal is incompetent (a springing durable special power of 
attorney). In no instance may a special power of attorney be used as the 
basis for negotiation of a check drawn on the United States Treasury 
more than six months after a determination that the principal is 
incompetent.
    FMS Form 234--Specific Power of Attorney (Corporation). This general 
power of attorney form may be executed by a corporation to authorize the 
indorsement by an attorney-in-fact for the classes of payments listed 
under FMS Form 231. When authority is given to an officer of the 
corporation to execute a power of attorney authorizing a third person to 
indorse and collect checks drawn on the United States Treasury in the 
name of the corporation, the power of attorney on FMS Form 234 should be 
accompanied by FMS Form 235 (Resolution by Corporation Conferring 
Authority Upon an Officer to Execute a Power of Attorney for the 
Collection of Checks Drawn on the Treasurer of the United States), 
executed by the officer authorized herein to execute such a power.
    FMS Form 236--Specific Power of Attorney (Corporation). This 
specific power of attorney form may be executed by a corporation to 
authorize the indorsement by an attorney-in-fact of any class of check 
drawn on the United States Treasury. To be valid, the form must be 
executed after the issuance of the check and must describe the check in

[[Page 96]]

full, including the check serial and symbol numbers, date of issue, 
amount, and name of the payee. When authority is given to an officer of 
the corporation to execute a power of attorney authorizing a third 
person to indorse and collect checks drawn on the United States Treasury 
in the name of the corporation, the power of attorney on FMS Form 236 
should be accompanied by FMS Form 235 (Resolution by Corporation 
Conferring Authority Upon an Officer to Execute a Power of Attorney for 
the Collection of Checks Drawn on the Treasurer of the United States), 
executed by the officer authorized herein to execute such a power.



PART 245_CLAIMS ON ACCOUNT OF TREASURY CHECKS--Table of Contents




Sec.
245.1 Introductory.
245.2 Definitions.
245.3 Time limit for check claims.
245.4 Advice of nonreceipt or loss.
245.5 Recertification of payment.
245.6 Claim by an indorser.
245.7 Check status inquiry.
245.8 Receipt or recovery of original check.
245.9 Procedural instructions.
245.10 Performance of functions of the Commissioner.

    Authority: R.S. 3646, as amended; 31 U.S.C. 3328; 31 U.S.C. 3331.

    Source: 54 FR 35647, Aug. 29, 1989, unless otherwise noted.



Sec. 245.1  Introductory.

    This part governs the issuance of replacement checks for checks 
drawn on the United States Treasury, when
    (a) The original check has been lost, stolen, destroyed or mutilated 
or defaced to such an extent that it is rendered non-negotiable;
    (b) The original check has been negotiated and paid on a forged or 
unauthorized indorsement, and
    (c) The original check has been cancelled pursuant to Sec. 204.4 of 
this chapter.



Sec. 245.2  Definitions.

    For purposes of this part:
    (a) Agency means each authority of the United States for which the 
Treasury of the United States issues checks or for which checks drawn on 
the Treasury of the United States are issued.
    (b) Check means a check drawn on the United States Treasury.
    (c) Certifying Agency means an agency for whom a Treasury disbursing 
officer or a non-Treasury disbursing officer makes payment in accordance 
with 31 U.S.C. 3325. The responsibilities of a certifying official are 
set forth at 31 U.S.C. 3528.
    (d) Commissioner means the Commissioner of the Financial Management 
Service, Department of the Treasury, 401 14th Street, SW., Washington, 
DC 20227.
    (e) Person means an individual, a partnership, a corporation, a 
labor organization, a government or a subdivision or instrumentality 
thereof, and any other entity to which a check may be issued.
    (f) Replacement check means a check issued pursuant to the 
recertification of payment by a certifying official.
    (g) Secretary means the Secretary of the Treasury.



Sec. 245.3  Time limit for check claims.

    (a) Any claim on account of a Treasury check must be presented to 
the agency that authorized the issuance of such check within one year 
after the date of issuance of the check or within one year after October 
1, 1989, whichever is later.
    (b) Any claim by an indorser under Sec. 245.6 will be considered 
timely if presented to the Commissioner within one year after the date 
of issuance of the check or within one year after October 1, 1989, 
whichever is later.
    (c) Nothing in this subsection affects the underlying obligation of 
the United States, or any agency thereof, for which a Treasury check was 
issued.



Sec. 245.4  Advice of nonreceipt or loss.

    (a) In the event of the nonreceipt, loss or destruction of a check 
drawn on the United States Treasury, or the mutilation or defacement of 
such a check to an exent which renders it nonnegotiable, the claimant 
should immediately notify the agency that authorized the issuance of 
such check, describing the check, stating the purpose for which it was 
issued and giving, if possible, its date, amount, Treasury symbol and 
number.
    (b) In cases involving mutiliated or defaced checks, the claimant 
should

[[Page 97]]

enclose the mutilated or defaced check with his communication to the 
agency.



Sec. 245.5  Recertification of payment.

    Upon receipt of a claim concerning the nonreceipt, loss, 
destruction, mutilation or defacement of a check, or the cancellation of 
a check pursuant to Sec. 240.4 of this chapter, the certifying agency 
may certify a new payment.



Sec. 245.6  Claim by an indorser.

    When one or more Treasury checks are lost, stolen or destroyed in a 
single incident while in the possession of a person to whom the checks 
have been negotiated by the payee, and if the checks have not been paid, 
the Commissioner may issue a replacement check to the person to whom the 
checks had been negotiated.



Sec. 245.7  Check status inquiry.

    The Commissioner will provide the status and a copy of the check if 
available, upon request, to the agency which authorized the issuance of 
the check.



Sec. 245.8  Receipt or recovery of original check.

    (a) If the original check is received or recovered by the claimant 
after he has requested the agency to issue a replacement check, but 
before a replacement check has been received, he should immediately 
advise the agency and hold such check until receipt of instructions with 
respect to the negotiability of such check.
    (b) If the original check is received or recovered by the claimant 
after a replacement check has been received by him, the original shall 
not be cashed, but shall be forwarded immediately to the agency that 
authorized the issuance of such check. Under no circumstances should 
both the original and replacement checks be cashed.



Sec. 245.9  Procedural instructions.

    The Commissioner of the Financial Management Service may issue 
procedural instructions, implementing these regulations, in Volume I, 
Part 4 of the Treasury Financial Manual.



Sec. 245.10  Performance of functions of the Commissioner.

    The Commissioner of the Financial Management Services may authorize 
any officer of the Treasury Department to perform any of his functions 
under this part and to redelegate such authority within such limits as 
the Commissioner may prescribe.

(Approved by the Office of Management and Budget under control number 
1510-0058)



PART 248_ISSUE OF SUBSTITUTES OF LOST, STOLEN, DESTROYED, MUTILATED AND 

DEFACED CHECKS OF THE UNITED STATES DRAWN ON ACCOUNTS MAINTAINED IN 
DEPOSITARY BANKS IN FOREIGN COUNTRIES OR UNITED STATES TERRITORIES OR 
POSSESSIONS--Table of Contents




Sec.
248.1 Introductory.

                         Delegation of Authority

248.2 Delegation of authority to issue substitute checks.

                     Action To Be Taken By Claimants

248.3 Advice of nonreceipt or loss.
248.4 Undertaking of indemnity.
248.5 Exception to requirement of undertaking of indemnity Form 2244.
248.6 Recovery of original check.
248.7 Claims requiring settlement action.
248.8 Inquiries.
248.9 Amendments and waivers.

    Authority: 31 U.S.C. 3331.

    Source: 25 FR 10869, Nov. 16, 1960, unless otherwise noted. 
Redesignated at 39 FR 20969, June 17, 1974.



Sec. 248.1  Introductory.

    This part governs the issuance of substitutes for checks of the 
United States drawn on United States dollar or foreign currency 
accounts, maintained with designated depositaries in foreign countries 
or territories or possessions of the United States. Checks of the United 
States drawn on such depositaries are hereafter referred to as 
``depositary checks.''

[54 FR 35647, Aug. 29, 1989]

[[Page 98]]

                         Delegation of Authority



Sec. 248.2  Delegation of authority to issue substitute checks.

    Pursuant to authority contained in section 3646 of the Revised 
Statutes, as amended, and subject to such procedural requirements as may 
be prescribed by the Treasury Department, there is hereby delegated to 
heads of departments and agencies whose disbursing officers issue 
depositary checks, authority to authorize officers or employees of their 
respective departments or agencies to issue substitutes of such checks, 
prior to the close of the fiscal year next following the fiscal year in 
which the checks are issued, and to receive and approve undertakings to 
indemnify the United States in such cases. The Commissioner of the 
Financial Management Service, Treasury Department, is hereby delegated 
authority to issue substitutes of depositary checks drawn by the 
Director, Operations Group, Treasury Department, or by officers 
disbursing under delegation from the Director, Operations Group, and to 
receive and approve undertakings of indemnity in such cases. The 
authority delegated to the Commissioner of the Financial Management 
Service may be redelegated by him to such disbursing officers.

[39 FR 20969, June 17, 1974, as amended at 49 FR 47001, 47002, Nov. 30, 
1984]

                     Action To Be Taken by Claimants



Sec. 248.3  Advice of nonreceipt or loss.

    The payee or owner of a depositary check which is not received, or 
which has been lost, stolen, destroyed or mutilated or defaced to such 
an extent that it is rendered non-negotiable, should immediately notify 
the disbursing officer who issued such check or the administrative 
agency exercising jurisdiction over such disbursing officer, over his 
signature and current address, giving information as to the 
circumstances of the loss, theft or destruction of the check and whether 
it was endorsed, and also requesting that payment of the check be 
stopped. A claimant who is one other than the payee of the check, should 
present a statement in support of his ownership of the check. If the 
check has been mutilated or defaced, it should be forwarded to the 
issuing disbursing officer with request for the issuance of a 
substitute.



Sec. 248.4  Undertaking of indemnity.

    (a) If the check is found to be outstanding and unpaid and it 
appears that the proceeds are due the claimant, the disbursing officer 
will request the claimant to execute an undertaking of indemnity, Form 
2244, in a penal sum equal to the amount of the check (or checks).
    (b) Except in the circumstances set forth below, a corporate surety 
authorized by the Secretary of the Treasury to act as an acceptable 
surety on bonds in favor of the United States or two responsible 
individual sureties will be required on the undertaking of indemnity. It 
will be the responsibility of the claimant in a foreign country to 
secure a certification as to the financial sufficiency of the individual 
sureties executed by one of the persons listed in, and in the manner 
prescribed by, the instruction appearing under the Certificate as to 
Sureties on the face of Form 2244.
    (c) Where the amount of the original check (or checks) is $200 or 
less, or the equivalent in foreign currency, one financially responsible 
individual surety may be accepted.
    (d) Unless it is determined that the requirement of sureties is 
essential in the public interest, sureties will not be required under 
the following circumstances:
    (1) If the officer authorized to issue a substitute check is 
satisfied that the loss, theft, destruction, mutilation or defacement of 
the original check occurred without fault of the owner or holder and 
while the check was in the custody or control of the United States or of 
a person duly authorized as an agent of the United States when 
performing services in connection with an official function of the 
United States;
    (2) If substantially the entire check is presented and surrendered 
by the owner or holder and the disbursing officer is satisfied as to the 
identity of the check presented and that any missing portions are not 
sufficient to form the

[[Page 99]]

basis of a valid claim against the United States;
    (3) If the owner or holder is the United States or an officer or 
employee thereof in his official capacity, a State, the District of 
Columbia, a territory or possession of the United States, a municipal 
corporation or political subdivision of any of the foregoing, a 
corporation the entire capital of which is owned by the United States, a 
foreign government or agency thereof, a foreign central bank, or a 
Federal Reserve Bank.



Sec. 248.5  Exception to requirement of undertaking of indemnity Form 
2244.

    Notwithstanding the provisions of Sec. 248.4, if in any case 
involving a financially responsible claimant it is impracticable to 
obtain the execution of Standard Form 2244, with or without sureties, 
the officer or employee responsible for handling the claim, in his 
discretion, may accept an undertaking of indemnity in the form of a 
written statement or letter, substantially as follows:

In consideration of the issuance of a substitute check in lieu of_______
                                                     (Check description)

and the payment of the substitute check, the undersigned undertakes and 
agrees to save harmless and indemnify the United States of America, its 
officers and agents, of and from any and all liability, loss, expense, 
claim, and demand whatsoever, arising in any manner by reason of or on 
account of said original check (or checks) or the stoppage or payment 
thereof, or the issue or payment of the substitute check (or checks), to 
replace the same.


The undertaking of indemnity should be appropriately witnessed, and if 
it is executed on behalf of a corporation or other business 
organization, the individual executing the same should furnish proof of 
this authority to so act. In appropriate cases, a foreign language 
translation of the foregoing letter of indemnity may be accepted.

[25 FR 10869, Nov. 16, 1960. Redesignated at 39 FR 20969, June 17, 1974, 
as amended at 54 FR 35648, Aug. 29, 1989]



Sec. 248.6  Recovery of original check.

    (a) If the claimant recovers an original check after he has 
furnished advice of non-receipt but before receipt of a substitute 
check, he should immediately notify the disbursing officer or agency 
concerned and hold the check until receipt of advice from the disbursing 
officer or agency concerned regarding the negotiability of such original 
check.
    (b) In the event the substitute check has been received prior to the 
recovery of the original check, the original check should be returned 
immediately to the disbursing officer.
    (c) Under no circumstances should the claimant attempt to cash both 
the original and substitute check.



Sec. 248.7  Claims requiring settlement action.

    There are certain types of claims on which the disbursing officer 
will not be authorized to take final action. These include:
    (a) Claims on original checks which have been outstanding more than 
one full fiscal year following the fiscal year in which the checks were 
issued, and
    (b) Claims involving doubtful questions of law and fact.

In such cases the disbursing officer will obtain information and 
supporting papers, including an undertaking of indemnity, from the 
claimant and transmit such data to the Claims Division, General 
Accounting Office, for settlement action.



Sec. 248.8  Inquiries.

    Claimants should direct any inquiries regarding the application of 
these regulations to the department or agency or disbursing officer 
concerned.



Sec. 248.9  Amendments and waivers.

    The Treasury Department may waive, withdraw or amend at any time or 
from time to time any or all of the foregoing regulations.



PART 250_PAYMENT ON ACCOUNT OF AWARDS OF THE FOREIGN CLAIMS SETTLEMENT 
COMMISSION OF THE UNITED STATES--Table of Contents




Sec.
250.1 Scope of regulations.
250.2 Forms.

[[Page 100]]

250.3 Voucher applications.
250.4 Payment on awards.
250.5 Manner of payment.
250.6 Powers of attorney.
250.7 Additional evidence.

    Authority: Sec. 7, 64 Stat. 16, sec. 310, 69 Stat. 573, sec. 413, 72 
Stat. 530, sec. 213, 76 Stat. 1111; 22 U.S.C. 1626, 1641i, 1642l, 50 
U.S.C. App. 2017l.



Sec. 250.1  Scope of regulations.

    The regulations in this part govern payment by the Department of the 
Treasury on awards made and certified to the Secretary of the Treasury 
by the Foreign Claims Settlement Commission under the International 
Claims Settlement Act of 1949, as amended (22 U.S.C. 1621 et seq.), and 
Title II of the War Claims Act of 1948 (50 U.S.C. App. 2017 et seq.).

[34 FR 1897, Feb. 8, 1969]



Sec. 250.2  Forms.

    The forms referred to in Sec. Sec. 250.3 and 250.4 shall be used in 
connection with the payment of awards hereunder. Voucher applications 
for all payments will be mailed to awardees by the Financial Management 
Service, Treasury Department, Hyattsville, MD 20782, without request 
therefor by awardees.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]



Sec. 250.3  Voucher applications.

    (a) Execution of voucher by person named. No payment of any part of 
the amount due on account of an award will be made unless a voucher 
application therefor properly executed (preferably in ink or indelible 
pencil) is received by the Treasury Department. A voucher application 
for each payment on account of an award must be signed by each person 
whose name appears on such voucher application as payee exactly as his 
name appears thereon, with the following two exceptions:
    (1) If only the name of the payee, and not his identity, has 
changed, the payee shall sign the voucher application with his changed 
name and return it to the Financial Management Service, Treasury 
Department, Hyattsville, MD 20782; the voucher application shall be 
accompanied by an explanatory affidavit and appropriate supporting 
documents, e.g., a copy of a marriage certificate or court order of 
change of name.
    (2) If the identity of the payee has changed, paragraph (b) of this 
section shall apply. A signature by mark (X) must be witnessed by two 
persons; the signature and address of each must appear on the voucher 
application. In the case of a corporation the voucher application must 
be signed by an appropriate officer thereof having authority to do so, 
whose authority to sign on behalf of the corporation must be duly 
certified to thereon over the seal of the corporation.
    (b) Execution of voucher by other person. If the person named in the 
voucher application as payee is no longer the proper person to receive 
the payment by reason of assignment, incompetency or death, or of 
termination of a partnership or corporation named, the voucher shall be 
executed by the person entitled to payment as provided in Sec. 250.4 
and returned to the Credit Accounting Branch with the relevant 
information and the appropriate supporting documents required by that 
section.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]



Sec. 250.4  Payment on awards.

    Payment will be made only to the person or persons on behalf of whom 
the award is made, except in the following circumstances:
    (a) If such person is incompetent, payment will be made to his 
guardian, committee, or other equivalent legal representative. The law 
of the residence of the incompetent will determine whether the legal 
representative must be court appointed. If court appointment is 
required, the legal representative shall submit a certificate of the 
clerk of the appointing court, under its seal, dated within 6 months of 
the date of the voucher application for payment, showing that his 
appointment is in full force and effect. If court appointment is not 
required, the legal representative shall submit a notarized statement 
showing:
    (1) His relationship to the incompetent;
    (2) The name and address of the person having care and custody of 
the incompetent;

[[Page 101]]

    (3) That any money received will be applied to the use and benefit 
of the incompetent, and
    (4) That there was no appointment of a guardian or committee.
    (b) If such person is deceased, payment will be made to his legal 
representative.
    (1) If any payment to be made is not over $1,000 and there is no 
qualified executor or administrator, the legal representative will be 
the person found by the Comptroller General to be entitled thereto, 
without the necessity of compliance with the requirements of law with 
respect to the administration of estates, upon execution and submission 
of Standard Form No. 1055 to the Financial Management Service for 
transmittal to the Comptroller General. That form is available from the 
Credit Accounting Branch.
    (2) In all other cases, the term legal representative shall include 
court-appointed or statutory administrators or executors, and successors 
in interest of the decedent, e.g., his legatees or heirs as determined 
by an appropriate court or by the law of his residence. If 
administration of the decedent's estate is closed, the legal 
representative shall submit a copy of the appropriate court's final 
order of distribution or other pertinent order, identifying the 
distributees and their addresses. If administration continues and the 
legal representative is court-appointed, he shall submit a certificate 
of the clerk of the appointing court, under its seal, dated within 6 
months of the date of the voucher application for payment, showing that 
such appointment is in full force and effect. If the legal 
representative is not court-appointed, he shall submit evidence 
sufficient to prove his interest and authority to apply for payment. If 
that evidence is a copy of the decedent's will, it shall show on its 
face or by attachments thereto that it has been offered for probate, and 
that the appropriate court has affixed its seal and attached its 
certification of authenticity that the will is in fact the decedent's 
last will and testament.
    (c)-(d) [Reserved]
    (e) In the case of a partnership or corporation, the existence of 
which has been terminated, if a receiver or trustee has been duly 
appointed by a court of competent jurisdiction in the United States and 
has not been discharged prior to the date of payment, payment will be 
made to such receiver or trustee in accordance with the order of the 
court. In the event a receiver or trustee duly appointed by a court of 
competent jurisdiction in the United States makes an assignment of the 
claim or any part thereof with respect to which an award is made, or 
makes an assignment of such award or any part thereof, payment will be 
made to the assignee as his interest may appear. In the latter 
circumstance, certified copies of the court orders showing the authority 
of the receiver or trustee to make the assignment shall be submitted 
with the assignment. No particular form of assignment is prescribed, but 
the original assignment must be submitted to, and will be retained by 
the Treasury Department.
    (f) In the case of a partnership or corporation, the existence of 
which has been terminated, if no receiver or trustee has been duly 
appointed by a court of competent jurisdiction in the United States, or 
if such a receiver or trustee has been discharged prior to the date of 
payment without having made an assignment, payment may be made to the 
person or persons found by the Comptroller General of the United States 
to be entitled thereto. In this circumstance, the person or persons 
claiming payment shall submit to the Financial Management Service, 
Treasury Department, Hyattsville, MD 20782, such documentary evidence as 
is appropriate to show his or their right to the payment.
    (g) In the case of an assignment of an award or any part thereof 
which is made in writing and duly acknowledged and filed after such 
award is certified to the Secretary of the Treasury, payment may in the 
discretion of the Secretary of the Treasury be made to the assignee as 
his interest may appear. No particular form of assignment is prescribed, 
but the original assignment must be submitted to, and will be retained 
by the Treasury Department.

[31 FR 9418, July 9, 1966, as amended at 34 FR 1897, Feb. 8, 1969; 49 FR 
47001, Nov. 30, 1984; 58 FR 4578, Jan. 15, 1993]

[[Page 102]]



Sec. 250.5  Manner of payment.

    Payment will be made by check drawn on the United States Treasury. 
Checks will be mailed to the payee at the address indicated on the 
voucher application, unless subsequent to the issue of the voucher 
application the Treasury Department receives a written request from the 
payee to deliver the check to him at some other address. Where the award 
has been entered in favor of more than one person, only one check will 
be drawn in making payment unless the payees specify the share of each 
and request separate checks.

[31 FR 9418, July 9, 1966]



Sec. 250.6  Powers of attorney.

    No power of attorney to sign a voucher application will be 
recognized but a power of attorney executed subsequent to the 
certification of an award to the Secretary of the Treasury to receive, 
endorse and collect a check given in payment on an award may be 
recognized. An appropriate form for such a power of attorney may be 
obtained from the Financial Management Service, Treasury Department, 
Hyattsville, MD 20782.

[31 FR 9418, July 9, 1966, as amended at 49 FR 47001, Nov. 30, 1984; 58 
FR 4578, Jan. 15, 1993]



Sec. 250.7  Additional evidence.

    The Secretary of the Treasury or the Comptroller General of the 
United States may in any case require such additional information and 
evidence as may be deemed necessary.

[31 FR 9418, July 9, 1966]



PART 256_PAYMENTS UNDER JUDGMENTS AND PRIVATE RELIEF ACTS--Table of 
Contents




Sec.
256.1 Judgments against the United States.
256.2 Payment of sums appropriated in private relief acts.

    Authority: 5 U.S.C. 301, 552.



Sec. 256.1  Judgments against the United States.

    (a) Persons securing money judgments against the United States, in 
excess of $100,000 in any one case, in the Court of Claims are required, 
in order to secure payment, to file original transcripts of such 
judgments with the Secretary of the Treasury for certification to the 
Congress for appropriation. Following receipt of an application on the 
part of the claimant for payment of the amount appropriated by the 
Congress, the General Accounting Office transmits a certificate of 
settlement to the Treasury Department. Payment is then made to the 
claimant by check drawn in the Treasury Department by the Field 
Operations Group, Financial Management Service. A similar procedure 
applies with respect to such judgments obtained in the Federal district 
courts, except that papers pertaining to such judgments are filed with 
the Secretary of the Treasury by the Department of Justice instead of by 
the claimant.
    (b) A procedure similar to that outlined in paragraph (a) of this 
section is followed with respect to judgments not in excess of $100,000 
in any one case except that the necessary documents are filed with the 
General Accounting Office and no action is taken by the Treasury 
Department prior to the receipt of a certificate of settlement from the 
General Accounting Office. After receipt of a certificate of settlement 
a check payable from a permanent appropriation established for the 
payment of such judgments is drawn in the Treasury Department by the 
Field Operations Group, Financial Management Service and mailed to the 
claimant in accordance with the terms of the certificate of settlement.

[23 FR 10184, Dec. 24, 1958. Redesignated at 32 FR 9562, July 1, 1967, 
as amended at 49 FR 47002, Nov. 30, 1984]



Sec. 256.2  Payment of sums appropriated in private relief acts.

    Persons entitled to payment of sums appropriated in private relief 
acts should make application for payment to the Treasury Department, 
Financial Management Service, Washington, DC 20226. Upon receipt of an 
application, bearing the signature and mailing address of the 
beneficiary, the Treasury Department will effect payment.

[29 FR 13164, Sept. 23, 1964. Redesignated at 32 FR 9562, July 1, 1967, 
as amended at 49 FR 47001, Nov. 30, 1984]

[[Page 103]]



PART 270_AVAILABILITY OF RECORDS--Table of Contents




Sec.
270.1 Rules governing availability of information.
270.2 Materials available for inspection and copying.
270.3 Requests for identifiable records.
270.4 Fees for services.

    Authority: 5 U.S.C. 552.

    Source: 58 FR 25943, Apr. 29, 1993, unless otherwise noted.



Sec. 270.1  Rules governing availability of information.

    The records of the Financial Management Service required by 5 U.S.C. 
552 to be made available to the public shall be made available in 
accordance with the definitions, procedures and other provisions of the 
regulations on the Disclosure of Records of the Office of the Secretary 
and of other bureaus and offices of the Department issued under 5 U.S.C. 
552 and published as part 1 of title 31 of the Code of Federal 
Regulations, except as provided in these regulations.



Sec. 270.2  Materials available for inspection and copying.

    (a) Materials available. The materials in the Financial Management 
Service which are required by 5 U.S.C. 552(a)(2) to be made available 
for public inspection and copying are the following:
    (1) Final opinions, as well as orders, made in the adjudication of 
cases. These will include final dispositions of claims on Government 
checks which are of a precedential nature. Generally, however, the 
Financial Management Service does not issue orders in the adjudication 
of cases.
    (2) Statements of policy and interpretations which have been adopted 
by the Service and are not published in the Federal Register.
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public. These materials include sections of the 
Treasury Financial Manual and such Department Circulars applicable to 
Financial Management Service operations, that have been determined by 
the agency to affect a member of the public, and have not been 
incorporated into that manual or published as parts of title 31 of the 
Code of Federal Regulations.
    (4) Current indices for the foregoing materials.
    (b) Location. The materials listed in paragraph (a) of this section 
issued on or after the effective date of these regulations are available 
for inspection and copying during office hours in the public reading 
room of the Treasury Department, 15th Street and Pennsylvania Avenue, 
NW., Washington, DC 20220. Materials issued prior thereto are available 
in the public reading room to the extent feasible. If not so available, 
they may be requested as identifiable records.



Sec. 270.3  Requests for identifiable records.

    (a) Procedure. A written request for an identifiable record shall be 
addressed to: Freedom of Information Disclosure Officer, Financial 
Management Service, 401 14th Street, SW., Washington, DC 20227.
    (b) Determination of request. Determination as to the disclosure of 
a record request shall be made, subject to appeal to the Commissioner of 
the Financial Management Service, by the head of the division in which 
the record belongs and by the Disclosure Officer of the agency. The 
decision of the Commissioner shall constitute final agency action, 
unless the Commissioner refers the appeal to the Fiscal Assistant 
Secretary, in which case the decision of the Fiscal Assistant Secretary 
shall constitute final agency action.



Sec. 270.4  Fees for services.

    Fees for services performed by the Financial Management Service will 
be imposed and collected as set forth in part 1 of title 31 of the Code 
of Federal Regulations.



PART 281_FOREIGN EXCHANGE OPERATIONS--Table of Contents




Sec.
281.1 Authority.
281.2 [Reserved]
281.3 Collections.
281.4 Guaranty funds.
281.5 Depositaries.
281.6 Withdrawals from Treasury accounts.
281.7 Limitations.
281.8 Reporting and accounting.

[[Page 104]]

281.9 General provisions.

    Authority: Sec. 114, 64 Stat. 836, sec. 613, 75 Stat. 443; 31 U.S.C. 
66b, 22 U.S.C. 2363, E.O. 10488, 18 FR 5699, 3 CFR, 1949-1953 Comp., p. 
972, E.O. 10900, 26 FR 143, 3 CFR, 1959-1963 Comp., p. 429.

    Source: 26 FR 10054, Oct. 26, 1961, unless otherwise noted.



Sec. 281.1  Authority.

    By virtue of the authority vested in the Secretary of the Treasury 
by section 114 of the Budget and Accounting Procedures Act of 1950, 64 
Stat. 836, 31 U.S.C. 66b; section 613 of the Act of September 4, 1961, 
75 Stat. 443; Executive Order No. 10488, 18 FR 5699, 3 CFR 1949-1953 
Comp.; and Executive Order No. 10900, 26 FR 143, the following 
regulations are prescribed for administration of the purchase custody, 
deposit, transfer, sale and reporting of foreign exchange (including 
credits and currencies) by executive departments and agencies 
(hereinafter referred to as agencies).



Sec. 281.2  [Reserved]



Sec. 281.3  Collections.

    Foreign exchange collected by agencies shall be delivered promptly 
into the custody of accountable officers for credit to accounts of the 
Secretary of the Treasury (hereinafter referred to as the Secretary) 
unless otherwise directed by the Secretary. The term ``collections,'' 
for the purpose of these regulations in this part, does not include 
foreign exchange acquired by the United States by purchase with dollars. 
The accountable officer shall maintain records, showing the collections, 
by source, and indicating the miscellaneous receipt accounts or other 
accounts in the Treasury to be credited with dollar proceeds from sale 
of the foreign exchange, and such further classifications as may be 
needed to indicate exchange which can be used only for restricted 
purposes. Accountable officers shall be advised by the collecting 
agencies of the source of collections and any restrictions on the use of 
the foreign exchange in order that the foregoing records may be 
maintained.



Sec. 281.4  Guaranty funds.

    The regulations in this part are applicable to all foreign exchange 
acquired by the United States under guaranty provisions of section 1011 
of the United States Information and Educational Exchange Act of 1948, 
as amended (22 U.S.C. 1442), except that receipts of such foreign 
exchange shall be deposited in the foreign exchange accounts of the 
United States Treasury referred to in Sec. 281.5(c).



Sec. 281.5  Depositaries.

    (a) Except as provided in paragraph (b) of this section, foreign 
exchange which is held by accountable officers for account of the 
Secretary and foreign exchange acquired by accountable officers by 
purchase or otherwise, which is not immediately disbursed but is held by 
such officers for their own account or for the account of any agency, 
shall be maintained only in depositaries designated by the Secretary. 
Unless otherwise directed by the Secretary, accountable officers are not 
required to have separate depositary accounts for foreign exchange held 
for the Secretary's account.
    (b) Accountable officers may carry foreign exchange as cash outside 
depositaries only pursuant to authority granted in accordance with 
Treasury Department Circular No. 1030 dated July 24, 1959, as amended.
    (c) Deposits in and withdrawals from foreign exchange accounts 
maintained with depositaries in the name of the United States Treasury 
will be made only as directed by the Secretary.



Sec. 281.6  Withdrawals from Treasury accounts.

    Foreign exchange shall be withdrawn from accounts of the Secretary 
on the books of accountable officers or from the foreign exchange 
accounts carried with depositaries in the name of the United States 
Treasury, only for the purpose of sale for dollars or transfer to 
agencies for authorized purposes, without reimbursement to the Treasury, 
as provided by or pursuant to law. Such transfers, as well as transfers 
between foreign exchange accounts of the Secretary and between foreign 
exchange accounts in the name of the United States Treasury, shall be 
made

[[Page 105]]

only by direction of the Secretary. An agency requiring foreign exchange 
from the Treasury Department shall make request of the Secretary, 
indicating the amount of exchange required, in units of foreign 
currency, and the name and location of the accountable officer to 
receive the exchange. To the extent practicable and desirable, standing 
authorizations will be given for withdrawals from accounts of the 
Secretary. The following conditions apply to the sale of foreign 
exchange and to the requisition of foreign exchange without dollar 
payment:
    (a) Sales. With respect to the sale of foreign exchange held in 
accounts of the Secretary, the payment in dollars shall be calculated at 
the rate of exchange that would otherwise be available to the United 
States for the acquisition of the foreign exchange for its official 
disbursements unless otherwise determined by the Treasury Department in 
consultation with the agencies concerned. When the rate that would 
otherwise be available to the United States is not readily 
ascertainable, the Treasury Department shall be consulted. The dollar 
proceeds realized from the sale of exchange shall be credited to the 
appropriate receipt, appropriation or refund account on the books of the 
Treasury. The dollar payment for foreign exchange purchased shall not be 
charged as an appropriation expenditure until the foreign exchange is 
disbursed.
    (b) Transfers without reimbursement. When foreign exchange is to be 
obtained from the Treasury Department without payment of dollars, the 
agency concerned shall furnish written certification that the exchange 
may be used without reimbursement to the Treasury, citing the relevant 
legal authority. In cases where international agreements or Bureau of 
the Budget allocations specify the programs for which foreign exchange 
may be used, the Secretary may transfer exchange to agencies without 
requiring a certification.

[26 FR 10054, Oct. 26, 1961, as amended at 29 FR 11497, Aug. 11, 1964]



Sec. 281.7  Limitations.

    The following limitations apply to the purchase and holding of 
foreign exchange:
    (a) Unless otherwise authorized by the Secretary, no agency or 
accountable officer shall purchase, or direct the purchase of, foreign 
exchange from any source outside the Government of the United States, 
except when exchange for the purpose intended is not available for 
purchase from within the Government.
    (b) All foreign exchange acquired by agencies by transfer from the 
Treasury Department, without payment of dollars, for the purpose of 
making authorized expenditures, shall be placed with accountable 
officers for account of the agencies concerned.
    (c) Unless otherwise authorized by the Secretary, no accountable 
officer shall purchase foreign exchange which, together with the balance 
on hand at the time of purchase, would exceed estimated requirements for 
a thirty-day period.
    (d) To the maximum extent possible, foreign exchange accounts which 
are earmarked for specific programs shall be maintained on an unfunded 
basis. Each agency responsible for administering international 
agreements pertaining to the use of foreign exchange held in funded 
accounts shall review the agreement and other considerations relevant to 
each such account at least annually to determine if the account can be 
placed on an unfunded basis, and shall initiate appropriate action to 
accomplish the objective of minimizing the number of funded program 
accounts and the amounts therein. The resulting determinations and the 
status of actions undertaken shall be furnished in writing to the 
Treasury Department within 60 days from the date of this regulation and 
each time thereafter that there is a change of status of a particular 
account, or as requested by the Treasury Department. Exchange which 
becomes eligible for removal from a funded status either as a result of 
the foregoing determinations, or because of the expiration of the period 
of availability for restricted use under the terms of international 
agreements, or for other reasons, shall be released promptly by the 
program agency for transfer to a nonrestricted Treasury sales account.

[26 FR 10054, Oct. 26, 1961, as amended at 29 FR 11497, Aug. 11, 1964]

[[Page 106]]



Sec. 281.8  Reporting and accounting.

    The Treasury Department will maintain a system of central accounting 
and reporting for the purpose of providing information on foreign 
exchange operations to the President, the Congress, and the public. The 
Treasury Department will also prescribe rules to enhance consistency in 
reporting of foreign exchange operations by all agencies. Agencies shall 
furnish such reports and information as may be required for the 
administration of the provisions of this circular.



Sec. 281.9  General provisions.

    (a) Nothing contained in this part shall be construed as having the 
effect of superseding or amending the provisions of any regulations 
issued or approved by the Secretary pursuant to the Act of December 23, 
1944, as amended (67 Stat. 61).
    (b) The Secretary may waive, withdraw, or amend at any time or from 
time to time any or all of the provisions of the regulations of this 
part.
    (c) Implementing regulations within the framework of this circular 
will be issued by the Fiscal Assistant Secretary of the Treasury. All 
communications pertaining to the administration of the provisions of 
this part shall be directed to the Fiscal Assistant Secretary.



PART 285_DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION 
IMPROVEMENT ACT OF 1996--Table of Contents




                  Subpart A_Disbursing Official Offset

Sec.
285.1 Collection of past-due support by administrative offset.
285.2 Offset of tax refund payments to collect past-due, legally 
          enforceable nontax debt.
285.3 Offset of tax refund payments to collect past-due support.
285.4 Offset of Federal benefit payments to collect past-due, legally 
          enforceable nontax debt.
285.5 Centralized offset of Federal payments to collect nontax debts 
          owed to the United States.
285.7 Salary offset.
285.8 Offset of tax refund payments to collect state income tax 
          obligations.

                 Subpart B_Authorities Other Than Offset

285.11 Administrative wage garnishment.
285.12 Transfer of debts to Treasury for collection.
285.13 Barring delinquent debtors from obtaining Federal loans or loan 
          insurance or guarantees.

    Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 
3716, 3719, 3720A, 3720B, 3720D; 42 U.S.C. 664; E.O. 13019, 61 FR 51763, 
3 CFR, 1996 Comp., p. 216.

    Source: 62 FR 34179, June 25, 1997, unless otherwise noted.



                  Subpart A_Disbursing Official Offset



Sec. 285.1  Collection of past-due support by administrative offset.

    (a) Definitions. For purposes of this section:
    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a debt.
    Debt as used in this section is synonymous with the term past-due 
support.
    Disbursing official includes an official who has authority to 
disburse public money pursuant to 31 U.S.C. 3321 or another Federal law.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury. FMS is the designee of the Secretary of the 
Treasury for all matters concerning this section, unless otherwise 
specified.
    HHS means the Department of Health and Human Services, Office of 
Child Support Enforcement.
    Past-due support means the amount of support determined under a 
court order, or an order of an administrative procedure established 
under State law, for support and maintenance of a child, or of a child 
and the parent with whom the child is living, which has not been paid. 
The term child as used in this definition is not limited to minor 
children.
    Past-due support being enforced by the State means there has been an 
assignment of the support rights to the State, or the State making the 
request for offset is providing services to individuals pursuant to 42 
U.S.C. 654(5)

[[Page 107]]

(section 454(5) of the Social Security Act), or the State is enforcing 
support pursuant to a cooperative agreement with or by an Indian tribal 
government.
    State means the several States of the United States. The term State 
also includes the District of Columbia, American Samoa, Guam, the United 
States Virgin Islands, the Commonwealth of the Northern Mariana Islands, 
and the Commonwealth of Puerto Rico.
    Secretary means the Secretary of the Treasury.
    (b) General rule. FMS may enter into a reciprocal agreement with a 
State for the collection of past-due support being enforced by the State 
by administrative offset from certain Federal payments. Upon 
notification of past-due support either directly from a State which has 
entered into such an agreement or from HHS, disbursing officials of FMS 
or any other disbursing official of the United States shall offset 
Federal payments which are subject to offset under this section, to 
collect past-due support. The amount offset, minus the offset fee, shall 
be forwarded to the State to be distributed in accordance with 
applicable laws and procedures.
    (c) Agreements. FMS may enter into reciprocal agreements with States 
for disbursing officials of FMS and any other Federal disbursing 
official to offset certain Federal payments to collect past-due support 
being enforced by the State. The agreement shall contain any 
requirements which FMS considers appropriate to facilitate the offset 
and prevent duplicative efforts and shall require States to prescribe 
procedures governing the collection of past-due support by Federal 
administrative offset. For purposes of this section, reciprocal means of 
mutual benefit. An agreement between FMS and a State to collect past-due 
support by offsetting Federal payments will be considered of mutual 
benefit and it is not required that States conduct administrative 
offsets to collect debts owed to the Federal Government. States which 
have entered into an agreement with FMS pursuant to this section may 
thereafter request, in the manner prescribed herein, that an offset be 
performed. Such requests shall be made by the appropriate State 
disbursing official which, for purposes of this section, means an 
appropriate official of the State agency which administers or supervises 
the administration of the State plan under Title IV-D of the Social 
Security Act.
    (d) Notification to FMS of past-due support. (1) States notifying 
FMS of past-due support must do so in the manner and format prescribed 
by FMS. States notifying HHS of past-due support must do so in the 
manner and format prescribed by HHS. HHS shall notify FMS of all past-
due support referred to HHS by States for collection by administrative 
offset provided that the requirements of paragraphs (d)(3) and (h) of 
this section have been met.
    (2) When a State has knowledge that past-due support is being 
enforced by more than one State, the State notifying FMS or HHS of the 
past-due support must inform any other State involved in enforcing the 
past-due support when it refers the debt for offset and when it receives 
the offset amount.
    (3) The notification of past-due support must be accompanied by a 
certification that the debt is past-due, legally enforceable, and that 
the State has complied with all the requirements as set forth in 
paragraph (h) of this section and with any requirements imposed by State 
law or procedure. For debts so certified, the Secretary may waive 
sections 552a (o) and (p) of Title 5, United States Code, where 
applicable, in accordance with the Secretary's authority under 31 U.S.C. 
3716(f).
    (4) FMS may reject a notification of past-due support which does not 
comply with the requirements of this section. The State will be notified 
of the rejection along with the reason for the rejection.
    (e) Minimum amount of past-due support. FMS will reject a 
notification of past-due support where the past-due support owed is less 
than $25.00. This amount may be adjusted from time to time by FMS to 
ensure that the cost of collection does not exceed the debt.
    (f) Limitations. Debts properly submitted to FMS for administrative 
offset will remain subject to collection by administrative offset until 
withdrawn by the State provided the debt remains past-due and legally 
enforceable.

[[Page 108]]

    (g) Notification of changes in status of debt. The State notifying 
FMS or HHS of past-due support shall, in the manner and in the time 
frames provided by FMS or HHS, notify FMS or HHS of deletions or 
decreases in the amount of a debt referred for collection by 
administrative offset. The State may notify FMS or HHS of any increases 
in the amount of a debt referred for collection by administrative offset 
provided the State has complied with the requirements of paragraph (h) 
of this section with regard to those amounts.
    (h) Advance notification of intent to collect by administrative 
offset. (1) The State, or FMS or HHS on behalf of the State, if the 
State requests and FMS or HHS agrees, shall send a written notification, 
at least 30 days in advance of referral of the debt for offset, to the 
individual owing past-due support, informing the individual that the 
State intends to refer the debt for collection by administrative offset 
against Federal payments. The notice must also inform the individual of:
    (i) The nature and amount of the debt; and
    (ii) The right to an administrative review by the State referring 
the debt or, upon the request of the individual, by the State with the 
order upon which the referral was based, of the determination of the 
State with respect to the debt and of the procedures and time frames 
established by the State for such reviews.
    (2) Prior to referring a debt to FMS for collection by 
administrative offset, States must provide individuals with a reasonable 
opportunity to exercise the rights enumerated in paragraph (h)(1) of 
this section in accordance with procedures prescribed by the State.
    (i) Payments subject to offset. Federal payments subject to offset 
under this section include all Federal payments except:
    (1) Payments due to an individual under
    (i) Title IV of the Higher Education Act of 1965;
    (ii) The Social Security Act;
    (iii) Part B of the Black Lung Benefits Act;
    (iv) Any law administered by the Railroad Retirement Board;
    (2) Payments which the Secretary determines are exempt from offset 
in accordance with paragraph (k) of this section;
    (3) Payments from which collection of past-due support by 
administrative offset is expressly prohibited by law;
    (4) Payments made under the Internal Revenue Code of 1986 (except 
that tax refund payments are subject to offset under separate 
authority); and
    (5) Payments made under the tariff laws of the United States.
    (j) Special provisions applicable to Federal salary payments. (1) 
Unless a lower maximum offset limitation is provided by applicable State 
law, the maximum part of a Federal salary payment per pay period subject 
to offset to collect past-due support shall not exceed those amounts set 
forth at section 1673(b)(2) (A) and (B) of Title 15, United States Code, 
as follows:
    (i) Fifty (50%) percent of the debtor's aggregate disposable 
earnings for any pay period, where the debtor asserts by affidavit, or 
by other acceptable evidence, that he/she is supporting a spouse and/or 
dependent child, other than the former spouse and/or child for whom 
support is being collected, except that an additional five (5%) percent 
will apply if it appears that such earnings are to enforce past-due 
support for a period which is twelve (12) weeks or more prior to the pay 
period to which the offset applies. A debtor shall be considered to be 
supporting a spouse and/or dependent child only if the debtor provides 
over half of the spouse's and/or dependent child's support.
    (ii) Sixty (60%) percent of the debtor's aggregate disposable 
earnings for any pay period where the debtor fails to assert by 
affidavit or establish by other acceptable evidence that he/she is 
supporting a spouse and/or dependent child, other than a former spouse 
and/or child for whom support is being collected, except that an 
additional five (5%) percent will apply if it appears that such earnings 
are to enforce past-due support for a period which is twelve (12) weeks 
or more prior to the pay period to which the offset applies.
    (2) The maximum allowable offset amount shall be reduced by the 
amount of any deductions in pay resulting from

[[Page 109]]

a garnishment order for support. Nothing in this rule is intended to 
alter rules applicable to processing garnishment orders for child 
support and/or alimony.
    (3) Federal salary payments subject to offset for the collection of 
past-due support include current basic pay, special pay, incentive pay, 
retainer pay, overtime, or in the case of an employee not entitled to 
basic pay, other authorized pay. Aggregate disposable earnings for 
purposes of determining the maximum amounts which may be offset under 
paragraph (j)(1) of this section is Federal salary pay remaining after 
the deduction of:
    (i) Any amount required by law to be withheld;
    (ii) Amounts properly withheld for Federal, State or local income 
tax purposes;
    (iii) Amounts deducted as health insurance premiums;
    (iv) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage; and
    (v) Amounts deducted as normal life insurance premiums not including 
amounts deducted for supplementary coverage.
    (4) At least 30 days in advance of offset, the disbursing official 
shall send written notice to the debtor of the maximum offset 
limitations described in paragraph (j)(1) of this section. The notice 
shall include a request that the debtor submit supporting affidavits or 
other documentation necessary to determine the applicable offset 
percentage limitation. The notice shall also inform the debtor of the 
percentage that will be deducted if he/she fails to submit the requested 
documentation.
    (5) At the time the past-due support debt is submitted for offset, 
the State shall advise FMS or HHS if the maximum amount of a Federal 
salary payment that may be offset is less than the amount described 
under this paragraph.
    (k) Payments exempt from administrative offset to collect past-due 
support being enforced by a State. The Secretary will exempt from 
administrative offset under this part payments made under means-tested 
programs when requested by the head of the Federal agency which 
administers the program. For purposes of this section, means-tested 
programs are programs for which eligibility is based on a determination 
that income and/or assets of the beneficiary are inadequate to provide 
the beneficiary with an adequate standard of living without program 
assistance. The Secretary may exempt from administrative offset under 
this section any other class or type of payment upon the written request 
of the head of the agency which authorizes the payments. In determining 
whether or not to grant such exemptions, the Secretary shall give due 
consideration to whether administrative offset would tend to interfere 
substantially with or defeat the purposes of the payment agency's 
program.
    (l) Fees. A fee which FMS has determined to be sufficient to 
reimburse FMS for the full cost of the offset procedure, shall be 
deducted from each offset amount. FMS will notify the States, annually 
and in advance, of the amount of the fee to be charged for each offset.
    (m) Offsetting payments--(1) Conducting the offset. Disbursing 
officials of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other Government corporation, 
any disbursing official of the United States designated by the 
Secretary, or any disbursing official of an executive department or 
agency that disburses Federal payments shall offset payments subject to 
offset under this section to satisfy, in whole or part, a debt owed by 
the payee. Disbursing officials shall compare payment certification 
records with records of debts submitted to FMS for collection by 
administrative offset. A match will occur when the taxpayer identifying 
number and name control of a payment record are the same as the taxpayer 
identifying number and name control of a debt record. The taxpayer 
identifying number for an individual is the individual's social security 
number. When a match occurs and all other requirements for offset have 
been met, the disbursing official shall offset the payment to satisfy, 
in whole or part, the debt. Any amounts not offset shall be paid to the 
payee. The amount that can be offset from a

[[Page 110]]

single payment is the lesser of the amount of the debt (including 
interest, penalties, and administrative costs); the amount of the 
payment; or the amount of the payment available for offset if a statute 
or regulation prohibits offset of the entire amount. Debts remain 
subject to collection by offset until paid in full.
    (2) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (l) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment has been made to HHS or any State, FMS will 
notify HHS or the appropriate State that an erroneous offset payment has 
been made. FMS may deduct the amount of the erroneous offset payment 
from amounts payable to HHS or the State, as the case may be. 
Alternatively, upon FMS' request, the State shall return promptly to the 
affected payee or FMS an amount equal to the amount of the erroneous 
payment (unless the State previously has paid such amounts, or any 
portion of such amounts, to the affected payee). HHS and States shall 
notify FMS any time HHS or a State returns an erroneous offset payment 
to an affected payee. FMS and HHS, or the appropriate State, will adjust 
their debtor records accordingly.
    (n) Administrative offset priorities. When a payee/debtor owes more 
than one debt which has been referred to FMS for collection by 
administrative offset, any offset by a disbursing official will be 
applied first to past-due support assigned to a State and will be 
applied to any other past-due support after any other reductions allowed 
by law.
    (o) Notification of offset. (1) Disbursing officials of FMS or any 
other disbursing official which conducts an offset will notify the payee 
in writing of the occurrence of the offset to satisfy past-due support. 
The notice shall inform the payee of the type and amount of the payment 
that was offset; the identity of the State which requested the offset; 
and a contact point within the State that will handle concerns regarding 
the offset. Disbursing officials shall not be liable for failure to 
provide this notice.
    (2) Disbursing officials of FMS or any other disbursing official 
which conducts an offset under this section will share with HHS, upon 
request by the Secretary of HHS, information contained in payment 
certification records of persons who are delinquent in child support 
obligations that would assist in the collection of such debts. When no 
offset is conducted, disbursing officials of FMS or any other disbursing 
official, will provide such information to HHS to the extent such 
information is available from offset activities conducted by FMS and 
other disbursing officials.
    (p) Liability of disbursing officials and payment agencies. Neither 
the disbursing official nor the agency authorizing the payment shall be 
liable for the amount of the administrative offset on the basis that the 
underlying obligation, represented by the payment before the 
administrative offset was taken, was not satisfied. Disbursing officials 
will notify the agency authorizing the payment that the offset has 
occurred so that the agency authorizing the payment may direct any 
inquiries concerning the offset to the appropriate State.

[62 FR 36210, July 7, 1997, as amended at 63 FR 46145, Aug. 28, 1998]



Sec. 285.2  Offset of tax refund payments to collect past-due, legally 
enforceable nontax debt.

    (a) Definitions. For purposes of this section:
    Creditor agency means a Federal agency owed a claim that seeks to 
collect that claim through tax refund offset.
    Debt or claim refers to an amount of money, funds, or property which 
has been determined by an agency official to be due the United States 
from any person, organization, or entity, except another Federal agency. 
For the purposes of this section, the terms ``claim'' and ``debt'' are 
synonymous and interchangeable and includes debt administered by a third 
party acting as an agent for the Federal Government.
    Debtor means a person who owes a debt or claim. The term ``person'' 
includes any individual, organization or entity, except another Federal 
agency.

[[Page 111]]

    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any tax on the part of the person who 
made the overpayment.
    (b) General rule. (1) A Federal agency (as defined in 26 U.S.C. 
6402(g)) that is owed by a person a past-due, legally enforceable nontax 
debt shall notify FMS of the amount of such debt for collection by tax 
refund offset. However, any agency subject to section 9 of the Act of 
May 18, 1933 (16 U.S.C. 831h) owed such a debt may, but is not required 
to, notify FMS of the amount of such debt for collection by tax refund 
offset.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name (or derivation of the name, known as a ``name control'') of a 
payment certification record are the same as the taxpayer identifying 
number and name control of a debtor record. When a match occurs and all 
other requirements for tax refund offset have been met, FMS will reduce 
the amount of any tax refund payment payable to a debtor by the amount 
of any past-due, legally enforceable debt owed by the debtor. Any 
amounts not offset will be paid to the payee(s) listed in the payment 
certification record.
    (3) This section does not apply to any debt or claim arising under 
the Internal Revenue Code.
    (4)(i) This section applies to Federal Old Age, Survivors and 
Disability Insurance (OASDI) overpayments provided the requirements of 
31 U.S.C. 3720A(f)(1) and (2) are met with respect to such overpayments.
    (ii) For purposes of this section, OASDI overpayment means any 
overpayment of benefits made to an individual under title II of the 
Social Security Act (42 U.S.C. 401 et seq.).
    (5) A creditor agency is not precluded from using debt collection 
procedures, such as wage garnishment, to collect debts that have been 
submitted to FMS for purposes of offset under this part. Such debt 
collection procedures may be used separately or in conjunction with 
offset collection procedures.
    (c) Regulations. Prior to submitting debts to FMS for collection by 
tax refund offset, Federal agencies shall promulgate temporary or final 
regulations under 31 U.S.C. 3716 and 31 U.S.C. 3720A, governing the 
agencies' authority to collect debts by administrative offset, in 
general, and offset of tax refund payments, in particular.
    (d) Agency certification and referral of debt--(1) Past-due, legally 
enforceable debt eligible for tax refund offset. For purposes of this 
section, when a Federal agency refers a past-due, legally enforceable 
debt to FMS for tax refund offset, the agency will certify to FMS that:
    (i) The debt is past-due and legally enforceable in the amount 
submitted to FMS and that the agency will ensure that collections are 
properly credited to the debt;
    (ii) Except in the case of a judgment debt or as otherwise allowed 
by law, the debt is referred for offset within ten years after the 
agency's right of action accrues;
    (iii) The creditor agency has made reasonable efforts to obtain 
payment of the debt in that the agency has:
    (A) Submitted the debt to FMS for collection by administrative 
offset and complied with the provisions of 31 U.S.C. 3716(a) and related 
regulations, to the extent that collection of the debt by administrative 
offset is not prohibited by statute;
    (B) Notified, or has made a reasonable attempt to notify, the debtor 
that the debt is past-due, and unless repaid within 60 days after the 
date of the notice, will be referred to FMS for tax refund offset;

[[Page 112]]

    (C) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past-due or legally enforceable, considered 
any evidence presented by the debtor, and determined that the debt is 
past-due and legally enforceable; and
    (D) Provided the debtor with an opportunity to make a written 
agreement to repay the amount of the debt;
    (iv) The debt is at least $25; and
    (v) In the case of an OASDI overpayment--
    (A) The individual is not currently entitled to monthly insurance 
benefits under title II of the Social Security Act (42 U.S.C. 401 et 
seq.);
    (B) The notice describes conditions under which the Commissioner of 
Social Security is required to waive recovery of the overpayment, as 
provided under 42 U.S.C. 404(b); and
    (C) If the debtor files a request for a waiver under 42 U.S.C. 
404(b) within the 60-day notice period, the agency has considered the 
debtor's request.
    (2) Pre-offset notice and consideration of evidence for past-due, 
legally enforceable debt. (i) For purposes of paragraph (d)(1)(iii)(B) 
of this section, a creditor agency has made a reasonable attempt to 
notify the debtor if the agency uses the current address information 
contained in the agency's records related to the debt. Agencies may, but 
are not required to, obtain address information from the IRS pursuant to 
26 U.S.C. 6103(m)(2), (4), or (5).
    (ii) For purposes of paragraph (d)(1)(iii)(C) of this section, if 
the evidence presented by the debtor is considered by an agent of the 
creditor agency, or other entities or persons acting on the agency's 
behalf, the debtor must be accorded at least 30 days from the date the 
agent or other entity or person determines that all or part of the debt 
is past-due and legally enforceable to request review by an officer or 
employee of the agency of any unresolved dispute. The agency must then 
notify the debtor of its decision.
    (3) Referral of past-due, legally enforceable debt. A Federal agency 
will submit past-due, legally enforceable debt information for tax 
refund offset to FMS in the time and manner prescribed by FMS. For each 
debt, the creditor agency will include the following information:
    (i) The name and taxpayer identifying number (as defined in 26 
U.S.C. 6109) of the debtor who is responsible for the debt;
    (ii) The amount of such past-due and legally enforceable debt;
    (iii) The date on which the debt became past-due;
    (iv) The designation of the Federal agency or subagency referring 
the debt; and
    (v) In the case of an OASDI overpayment, a certification by the 
Commissioner of Social Security designating whether the amount payable 
to the agency is to be deposited in either the Federal Old-Age and 
Survivors Insurance Trust Fund or the Federal Disability Insurance Trust 
Fund, but not both.
    (4) Correcting and updating referral. If, after referring a past-
due, legally enforceable debt to FMS as provided in paragraph (d)(3) of 
this section, a creditor agency determines that an error has been made 
with respect to the information transmitted to FMS, or if an agency 
receives a payment or credits a payment to the account of a debtor 
referred to FMS for offset, or if the debt amount is otherwise 
incorrect, the agency shall promptly notify FMS and make the appropriate 
correction of the agency's records. Creditor agencies will provide 
certification as required under paragraph (d)(1) of this section for any 
increases to amounts owed.
    (5) FMS may reject a certification which does not comply with the 
requirements of paragraph (d)(1) of this section. Upon notification of 
the rejection and the reason for the rejection, a creditor agency may 
resubmit the debt with a corrected certification.
    (e) Priorities for offset. (1) A tax refund payment shall be reduced 
first by the amount of any past-due support assigned to a State under 
section 402(a)(26) or section 471(a)(17) of the Social Security Act (42 
U.S.C. 602(a)(26) or 42 U.S.C. 671(a)(17)) which is to be offset under 
26 U.S.C. 6402(c), 42 U.S.C. 664 and the regulations thereunder; second, 
by the amount of any past-due, legally enforceable debt owed to a 
Federal agency which is to be offset under 26 U.S.C. 6402(d), 31 U.S.C. 
3720A and this section;

[[Page 113]]

and third, by the amount of any qualifying past-due support not assigned 
to a State which is to be offset under 26 U.S.C. 6402(c), 42 U.S.C. 664 
and the regulations thereunder.
    (2) If a debtor owes more than one past-due, legally enforceable 
debt to a Federal agency or agencies, the tax refund payment shall be 
credited against the debts in the order in which the debts accrued. A 
debt shall be considered to have accrued at the time at which the agency 
determines that the debt became past due.
    (3) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), and (d) shall occur prior to crediting the overpayment to 
any future liability for an internal revenue tax. Any amount remaining 
after tax refund offset under 26 U.S.C. 6402 (a), (c), and (d) shall be 
refunded to the taxpayer, or applied to estimated tax, if elected by the 
taxpayer pursuant to IRS regulations.
    (f) Post-offset notice to the debtor, the creditor agency, and the 
IRS. (1)(i) FMS will notify the payee(s) to whom the tax refund payment 
is due, in writing of:
    (A) The amount and date of the offset to satisfy a past-due, legally 
enforceable nontax debt;
    (B) The creditor agency to which this amount has been paid or 
credited; and
    (C) A contact point within the creditor agency that will handle 
concerns or questions regarding the offset.
    (ii) The notice in paragraph (f)(1)(i) of this section will also 
advise any non-debtor spouse who may have filed a joint tax return with 
the debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund. See paragraph (g) of 
this section.
    (2) FMS will advise each creditor agency of the names, mailing 
addresses, and identifying numbers of the debtors from whom amounts of 
past-due, legally enforceable debt were collected and of the amounts 
collected from each debtor for that agency. FMS will not advise the 
creditor agency of the source of payment from which such amounts were 
collected. If a payment from which an amount of past-due, legally 
enforceable debt is to be withheld is payable to two individual payees, 
FMS will notify the creditor agency and furnish the name and address of 
each payee to whom the payment was payable.
    (3) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts of past-
due, legally enforceable debt were collected and the amounts collected 
from each debtor.
    (g) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due, legally enforceable debt takes appropriate action to secure 
his or her proper share of a tax refund from which an offset was made, 
the IRS will pay the person his or her share of the refund and request 
that FMS deduct that amount from amounts payable to the creditor agency. 
FMS and the creditor agency will adjust their debtor records 
accordingly.
    (h) Disposition of amounts collected. FMS will transmit amounts 
collected for past-due, legally enforceable debts, less fees charged 
under paragraph (i) of this section, to the creditor agency's account. 
If an erroneous payment is made to any agency, FMS will notify the 
creditor agency that an erroneous payment has been made. The agency 
shall pay promptly to FMS an amount equal to the amount of the erroneous 
payment (without regard to whether any other amounts payable to such 
agency have been paid).
    (i) Fees. The creditor agency will reimburse FMS and the IRS for the 
full cost of administering the tax refund offset program. FMS will 
deduct the fees from amounts collected prior to disposition and transmit 
a portion of the fees deducted to reimburse the IRS for its share of the 
cost of administering the tax refund offset program. To the extent 
allowed by law, creditor agencies may add the offset fees to the debt.
    (j) Review of tax refund offsets. Any reduction of a taxpayer's 
refund made pursuant to 26 U.S.C. 6402(d) shall not be subject to review 
by any court of the United States or by the Secretary of the Treasury, 
FMS or IRS in an administrative proceeding. No action brought against 
the United States to

[[Page 114]]

recover the amount of this reduction shall be considered to be a suit 
for refund of tax. Any legal, equitable, or administrative action by any 
person seeking to recover the amount of the reduction of the overpayment 
must be taken against the Federal creditor agency to which the amount of 
the reduction was paid. Any action which is otherwise available with 
respect to recoveries of overpayments of benefits under 42 U.S.C. 404 
must be taken against the Commissioner of Social Security.
    (k) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program are restricted by 26 U.S.C. 6103. Generally, agencies 
will not receive confidential tax information from FMS. To the extent 
such information is received, agencies are subject to the safeguard, 
recordkeeping, and reporting requirements of 26 U.S.C. 6103(p)(4) and 
the regulations thereunder. The agency shall inform its officers and 
employees who access or use confidential tax information of the 
restrictions and penalties under the Internal Revenue Code for misuse of 
confidential tax information.
    (l) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 after January 1, 1998.



Sec. 285.3  Offset of tax refund payments to collect past-due support.

    (a) Definitions. For purposes of this section:
    Debt as used in this section is synonymous with the term past-due 
support unless otherwise indicated.
    Debtor as used in this section means a person who owes past-due 
support.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    HHS means the Department of Health and Human Services, Office of 
Child Support Enforcement.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Past-due support means the amount of support, determined under a 
court order, or an order of an administrative process established under 
State law, for support and maintenance of a child, or of a child and the 
parent with whom the child is living, which has not been paid, as 
defined in 42 U.S.C. 664(c).
    Qualified child means a child:
    (i) Who is a minor, or
    (ii) Who, while a minor, was determined to be disabled under 
subchapters II or XVI, Chapter 7, Title 42, United States Code, and for 
whom an order of support is in force.
    State means the several States of the United States. The term 
``State'' also includes the District of Columbia, American Samoa, Guam, 
the United States Virgin Islands, the Commonwealth of the Northern 
Mariana Islands, and the Commonwealth of Puerto Rico.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any Federal tax on the part of the 
person who made the overpayment.
    (b) General rule. (1) Past-due support will be collected by tax 
refund offset upon notification to FMS in accordance with 26 U.S.C. 
6402(c), 42 U.S.C. 664 and this section. Collection by offset under 26 
U.S.C. 6402(c) is a collection procedure separate from the collection 
procedures provided by 26 U.S.C. 6305 and 26 CFR 301.6305-1, relating to 
the assessment and collection of certain child and spousal support 
liabilities. Tax refund offset may be used separately or in conjunction 
with the collection procedures provided in 26 U.S.C. 6305, as well as 
other collection procedures.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name of a payment certification record are the same as the taxpayer 
identifying number and name of a delinquent debtor record. When a match 
occurs and all

[[Page 115]]

other requirements for tax refund offset have been met, FMS will reduce 
the amount of any tax refund payment payable to a debtor by the amount 
of any past-due support debt owed by the debtor. Any amounts not offset 
will be paid to the payee(s) listed in the payment certification record.
    (c) Notification of past-due support--(1) Past-due support eligible 
for tax refund offset. Past-due support qualifies for tax refund offset 
if:
    (i)(A) There has been an assignment of the support obligation to a 
State and the amount of past-due support is not less than $25.00, or 
such higher amount as HHS rules may allow, whichever is greater; or
    (B) A State agency is providing support collection services under 42 
U.S.C. 654(4), the amount of past-due support is not less than $500.00, 
and the past-due support is owed to or on behalf of a qualified child 
(or a qualified child and the parent with whom the child is living if 
the same support order includes support for the child and the parent); 
and
    (ii) A notification of liability for past-due support has been 
received by FMS as prescribed by paragraphs (c)(2) or (c)(3) of this 
section.
    (2) Notification of liability for past-due support and transmission 
of information to FMS by HHS. States notifying HHS of past-due support 
shall do so in the manner and format prescribed by HHS. The notification 
of liability shall be accompanied by a certification that the State has 
complied with the requirements contained in paragraph (c)(4) of this 
section and with any requirements applicable to the offset of Federal 
tax refunds to collect past-due support imposed by State law or 
procedures. HHS shall consolidate and transmit to FMS the information 
contained in the notifications of liability for past-due support 
submitted by the States provided that the State has certified that the 
requirements of paragraph (c)(4) of this section have been met.
    (3) Notification of liability for past-due support transmitted 
directly to FMS by States. States must notify HHS of past-due support in 
accordance with the provisions of paragraph (c)(2) of this section 
unless HHS rules authorize notification to FMS directly. If authorized 
by HHS rules, States may notify FMS directly of past-due support. States 
notifying FMS directly of past-due support shall do so in the manner and 
format prescribed by FMS. The notification of liability shall be 
accompanied by a certification that the State has complied with the 
requirements contained in paragraph (c)(4) of this section and with any 
requirements applicable to the offset of Federal tax refunds to collect 
past-due support imposed by State law or procedures. FMS may reject a 
notification of past-due support which does not comply with the 
requirements of this section. Upon notification of the rejection and the 
reason for rejection, the State may resubmit a corrected notification.
    (4) Advance notification to debtor of intent to collect by tax 
refund offset. The State, or HHS if the State requests and HHS agrees, 
is required to provide a written notification to the debtor, pursuant to 
the provisions of 42 U.S.C. 664(a)(3) and 45 CFR 303.72(e), informing 
the debtor that the State intends to refer the debt for collection by 
tax refund offset. The notice also shall:
    (i) Instruct the debtor of the steps which may be taken to contest 
the State's determination that past-due support is owed or the amount of 
the past-due support;
    (ii) Advise any non-debtor who may file a joint tax return with the 
debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund; and
    (iii) In cases when a debt is being enforced by more than one State, 
advise the debtor of his or her opportunities to request a review with 
the State enforcing collection or the State issuing the support order as 
prescribed by the provisions of 45 CFR 303.72(g).
    (5) Correcting and updating notification. The State shall, in the 
manner and in the time frames provided by FMS or HHS, notify FMS or HHS 
of any deletion or net decrease in the amount of past-due support 
referred to FMS, or HHS as the case may be, for collection by tax refund 
offset. The State may notify FMS or HHS of any increases in the amount 
of the debt referred to FMS for collection by tax refund offset provided 
that the State has

[[Page 116]]

complied with the requirements of paragraph (c)(4) of this section with 
regard to those debts.
    (6) Collection of past-due support enforced by multiple States. When 
a State has knowledge that the debt is being enforced by more than one 
State, the State notifying FMS, or HHS as the case may be, of the debt 
shall inform any such other State involved in enforcing the debt when it 
receives the offset amount.
    (d) Priorities for offset. (1) As provided in 26 U.S.C. 6402 as 
amended, a tax refund payment shall be reduced in the following order of 
priority:
    (i) First by the amount of any past-due support assigned to a State 
(welfare cases) which is to be offset under 26 U.S.C. 6402(c), 42 U.S.C. 
664 and this section;
    (ii) Second, by the amount of any past-due, legally enforceable debt 
owed to a Federal agency which is to be offset under 26 U.S.C. 6402(d), 
31 U.S.C. 3720A and Sec. 285.2 of this part;
    (iii) Third, by the amount of any qualifying past-due support not 
assigned to a State (non-welfare cases) which is to be offset under 26 
U.S.C. 6402(c), 42 U.S.C. 664 and this section; and
    (iv) Fourth, by the amount of any past-due, legally enforceable 
State income tax obligation which is to be offset under 26 U.S.C. 
6402(e).
    (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), (d), and (e) shall occur prior to crediting the 
overpayment to any future liability for an internal revenue tax. Any 
amount remaining after tax refund offset under 26 U.S.C. 6402(a), (c), 
(d), and (e) shall be refunded to the taxpayer, or applied to estimated 
tax, if elected by the taxpayer pursuant to IRS regulations.
    (e) Post-offset notice. (1)(i) FMS shall notify the debtor in 
writing of:
    (A) The amount and date of the offset to satisfy past-due support;
    (B) The State to which this amount has been paid or credited; and
    (C) A contact point within the State that will handle concerns or 
questions regarding the offset.
    (ii) The notice in paragraph (e)(1)(i) of this section also will 
advise any non-debtor who may have filed a joint tax return with the 
debtor of the steps which a non-debtor spouse may take in order to 
secure his or her proper share of the tax refund. See paragraph (f) of 
this section.
    (2) FMS will advise HHS of the names, mailing addresses, and 
identifying numbers of the debtors from whom amounts of past-due support 
were collected, of the amounts collected from each debtor through tax 
refund offset, the names of any non-debtor spouses who may have filed a 
joint return with the debtor, and of the State on whose behalf each 
collection was made. Alternatively, FMS will provide such information to 
each State that refers debts directly to FMS. FMS will inform HHS and 
each State that the payment source is a tax refund payment.
    (3) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts owed for 
past-due support were collected from tax refund offsets and the amounts 
collected from each debtor.
    (4) At such time and in such manner as FMS and HHS agree, but no 
less than annually, FMS will advise HHS of the States which have 
furnished notices of past-due support, the number of cases in each State 
with respect to which such notices have been furnished, the amount of 
past-due support sought to be collected by each State, and the amount of 
such tax refund offset collections actually made in the case of each 
State. As FMS and HHS may agree, FMS may provide additional offset-
related information about States which have furnished notices of past-
due support.
    (f) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due support takes appropriate action to secure his or her proper 
share of a tax refund from which an offset was made, the IRS will pay 
the person his or her share of the refund and request that FMS deduct 
that amount from amounts payable to HHS or the State, as the case may 
be. FMS and HHS, or the appropriate State, will adjust their debtor 
records accordingly.

[[Page 117]]

    (g) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (h) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment is made to HHS or any State, FMS will notify 
HHS or the appropriate State that an erroneous offset payment has been 
made. FMS may deduct the amount of the erroneous offset payment from 
amounts payable to HHS or the State, as the case may be. Alternatively, 
upon FMS' request, the State shall return promptly to the affected 
taxpayer or FMS an amount equal to the amount of the erroneous payment 
(unless the State previously has paid such amounts, or any portion of 
such amounts, to the affected taxpayer). HHS and States shall notify FMS 
any time HHS or a State returns an erroneous offset payment to an 
affected taxpayer. FMS and HHS, or the appropriate State, will adjust 
their debtor records accordingly.
    (h) Fees. The State will pay a fee to FMS for the full cost of 
administering the tax refund offset program. The fee (not to exceed $25 
per case submitted) will be established annually in such amount as FMS 
and HHS agree to be sufficient to reimburse FMS for the full cost of the 
offset procedure. FMS will deduct the fees from amounts collected prior 
to disposition and transmit a portion of the fees deducted to reimburse 
the IRS for its share of the cost of administering the tax refund offset 
program. Fees will be charged only for actual tax refund offsets 
completed.
    (i) Review of tax refund offsets. In accordance with 26 U.S.C. 
6402(f), any reduction of a taxpayer's refund made pursuant to 26 U.S.C. 
6402(c), (d), or (e) shall not be subject to review by any court of the 
United States or by the Secretary of the Treasury, FMS or IRS in an 
administrative proceeding. No action brought against the United States 
to recover the amount of this reduction shall be considered to be a suit 
for refund of tax.
    (j) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program is permitted to the extent necessary in establishing 
appropriate agency records, locating any person with respect to whom a 
reduction under 26 U.S.C. 6402(c) is sought for purposes of collecting 
the debt, and in the defense of any litigation or administrative 
procedure ensuing from a reduction made under section 6402(c).
    (k) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 after January 1, 1999.

[63 FR 72094, Dec. 30, 1998]



Sec. 285.4  Offset of Federal benefit payments to collect past-due, 
legally enforceable nontax debt.

    (a) Scope. (1) This section sets forth special rules applicable to 
the offset of Federal benefit payments payable to an individual under 
the Social Security Act (other than Supplemental Security Income (SSI) 
payments), part B of the Black Lung Benefits Act, or any law 
administered by the Railroad Retirement Board (other than payments that 
such Board determines to be tier 2 benefits) to collect delinquent 
nontax debt owed to the United States.
    (2) As used in this section, benefit payments ``due to'' an 
individual, ``payable to'' an individual, and/or benefit payments 
``received by'' an individual, refer to those benefit payments expected 
to be paid to an individual before any amounts are offset to satisfy the 
payee's delinquent debt owed to the United States. Nothing in these 
phrases, similar phrases, or this section is intended to imply or confer 
any new or additional rights or benefits on an individual with respect 
to his or her entitlement to benefit payments. The Financial Management 
Service (FMS), the Social Security Administration, the Railroad 
Retirement Board, and other payment agencies are not liable for the 
amount offset from an individual's benefit payment on the basis that the 
underlying obligation, represented by the payment before the offset was 
taken, was not satisfied. See 31 U.S.C. 3716(c)(2)(A).
    (b) Definitions. As used in this section:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a State government) to, or held by the

[[Page 118]]

United States for, a person to satisfy a debt.
    Agency or Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, or 
legislative branch of the Federal Government, including government 
corporations.
    Covered benefit payment means a Federal benefit payment payable to 
an individual under the Social Security Act (other than SSI payments), 
part B of the Black Lung Benefits Act, or any law administered by the 
Railroad Retirement Board (other than payments that such Board 
determines to be tier 2 benefits). The amount of the covered benefit 
payment payable to a debtor for purposes of this section will be the 
amount after reduction or deduction required under the laws authorizing 
the program. Reductions to recover benefit overpayments are excluded 
from the covered benefit payment when calculating amounts available for 
offset.
    Creditor agency means a Federal agency owed a debt that seeks to 
collect that debt through administrative offset.
    Debt or claim means an amount of money, funds, or property which has 
been determined by an agency official to be due the United States from 
any person, organization, or entity except another Federal agency. Debt 
or claim does not include a debt or claim arising under the Internal 
Revenue Code of 1986 or the tariff laws of the United States.
    Debtor means a person who owes a debt. The term ``person'' includes 
any individual, organization or entity, except another Federal agency.
    Disbursing official means an official who has authority to disburse 
public money pursuant to 31 U.S.C. 3321 or another law, including an 
official of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other government corporation, 
or any official of the United States designated by the Secretary of the 
Treasury to disburse public money.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Monthly covered benefit payment means a covered benefit payment 
payable to a payee on a recurring basis at monthly intervals that is not 
expressly limited in duration, at the time the first payment is made, to 
a period of less than 12 months.
    Payee means a person who is due a payment from a disbursing 
official. For purposes of this section, a ``payee'' is a person who is 
entitled to the benefit of all or part of a payment from a disbursing 
official.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number generally is 
the individual's social security number.
    (c) Administrative offset, generally. Disbursing officials shall 
offset payments to satisfy, in whole or in part, debts owed by the 
payee. Disbursing officials shall compare payment records with records 
of debts submitted to FMS for collection by administrative offset. A 
match will occur when the taxpayer identifying number and name of the 
payee (as defined in paragraph (b) of this section) on a payment record 
are the same as the taxpayer identifying number and name of the debtor 
on a debt record. When a match occurs and all other requirements for 
offset have been met, the disbursing official shall offset the payment 
to satisfy, in whole or in part, the debt. Any amounts not offset shall 
be paid to the payee. Covered benefit payments, i.e., payments made to 
individuals under the Social Security Act (other than Supplemental 
Security Income (SSI) payments), part B of the Black Lung Benefits Act, 
or any law administered by the Railroad Retirement Board (RRB) (other 
than tier 2 benefit payments) are among the types of payments which may 
be offset to collect debts owed to the United States. Offset of covered 
benefit payments are subject to the limitations contained in this 
section. Offsets of covered benefit payments will occur only if the name 
and taxpayer identifying number of the person who is entitled to the 
benefit of all or a part of the payment matches the name and taxpayer 
identifying number of the debtor.

[[Page 119]]

    (d) Submission of debts to FMS for collection by administrative 
offset. Creditor agencies must notify FMS of all past-due, legally 
enforceable debt delinquent for more than 180 days for purposes of 
collection by administrative offset. Creditor agencies may notify FMS of 
all debt delinquent for less than 180 days for purposes of collection by 
administrative offset. Prior to such notification, creditor agencies 
must certify to FMS that the debt is past-due, legally enforceable, and 
that the creditor agency has provided the debtor with notice and an 
opportunity for a review in accordance with the provisions of 31 U.S.C. 
3716(a) and other applicable law.
    (e) Offset amount. (1) The amount offset from a monthly covered 
benefit payment shall be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs;
    (ii) An amount equal to 15% of the monthly covered benefit payment; 
or
    (iii) The amount, if any, by which the monthly covered benefit 
payment exceeds $750.
    (2) A debtor shall not receive a refund of any amounts offset if the 
debtor's monthly covered benefit payments are reduced, suspended, 
terminated, or otherwise not received for a period of 12 months.
    (3) Examples. (i) A debtor receives monthly Social Security benefits 
of $850. The amount offset is the lesser of $127.50 (15% of $850) or 
$100 (the amount by which $850 exceeds $750). In this example, the 
amount offset is $100 (assuming the debt is $100 or more).
    (ii) A debtor receives monthly Social Security benefits of $1250. 
The amount offset is the lesser of $187.50 (15% of $1250) or $500 (the 
amount by which $1250 exceeds $750). In this example, the amount offset 
is $187.50 (assuming the debt is $187.50 or more).
    (iii) A debtor receives monthly Social Security payments of $650. No 
amount will be offset because $650 is less than $750.
    (f) Notification of offset. (1) Before offsetting a covered benefit 
payment, the disbursing official will notify the payee in writing of the 
date offset will commence. The notice shall inform the payee of the type 
of payment that will be offset; the identity of the creditor agency 
which requested the offset; and a contact point within the creditor 
agency that will handle concerns regarding the offset.
    (2) The disbursing official conducting the offset will notify the 
payee in writing of the occurrence of the offset to satisfy, in whole or 
in part, a delinquent debt owed to the United States. The notice shall 
inform the payee of the type and amount of the payment that was offset; 
the identity of the creditor agency which requested the offset; and a 
contact point within the creditor agency that will handle concerns 
regarding the offset.
    (3) Non-receipt by the debtor of the notices described in paragraphs 
(f)(1) and (f)(2) of this section shall not impair the legality of the 
administrative offset.
    (g) Fees. A fee which FMS has determined to be sufficient to cover 
the full cost of the offset procedure, shall be deducted from each 
offset amount. Creditor agencies may add this fee to the debt if not 
otherwise prohibited by law.
    (h) Disposition of amounts collected. The disbursing official 
conducting the offset will transmit amounts collected for debts, less 
fees charged under paragraph (g) of this section, to the appropriate 
creditor agency. If an erroneous offset payment is made to a creditor 
agency, the disbursing official will notify the creditor agency that an 
erroneous offset payment has been made. The disbursing official may 
deduct the amount of the erroneous offset payment from future amounts 
payable to the creditor agency. Alternatively, upon the disbursing 
official's request, the creditor agency shall return promptly to the 
disbursing official or the affected payee an amount equal to the amount 
of the erroneous payment. The disbursing official and the creditor 
agency shall adjust the debtor records appropriately.

[63 FR 44988, Aug. 21, 1998]



Sec. 285.5  Centralized offset of Federal payments to collect nontax 
debts owed to the United States.

    (a) Scope. (1) This section governs the centralized offset of 
Federal payments to collect delinquent, nontax debts

[[Page 120]]

owed to Federal agencies in accordance with 31 U.S.C. 3716, 3720A and 26 
U.S.C. 6402 and applicable regulations. The Department of the Treasury's 
Financial Management Service (FMS) administers centralized offset 
through the Treasury Offset Program. Offset occurs when the Federal 
government withholds part or all of a debtor's Federal payment to 
satisfy the debtor's delinquent debt owed to the government.
    (2) Special rules apply to the collection of delinquent, nontax 
debts through the centralized offset of certain types of Federal 
payments, including tax refunds (31 CFR 285.2), Federal benefit payments 
(31 CFR 285.4), and Federal salary payments (31 CFR 285.7). While this 
rule applies to such payments, nothing in this rule is intended to 
contradict any provision of those more specific sections. To the extent 
any provision of this rule is inconsistent with a more specific 
provision of Sec. Sec. 285.2, 285.4 or 285.7 of this part, the more 
specific provision shall apply.
    (3) The receipt of collections pursuant to this section does not 
preclude a Federal agency from pursuing other debt collection remedies 
in conjunction with centralized offset. Nothing in this section 
precludes an agency from pursuing all available debt collection remedies 
simultaneously, provided that collections do not exceed the amount of 
the debt, including any interest, penalties, and administrative costs.
    (b) Definitions. As used in this section:
    Agency or Federal agency means a department, agency or subagency, 
court, court administrative office, or instrumentality in the executive, 
judicial, or legislative branch of the Federal Government, including 
government corporations.
    Centralized offset means the offset of Federal payments through the 
Treasury Offset Program to collect debts which creditor agencies have 
certified pursuant to 31 U.S.C. 3716(c), 3720A(a) and applicable 
regulations. The term ``centralized offset'' includes the Treasury 
Offset Program's processing of offsets of Federal payments disbursed by 
disbursing officials other than FMS.
    Creditor agency has the same meaning as found at 31 U.S.C. 
3701(e)(1) and means any Federal agency that is owed a claim or debt 
that seeks to collect that claim or debt through offset of Federal 
payments.
    Debt or claim has the meaning contained in 31 U.S.C. 3701(b) and 
means any amount of money, funds, or property that has been determined 
by an appropriate official of the Federal government to be owed to the 
United States by a person, organization, or entity, except another 
Federal agency. The terms ``debt'' and ``claim'' are synonymous and 
include debt administered by a third party acting as an agent for the 
Federal Government. For purposes of this section, the term ``debt'' does 
not include debts arising under the Internal Revenue Code of 1986 (26 
U.S.C. 1 et seq.), the tariff laws of the United States, or the Social 
Security Act (42 U.S.C. 301 et seq.), except to the extent provided in 
sections 204(f) and 1631(b)(4) of such Act (42 U.S.C. 404(f) and 
1383(b)(4)(A), respectively) and 31 U.S.C. 3716(c).
    Debt collection center means a Federal agency or a unit or subagency 
within a Federal agency that has been designated by the Secretary to 
collect debt owed to the United States.
    Debtor means a person who owes a debt to the United States.
    Delinquent or past-due refers to the status of a debt and means a 
debt has not been paid by the date specified in the agency's initial 
written demand for payment, or applicable agreement or instrument 
(including a post-delinquency payment agreement), unless other payment 
arrangements satisfactory to the creditor agency have been made. Nothing 
in this section is intended to define whether a debt is delinquent or 
past-due for purposes other than offset under this section.
    Delinquent debt record means information about a past-due, legally 
enforceable debt submitted by a creditor agency to FMS for purposes of 
offset in accordance with the provisions of this section. Information 
about a past-due, legally enforceable debt includes, but is not limited 
to, the amount of the debt and the debtor's name, address, and taxpayer 
identifying number.
    Disbursing official means an official who has authority to disburse 
public money pursuant to 31 U.S.C. 3321 or another law, including an 
official of the

[[Page 121]]

Department of the Treasury, the Department of Defense, the United States 
Postal Service, or any other government corporation, or any official of 
the United States designated by the Secretary of the Treasury to 
disburse public money.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury and its disbursing office. FMS is responsible 
for administering centralized offset.
    Legally enforceable refers to a characteristic of a debt and means 
there has been a final agency determination that the debt, in the amount 
stated, is due, and there are no legal bars to collection by offset. 
Debts that are not legally enforceable for purposes of this section 
include, but are not limited to, debts subject to the automatic stay in 
bankruptcy proceedings or debts covered by a statute that prohibits 
collection of such debt by offset. For example, if a delinquent debt is 
the subject of a pending administrative review process required by 
statute or regulation, and if collection action during the review 
process is prohibited, the debt is not considered legally enforceable 
for purposes of this section. Nothing in this section is intended to 
define whether a debt is legally enforceable for purposes other than 
offset under this section.
    Match means the taxpayer identifying number and name (or derivative 
thereof) of the payee on a payment record are the same as the taxpayer 
identifying number and name of the debtor on a delinquent debt record.
    Offset means withholding funds payable by the United States to, or 
held by the United States for, a person to satisfy a debt owed by the 
payee.
    Past-due has the same meaning as ``delinquent'', as defined above.
    Payee means a person who is due a payment from a disbursing official 
as certified by the payment agency. For purposes of this section, a 
``payee'' is a person who is entitled to the benefit of all or part of a 
payment from a disbursing official.
    Payment agency means any agency that transmits payment requests, in 
the form of certified payment vouchers or other similar forms, to a 
disbursing official for disbursement.
    Payment record means information contained on a payment request, in 
the form of a certified payment voucher or other similar form, that has 
been transmitted to a disbursing official for disbursement in accordance 
with the provisions of 31 U.S.C. 3325 and 3528 or other applicable law. 
For purposes of matching, ``payment record'' may include information 
extracted from a payment request. Such information could include, but is 
not limited to, the amount and type of payment and the payee's name, 
address, and taxpayer identifying number.
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Recurring payment means a payment to an individual that is expected 
to be payable to a payee at regular intervals, at least four times 
annually. The term ``recurring payment'' does not include payments made 
pursuant to a Federal contract, grant or cooperative agreement.
    Representative payee means a person named as payee on the payment 
voucher certified by the payment agency who is acting on behalf of a 
person entitled to receive the benefit of all or part of the payment.
    Secretary means the Secretary of the Treasury.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number is generally 
the individual's social security number.
    (c) General rule. (1) Creditor agencies shall submit delinquent 
debts to FMS for purposes of offset in accordance with paragraph (d) of 
this section.
    (2) Disbursing officials shall compare payment records with 
delinquent debt records submitted to FMS for collection by offset. When 
a match occurs, and all other requirements for offset have been met, the 
disbursing official shall offset the payment to satisfy, in whole or 
part, the payee's debt to the extent allowed by law. The disbursing 
official shall pay any amounts not offset to the payee. See paragraphs 
(e), (f), (g), and (h) of this section.

[[Page 122]]

    (d) Requirements for creditor agencies--(1) Mandatory notification 
of delinquent debts. As required by 31 U.S.C. 3716(c)(6), and in 
accordance with the provisions of this section, a creditor agency shall 
notify FMS of all legally enforceable debts over 180 days delinquent 
that are owed to the creditor agency. By complying with this 
requirement, creditor agencies will satisfy the requirement of 31 U.S.C. 
3720A(a) to notify the Secretary of past due, legally enforceable debt 
for purposes of tax refund offset. If a debt which is over 180 days 
delinquent is considered not legally enforceable solely because it is 
under review as described in paragraph (d)(6)(ii)(C) of this section, 
the agency must submit the debt to FMS for collection by offset within 
30 days of completing the review.
    (2) Discretionary notification of delinquent debts. Creditor 
agencies may notify FMS of any debt that is less than 180 days 
delinquent, so long as the requirements of paragraph (d)(3) of this 
section are met.
    (3) Debt eligibility. (i) A debt submitted to FMS for collection by 
centralized offset must be:
    (A) Past-due in the amount stated by the creditor agency;
    (B) Legally enforceable;
    (C) Less than 10 years delinquent, unless the debt legally may be 
offset if more than 10 years delinquent;
    (D) More than $25, or such other amount as FMS may prescribe; and
    (E) Not secured by collateral subject to a pending foreclosure 
action, unless the creditor agency certifies that offset will not affect 
the Government's rights to the secured collateral.
    (ii) The creditor agency must certify that the debt is eligible for 
collection by offset, as required in paragraph (d)(6) of this section.
    (iii) Debts owed by foreign sovereigns may be referred to Treasury 
Offset Program at the discretion of the creditor agency to the extent 
allowed by law, but are excluded from mandatory referral under paragraph 
(d)(1) of this section.
    (iv) In accordance with 31 U.S.C. 3719 and the procedures 
promulgated thereunder, creditor agencies must report to Treasury the 
amount of debt over 180 days delinquent eligible for the Treasury Offset 
Program. The procedures require that such report include the amount of 
debt over 180 days delinquent that the creditor agency has determined is 
not eligible for the Treasury Offset Program and the reasons for such 
determination.
    (4) Creditor agency regulations. Prior to submitting a debt to FMS 
for purposes of offset, Federal agencies shall prescribe regulations in 
accordance with the requirements of 31 U.S.C. 3716(b), 31 CFR 
901.3(b)(4), 31 U.S.C. 3720A(a), and 31 CFR 285.2(c). Before submitting 
debts to FMS for purposes of offsetting Federal salary payments, 
creditor agencies must also publish regulations pursuant to 5 U.S.C. 
5514, 31 CFR 285.7(d)(2), and 5 CFR 550.1104.
    (5) Delinquent debt information requirements. For each debt 
submitted to FMS for offset, the creditor agency shall provide the 
following information:
    (i) Name and taxpayer identifying number of the person who owes the 
debt;
    (ii) Debtor's address last known to the creditor agency;
    (iii) The amount of the debt (including, as applicable, interest, 
penalties and administrative costs) and the date on which the debt 
became delinquent;
    (iv) The address and telephone number of the contact point within 
the creditor agency who will handle questions, concerns or 
communications regarding the debt;
    (v) Written certification as required in paragraph (d)(6) of this 
section; and
    (vi) Other information as may be requested by FMS.
    (6) Creditor agency certification. At the time the creditor agency 
notifies FMS of a debt for purposes of collection by offset, the 
creditor agency shall provide, in the manner required by FMS, written 
certification to FMS that:
    (i) The debt meets the requirements described in paragraph (d)(3)(i) 
of this section;
    (ii) In compliance with 31 U.S.C. 3716, 3720A, 26 U.S.C. 6402, and 
applicable regulations, the creditor agency has made a reasonable 
attempt to provide each debtor with:
    (A) Written notification, at least sixty days prior to submitting 
the debt

[[Page 123]]

and at the debtor's most current address known to the agency, of the 
nature and the amount of the debt, the intention of the creditor agency 
to collect the debt through offset, and an explanation of the rights of 
the debtor;
    (B) An opportunity to inspect and copy the records of the creditor 
agency with respect to the debt;
    (C) An opportunity for a review within the creditor agency of the 
determination of indebtedness, including the opportunity to present 
evidence that all or part of the debt is not past-due or legally 
enforceable;
    (D) An opportunity to enter into a written repayment agreement with 
the creditor agency; and
    (E) In the case of Federal employees, an opportunity for a hearing 
prior to submitting the debt for Federal salary offset. See 5 U.S.C. 
5514 and 5 CFR 550.1104. (See 31 CFR 285.7(d), which describes the 
authority to waive the salary offset certification as a prerequisite to 
referring the debt for other types of offsets.)
    (iii) The creditor agency has complied with all statutes, 
regulations, and policies applicable to the creditor agency's assessment 
of interest, penalties and administrative costs (including, as 
applicable, 31 U.S.C. 3717), and that the creditor agency has provided a 
written notice to debtors explaining the creditor agency's requirements 
concerning any such charges assessed against those debtors;
    (iv) The individual signing the certification has the delegated 
authority to execute the certification on behalf of the head of the 
creditor agency; and
    (v) such additional information that FMS may from time to time 
require in compliance with law, regulation or policy.
    (7) Updating Certification. After a debt has been submitted to FMS 
for purposes of collection by offset, the creditor agency shall provide, 
at least annually, in the manner and time frames required by FMS, 
written certification to FMS that:
    (i) The debt continues to meet the requirements described in 
paragraph (d)(3) of this section; and
    (ii) The creditor agency has properly credited all collections to 
the debt balance (other than collections received through centralized 
offset).
    (8) FMS instructions to creditor agencies. Agencies will provide the 
certification in a form and manner prescribed by FMS. FMS will instruct 
agencies as to the form such written certifications will take and how 
certifications can be delivered to FMS, including, but not limited to, 
the use of electronic data transmission.
    (9) Agencies which are both creditor and disbursing officials. A 
creditor agency that also designates disbursing officials pursuant to 31 
U.S.C. 3321(c) is not required to certify debts arising out of its 
operations to FMS before such agency's disbursing officials offset to 
collect such claims. This paragraph (d)(9) does not apply to FMS when it 
submits debts which it is servicing pursuant to 31 U.S.C. 3711(g).
    (10) Correcting and updating debt information. (i) When submitting 
debts for offset, the creditor agency must properly credit all 
collections, other than collections received from centralized offset.
    (ii) The creditor agency shall update delinquent debt records, in 
the manner and time frames required by FMS, to reflect any amounts 
credited by the creditor agency to the debtor's account after submission 
of the debt to FMS (other than credits for amounts collected by 
centralized offset).
    (iii) The creditor agency may update delinquent debt records to 
reflect any increases in the amount of the debt submitted to FMS for 
collection by offset provided that the creditor agency has complied with 
the requirements of paragraph (d)(6) of this section with regard to the 
increased amounts.
    (iv) The creditor agency shall notify FMS immediately of any change 
in the status of the legal enforceability of the debt--for example, if 
the creditor agency receives notice that the debtor has filed for 
bankruptcy protection.
    (v) The creditor agency shall notify FMS if it has returned any 
monies to the debtor/payee.
    (11) Debts at FMS, a debt collection center, or the Department of 
Justice. If a creditor agency has transferred a debt to FMS or a 
Treasury-designated debt collection center pursuant to 31 U.S.C.

[[Page 124]]

3711(g) and 31 CFR 285.12, or if a creditor agency has referred a debt 
to the Department of Justice for enforced collection, then FMS, the debt 
collection center, or the Department of Justice, as the case may be, is 
responsible for submitting the debt information to FMS to satisfy the 
creditor agency's obligations under 31 U.S.C. 3716(c)(6) and this 
section.
    (12) Certification of amount to be offset if different than maximum 
allowed by law. Generally, the amount of an offset will be calculated as 
set forth in paragraph (f)(2) of this section. If the creditor agency 
certifies to FMS that the creditor agency has determined the offset 
amount allowed by law would result in financial hardship to the debtor 
and that a lesser offset amount (specified either in dollar amount or as 
a percentage of the payment) is reasonable and appropriate based on the 
debtor's financial circumstances, then the disbursing official shall 
offset such lesser amount specified by the creditor agency.
    (13) Duplication of notices not required. Nothing in this section 
requires any creditor agency to duplicate any notice or opportunity for 
hearing or review provided to the debtor prior to offset.
    (e) Payments made by the United States--(1) Payments eligible for 
offset. Except as set forth in paragraph (e)(2) of this section, all 
Federal payments are eligible for offset under this section. Eligible 
Federal payments include, but are not limited to, Federal wage, salary, 
and retirement payments, vendor and expense reimbursement payments, 
certain benefit payments, travel advances and reimbursements, grants, 
fees, refunds, judgments (including those certified for payment pursuant 
to 31 U.S.C. 1304), tax refunds, and other payments made by Federal 
agencies.
    (2) Payments excluded from offset under this section. This section 
does not apply to the following payments:
    (i) Black Lung Part C benefit payments, or Railroad Retirement tier 
2 payments;
    (ii) Payments made under the tariff laws of the United States;
    (iii) Veterans Affairs benefit payments to the extent such payments 
are exempt from offset pursuant to 38 U.S.C. 5301;
    (iv) Payments made under any program administered by the Secretary 
of Education under title IV of the Higher Education Act of 1965 for 
which payments are certified by the Department of Education;
    (v) Payments made under any other Federal law if offset is expressly 
prohibited by Federal statute;
    (vi) Payments made under any program for which the Secretary has 
granted an exemption in accordance with the provisions of 31 U.S.C. 
3716(c)(3)(B) and paragraph (e)(7) of this section; and
    (vii) Federal loan payments other than travel advances.
    (3) Specific rules for certain payment types. (i) Specific rules 
apply with respect to the offset of the following types of payments:
    (A) Social Security benefit payments (excluding Supplemental 
Security Income payments), Black Lung (part B) payments, and Railroad 
Retirement (other than tier 2) payments to the extent such payments are 
subject to offset under 31 U.S.C. 3716(c)(3)(A) (see 31 CFR 285.4);
    (B) Federal salary payments (see 31 CFR 285.7; 5 CFR 550.1101 
through 550.1108); and
    (C) Tax refund payments (see 31 CFR 285.2).
    (ii) This section governs the offset of such payments to the extent 
that this section is not inconsistent with the special rules that apply 
for a particular type of payment.
    (4) Payments made to joint payees. If a payment is certified to more 
than one payee (i.e., joint payees), the entire payment (including a tax 
refund payment) will be subject to offset for a debt of either payee, 
unless otherwise prohibited by law or regulation. See 31 CFR 285.2(g) 
regarding offset of joint tax refunds and claims to return offset funds 
to the non-debtor, joint payee.
    (5) Payments made to representative payees. If a payment is made to 
a person solely in that person's capacity as a representative payee for 
another person having the beneficial interest in a payment, the 
disbursing official shall offset that payment only to collect debts owed 
by the person having the

[[Page 125]]

beneficial interest in the payment. Payment agencies are responsible for 
identifying representative payees.
    (6) Assigned payments. (i) If a person, including a Federal 
contractor, assigns the right to receive a Federal payment to a third 
party (the ``assignee''), the assigned payment will be subject to offset 
to collect a delinquent debt owed by the assignee.
    (ii) An assigned payment will also be subject to offset to collect 
delinquent debts owed by the assignor unless:
    (A) In accordance with 41 U.S.C. 15(e)-(f), the payment has been 
properly assigned to a financial institution pursuant to a Federal 
contract, the contract contains provisions prohibiting the payment from 
being reduced or offset for debts owed by the contractor, and the debt 
arose independently of the contract; or
    (B) pursuant to 31 U.S.C. 3727, the payment is being made to the 
assignee as settlement or satisfaction of a claim brought by the 
assignee against the creditor agency based upon the contract, and the 
debt of the contractor arises independently of the contract; or
    (C) the debtor has properly assigned the right to such payments and 
the debt arose after the effective date of the assignment.
    (7) Payment agency requests for exemptions from centralized offset 
pursuant to 31 U.S.C. 3716(c)(3)(B)--(i) Means-tested payments. The 
Secretary will exempt from centralized offset payments made under means-
tested programs when requested by the head of the agency making such 
payments. For purposes of this section ``means-tested programs'' are 
those which base eligibility on a determination that the income and/or 
assets of the beneficiary are inadequate to provide the beneficiary with 
an adequate standard of living without program assistance.
    (ii) Payments made under programs which are not means-tested. Upon 
written request from the payment agency, the Secretary may exempt 
classes of payments which are not means-tested. Payment agencies may 
request that the Secretary exempt 100% of each payment in a payment 
class or that the Secretary exempt a specific lesser percentage. The 
Secretary will consider such requests under standards prescribed by the 
Secretary and published on the FMS Web site. See www.fms.treas.gov/debt.
    (iii) Procedures for requesting exemptions. The head of the payment 
agency must make a request for exemption in writing. The request must 
comply with the procedures published by FMS and made available at its 
Web site. See www.fms.treas.gov/debt.
    (iv) Exemptions apply to classes of payments. The Secretary will 
only exempt classes of payments. Requests for exemption of individual 
payments will not be considered.
    (8) Payment agency responsibilities. (i) Payment agencies shall 
prepare and submit payment vouchers in the manner prescribed by the 
disbursing official to ensure that all payments legally eligible for 
offset will be offset and all payments not eligible will not be offset. 
Payment agencies shall notify the disbursing agency, in the manner 
prescribed by FMS, that a payment is a recurring payment.
    (ii) Payment agencies shall also review the nature of payments the 
agency certifies and notify FMS of any legal bars to centralized offset 
of payments.
    (9) Payment and disbursing officials have satisfied the obligation 
underlying the payment. When an offset occurs, the debtor has received 
payment in full for the underlying obligation represented by the 
payment. Pursuant to 31 U.S.C. 3716(c)(2)(A), neither the disbursing 
official nor the payment agency shall be liable for the amount of the 
offset on the basis that the underlying obligation was not satisfied. 
For example, if an agency certifies a payment to a Federal contractor 
for work completed or services provided, and that payment is offset to 
collect a delinquent debt that the contractor owes to another Federal 
agency, the contractor has been paid in full for its services. When the 
creditor agency credits the offset amount to the contractor's delinquent 
debt, the contractor has received full value for the services performed 
under the contract.
    (f) Offset--(1) When offset occurs. When a match occurs and all 
other requirements for offset under 31 U.S.C. 3716(c), 3720A, and 
applicable regulations have been met, the disbursing official shall 
offset the payee's Federal payment to

[[Page 126]]

satisfy, in whole or part, the debt owed by the debtor. Offsets will 
continue until the debt, including any interest, penalties, and 
administrative costs, is paid in full or otherwise resolved to the 
satisfaction of the creditor agency.
    (2) Offset amount. (i) Except as otherwise provided in 31 CFR 
285.4(e) and 285.7(g) (addressing centralized offset of certain Federal 
benefit payments and salary payments, respectively), the disbursing 
official shall offset the lesser of:
    (A) The amount of the payment as shown on the payment record; or
    (B) The amount of the debt, including any interest, penalties and 
administrative costs; or
    (C) In the case of retirement annuity payments certified by the 
Office of Personnel Management, up to twenty-five percent of the amount 
of the payment as shown on the payment record.
    (ii) Notwithstanding paragraph (f)(2)(i) of this section, if a 
creditor agency has specified another amount, either in dollars or as a 
percentage of the payment, pursuant to paragraph (d)(15) of this 
section, the disbursing official shall offset the amount specified by 
the creditor agency.
    (3) Priorities for collecting multiple debts owed by the payee. (i) 
A levy pursuant to the Internal Revenue Code of 1986 shall take 
precedence over deductions under this section.
    (ii) When a payment may be offset to collect more than one debt, 
amounts offset will be applied:
    (A) First, to satisfy any past due support debts assigned to a State 
pursuant to sections 402(a)(26) and 471(a)(17) of the Social Security 
Act (see 26 U.S.C. 6402(c) and Sec. Sec. 285.1 and 285.3 of this part);
    (B) Second, to satisfy any debts owed to Federal agencies, as 
described in this Sec. 285.5;
    (C) Third, to satisfy any qualifying past-due support claims not 
assigned to a State (see 26 U.S.C. 6402(c) and Sec. Sec. 285.1 and 
285.3 of this part); and
    (D) Fourth, to any debts owed to States for debts other than past-
due support (see Sec. 285.8 of this part).
    (g) Notices--(1) Warning notice by disbursing official to payee/
debtor. Before offsetting a recurring payment, the disbursing official, 
or FMS on behalf of the disbursing official, will notify the payee in 
writing when offsets will begin (which may be stated as a number of days 
or number of payments from the time of the notice) and the anticipated 
amount of such offset (which may be stated as a percentage of the 
payment). Such notice shall also provide the information contained in 
paragraph (g)(3) of this section. Failure to send such notice does not 
affect the validity of the offset.
    (2) No additional warning notice when collections are suspended and 
resumed. As described in paragraph (f)(3)(iii) of this section, FMS may 
suspend or reduce the application of collections from a recurring 
payment for one debt when another debt, which is owed by the same debtor 
and has a higher legal priority, is submitted to FMS for collection. The 
disbursing official is not required to send additional warning notices 
when collections for the lower priority debt resume; however, pursuant 
to paragraph (g)(3) of this section, each offset will be accompanied by 
an offset notice, which explains how the offset amounts were applied.
    (3) Offset notice. When an offset occurs under this section, the 
disbursing official, or FMS on behalf of the disbursing official, shall 
notify the payee in writing that an offset has occurred including:
    (i) A description of the payment and the amount of offset taken;
    (ii) The identity of the creditor agency requesting the offset; and
    (iii) The address and telephone number of the contact point within 
the creditor agency who will handle concerns regarding the offset.
    (h) Notification to creditor and payment agencies. (1) FMS will 
notify the creditor agency of all offsets made to collect the creditor 
agency's debts. Such notification shall include the complete name and 
taxpayer identifying number of each debtor/payee, the total amounts 
collected from each debtor/payee's payment, and the amount of any fees 
charged by FMS and any other disbursing official conducting offsets. FMS 
will not advise the creditor agency of the source of payment from which 
such amounts were collected.

[[Page 127]]

    (2) When a non-Treasury disbursing official conducts the offset, 
that disbursing official will transmit to FMS all of the information 
necessary for FMS to send notification under paragraph (h)(1) of this 
section, including the amount of any fees that the creditor agency is 
responsible for paying.
    (3) FMS will make available to the payment agency the information 
contained in the notification of offset, so that the payment agency may 
direct any questions concerning the claim to the appropriate contact 
person in the creditor agency.
    (i) Disposition of amounts collected. (1) FMS will transmit amounts 
collected for debts, less fees charged pursuant to paragraph (j) of this 
section, to the appropriate creditor agency or agencies. Alternatively, 
FMS may bill the creditor agency for any fees charged pursuant to 
paragraph (j) of this section.
    (2) If FMS learns from a paying agency that a payment should not 
have been made, and thus not offset, FMS will notify the creditor 
agency. FMS may deduct the offset amount from future amounts payable to 
the creditor agency. Alternatively, upon FMS's request, the creditor 
agency shall return promptly to the disbursing official an amount equal 
to the amount of the offset (without regard to whether any other amounts 
payable to such disbursing official have been paid).
    (3) Generally, the disbursing official is not responsible for 
refunding money to debtors. The creditor agency shall notify FMS any 
time the creditor agency returns all or any part of an offset payment to 
an affected payee. See paragraph (d)(10)(v) of this section. FMS and the 
creditor agency shall adjust the debtor records appropriately.
    (j) Fees. FMS may charge a fee sufficient to cover the full cost of 
implementing the centralized offset program, including the amount of any 
fees charged by other disbursing officials conducting an offset under 
this section. FMS may deduct the fees from amounts collected by offset 
or may bill the creditor agencies. FMS will charge fees only for actual 
offsets collected.
    (k) Waiver of certain provisions under the Computer Matching Privacy 
and Protection Act of 1988. As authorized by 31 U.S.C. 3716(f), FMS, 
under a delegation of authority from the Secretary, has waived certain 
requirements of the Computer Matching and Privacy Protection Act of 
1988, Pub. L. No. 100-503, as amended, for matches between delinquent 
debt records and payment records for offset purposes upon written 
certification by the head of the creditor agency that the requirements 
of 31 U.S.C. 3716(a) have been met. Specifically, for administrative 
offset of Federal payments other than tax refunds, FMS has waived the 
requirements for a computer matching agreement contained in 5 U.S.C. 
552a(o) and for post-match notice and verification contained in 5 U.S.C. 
552a(p) so long as the creditor agency provides certification to FMS in 
accordance with the provisions of paragraph (d)(6) of this section. Such 
waiver is not necessary for offset of Federal tax refunds, pursuant to 5 
U.S.C. 552a(a)(8)(B). The Data Integrity Board of the Department of the 
Treasury shall review and include in reports under 5 U.S.C. 
552a(u)(3)(D) a description of the matching activities conducted for 
centralized offset under this section. No other Data Integrity Board is 
required to take any action under 5 U.S.C. 552a(u) concerning these 
computerized comparisons.

[67 FR 78942, Dec. 26, 2002, as amended at 70 FR 7135, Jan. 21, 2005]



Sec. 285.7  Salary offset.

    (a) Purpose and scope. (1) This section establishes FMS's procedures 
for the centralized offset of Federal salary payments to collect 
delinquent nontax debts owed to the United States. This process is known 
as centralized salary offset. Rules issued by the Office of Personnel 
Management contain the requirements Federal agencies must follow prior 
to conducting centralized or non-centralized salary offset and the 
procedures for requesting offsets directly from a paying agency, rather 
than through TOP. See 5 CFR 550.1101 through 550.1108.
    (2) This section implements the requirement under 5 U.S.C. 
5514(a)(1) that all Federal agencies, using a process known as 
centralized salary offset computer matching, identify Federal employees 
who owe delinquent nontax debt to the United States. Centralized salary 
offset computer matching is the

[[Page 128]]

computerized comparison of delinquent debt records with records of 
Federal employees. The purpose of centralized salary offset computer 
matching is to identify those debtors whose Federal salaries should be 
offset to collect delinquent debts owed to the Federal Government.
    (3) This section specifies the delinquent debt records and Federal 
employee records that must be included in the salary offset matching 
process. For purposes of this section, delinquent debt records consist 
of the debt information submitted to the Financial Management Service 
for purposes of administrative offset as required under 31 U.S.C. 
3716(c)(6). Agencies that submit their debt to FMS for purposes of 
administrative offset are not required to submit duplicate information 
for purposes of centralized salary offset computer matching under 5 
U.S.C. 5514 and this section.
    (4) This section establishes an interagency consortium to implement 
centralized salary offset computer matching on a government-wide basis 
as required under 5 U.S.C. 5514(a)(1).
    (5) The receipt of collections from salary offsets does not preclude 
a creditor agency from pursuing other debt collection remedies, 
including the offset of other Federal payments to satisfy delinquent 
nontax debt owed to the United States. A creditor agency should pursue, 
when deemed appropriate by such agency, such debt collection remedies 
separately or in conjunction with salary offset.
    (6) This section does not govern the centralized offset of final 
salary payments or lump-sum payments made to employees who have left an 
agency's employ. The centralized offset of such payments is governed by 
Sec. 285.5 of this part.
    (b) Definitions. For purposes of this section:
    Administrative offset means withholding funds payable by the United 
States to, or held by the United States for, a person to satisfy a debt 
owed by the payee.
    Agency means a department, agency or subagency, court, court 
administrative office, or instrumentality in the executive, judicial, or 
legislative branch of the Federal government, including government 
corporations.
    Centralized salary offset computer matching means the computerized 
comparison of Federal employee records with delinquent debt records to 
identify Federal employees who owe such debts.
    Creditor agency means any agency that is owed a debt.
    Debt means any amount of money, funds, or property that has been 
determined by an appropriate official of the Federal government to be 
owed to the United States by a person, including debt administered by a 
third party acting as an agent for the Federal Government. For purposes 
of this section, the term ``debt'' does not include debts arising under 
the Internal Revenue Code of 1986 (26 U.S.C.).
    Delinquent debt record means information about a past-due, legally 
enforceable debt, submitted by a creditor agency to FMS for purposes of 
administrative offset (including salary offset) in accordance with the 
provisions of 31 U.S.C. 3716 and applicable regulations. Debt 
information includes the amount and type of debt and the debtor's name, 
address, and taxpayer identifying number.
    Disbursing official means an officer or employee designated to 
disburse Federal salary payments. This section applies to all disbursing 
officials of Federal salary payments, including but not limited to, 
disbursing officials of the Department of the Treasury, the Department 
of Defense, the United States Postal Service, any government 
corporation, and any disbursing official of the United States designated 
by the Secretary.
    Disposable pay has the same meaning as that term is defined in 5 CFR 
550.1103.
    Federal employee means a current employee of an agency, including a 
current member of the Armed Forces or a Reserve of the Armed Forces 
(Reserves), employees of the United States Postal Service, and seasonal 
and temporary employees.
    Federal employee records means records of Federal salary payments 
that a paying agency has certified to a disbursing official for 
disbursement.

[[Page 129]]

    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Paying agency means the agency that employs the Federal employee who 
owes the debt and authorizes the payment of his or her current pay. A 
paying agency also includes an agency that performs payroll services on 
behalf of the employing agency.
    Salary offset means administrative offset to collect a debt owed by 
a Federal employee from the current pay account of the employee.
    Secretary means the Secretary of the Treasury or his or her 
delegate.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number is the 
individual's social security number.
    (c) Establishment of the consortium. As required by the provisions 
of 5 U.S.C. 5514(a)(1), by issuance of this section, the Secretary 
establishes an interagency consortium to implement centralized salary 
offset computer matching. The consortium initially includes all agencies 
that disburse Federal salary payments, including but not limited to, 
FMS, the Department of Defense, the United States Postal Service, 
government corporations, and agencies with Treasury-designated 
disbursing officials. The membership of the consortium may be changed at 
the discretion of the Secretary, and the Secretary will be responsible 
for the ongoing coordination of the activities of the consortium.
    (d) Creditor agency participation. (1) As required under 5 U.S.C. 
5514(a)(1), creditor agencies shall participate at least annually in 
centralized salary offset computer matching. By notifying FMS of all 
past-due, legally enforceable debts delinquent for more than 180 days 
for purposes of 31 U.S.C. 3716(c)(6), creditor agencies shall have met 
the requirement set forth in 5 U.S.C. 5514(a)(1). Additionally, creditor 
agencies may notify FMS of past-due, legally enforceable debts 
delinquent for less than 180 days for purposes of centralized offset.
    (2) Prior to submitting debts to FMS for purposes of administrative 
offset (including salary offset) and centralized salary offset computer 
matching, Federal agencies shall prescribe regulations in accordance 
with the requirements of 31 U.S.C. 3716 (administrative offset) and 5 
U.S.C. 5514 (salary offset).
    (3) Prior to submitting a debt to FMS for purposes of collection by 
administrative offset, including salary offset, creditor agencies shall 
provide written certification to FMS that:
    (i) The debt is past-due and legally enforceable in the amount 
submitted to FMS and that the creditor agency will ensure that 
collections (other than collections through offset) are properly 
credited to the debt;
    (ii) Except in the case of a judgment debt or as otherwise allowed 
by law, the debt is referred for offset within ten years after the 
agency's right of action accrues;
    (iii) The creditor agency has complied with the provisions of 31 
U.S.C. 3716 (administrative offset) and related regulations including, 
but not limited to, the provisions requiring that the creditor agency 
provide the debtor with applicable notices and opportunities for a 
review of the debt; and
    (iv) The creditor agency has complied with the provisions of 5 
U.S.C. 5514 (salary offset) and related regulations including, but not 
limited to, the provisions requiring that the creditor agency provide 
the debtor with applicable notices and opportunities for a hearing.
    (4) The creditor agency is not required to submit the certification 
set forth in paragraph (d)(3)(iv) of this section prior to submitting a 
debt to FMS. However, if the creditor agency does not provide such 
certification initially, the creditor agency shall provide the Federal 
employee with the notices and opportunity for a hearing, as required by 
5 U.S.C. 5514 and applicable regulations, and shall make the necessary 
certification before the disbursing official offsets a salary payment 
pursuant to this section. A creditor agency may submit a debt without 
the requirement set forth in paragraph (d)(3)(iv) of this section, only 
if the creditor agency intends to complete the certification after 
complying with the provisions of 5 U.S.C. 5514 and applicable 
regulations.

[[Page 130]]

    (5) The creditor agency shall notify FMS immediately of any payments 
credited by the creditor agency to the debtor's account, other than 
credits for amounts collected by offset, after submission of the debt to 
FMS. The creditor agency also shall notify FMS immediately of any change 
in the status of the legal enforceability of the debt, for example, if 
the creditor agency receives notice that the debtor has filed for 
bankruptcy protection.
    (e) Centralized salary offset computer match. (1) Delinquent debt 
records will be compared with Federal employee records maintained by 
members of the consortium or paying agencies. The records will be 
compared to identify Federal employees who owe delinquent debts for 
purposes of collecting the debt by administrative offset. A match will 
occur when the taxpayer identifying number and name of a Federal 
employee are the same as the taxpayer identifying number and name of a 
debtor.
    (2) As authorized by the provisions of 31 U.S.C. 3716(f), FMS, under 
a delegation of authority from the Secretary, has waived certain 
requirements of the Computer Matching and Privacy Protection Act of 
1988, 5 U.S.C. 552a, as amended, for administrative offset, including 
salary offset, upon written certification by the head of the creditor 
agency that the requirements of 31 U.S.C. 3716(a) have been met. 
Specifically, FMS has waived the requirements for a computer matching 
agreement contained in 5 U.S.C. 552a(o) and for post-match notice and 
verification contained in 5 U.S.C. 552a(p). The creditor agency will 
provide certification in accordance with the provisions of paragraph 
(d)(3)(iii) of this section.
    (f) Salary offset. When a match occurs and all other requirements 
for offset have been met, as required by the provisions of 31 U.S.C. 
3716(c) the disbursing official shall offset the Federal employee's 
salary payment to satisfy, in whole or part, the debt owed by the 
employee. Alternatively, the paying agency, on behalf of the disbursing 
official, may deduct the amount of the offset from an employee's 
disposable pay before the employee's salary payment is certified to a 
disbursing official for disbursement. The salary paying agency shall use 
such records as it deems necessary to accurately calculate disposable 
pay in accordance with 5 CFR 550.1103.
    (g) Offset amount. (1) The amount offset from a salary payment under 
this section shall be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs; or
    (ii) An amount up to 15% of the debtor's disposable pay.
    (2) Alternatively, the amount offset may be an amount agreed upon, 
in writing, by the debtor and the creditor agency.
    (3) Offsets will continue until the debt, including any interest, 
penalties, and costs, is paid in full or otherwise resolved to the 
satisfaction of the creditor agency.
    (h) Priorities. (1) A levy pursuant to the Internal Revenue Code of 
1986 shall take precedence over other deductions under this section.
    (2) When a salary payment may be reduced to collect more than one 
debt, amounts offset under this section will be applied to a debt only 
after amounts offset have been applied to satisfy past due child support 
debts assigned to a State pursuant to 402(a)(26) or section 471(a)(17) 
of the Social Security Act.
    (i) Notice. (1) Before offsetting a salary payment, the disbursing 
official, or the paying agency on behalf of the disbursing official, 
shall notify the Federal employee in writing of the date deductions from 
salary will commence and of the amount of such deductions.
    (2)(i) When an offset occurs under this section, the disbursing 
official, or the paying agency on behalf of the disbursing official, 
shall notify the Federal employee in writing that an offset has occurred 
including:
    (A) A description of the payment and the amount of offset taken;
    (B) The identity of the creditor agency requesting the offset; and,
    (C) A contact point within the creditor agency that will handle 
concerns regarding the offset.
    (ii) The information described in paragraphs (i)(2)(i)(B) and 
(i)(2)(i)(C) of this section does not need to be provided to the Federal 
employee when the offset occurs if such information

[[Page 131]]

was included in a prior notice from the disbursing official or paying 
agency.
    (3) The disbursing official will advise each creditor agency of the 
names, mailing addresses, and taxpayer identifying numbers of the 
debtors from whom amounts of past-due, legally enforceable debt were 
collected and of the amounts collected from each debtor for that agency. 
The disbursing official will not advise the creditor agency of the 
source of payment from which such amounts were collected.
    (j) Fees. Agencies that perform centralized salary offset computer 
matching services may charge a fee sufficient to cover the full cost for 
such services. In addition, FMS, or a paying agency acting on behalf of 
FMS, may charge a fee sufficient to cover the full cost of implementing 
the administrative offset program. FMS may deduct the fees from amounts 
collected by offset or may bill the creditor agencies. Fees charged for 
offset shall be based on actual administrative offsets completed.
    (k) Disposition of amounts collected. The disbursing official 
conducting the offset will transmit amounts collected for debts, less 
fees charged under paragraph (j) of this section, to the appropriate 
creditor agency. If an erroneous offset payment is made to a creditor 
agency, the disbursing official will notify the creditor agency that an 
erroneous offset payment has been made. The disbursing official may 
deduct the amount of the erroneous offset payment from future amounts 
payable to the creditor agency. Alternatively, upon the disbursing 
official's request, the creditor agency shall return promptly to the 
disbursing official or the affected payee an amount equal to the amount 
of the erroneous payment (without regard to whether any other amounts 
payable to such agency have been paid). The disbursing official and the 
creditor agency shall adjust the debtor records appropriately.

[63 FR 23357, Apr. 28, 1998, as amended at 70 FR 22789, May 3, 2005]



Sec. 285.8  Offset of tax refund payments to collect state income tax 
obligations.

    (a) Definitions. For purposes of this section:
    Debt as used in this section means past-due, legally enforceable 
State income tax obligation unless otherwise indicated.
    Debtor as used in this section means a person who owes a state 
income tax obligation.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Past-due, legally enforceable State income tax obligation means a 
debt which resulted from:
    (1) A judgment rendered by a court of competent jurisdiction which 
has determined an amount of State income tax to be due,
    (2) A determination after an administrative hearing which has 
determined an amount of state income tax to be due and which is no 
longer subject to judicial review, or
    (3) A State income tax assessment (including self-assessments) which 
has become final in accordance with State law but not collected and 
which has not been delinquent for more than 10 years.
    State means the several States of the United States. The term 
``State'' also includes the District of Columbia, American Samoa, Guam, 
the United States Virgin Islands, the Commonwealth of the Northern 
Mariana Islands, and the Commonwealth of Puerto Rico.
    State income tax obligation means State income tax obligations as 
determined under State law. For purposes of this section, State income 
tax obligation includes any local income tax administered by the chief 
tax administration agency of the State.
    Tax refund offset means withholding or reducing a tax refund 
overpayment by an amount necessary to satisfy a debt owed by the 
payee(s).
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402(a) and 26 CFR 6402-
3(a)(6)(i) for any liabilities for any Federal tax on the part of the 
person who made the overpayment.

[[Page 132]]

    (b) General rule. (1) FMS will collect past-due, legally enforceable 
State income tax obligations by tax refund offset upon notification to 
FMS of a past-due, legally enforceable State income tax obligation in 
accordance with 26 U.S.C. 6402(e) and this section.
    (2) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted to FMS. A match will occur when the 
taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and 
name on a payment certification record are the same as the taxpayer 
identifying number and name on a delinquent debtor record. When a match 
occurs and all other requirements for tax refund offset have been met, 
FMS will reduce the amount of any tax refund payment payable to a debtor 
by the amount of any past-due, legally enforceable State income tax 
obligation owed by the debtor. Any amounts not offset will be paid to 
the payee(s) listed in the payment certification record.
    (3) FMS only will offset a tax refund payment if the address shown 
on the Federal tax return for the taxable year of the overpayment is an 
address within the State seeking the offset.
    (c) Notification of past-due, legally enforceable State income tax 
obligations. (1) Notification to FMS of past-due, legally enforceable 
State income tax obligations. States notifying FMS of state income tax 
obligations shall do so in the manner and format prescribed by FMS. The 
notification of liability must be accompanied by a certification that 
the debt is past-due and legally enforceable and that the State has 
complied with the requirements contained in paragraph (c)(3) of this 
section and with any requirements applicable to the offset of Federal 
tax refunds to collect past-due, legally enforceable State income tax 
obligations imposed by State law or procedures. The certification must 
specifically state that none of the debts submitted for collection by 
offset are debts owed by an individual who has claimed immunity from 
state taxation by reason of being an enrolled member of an Indian tribe 
who lives on a reservation and derives all of his or her income from 
that reservation unless such claim has been adjudicated de novo on its 
merits in accordance with paragraph (c)(3). FMS may reject a 
notification of past-due, legally enforceable State income tax 
obligations which do not comply with the requirements of this section. 
Upon notification of the rejection and the reason for rejection, the 
State may resubmit a corrected notification.
    (2) Minimum amount of past-due, legally enforceable State income tax 
obligations that may be submitted. FMS only will accept notification of 
past-due, legally enforceable State income tax obligations of $25 or 
more or such higher amounts as determined by FMS. States will be 
notified annually of any changes in the minimum debt amount.
    (3)(i) Advance notification to the debtor of the State's intent to 
collect by Federal tax refund offset. The State is required to provide a 
written notification to the debtor by certified mail, return receipt 
requested, informing the debtor that the State intends to refer the debt 
for collection by tax refund offset. The notice must also give the 
debtor at least 60 days to present evidence, in accordance with 
procedures established by the State, that all or part of the debt is not 
past-due or not legally enforceable.
    (ii) Determination. The State must, in accordance with procedures 
established by the State, consider any evidence presented by a debtor in 
response to the notice described in paragraph (c)(3)(i) of this section 
and determine whether an amount of such debt is past-due and legally 
enforceable. In those cases where a debtor claims that he or she is 
immune from State taxation by reason of being an enrolled member of an 
Indian tribe who lives on a reservation and derives all of his or her 
income from that reservation, State procedures shall include 
consideration of such claims de novo on the merits unless such claims 
have been previously adjudicated by a court of competent jurisdiction. 
States shall, upon request from the Secretary of the Treasury, make such 
procedures available to the Secretary of the Treasury for review.
    (iii) Reasonable efforts. Prior to submitting a debt to FMS for 
collection by tax refund offset the State must make reasonable efforts 
to collect the debt. Reasonable efforts include making

[[Page 133]]

written demand on the debtor for payment and complying with any other 
prerequisites to offset established by the State.
    (4) Correcting and updating notification. The State shall, in the 
manner and in the time frames provided by FMS, notify FMS of any 
deletion or decrease in the amount of past-due, legally enforceable 
State income tax obligation referred to FMS for collection by tax refund 
offset. The State may notify FMS of any increases in the amount of the 
debt referred to FMS for collection by tax refund offset provided that 
the State has complied with the requirements of paragraph (c)(3) of this 
section with regard to those debts.
    (d) Priorities for offset. (1) As provided in 26 U.S.C. 6402, a tax 
refund payment shall be reduced first by the amount of any past-due 
support assigned to a State; second, by the amount of any past-due, 
legally enforceable debt owed to a Federal agency; third, by the amount 
of any qualifying past-due support not assigned to a State and fourth, 
by any past-due, legally enforceable State income tax obligation.
    (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 
6402(a), (c), (d) and (e) shall occur prior to crediting the overpayment 
to any future liability for an internal revenue tax. Any amount 
remaining after tax refund offset under 26 U.S.C. 6402(a), (c), (d) and 
(e) shall be refunded to the taxpayer, or applied to estimated tax, if 
elected by the taxpayer pursuant to IRS regulations.
    (3) If FMS receives notice from a State of more than one debt 
subject to this section that is owed by a debtor to the State, any 
overpayment by the debtor shall be applied against such debts in the 
order in which such debts accrued.
    (e) Post-offset notice. (1) When an offset occurs, FMS shall notify 
the debtor in writing of:
    (i) The amount and date of the offset and that the purpose of the 
offset was to satisfy a past-due, legally enforceable State income tax 
obligation;
    (ii) The State to which this amount has been paid or credited; and
    (iii) A contact point within the State that will handle concerns or 
questions regarding the offset.
    (2) The notice in paragraph (e)(1) of this section also will advise 
any non-debtor spouse who may have filed a joint return with the debtor 
of the steps which the non-debtor spouse may take in order to secure his 
or her proper share of the tax refund. See paragraph (f) of this 
section.
    (3) FMS will advise States of the names, mailing addresses, and 
taxpayer identifying numbers of the debtors from whom amounts of state 
income tax obligations were collected, and of the amounts collected from 
each debtor through tax refund offset.
    (4) At least weekly, FMS will notify the IRS of the names and 
taxpayer identifying numbers of the debtors from whom amounts owed for 
past-due, legally enforceable State income tax obligations were 
collected from tax refund offsets and the amounts collected from each 
debtor.
    (f) Offset made with regard to a tax refund payment based upon joint 
return. If the person filing a joint return with a debtor owing the 
past-due, legally enforceable State income tax obligation takes 
appropriate action to secure his or her proper share of a tax refund 
from which an offset was made, the IRS will pay the person his or her 
share of the refund and request that FMS deduct that amount from future 
amounts payable to the State or that FMS otherwise obtain the funds back 
from the State. FMS, or the appropriate State, will adjust their debtor 
records accordingly.
    (g) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (h) of this 
section, to the appropriate State. If FMS learns that an erroneous 
offset payment is made to any State, FMS will notify the appropriate 
State that an erroneous offset payment has been made. FMS may deduct the 
amount of the erroneous offset payment from future amounts payable to 
the State. Alternatively, upon FMS' request, the State shall return 
promptly to the affected taxpayer or FMS an amount equal to the amount 
of the erroneous payment (unless the State previously has paid such 
amounts, or any portion of such amounts, to the affected taxpayer). 
States shall notify

[[Page 134]]

FMS any time a State returns an erroneous offset payment to an affected 
taxpayer. FMS, or the appropriate State, will adjust their debtor 
records accordingly.
    (h) Fees. The State will pay a fee to FMS to cover the full cost of 
offsets taken. The fee will be established annually in such amount as 
FMS determines to be sufficient to reimburse FMS for the full cost of 
the offset procedure. FMS will deduct the fees from amounts collected 
prior to disposition and transmit a portion of the fees deducted to 
reimburse the IRS for its share of the cost of administering the tax 
refund offset program for purposes of collecting past-due, legally 
enforceable State income tax obligations reported to FMS by the States. 
Fees will be charged only for actual tax refund offsets completed.
    (i) Review of tax refund offsets. In accordance with 26 U.S.C. 
6402(f), any reduction of a taxpayer's refund made pursuant to 26 U.S.C. 
6402(e) shall not be subject to review by any court of the United States 
or by the Secretary of the Treasury, FMS or IRS in an administrative 
proceeding. No action brought against the United States to recover the 
amount of this reduction shall be considered to be a suit for refund of 
tax. This subsection does not preclude any legal, equitable, or 
administrative action against the State to which the amount of such 
reduction was paid.
    (j) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program is permitted to the extent necessary in establishing 
appropriate agency records, locating any person with respect to whom a 
reduction under 26 U.S.C. 6402(e) is sought for purposes of collecting 
the debt, and in the defense of any litigation or administrative 
procedure ensuing from a reduction made under section 6402(e).
    (k) Effective date. This section applies to tax refund payments 
payable under 26 U.S.C. 6402 beginning January 1, 2000.

[64 FR 71231, Dec. 20, 1999]



                 Subpart B_Authorities Other Than Offset



Sec. 285.11  Administrative wage garnishment.

    (a) Purpose. This section provides procedures for Federal agencies 
to collect money from a debtor's disposable pay by means of 
administrative wage garnishment to satisfy delinquent nontax debt owed 
to the United States.
    (b) Scope. (1) This section applies to any Federal agency that 
administers a program that gives rise to a delinquent nontax debt owed 
to the United States and to any agency that pursues recovery of such 
debt.
    (2) This section shall apply notwithstanding any provision of State 
law.
    (3) Nothing in this section precludes the compromise of a debt or 
the suspension or termination of collection action in accordance with 
applicable law. See, for example, the Federal Claims Collection 
Standards (FCCS), 31 CFR parts 900-904.
    (4) The receipt of payments pursuant to this section does not 
preclude a Federal agency from pursuing other debt collection remedies, 
including the offset of Federal payments to satisfy delinquent nontax 
debt owed to the United States. A Federal agency may pursue such debt 
collection remedies separately or in conjunction with administrative 
wage garnishment.
    (5) This section does not apply to the collection of delinquent 
nontax debt owed to the United States from the wages of Federal 
employees from their Federal employment. Federal pay is subject to the 
Federal salary offset procedures set forth in 5 U.S.C. 5514 and other 
applicable laws.
    (6) Nothing in this section requires agencies to duplicate notices 
or administrative proceedings required by contract or other laws or 
regulations.
    (c) Definitions. As used in this section the following definitions 
shall apply:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations. For 
purposes of this section, agency means either the agency that 
administers the program that

[[Page 135]]

gave rise to the debt or the agency that pursues recovery of the debt.
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal legal holiday.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, a Sunday, or a 
Federal legal holiday.
    Debt or claim means any amount of money, funds or property that has 
been determined by an appropriate official of the Federal Government to 
be owed to the United States by an individual, including debt 
administered by a third party as an agent for the Federal Government.
    Debtor means an individual who owes a delinquent nontax debt to the 
United States.
    Delinquent nontax debt means any nontax debt that has not been paid 
by the date specified in the agency's initial written demand for 
payment, or applicable agreement, unless other satisfactory payment 
arrangements have been made. For purposes of this section, the terms 
``debt'' and ``claim'' are synonymous and refer to delinquent nontax 
debt.
    Disposable pay means that part of the debtor's compensation 
(including, but not limited to, salary, bonuses, commissions, and 
vacation pay) from an employer remaining after the deduction of health 
insurance premiums and any amounts required by law to be withheld. For 
purposes of this section, ``amounts required by law to be withheld'' 
include amounts for deductions such as social security taxes and 
withholding taxes, but do not include any amount withheld pursuant to a 
court order.
    Employer means a person or entity that employs the services of 
others and that pays their wages or salaries. The term employer 
includes, but is not limited to, State and local Governments, but does 
not include an agency of the Federal Government.
    Evidence of service means information retained by the agency 
indicating the nature of the document to which it pertains, the date of 
mailing of the document, and to whom the document is being sent. 
Evidence of service may be retained electronically so long as the manner 
of retention is sufficient for evidentiary purposes.
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and the paying of those amounts to a creditor 
in satisfaction of a withholding order.
    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial or administrative body. For 
purposes of this section, the terms ``wage garnishment order'' and 
``garnishment order'' have the same meaning as ``withholding order.''
    (d) General rule. Whenever an agency determines that a delinquent 
debt is owed by an individual, the agency may initiate proceedings 
administratively to garnish the wages of the delinquent debtor.
    (e) Notice requirements. (1) At least 30 days before the initiation 
of garnishment proceedings, the agency shall mail, by first class mail, 
to the debtor's last known address a written notice informing the debtor 
of:
    (i) The nature and amount of the debt;
    (ii) The intention of the agency to initiate proceedings to collect 
the debt through deductions from pay until the debt and all accumulated 
interest, penalties and administrative costs are paid in full; and
    (iii) An explanation of the debtor's rights, including those set 
forth in paragraph (e)(2) of this section, and the time frame within 
which the debtor may exercise his or her rights.
    (2) The debtor shall be afforded the opportunity:
    (i) To inspect and copy agency records related to the debt;
    (ii) To enter into a written repayment agreement with the agency 
under terms agreeable to the agency; and
    (iii) For a hearing in accordance with paragraph (f) of this section 
concerning the existence or the amount of the debt or the terms of the 
proposed repayment schedule under the garnishment order. However, the 
debtor is not entitled to a hearing concerning the terms of the proposed 
repayment schedule if these terms have been established by written

[[Page 136]]

agreement under paragraph (e)(2)(ii) of this section.
    (3) The agency will retain evidence of service indicating the date 
of mailing of the notice.
    (f) Hearing--(1) In general. Agencies shall prescribe regulations 
for the conduct of administrative wage garnishment hearings consistent 
with this section or shall adopt this section without change by 
reference.
    (2) Request for hearing. The agency shall provide a hearing, which 
at the agency's option may be oral or written, if the debtor submits a 
written request for a hearing concerning the existence or amount of the 
debt or the terms of the repayment schedule (for repayment schedules 
established other than by written agreement under paragraph (e)(2)(ii)) 
of this section.
    (3) Type of hearing or review. (i) For purposes of this section, 
whenever an agency is required to afford a debtor a hearing, the agency 
shall provide the debtor with a reasonable opportunity for an oral 
hearing when the agency determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the claim turns on the issue of credibility or veracity.
    (ii) If the agency determines that an oral hearing is appropriate, 
the time and location of the hearing shall be established by the agency. 
An oral hearing may, at the debtor's option, be conducted either in-
person or by telephone conference. All travel expenses incurred by the 
debtor in connection with an in-person hearing will be borne by the 
debtor. All telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (iii) In those cases when an oral hearing is not required by this 
section, an agency shall nevertheless accord the debtor a ``paper 
hearing,'' that is, an agency will decide the issues in dispute based 
upon a review of the written record. The agency will establish a 
reasonable deadline for the submission of evidence.
    (4) Effect of timely request. Subject to paragraph (f)(13) of this 
section, if the debtor's written request is received by the agency on or 
before the 15th business day following the mailing of the notice 
described in paragraph (e)(1) of this section, the agency shall not 
issue a withholding order under paragraph (g) of this section until the 
debtor has been provided the requested hearing and a decision in 
accordance with paragraphs (f)(10) and (f)(11) of this section has been 
rendered.
    (5) Failure to timely request a hearing. If the debtor's written 
request is received by the agency after the 15th business day following 
the mailing of the notice described in paragraph (e)(1) of this section, 
the agency shall provide a hearing to the debtor. However, the agency 
will not delay issuance of a withholding order unless the agency 
determines that the delay in filing the request was caused by factors 
over which the debtor had no control, or the agency receives information 
that the agency believes justifies a delay or cancellation of the 
withholding order.
    (6) Hearing official. A hearing official may be any qualified 
individual, as determined by the head of the agency, including an 
administrative law judge.
    (7) Procedure. After the debtor requests a hearing, the hearing 
official shall notify the debtor of:
    (i) The date and time of a telephonic hearing;
    (ii) The date, time, and location of an in-person oral hearing; or
    (iii) The deadline for the submission of evidence for a written 
hearing.
    (8) Burden of proof. (i) The agency will have the burden of going 
forward to prove the existence or amount of the debt.
    (ii) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must present by a preponderance of the evidence 
that no debt exists or that the amount of the debt is incorrect. In 
addition, the debtor may present evidence that the terms of the 
repayment schedule are unlawful, would cause a financial hardship to the 
debtor, or that collection of the debt may not be pursued due to 
operation of law.
    (9) Record. The hearing official must maintain a summary record of 
any hearing provided under this section. A hearing is not required to be 
a formal evidentiary-type hearing, however, witnesses who testify in 
oral hearings will do so under oath or affirmation.

[[Page 137]]

    (10) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, as soon as practicable, but not 
later than sixty (60) days after the date on which the request for such 
hearing was received by the agency. If an agency is unable to provide 
the debtor with a hearing and render a decision within 60 days after the 
receipt of the request for such hearing:
    (i) The agency may not issue a withholding order until the hearing 
is held and a decision rendered; or
    (ii) If the agency had previously issued a withholding order to the 
debtor's employer, the agency must suspend the withholding order 
beginning on the 61st day after the receipt of the hearing request and 
continuing until a hearing is held and a decision is rendered.
    (11) Content of decision. The written decision shall include:
    (i) A summary of the facts presented;
    (ii) The hearing official's findings, analysis and conclusions; and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The hearing official's decision will be 
the final agency action for the purposes of judicial review under the 
Administrative Procedure Act (5 U.S.C. 701 et seq.).
    (13) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a hearing scheduled pursuant to paragraph (f)(4) 
of this section will be deemed as not having timely filed a request for 
a hearing.
    (g) Wage garnishment order. (1) Unless the agency receives 
information that the agency believes justifies a delay or cancellation 
of the withholding order, the agency should send, by first class mail, a 
withholding order to the debtor's employer:
    (i) Within 30 days after the debtor fails to make a timely request 
for a hearing (i.e., within 15 business days after the mailing of the 
notice described in paragraph (e)(1) of this section), or,
    (ii) If a timely request for a hearing is made by the debtor, within 
30 days after a final decision is made by the agency to proceed with 
garnishment, or,
    (iii) As soon as reasonably possible thereafter.
    (2) The withholding order sent to the employer under paragraph 
(g)(1) of this section shall be in a form prescribed by the Secretary of 
the Treasury. The withholding order shall contain the signature of, or 
the image of the signature of, the head of the agency or his/her 
delegatee. The order shall contain only the information necessary for 
the employer to comply with the withholding order. Such information 
includes the debtor's name, address, and social security number, as well 
as instructions for withholding and information as to where payments 
should be sent.
    (3) The agency will retain evidence of service indicating the date 
of mailing of the order.
    (h) Certification by employer. Along with the withholding order, the 
agency shall send to the employer a certification in a form prescribed 
by the Secretary of the Treasury. The employer shall complete and return 
the certification to the agency within the time frame prescribed in the 
instructions to the form. The certification will address matters such as 
information about the debtor's employment status and disposable pay 
available for withholding.
    (i) Amounts withheld. (1) After receipt of the garnishment order 
issued under this section, the employer shall deduct from all disposable 
pay paid to the applicable debtor during each pay period the amount of 
garnishment described in paragraph (i)(2) of this section.
    (2)(i) Subject to the provisions of paragraphs (i)(3) and (i)(4) of 
this section, the amount of garnishment shall be the lesser of:
    (A) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (B) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on 
Garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount 
by which a debtor's disposable pay exceeds an amount equivalent to 
thirty times the minimum wage. See 29 CFR 870.10.
    (3) When a debtor's pay is subject to withholding orders with 
priority the following shall apply:
    (i) Unless otherwise provided by Federal law, withholding orders 
issued

[[Page 138]]

under this section shall be paid in the amounts set forth under 
paragraph (i)(2) of this section and shall have priority over other 
withholding orders which are served later in time. Notwithstanding the 
foregoing, withholding orders for family support shall have priority 
over withholding orders issued under this section.
    (ii) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (A) The amount calculated under paragraph (i)(2) of this section, or
    (B) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (iii) If a debtor owes more than one debt to an agency, the agency 
may issue multiple withholding orders provided that the total amount 
garnished from the debtor's pay for such orders does not exceed the 
amount set forth in paragraph (i)(2) of this section. For purposes of 
this paragraph (i)(3)(iii), the term agency refers to the agency that is 
owed the debt.
    (4) An amount greater than that set forth in paragraphs (i)(2) and 
(i)(3) of this section may be withheld upon the written consent of 
debtor.
    (5) The employer shall promptly pay to the agency all amounts 
withheld in accordance with the withholding order issued pursuant to 
this section.
    (6) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (7) Any assignment or allotment by an employee of his earnings shall 
be void to the extent it interferes with or prohibits execution of the 
withholding order issued under this section, except for any assignment 
or allotment made pursuant to a family support judgment or order.
    (8) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the agency to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.
    (j) Exclusions from garnishment. The agency may not garnish the 
wages of a debtor who it knows has been involuntarily separated from 
employment until the debtor has been reemployed continuously for at 
least 12 months. The debtor has the burden of informing the agency of 
the circumstances surrounding an involuntary separation from employment.
    (k) Financial hardship. (1) A debtor whose wages are subject to a 
wage withholding order under this section, may, at any time, request a 
review by the agency of the amount garnished, based on materially 
changed circumstances such as disability, divorce, or catastrophic 
illness which result in financial hardship.
    (2) A debtor requesting a review under paragraph (k)(1) of this 
section shall submit the basis for claiming that the current amount of 
garnishment results in a financial hardship to the debtor, along with 
supporting documentation. Agencies shall consider any information 
submitted in accordance with procedures and standards established by the 
agency.
    (3) If a financial hardship is found, the agency shall downwardly 
adjust, by an amount and for a period of time agreeable to the agency, 
the amount garnished to reflect the debtor's financial condition. The 
agency will notify the employer of any adjustments to the amounts to be 
withheld.
    (l) Ending garnishment. (1) Once the agency has fully recovered the 
amounts owed by the debtor, including interest, penalties, and 
administrative costs consistent with the FCCS, the agency shall send the 
debtor's employer notification to discontinue wage withholding.
    (2) At least annually, an agency shall review its debtors' accounts 
to ensure that garnishment has been terminated for accounts that have 
been paid in full.
    (m) Actions prohibited by the employer. An employer may not 
discharge, refuse to employ, or take disciplinary action against the 
debtor due to the issuance

[[Page 139]]

of a withholding order under this section.
    (n) Refunds. (1) If a hearing official, at a hearing held pursuant 
to paragraph (f)(3) of this section, determines that a debt is not 
legally due and owing to the United States, the agency shall promptly 
refund any amount collected by means of administrative wage garnishment.
    (2) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.
    (o) Right of action. The agency may sue any employer for any amount 
that the employer fails to withhold from wages owed and payable to an 
employee in accordance with paragraphs (g) and (i) of this section. 
However, a suit may not be filed before the termination of the 
collection action involving a particular debtor, unless earlier filing 
is necessary to avoid expiration of any applicable statute of 
limitations period. For purposes of this section, ``termination of the 
collection action'' occurs when the agency has terminated collection 
action in accordance with the FCCS or other applicable standards. In any 
event, termination of the collection action will have been deemed to 
occur if the agency has not received any payments to satisfy the debt 
from the particular debtor whose wages were subject to garnishment, in 
whole or in part, for a period of one (1) year.

[63 FR 25139, May 6, 1998, as amended at 64 FR 22908, Apr. 28, 1999; 66 
FR 51868, Oct. 11, 2001]



Sec. 285.12  Transfer of debts to Treasury for collection.

    (a) Definitions. For purposes of this section:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal government to be 
owed to the United States by a person. As used in this section, the term 
``debt'' does not include debts arising under the Internal Revenue Code 
of 1986.
    Debt collection center means an agency or a unit or subagency within 
an agency that has been designated by the Secretary of the Treasury to 
collect debt owed to the United States. FMS is a debt collection center.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Secretary means the Secretary of the Treasury.
    (b) In general. Cross-servicing means that FMS or another debt 
collection center is taking appropriate debt collection action on behalf 
of one or more Federal agencies or a unit or subagency thereof.
    (c) Mandatory transfer of debts to FMS. (1) Except as set forth in 
paragraph (d) of this section, a creditor agency shall transfer any debt 
that is more than 180 days delinquent to FMS for debt collection 
services. For accounting and reporting purposes, the debt remains on the 
books and records of the agency which transferred the debt.
    (2) On behalf of the creditor agency, FMS will take appropriate 
action to collect or compromise the transferred debt, or to suspend or 
terminate collection action thereon, in accordance with the statutory 
and regulatory requirements and authorities applicable to the debt and 
the action. Appropriate action to collect a debt may include referral to 
another debt collection center, a private collection contractor, or the 
Department of Justice for litigation. The creditor agency shall advise 
FMS, in writing, of any specific statutory or regulatory requirements 
pertaining to their debt and will agree, in writing, to a collection 
strategy which includes parameters for entering into compromise and 
repayments agreements with debtors.
    (3)(i) A debt is considered 180 days delinquent for purposes of this 
section if it is 180 days past due and is legally enforceable. A debt is 
past-due if it has not been paid by the date specified in the agency's 
initial written demand for

[[Page 140]]

payment or applicable agreement or instrument (including a post-
delinquency payment agreement) unless other satisfactory payment 
arrangements have been made. A debt is legally enforceable if there has 
been a final agency determination that the debt, in the amount stated, 
is due and there are no legal bars to collection action. Where, for 
example, a debt is the subject of a pending administrative review 
process required by statute or regulation and collection action during 
the review process is prohibited, the debt is not considered legally 
enforceable for purposes of mandatory transfer to FMS and is not to be 
transferred even if the debt is more than 180 days past-due.
    (ii) When a final agency determination is made after an 
administrative appeal or review process, the creditor agency must 
transfer such debt to FMS, if more than 180 days delinquent, within 30 
days after the date of the final decision.
    (iii) Nothing in this section is intended to impact the date of 
delinquency of a debt for other purposes such as for purposes of 
accruing interest and penalties.
    (4) Agencies are not required to transfer to FMS debts which are 
less than $25 (including interest, penalties, and administrative costs), 
or such other amount as FMS may determine. Agencies may transfer debts 
less than $25 to FMS if the creditor agency, in consultation with FMS, 
determines that transfer is important to ensure compliance with the 
agency's policies or programs. Agencies may combine individual debts of 
less than $25 owed by the same debtor for purposes of meeting the $25 
threshold.
    (d) Exceptions to mandatory transfer. (1) A creditor agency is not 
required to transfer a debt to FMS pursuant to paragraph (c)(1) of this 
section only during such period of time that the debt:
    (i) Is in litigation or foreclosure as described in paragraph (d)(2) 
of this section;
    (ii) Is scheduled for sale as described in paragraph (d)(3) of this 
section;
    (iii) Is at a private collection contractor if the debt has been 
referred to a private collection contractor in accordance with paragraph 
(e) of this section;
    (iv) Is at a debt collection center if the debt has been referred to 
a Treasury-designated debt collection center in accordance with 
paragraph (f) of this section;
    (v) Is being collected by internal offset as described in paragraph 
(d)(4) of this section; or
    (vi) Is covered by an exemption granted by the Secretary as 
described in paragraph (d)(5) of this section.
    (2)(i) A debt is in litigation if:
    (A) The debt has been referred to the Attorney General for 
litigation by the creditor agency; or
    (B) The debt is the subject of proceedings pending in a court of 
competent jurisdiction, including bankruptcy proceedings, whether 
initiated by the creditor agency, the debtor, or any other party.
    (ii) A debt is in foreclosure if:
    (A)(1) Collateral securing the debt is the subject of judicial 
foreclosure proceedings in a court of competent jurisdiction; or
    (2) Notice has been issued that collateral securing the debt will be 
foreclosed upon, liquidated, sold, or otherwise transferred pursuant to 
applicable law in a nonjudicial proceeding; and
    (B) The creditor agency anticipates that proceeds will be available 
from the liquidation of the collateral for application to the debt.
    (3) A debt is scheduled for sale if:
    (i) The debt will be disposed of under an asset sales program within 
one (1) year after becoming eligible for sale; or
    (ii) The debt will be disposed of under an asset sales program and a 
schedule established by the creditor agency and approved by the Director 
of the Office of Management and Budget.
    (4) A debt is being collected by internal offset if a creditor 
agency expects the debt to be collected in full within three (3) years 
from the date of delinquency through internal offset. A debt is being 
collected by internal offset if the creditor agency is withholding funds 
payable to the debtor by the creditor agency, or if the creditor agency 
has issued notice to the debtor of the creditor agency's intent to 
offset such funds.

[[Page 141]]

    (5)(i) Upon the written request of the head of an agency, or as the 
Secretary may determine on his/her own initiative, the Secretary may 
exempt any class of debts from the application of the requirement 
described in paragraph (c)(1) of this section. In determining whether to 
exempt a class of debts, the Secretary will determine whether exemption 
is in the best interests of the Government after considering the 
following factors:
    (A) Whether an exemption is the best means to protect the 
government's financial interest, taking into consideration the number, 
dollar amount, age and collection rates of the debts for which exemption 
is requested;
    (B) Whether the nature of the program under which the delinquencies 
have arisen is such that the transfer of such debts would interfere with 
program goals; and
    (C) Whether an exemption would be consistent with the purposes of 
the Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-134, 110 
Stat. 1321-358 (April 26, 1996).
    (ii) Requests for exemptions must clearly identify the class of 
debts for which an exemption is sought and must explain how application 
of the factors listed above to that class of debts warrants an 
exemption.
    (iii) Requests for exemption must be made by the head of the agency 
requesting the exemption, the Chief Financial Officer of the agency, or 
the Deputy Chief Financial Officer of the agency. For purposes of this 
section, the head of an agency does not include the head of a 
subordinate organization within a department or agency.
    (6) In accordance with paragraph (d)(5)(i) of this section, debts 
being serviced and/or collected in accordance with applicable statutes 
and/or regulations by third parties, such as private lenders or guaranty 
agencies are exempt from the requirements in paragraph (c)(1) of this 
section.
    (e) Schedule of private collection contractors. FMS will maintain a 
schedule of private collection contractors eligible for referral of 
debts from FMS, other debt collection centers, and creditor agencies for 
collection action. An agency with debt which has not been transferred to 
FMS or referred to another debt collection center, for example, debt 
that is less than 180 days delinquent, may refer such debt to a private 
collection contractor listed on FMS' schedule of private collection 
contractors provided they do so in accordance with procedures 
established by FMS. Alternatively, an agency may refer debt that is less 
than 180 days delinquent to a private collection contractor pursuant to 
a contract between the creditor agency and the private collection 
contractor, as authorized by law.
    (f) Debt collection centers. A creditor agency may transfer debt 
that has not been transferred to FMS, such as debt less than 180 days 
delinquent, to a Treasury-designated debt collection center, with the 
consent of, and in accordance with procedures established by FMS. Debt 
collection centers will take action upon a debt in accordance with the 
statutory or regulatory requirements and other authorities that apply to 
the debt or to the particular action being taken. Debt collection 
centers may, on behalf of the creditor agency and subject to the terms 
under which the debt collection center has been designated as such by 
the Secretary, take any action to collect, compromise, suspend or 
terminate collection action on debts, in accordance with terms and 
conditions agreed upon in writing by the creditor agency and the debt 
collection center or FMS. Debt collection centers may charge fees for 
the debt collection services in accordance with the provisions of 
paragraph (j) of this section.
    (g) Administrative offset. As described in paragraph (c) of this 
section, under the DCIA, agencies are required to transfer all debts 
over 180 days delinquent to FMS for purposes of debt collection (i.e., 
cross-servicing). Agencies are also required, under the DCIA, to notify 
the Secretary of all debts over 180 days delinquent for purposes of 
administrative offset. Administrative offset is one type of collection 
tool used by FMS and Treasury-designated debt collection centers to 
collect debts transferred under this section. Thus, by transferring debt 
to FMS or to a Treasury-designated debt collection center under this 
section, Federal agencies will satisfy the requirement

[[Page 142]]

to notify the Secretary of debts for purposes of administrative offset 
and duplicate referrals are not required. A debt which is not 
transferred to FMS for purposes of debt collection, however, such as a 
debt which falls within one of the exempt categories listed in paragraph 
(d) of this section, nevertheless may be subject to the DCIA requirement 
of notification to the Secretary for purposes of administrative offset.
    (h) Voluntary referral of debts less than 180 days delinquent. A 
creditor agency may refer any debt that is less than 180 days delinquent 
to FMS or, with the consent of FMS, to a Treasury-designated debt 
collection center for debt collection services.
    (i) Certification. Before a debt may be transferred to FMS or 
another debt collection center, the head of the creditor agency or his 
or her delegatee must certify, in writing, that the debts being 
transferred are valid, legally enforceable, and that there are no legal 
bars to collection. Creditor agencies must also certify that they have 
complied with all prerequisites to a particular collection action under 
the laws, regulations or policies applicable to the agency unless the 
creditor agency has requested, and FMS has agreed, to do so on the 
creditor agency's behalf. The creditor agency shall notify FMS 
immediately of any change in the status of the legal enforceability of 
the debt, for example, if the creditor agency receives notice that the 
debtor has filed for bankruptcy protection.
    (j) Fees. FMS and other debt collection centers (as defined in 
paragraph (a) of this section) may charge fees sufficient to cover the 
full cost of providing debt collection services authorized by this 
section. Fees paid to recover amounts owed may not exceed amounts 
collected. Nothing in this rule precludes a creditor agency from 
agreeing to pay fees for debt collection services which are not based on 
amounts collected. FMS and debt collection centers are authorized to 
retain fees from amounts collected and may deposit and use such fees in 
accordance with 31 U.S.C. 3711(g). Fees charged by FMS and other debt 
collection centers may be added to the debt as an administrative cost if 
authorized under 31 U.S.C. 3717(e).

[63 FR 16356, Apr. 2, 1998, as amended at 64 FR 22908, Apr. 28, 1999]



Sec. 285.13  Barring delinquent debtors from obtaining Federal loans 
or loan insurance or guarantees.

    (a) Definitions. For purposes of this section:
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Federal Government, including government corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States or an agency thereof by a person, including 
debt administered by a third party as an agent for the Federal 
Government.
    Federal financial assistance or financial assistance means any 
Federal loan (other than a disaster loan), loan insurance, or loan 
guarantee.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Nontax debt means any debt other than a debt under the Internal 
Revenue Code of 1986 (26 U.S.C. 1 et seq.).
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Secretary means the Secretary of the Treasury.
    (b) Purpose and scope. (1) This section prescribes standards for 
determining whether an outstanding nontax debt owed to the Federal 
Government is in delinquent status and whether such delinquency is 
resolved for the purpose of denying Federal financial assistance to a 
debtor. In addition, this section prescribes the circumstances under 
which the Secretary may exempt a class of debts from affecting a 
debtor's loan eligibility. This section also outlines the factors an 
agency should consider when determining whether waiver of the general 
rule in paragraph (c) of this section is appropriate.

[[Page 143]]

    (2) Additional guidance concerning debt collection and debt 
management is provided in ``Managing Federal Receivables'' and other FMS 
publications.
    (3) Nothing in this section requires an agency to grant Federal 
financial assistance if denial otherwise is authorized by statute, 
regulation, or agency policies and procedures. For example, if an agency 
requires borrowers to have a satisfactory credit history, the agency may 
deny financial assistance even if a delinquent debt has been resolved.
    (4) This section does not confer any new rights or benefits on 
persons seeking Federal financial assistance.
    (5) This section applies to any person owing delinquent nontax debt 
and to any agency that administers a program that grants Federal 
financial assistance.
    (c) General rule. (1) As required by the provisions of 31 U.S.C. 
3720B, a person owing an outstanding nontax debt that is in delinquent 
status shall not be eligible for Federal financial assistance. This 
eligibility requirement applies to all persons seeking Federal financial 
assistance and owing an outstanding nontax debt in delinquent status, 
including, but not limited to, guarantors. This eligibility requirement 
applies to all Federal financial assistance even if creditworthiness or 
credit history is not otherwise a factor for eligibility purposes, e.g., 
student loans. A person may be eligible for Federal financial assistance 
only after the delinquency is resolved in accordance with this section. 
An agency may waive this eligibility requirement in accordance with 
paragraph (g) of this section.
    (2) An agency from which a person seeks Federal financial assistance 
may determine, under standards issued by the agency, that a person is 
ineligible for Federal financial assistance under this section if:
    (i) The person is controlled by a person owing an outstanding nontax 
debt that is in delinquent status (e.g., a corporation is controlled by 
an officer, director, or shareholder who owes a debt); or
    (ii) The person controls a person owing an outstanding nontax debt 
that is in delinquent status (e.g., a corporation controls a wholly-
owned or partially-owned subsidiary which owes a debt).
    (3) A creditor agency may obtain information concerning whether or 
not a person seeking Federal financial assistance owes a delinquent debt 
from, among other sources, credit reports, information contained on 
credit applications, and the Department of Housing and Urban 
Development's Credit Alert Interactive Voice Response System (CAIVRS). 
For information about participating in the CAIVRS program, agencies 
should contact the Director of Information Resources Management, Policy 
and Management Division, Office of Information Technology, Department of 
Housing and Urban Development, 451 7th Street, S.W., Washington, DC 
20410.
    (d) Delinquent status. (1) Except as otherwise provided in paragraph 
(d)(2) of this section, a debt is in ``delinquent status'' for purposes 
of this section if the debt has not been paid within 90 days of the 
payment due date. The payment due date is the date specified in the 
creditor agency's initial written demand for payment or applicable 
agreement or instrument (including a post-delinquency repayment 
agreement).
    (2) For purposes of this section, a debt is not in delinquent status 
if:
    (i) The person seeking Federal financial assistance has been 
released by the creditor agency from any obligation to pay the debt, or 
there has been an adjudication or determination that such person does 
not owe or does not have to pay the debt;
    (ii) The debtor is the subject of, or has been discharged in, a 
bankruptcy proceeding, and if applicable, the person seeking Federal 
financial assistance is current on any court authorized repayment plan; 
or
    (iii) The existence of the debt or the agency's determination that 
the debt is delinquent is being challenged under an ongoing 
administrative appeal or contested judicial proceeding and the appeal 
was filed by the debtor in a timely manner. Unless otherwise prohibited, 
an agency may defer making a determination as to whether or not to 
extend credit until the appeal process is completed.

[[Page 144]]

    (3) Unless the provisions of paragraph (d)(2) apply, a debt is in 
delinquent status even if the creditor agency has suspended or 
terminated collection activity with respect to such debt. For example, a 
delinquent nontax debt that has been written off the books of the 
creditor agency or reported to the Internal Revenue Service as 
discharged (i.e., canceled) is in delinquent status for purposes of this 
section.
    (4) Nothing in this section defines the terms ``delinquent'' or 
``delinquent status'' for any purposes other than those described in 
this section.
    (e) Delinquency resolution. (1) For purposes of this section, a 
person's delinquent debt is resolved only if the person:
    (i) Pays or otherwise satisfies the delinquent debt in full;
    (ii) Pays the delinquent debt in part if the creditor agency accepts 
such part payment as a compromise in lieu of payment in full;
    (iii) Cures the delinquency under terms acceptable to the creditor 
agency in that the person pays any overdue payments, plus all interest, 
penalties, late charges, and administrative charges assessed by the 
creditor agency as a result of the delinquency; or
    (iv) Enters into a written repayment agreement with the creditor 
agency to pay the debt, in whole or in part, under terms and conditions 
acceptable to the creditor agency.
    (2) Unless the provisions of paragraph (e)(1) of this section apply, 
a delinquent debt is not resolved even if the creditor agency has 
suspended or terminated collection activity with respect to such debt. 
For example, a delinquent nontax debt that has been written off the 
books of the creditor agency or reported to the Internal Revenue Service 
as discharged (i.e., canceled) would not be ``resolved.'' If the 
provisions of paragraph (e)(1) of this section do apply, a delinquent 
debt is considered resolved. For example, if a portion of a debt has 
been written off after the person has paid the debt in part where the 
creditor agency accepts such part payment as a compromise in lieu of 
payment in full, the entire debt would be deemed ``resolved'' for 
purposes of this section in accordance with paragraph (e)(1)(ii) of this 
section.
    (f) Exemptions by the Secretary. (1) Upon the written request and 
recommendation of the head of the creditor agency to which a class of 
debts is owed, the Secretary may exempt any class of debts from 
affecting a debtor's eligibility for Federal financial assistance based 
on the provisions of 31 U.S.C. 3720B and this section.
    (2) The creditor agency recommending an exemption for a class of 
debts will provide the Secretary with information about:
    (i) The nature of the program under which the delinquencies have 
arisen;
    (ii) The number, dollar amount, and age of the debts in the program 
for which exemption is recommended;
    (iii) The reasons why an exemption is justified, including why the 
granting of financial assistance to persons owing the type of debt for 
which exemption is requested would not be contrary to the Government's 
goal to reduce losses by requiring proper screening of potential 
borrowers; and,
    (iv) Other information the Secretary deems necessary to consider the 
exemption request.
    (3) The Secretary may exempt a class of debts if exemption is in the 
best interests of the Federal Government.
    (g) Waivers by the agency. (1) The head of an agency from which a 
person seeks to obtain Federal financial assistance may waive the 
eligibility requirement described in paragraph (c) of this section. 
Waivers shall be granted only on a person by person basis. The head of 
the agency may delegate the waiver authority only to the Chief Financial 
Officer of the agency. The Chief Financial Officer may redelegate the 
authority only to the Deputy Chief Financial Officer of the agency.
    (2) The authorized agency official should balance the following 
factors when deciding whether to grant a waiver under paragraph (g)(1) 
of this section:
    (i) Whether the denial of the financial assistance to the person 
would tend to interfere substantially with or defeat the purposes of the 
financial assistance program or otherwise would not be in the best 
interests of the Federal Government; and
    (ii) Whether the agency's granting of the financial assistance to 
the person

[[Page 145]]

is contrary to the Government's goal to reduce losses from debt 
management activities by requiring proper screening of potential 
borrowers.
    (3) When balancing the factors described in paragraph (d)(2) of this 
section, the authorized agency official should consider:
    (i) The age, amount, and cause(s) of the delinquency and the 
likelihood that the person will resolve the delinquent debt; and
    (ii) The amount of total debt, delinquent or otherwise, owed by the 
person and the person's credit history with respect to repayment of 
debt.
    (4) Each agency shall retain a centralized record of the number and 
type of waivers granted under this section.
    (h) Effect of denial of Federal financial assistance. Nothing 
contained in this section precludes a person who has been denied Federal 
financial assistance from obtaining such assistance after that person's 
delinquent debt has been resolved in accordance with paragraph (e)(1) of 
this section.

[63 FR 67756, Dec. 8, 1998]

[[Page 146]]



                 SUBCHAPTER B_BUREAU OF THE PUBLIC DEBT





PART 306_GENERAL REGULATIONS GOVERNING U.S. SECURITIES--Table of Contents




                      Subpart A_General Information

Sec.
306.0 Applicability of regulations.
306.1 Official agencies.
306.2 Definitions of words and terms as used in these regulations.
306.3 Transportation charges and risks in the shipment of securities.

                         Subpart B_Registration

306.10 General.
306.11 Forms of registration for transferable securities.
306.12 Errors in registration.
306.13 Nontransferable securities.

               Subpart C_Transfers, Exchanges and Reissues

306.15 Transfers and exchanges of securities--closed periods.
306.16 Exchanges of registered securities.
306.17 Exchanges of registered securities for coupon securities.
306.18 Exchanges of coupon securities for registered securities.
306.19 Denominational exchanges of coupon securities.
306.20 Reissue of registered transferable securities.
306.21 Reissue of nontransferable securities.
306.22 Exchange of Treasury Bonds, Investment Series B-1975-80.
306.23 Securities eligible to be held in the TREASURY DIRECT Book-entry 
          Securities System.
306.24 Collection of fees on definitive securities.

                     Subpart D_Redemption or Payment

306.25 Presentation and surrender.
306.26 Redemption of registered securities at maturity, upon prior call, 
          or for prerefunding or advance refunding.
306.27 Redemption of bearer securities at maturity, upon prior call, or 
          for advance refunding or prerefunding.

                           Subpart E_Interest

306.35 Computation of interest.
306.36 Termination of interest.
306.37 Interest on registered securities.
306.38 Interest on bearer securities.

Appendix to Subpart E--Interest--Computation of Interest on Treasury 
          Bonds, Treasury Notes, and Treasury Certificates of 
          Indebtedness, and Computation of Discount on Treasury Bills--
          Interest Tables

         Subpart F_Assignments of Registered Securities_General

306.40 Execution of assignments.
306.41 Form of assignment.
306.42 Alterations and erasures.
306.43 Voidance of assignments.
306.44 Discrepancies in names.
306.45 Certifying individuals.

          Subpart G_Assignments by or in Behalf of Individuals

306.55 Signatures, minor errors and change of name.
306.56 Assignment of securities registered in the names of or assigned 
          to two or more persons.
306.57 Minors and incompetents.
306.58 Nontransferable securities.

      Subpart H_Assignments in Behalf of Estates of Deceased Owners

306.65 Decedent's estate.
306.66-306.67 [Reserved]
306.68 Nontransferable securities.

     Subpart I_Assignments by or in Behalf of Trustees and Similar 
                               Fiduciaries

306.75 Individual fiduciaries.
306.76 Fiduciaries acting as a unit.
306.77 Corepresentatives and fiduciaries.
306.78 Nontransferable securities.

   Subpart J_Assignments in Behalf of Private or Public Organizations

306.85 Private corporations and unincorporated associations (including 
          nominees).
306.86 Change of name and succession of private organizations.
306.87 Partnerships (including nominee partnerships).
306.88 Political entities and public corporations.
306.89 Public officers.
306.90 Nontransferable securities.

                       Subpart K_Attorneys in Fact

306.95 Attorneys in fact.
306.96 Nontransferable securities.

             Subpart L_Transfer Through Judicial Proceedings

306.100 Transferable securities.

[[Page 147]]

306.101 Evidence required.
306.102 Nontransferable securities.

            Subpart M_Requests for Suspension of Transactions

306.105 Requests for suspension of transactions in registered 
          securities.
306.106 Requests for suspension of transactions in bearer securities.

Subpart N_Relief for Loss, Theft, Destruction, Mutilation, or Defacement 
                              of Securities

306.110 Statutory authority and requirements.
306.111 Procedure for applying for relief.
396.112 Type of relief granted.
306.113 Cases not requiring bonds of indemnity.

                     Subpart O_Book-Entry Procedure

306.115 Definition of terms.
306.116 Scope and effect of book-entry procedure.
306.117 Withdrawal of eligible book-entry Treasury securities for 
          conversion to registered form.

                   Subpart P_Miscellaneous Provisions

306.125 Additional requirements.
306.126 Waiver of regulations.
306.127 Preservation of existing rights.
306.128 Supplements, amendments or revisions.

    Authority: 31 U.S.C. Chapter 31; 5 U.S.C. 301; 12 U.S.C. 391.

    Source: 38 FR 7078, Mar. 15, 1973, unless otherwise noted.



                      Subpart A_General Information



Sec. 306.0  Applicability of regulations.

    These regulations apply to all U.S. transferable and nontransferable 
securities,\1\ other than U.S. Savings Bonds and U.S. Savings Notes, to 
the extent specified in these regulations, the offering circulars or 
special regulations governing such securities.
---------------------------------------------------------------------------

    \1\ These regulations may also be applied to securities issued by 
certain agencies of the United States and certain Government and 
Government-sponsored corporations.
---------------------------------------------------------------------------



Sec. 306.1  Official agencies.

    The Bureau of the Public Debt of the Department of the Treasury is 
charged with matters relating to transactions in securities. 
Correspondence concerning transactions in securities and requests for 
appropriate forms may be addressed to the Division of Customer Service, 
Parkersburg, WV 26102.

[64 FR 38125, July 15, 1999]



Sec. 306.2  Definitions of words and terms as used in these regulations.

    (a) Advance refunding offer is an offer to a holder of a security, 
usually a year or more in advance of its call or maturity date, to 
exchange it for another security.
    (b) A bearer security is payable on its face at maturity or call for 
redemption before maturity in accordance with its terms to bearer. The 
ownership is not recorded. Title to such a security may pass by delivery 
without endorsement and without notice. A coupon security is a bearer 
security with interest coupons attached.
    (c) Bureau refers to the Bureau of the Public Debt, Division of 
Customer Service, Parkersburg, WV 26102.
    (d) Call date or date of call is the date fixed in the official 
notice of call published in the Federal Register as the date on which 
the obligor will make payment of the security before maturity in 
accordance with its terms.
    (e) Court means one which has jurisdiction over the parties and the 
subject matter.
    (f) Department refers to the Department of the Treasury.
    (g) Depository institution means an entity described in section 
19(b)(1)(A)(i)--(vi) of the Federal Reserve Act (12 U.S.C. 
461(b)(1)(A)(i)--(vi)). Under section 19(b) of the Federal Reserve Act, 
the term depository institution includes:
    (1) Any insured bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (2) Any mutual savings bank as defined in 12 U.S.C. 1813 or any bank 
which is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (3) Any savings bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (4) Any insured credit union as defined in 12 U.S.C. 1752 or any 
credit

[[Page 148]]

union which is eligible to make application to become an insured credit 
union under 12 U.S.C. 1781;
    (5) Any member as defined in 12 U.S.C. 1422; and
    (6) Any savings association (as defined in 12 U.S.C. 1813) which is 
an insured depository institution, as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811, et seq., or is eligible to apply to 
become an insured depository institution under such Act.
    (h) Face maturity date is the payment date specified in the text of 
a security.
    (i) Incompetent refers to a person under any legal disability except 
minority.
    (j) Joint owner and joint ownership refer to any permitted form of 
ownership by two or more persons.
    (k) Nontransferable securities are those issued only in registered 
form which according to their terms are payable only to the registered 
owners or recognized successors in title to the extent and in the manner 
provided in the offering circulars or special applicable regulations.
    (l) Payment and redemption, unless otherwise indicated by the 
context, are used interchangeably for payment at maturity or payment 
before maturity pursuant to a call for redemption in accordance with the 
terms of the securities.
    (m) Prerefunding offer is an offer to a holder of a security, 
usually within the year preceding its call or maturity date, to exchange 
it for another security.
    (n) Redemption-exchange is any authorized redemption of securities 
for the purpose of applying the proceeds in payment for other securities 
offered in exchange.
    (o) A registered security refers to a security the ownership of 
which is registered on the books of the Department. It is payable at 
maturity or call for redemption before maturity in accordance with its 
terms to the person in whose name it is inscribed, or his assignee.
    (p) Securities assigned in blank or securities so assigned as to 
become in effect payable to bearer refers to registered securities which 
are assigned by the owner or his authorized representative without 
designating the assignee. Registered securities assigned simply to The 
Secretary of the Treasury or in the case of Treasury Bonds, Investment 
Series B--1975-80, to The Secretary of the Treasury for exchange for the 
current Series EA or EO Treasury notes are considered to be so assigned 
as to become in effect payable to bearer.
    (q) Signature guarantee program means a signature guarantee program 
established in response to Rule 17 Ad-15 (17 CFR 240.17Ad-15), issued 
under authority of the Securities Exchange Act of 1934. For the purpose 
of the regulations, in this part, the Securities Transfer Agents 
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), 
and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) 
are recognized by Treasury as such signature guarantee programs.
    (r) Taxpayer identifying number means the appropriate identifying 
number as required on tax returns and other documents submitted to the 
Internal Revenue Service, i.e., an individual's social security account 
number or an employer identification number. A social security account 
number is composed of nine digits separated by two hyphens, for example, 
123-45-6789; an employer identification number is composed of nine 
digits separated by one hyphen, for example, 12-3456789. The hyphens are 
an essential part of the numbers and must be included.
    (s) Transferable securities, which may be in either registered or 
bearer form, refers to securities which may be sold on the market and 
transfer of title accomplished by assignment and delivery if in 
registered form, or by delivery only if in bearer form.
    (t) Treasury securities, Treasury bonds, Treasury notes, Treasury 
certificates of indebtedness, and Treasury bills, or simply securities, 
bonds, notes, certificates, and bills, unless otherwise indicated by the 
context, refer only to transferable securities.
    (u) Voluntary representative means the person qualified by the 
Department of the Treasury to request payment or make an assignment of a 
decedent's securities pursuant to Sec. 306.65.

[38 FR 7078, Mar. 15, 1973, as amended at 59 FR 59036, Nov. 15, 1994; 64 
FR 38125, July 15, 1999; 70 FR 57429, Sept. 30, 2005]

[[Page 149]]



Sec. 306.3  Transportation charges and risks in the shipment of 
securities.

    The following guidelines apply to the transportation of reissued 
securities or securities presented for authorized transactions:
    (a) The securities may be presented in person by the owner or the 
owner's agent.
    (b) If securities are not presented in person, shipment of the 
securities is at the owner's risk and expense.
    (c) Reissued securities will be delivered by certified mail or by 
other means, at the risk of the registered owner and at the expense of 
the Department.

[64 FR 38125, July 15, 1999]



                         Subpart B_Registration



Sec. 306.10  General.

    The registration used must express the actual ownership of a 
security and may not include any restriction on the authority of the 
owner to dispose of it in any manner, except as otherwise specifically 
provided in these regulations. The Treasury Department reserves the 
right to treat the registration as conclusive of ownership. Requests for 
registration should be clear, accurate, and complete, conform with one 
of the forms set forth in this subpart, and include appropriate taxpayer 
identifying numbers.\2\ The registration of all bonds owned by the same 
person, organization, or fiduciary should be uniform with respect to the 
name of the owner and, in the case of a fiduciary, the description of 
the fiduciary capacity. Individual owners should be designated by the 
names by which they are ordinarily known or under which they do 
business, preferably including at least one full given name. The name of 
an individual may be preceded by any applicable title, as, for example, 
Mrs., Miss, Ms., Dr., or Rev., or followed by a designation such as 
M.D., D.D., Sr., or Jr. Any other similar suffix should be included when 
ordinarily used or when necessary to distinguish the owner from a member 
of his family. A married woman's own given name, not that of her 
husband, must be used, for example, Mrs. Mary A. Jones, not Mrs. Frank 
B. Jones. The address should include, where appropriate, the number and 
street, route, or any other local feature and the Zip Code.
---------------------------------------------------------------------------

    \2\ Taxpayer identifying numbers are not required for foreign 
governments, nonresident aliens not engaged in trade or business within 
the United States, international organizations and foreign corporations 
not engaged in trade or business and not having an office or place of 
business or a financial or paying agent within the United States, and 
other persons or organizations as may be exempted from furnishing such 
numbers under regulations of the Internal Revenue Service.
---------------------------------------------------------------------------



Sec. 306.11  Forms of registration for transferable securities.

    The forms of registration described below are authorized for 
transferable securities:
    (a) Natural persons in their own right. In the names of natural 
persons who are not under any legal disability, in their own right, 
substantially as follows:
    (1) One person. In the name of one individual. Examples:

John A. Doe (123-45-6789).
Mrs. Mary C. Doe. (123-45-6789).
Miss Elizabeth Jane Doe (123-45-6789).


An individual who is sole proprietor of a business conducted under a 
trade name may include a reference to the trade name. Examples:

John A. Doe, doing business as Doe's Home Appliance Store (123-45-6789).

or

John A. Doe (123-45-6789), doing business as Doe's Home Appliance Store.

    (2) Two or more persons--general. Securities will not be registered 
in the name of one person payable on death to another, or in any form 
which purports to authorize transfer by less than all the persons named 
in the registration (or all the survivors).\3\ Securities will

[[Page 150]]

not be registered in the forms John A. Doe and Mrs. Mary C. Doe, or 
either of them or William C. Doe or Henry J. Doe, or either of them and 
securities so assigned will be treated as though the words or either of 
them do not appear in the assignments. The taxpayer identifying number 
of any of the joint owners may be shown on securities registered in 
joint ownership form.
---------------------------------------------------------------------------

    \3\ Warning. Difference Between Transferable Treasury Securities 
Registered in the Names of Two or More Persons and United States Savings 
Bonds in Coownership Form. The effect of registering Treasury securities 
to which these regulations apply in the names of two or more persons 
differs decidedly from registration of savings bonds in coownership 
form. Savings bonds are virtually redeemable on demand at the option of 
either coowner on his signature alone. Transferable Treasury securities 
are redeemable only at maturity or upon prior call by the Secretary of 
the Treasury.
    \4-6\ [Reserved]
---------------------------------------------------------------------------

    (i) With right of survivorship. In the names of two or more 
individuals with right of survivorship. Examples:

John A. Doe (123-45-6789) or Mrs. Mary C. Doe or the survivor.
John A. Doe (123-45-6789) or Mrs. Mary C. Doe or Miss Mary Ann Doe or 
the survivors or survivor.
John A. Doe (123-45-6789) or Mrs. Mary C. Doe.
John A. Doe (123-45-6789) and Mrs. Mary C. Doe.
John A. Doe (123-45-6789) and Mrs. Mary C. Doe as joint tenants with 
right of survivorship and not as tenants in common.

Limited to husband and wife:

John A. Doe (123-45-6789) and Mrs. Mary C. Doe, as tenants by the 
entireties.

    (ii) Without right of survivorship. In the names of two or more 
individuals in such manner as to preclude the right of survivorship. 
Examples:

John A. Doe (123-45-6789) and William B. Doe as tenants in common.
John A. Jones as natural guardian of Henry B. Jones, a minor, and Robert 
C. Jones (123-45-6789), without right of survivorship.

Limited to husband and wife:

Charles H. Brown (123-45-6789) and Ann R. Brown, as partners in 
community.

    (b) Minors and incompetents--(1) Natural guardians of minors. A 
security may be registered in the name of a natural guardian of a minor 
for whose estate no legal guardian or similar representative has legally 
qualified. Example:

John R. Jones as natural guardian of Henry M. Jones, a minor (123-45-
6789).


Either parent with whom the minor resides, or if he does not reside with 
either parent, the person who furnishes his chief support, will be 
recognized as his natural guardian and will be considered a fiduciary. 
Registration in the name of a minor in his own right as owner or as 
joint owner is not authorized. Securities so registered, upon 
qualification of the natural guardian, will be treated as though 
registered in the name of the natural guardian in that capacity.
    (2) Custodian under statute authorizing gifts to minors. A security 
may be purchased as a gift to a minor under a gifts to minors statute in 
effect in the State in which either the donor or the minor resides. The 
security should be registered as provided in the statute, with an 
identifying reference to the statute if the registration does not 
clearly identify it. Examples:

William C. Jones, as custodian for John A. Smith, a minor (123-45-6789), 
under the California Uniform Gifts to Minors Act.
Robert C. Smith, as custodian for Henry L. Brown, a minor (123-45-6789), 
under the laws of Georgia; Chapter 48-3, Code of Ga. Anno.

    (3) Incompetents not under guardianship. Registration in the form 
John A. Brown, an incompetent (123-45-6789), under voluntary 
guardianship, is permitted only on reissue after a voluntary guardian 
has qualified for the purpose of collecting interest. (See Sec. Sec. 
306.37(c)(2) and 306.57(c)(2)). Otherwise, registration in the name of 
an incompetent not under legal guardianship is not authorized.
    (c) Executors, administrators, guardians, and similar 
representatives or fiduciaries. A security may be registered in the 
names of legally qualified executors, administrators, guardians, 
conservators, or similar representatives or fiduciaries of a single 
estate. The names and capacities of all the representatives or 
fiduciaries, as shown in their letters of appointment, must be included 
in the registration and must be followed by an adequate identifying 
reference to the estate. Examples:

John Smith, executor of will (or administrator of estate) of Henry J. 
Jones, deceased (12-3456789).
William C. Jones, guardian (or conservator, etc.) of estate of James D. 
Brown, a minor (or an incompetent) (123-45-6789).

    (d) Life tenant under will. A security may be registered in the name 
of a life

[[Page 151]]

tenant followed by an adequate identifying reference to the will. 
Example:

Anne B. Smith, life tenant under the will of Adam A. Smith, deceased 
(12-3456789).

The life tenant will be considered a fiduciary.
    (e) Private trust estates. A security may be registered in the name 
and title of the trustee or trustees of a single duly constituted 
private trust, followed by an adequate identifying reference to the 
authority governing the trust. Examples:

John Jones and Blank Trust Co., Albany, NY, trustees under will of Sarah 
Jones, deceased (12-3456789).
John Doe and Richard Roe, trustees under agreement with Henry Jones 
dated February 9, 1970 (12-3456789).


The names of all trustees, in the form used in the trust instrument, 
must be included in the registration, except as follows:
    (1) If there are several trustees designated as a board or 
authorized to act as a unit, their names should be omitted and the words 
Board of Trustees substituted for the word trustees. Example:

Board of Trustees of Blank Co. Retirement Fund, under collective 
bargaining agreement dated June 30, 1970 (12-3456789).

    (2) If the trustees do not constitute a board or otherwise act as a 
unit, and are either too numerous to be designated in the inscription by 
names and title, or serve for limited terms, some or all of the names 
may be omitted. Examples:

John Smith, Henry Jones, et al., trustees under will of Henry J. Smith, 
deceased (12-3456789).
Trustees under will of Henry J. Smith, deceased (12-3456789).
Trustees of Retirement Fund of Industrial Manufacturing Co., under 
directors' resolution of June 30, 1950 (12-3456789).

    (f) Private organizations (corporations, unincorporated associations 
and partnerships). A security may be registered in the name of any 
private corporation, unincorporated association, or partnership, 
including a nominee, which for purposes of these regulations is treated 
as the owner. The full legal name of the organization, as set forth in 
its charter, articles of incorporation, constitution, partnership 
agreement, or other authority from which its powers are derived, must be 
included in the registration and may be followed, if desired, by a 
reference to a particular account or fund, other than a trust fund, in 
accordance with the rules and examples given below:
    (1) A corporation. The name of a business, fraternal, religious, or 
other private corporation must be followed by descriptive words 
indicating the corporate status unless the term corporation or the 
abbreviation Inc. is part of the name or the name is that of a 
corporation or association organized under Federal law, such as a 
national bank or Federal savings and loan association. Examples:

Smith Manufacturing Co., a corporation (12-3456789).
The Standard Manufacturing Corp. (12-3456789).
Jones & Brown, Inc.--Depreciation Acct. (12-3456789).
First National Bank of Albemarle (12- 3456789).
Abco & Co., Inc., a nominee corporation (12-3456789).

    (2) An unincorporated association. The name of a lodge, club, labor 
union, veterans' organization, religious society, or similar self-
governing organization which is not incorporated (whether or not it is 
chartered by or affiliated with a parent organization which is 
incorporated) must be followed by the words an unincorporated 
association. Examples:

American Legion Post No. ----, Department of the D.C., an unincorporated 
association (12-3456789).
Local Union No. 100, Brotherhood of Locomotive Engineers, an 
unincorporated association (12-3456789).

Securities should not be registered in the name of an unincorporated 
    association if the legal title to its property in general, or the 
    legal title to the funds with which the securities are to be 
    purchased, is held by trustees. In such a case the securities should 
    be registered in the title of the trustees in accordance with 
    paragraph (e) of this section. The term unincorporated association 
    should not be used to describe a trust fund, a partnership or a 
    business conducted under a trade name.

[[Page 152]]

    (3) A partnership. The name of a partnership must be followed by the 
words a partnership. Example:

Smith & Brown, a partnership (12-3456789).
Acme Novelty Co., a limited partnership (12-3456789).
Abco & Co., a nominee partnership (12-3456789).

    (g) States, public bodies, and corporations and public officers. A 
security may be registered in the name of a State or county, city, town, 
village, school district, or other political entity, public body or 
corporation established by law (including a board, commission, 
administration, authority or agency) which is the owner or official 
custodian of public funds, other than trust funds, or in the full legal 
title of the public officer having custody. Examples:

State of Maine.
Town of Rye, NY.
Maryland State Highway Administration.
Treasurer, City of Springfield, IL.
Treasurer of Rhode Island--State Forestry Fund.

    (h) States, public officers, corporations or bodies as trustees. A 
security may be registered in the title of a public officer or in the 
name of a State or county or a public corporation or public body acting 
as trustee under express authority of law. An appropriate reference to 
the statute creating the trust may be included in the registration. 
Examples:

Insurance Commissioner of Pennsylvania, trustee for benefit of 
policyholders of Blank Insurance Co. (12-3456789), under Sec. ----, Pa. 
Stats.
Rhode Island Investment Commission, trustee of General Sinking Fund 
under Ch. 35, Gen. Laws of RI.
State of Colorado in trust for Colorado Surplus Property Agency.

[38 FR 7078, Mar. 15, 1973; 38 FR 8153, Mar. 29, 1973]



Sec. 306.12  Errors in registration.

    If an erroneously inscribed security is received, it should not be 
altered in any respect, but the Bureau should be furnished full 
particulars concerning the error and asked to furnish instructions.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38125, July 15, 1999]



Sec. 306.13  Nontransferable securities.

    Upon authorized reissue, Treasury Bonds, Investment Series B--1975-
80, may be registered in the forms set forth in Sec. 306.11.



               Subpart C_Transfers, Exchanges and Reissues



Sec. 306.15  Transfers and exchanges of securities--closed periods.

    (a) General. The transfer of registered securities should be made by 
assignment in accordance with subpart F of this part. Transferable 
registered securities are eligible for denominational exchange. Specific 
instructions for issuance and delivery of the new securities, signed by 
the owner or his authorized representative, must accompany the 
securities presented. (Form PD 3905 or PD 1827, as appropriate, may be 
used.) Denominational exchanges may be made at any time. Securities 
presented for transfer must be received by the Bureau not less than 1 
full month before the date on which the securities mature or become 
redeemable pursuant to a call for redemption before maturity. Any 
security so presented which is received too late to comply with this 
provision will be accepted for payment only.
    (b) Closing of transfer books. The transfer books are closed for one 
full month preceding interest payment dates and call or maturity dates. 
If the date set for closing of the transfer books falls on Saturday, 
Sunday, or a legal holiday, the books will be closed as of the close of 
business on the last business day preceding that date. The books are 
reopened on the first business day following the date on which interest 
falls due. Registered securities which have not matured or been called, 
submitted for transfer, reissue, and coupon securities which have not 
matured or been called, submitted for exchange for registered 
securities, which are received during the period the books for that loan 
are closed, will be processed on or after the date such books are 
reopened. If registered securities are received for transfer, or coupon 
securities are received for exchange for registered securities, during

[[Page 153]]

the time the books are closed for payment of final interest at maturity 
or call, unless otherwise provided in the offering circular or notice of 
call, the following action will be taken:
    (1) Payment of final interest will be made to the registered owner 
of record on the date the books were closed.
    (2) Payment of principal will be made to the assignee under a proper 
assignment of the securities.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38125, July 15, 1999]



Sec. 306.16  Exchanges of registered securities.

    No assignments will be required for:
    (a) Authorized denominational exchanges of registered securities for 
like securities in the same names and forms of registration and
    (b) Redemption-exchanges, or prefundings, or advance refundings in 
the same names and forms as appear in the registration or assignments of 
the securities surrendered.



Sec. 306.17  Exchanges of registered securities for coupon securities.

    Exchanges of registered securities for bearer securities are not 
permitted.

[64 FR 38126, July 15, 1999]



Sec. 306.18  Exchanges of coupon securities for registered securities.

    Coupon securities presented for exchange for registered securities 
should have all matured interest coupons detached. All unmatured coupons 
should be attached, except that if presented when the transfer books are 
closed (in which case the exchange will be effected on or after the date 
on which the books are reopened), the next maturing coupons should be 
detached and held for collection in ordinary course when due. If any 
coupons which should be attached are missing, the securities must be 
accompanied by a remittance in an amount equal to the face amount of the 
missing coupons. The new registered securities will bear interest from 
the interest payment date next preceding the date on which the exchange 
is made.



Sec. 306.19  Denominational exchanges of coupon securities.

    Denominational exchanges of bearer securities are not permitted.

[64 FR 38126, July 15, 1999]



Sec. 306.20  Reissue of registered transferable securities.

    Assignments are not required for reissue of registered transferable 
securities in the name(s) of:
    (a) The surviving joint owner(s) of securities registered in the 
names of or assigned to two or more persons, unless the registration or 
assignment includes words which preclude the right of survivorship,
    (b) A succeeding fiduciary or other lawful successor,
    (c) A remainderman, upon termination of a life estate,
    (d) An individual, corporation or unincorporated association whose 
name has been legally changed,
    (e) A corporation or unincorporated association which is the lawful 
successor to another corporation or unincorporated association, and
    (f) A successor in title to a public officer or body.

Evidence of survivorship, succession, or change of name, as appropriate, 
must be furnished. The appropriate taxpayer identifying number also must 
be furnished if the registration of the securities submitted does not 
include such number for the person or organization to be named on the 
reissued securities.



Sec. 306.21  Reissue of nontransferable securities.

    Treasury Bonds, Investment Series B--1975-80, may be reissued only 
in the names of:
    (a) Lawful successors in title,
    (b) The legal representatives or distributees of a deceased owner's 
estate, or the distributees of a trust estate, and
    (c) State supervisory authorities in pursuance of any pledge 
required of the owner under State law, or upon termination of the pledge 
in the names of the pledgors or their successors.

Bonds presented for reissue must be accompanied by evidence of 
entitlement.

[[Page 154]]



Sec. 306.22  Exchange of Treasury Bonds, Investment Series B-1975-80.

    Bonds of this series presented for exchange for 1\1/2\ percent 5-
year Treasury notes must bear duly executed assignments to ``The 
Secretary of the Treasury for exchange for the current series of EA or 
EO Treasury notes to be delivered to (inserting the name and address of 
the person to whom the notes are to be delivered).'' The notes will bear 
the April 1 or October 1 date next preceding the date the bonds, duly 
assigned with supporting evidence, if necessary, are received by the 
Bureau or a Federal Reserve Bank or Branch. Interest accrued at the rate 
of 2\3/4\ percent on the bonds surrendered from the next preceding 
interest payment date to the date of exchange will be credited, and 
interest at the rate of 1\1/2\ percent on the notes for the same period 
will be charged and the difference will be paid to the owner.



Sec. 306.23  Securities eligible to be held in the TREASURY DIRECT 
Book-entry Securities System.

    (a) Eligible issues. The Secretary will, from time to time, cause to 
be published in the Federal Register a notice describing those series of 
Treasury issues of bonds and notes issued before August 1, 1986, that 
will be eligible for conversion to the TREASURY DIRECT Book-entry 
Securities System. The notice shall specify the period during which 
requests for conversion will be accepted.
    (b) Establishment of TREASURY DIRECT account. To convert a bearer or 
registered security to book-entry form to be held in TREASURY DIRECT, 
the owner(s) must establish at the time of conversion, or prior thereto, 
an account in TREASURY DIRECT in accordance with Sec. 357.20 of part 
357. Similarly, to transfer to TREASURY DIRECT a security held in book-
entry form under subpart O of this part, the owner(s) must establish at 
the time of transfer, or prior thereto, an account in TREASURY DIRECT in 
accordance with Sec. 357.20 of part 357.
    (c) Procedure for conversion of bearer security. To convert a bearer 
security to TREASURY DIRECT, the owner must present it to the Department 
of the Treasury, accompanied by a request for conversion, which must 
include the information needed for establishing a TREASURY DIRECT 
account, unless such account has been previously established, and is 
identified by its number in the request.
    (d) Procedures for conversion of registered security. To convert a 
registered security to TREASURY DIRECT, the owner(s) thereof must 
execute an assignment in accordance with subpart F of this part. The 
assignment must be in substantially the following form: ``To the 
Secretary of the Treasury for conversion to book-entry and deposit in 
TREASURY DIRECT,''. The security should be accompanied by the 
information needed for establishing the TREASURY DIRECT account, or 
where an account has been previously established, the above assignment 
should be reworded to include the account number.
    (e) Procedure for transfer of book-entry security held under subpart 
O. To transfer a book-entry security held under subpart O of this part, 
the owner(s) must arrange with the bank or other entity where the 
security is being held to transfer the same to TREASURY DIRECT. No such 
transfer will be accepted unless a TREASURY DIRECT account has 
previously been established and the number thereof is shown in the 
transfer request.
    (f) Terms and conditions of securities held in TREASURY DIRECT. An 
eligible security held in TREASURY DIRECT shall be subject to subpart C 
and other applicable portions of part 357, and the provisions of part 
306 shall not apply thereto.
    (g) Re-conversion from TREASURY DIRECT to registered form or to 
book-entry under subpart O. The owner(s) of a security converted or 
transferred to TREASURY DIRECT in the manner herein provided may, by 
executing an appropriate transaction request, transfer the book-entry 
security to a book-entry account held under the provisions of subpart O 
of this part. Thereafter, to the extent that the security was originally 
eligible for such conversion the book-entry security held under subpart 
O may be converted to one in registered form. Securities transferred 
from TREASURY DIRECT

[[Page 155]]

under this subsection shall be thereupon subject to the provisions of 
part 306, and part 357 shall no longer apply thereto.

[53 FR 15554, May 2, 1988, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.24  Collection of fees on definitive securities.

    A fee shall be charged for each registered security, as defined in 
Sec. 306.115 (a), issued as a result of a transfer, exchange, reissue, 
withdrawal from book-entry, or the granting of relief on account of 
loss, theft, destruction, mutilation, or defacement. The applicable fee, 
and the basis for its determination, will be published by notice in the 
Federal Register.

[60 FR 4377, Jan. 23, 1995, as amended at 64 FR 38126, July 15, 1999]



                     Subpart D_Redemption or Payment



Sec. 306.25  Presentation and surrender.

    (a) General. Securities, whether in registered or bearer form, are 
payable in regular course of business at maturity unless called for 
redemption before maturity in accordance with their terms, in which case 
they will be payable in regular course of business on the date of call. 
The Secretary of the Treasury may provide for the exchange of maturing 
or called securities, or in advance of call or maturity, may afford 
owners the opportunity of exchanging a security for another security 
pursuant to a prerefunding or an advance refunding offer. Registered and 
bearer securities should be presented and surrendered for redemption to 
the Bureau. No assignments or evidence in support of assignments will be 
required by or on behalf of the registered owner or assignee for 
redemption for his or its account, or for redemption-exchange, or 
exchange pursuant to a prerefunding or an advance refunding offer, if 
the new securities are to be registered in exactly the same names and 
forms as appear in the registrations or assignments of the securities 
surrendered. To the extent appropriate, these rules also apply to 
securities registered in the title of public officers who are official 
custodians of public funds.
    (b) ``Overdue'' securities. If a bearer security or a registered 
security assigned in blank, or to bearer, or so assigned as to become in 
effect payable to bearer, is presented and surrendered for redemption 
after it has become overdue, the Secretary of the Treasury will 
ordinarily require satisfactory proof of ownership. (Form PD 1071 may be 
used.) A security shall be considered to be overdue after the lapse of 
the following periods of time from its face maturity:
    (1) One month for securities issued for a term of 1 year or less.
    (2) Three months for securities issued for a term of more than 1 
year but not in excess of 7 years.
    (3) Six months for securities issued for a term of more than 7 
years.

[38 FR 7078, Mar. 15, 1973; 38 FR 8432, Apr. 2, 1973, as amended by 64 
FR 38126, July 15, 1999]



Sec. 306.26  Redemption of registered securities at maturity, upon prior 
call, or for prerefunding or advance refunding.

    Registered securities presented and surrendered for redemption at 
maturity or pursuant to a call for redemption before maturity need not 
be assigned, unless the owner desires that payment be made to some other 
person, in which case assignments should be made to ``The Secretary of 
the Treasury for redemption for the account of (inserting name and 
address of person to whom payment is to be made). Specific instructions 
for the issuance and delivery of the redemption check, signed by the 
owner or his authorized representative, must accompany the securities, 
unless included in the assignment. (Form PD 3905 may be used.) Payment 
of the principal will be made by check drawn on the United States 
Treasury to the order of the persons entitled and mailed in accordance 
with the instructions received. Securities presented for prerefunding or 
advance refunding should be assigned as provided in the prerefunding or 
advance refunding offer.

[64 FR 38126, July 15, 1999]

[[Page 156]]



Sec. 306.27  Redemption of bearer securities at maturity, upon prior 
call, or for advance refunding or prerefunding.

    All interest coupons due and payable on or before the date of 
maturity or date fixed in the call for redemption before maturity should 
be detached from coupon securities presented for redemption and should 
be collected separately in regular course. All coupons bearing dates 
subsequent to the date fixed in a call for redemption, or offer of 
prerefunding or advance refunding, should be left attached to the 
securities. If any such coupons are missing, the full face amount 
thereof will be deducted from the payment to be made upon redemption or 
the prerefunding or advance refunding adjustment unless satisfactory 
evidence of their destruction is submitted. Any amounts so deducted will 
be held in the Department to provide for adjustments or refunds in the 
event it should be determined that the missing coupons were subsequently 
presented or their destruction is later satisfactorily established. In 
the absence of other instructions, payment or bearer securities will be 
made by check drawn to the order of the person presenting and 
surrendering the securities and mailed to him at his address, as given 
in the advice accompanying the securities. (Form PD 3905 may be used.) 
Under appropriate circumstances, payment to a financial institution for 
detached past due coupons may be made by crediting the amount of the 
proceeds to the account maintained by the financial institution at the 
Federal Reserve bank of its district.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



                           Subpart E_Interest



Sec. 306.35  Computation of interest.

    The interest on Treasury securities accrues and is payable on a 
semiannual basis unless otherwise provided in the circular offering them 
for sale or exchange. If the period of accrual is an exact 6 months, the 
interest accrual is an exact one-half year's interest without regard to 
the number of days in the period. If the period of accrual is less than 
an exact 6 months, the accrued interest is computed by determining the 
daily rate of accrual on the basis of the exact number of days in the 
full interest period and multiplying the daily rate by the exact number 
of days in the fractional period for which interest has actually 
accrued. A full interest period does not include the day as of which 
securities were issued or the day on which the last preceding interest 
became due, but does include the day on which the next succeeding 
interest payment is due. A fractional part of an interest period does 
not include the day as of which the securities were issued or the day on 
which the last preceding interest payment became due, but does include 
the day as of which the transaction terminating the accrual of interest 
is effected. The 29th of February in a leap year is included whenever it 
falls within either a full interest period or a fractional part 
thereof.\7\
---------------------------------------------------------------------------

    \7\ The appendix to this subpart contains a complete explanation of 
the method of computing interest on a semiannual basis on Treasury 
bonds, notes, and certificates of indebtedness, and an outline of the 
method of computing the discount rates on Treasury bills. Also included 
are tables of computation of interest on semiannual and annual basis.
---------------------------------------------------------------------------



Sec. 306.36  Termination of interest.

    Securities will cease to bear interest on the date of their maturity 
unless they have been called for redemption before maturity in 
accordance with their terms, or are presented and surrendered for 
redemption-exchange or exchange pursuant to an advance refunding or 
prerefunding offer, in which case they will cease to bear interest on 
the date of call, or the exchange date, as the case may be.



Sec. 306.37  Interest on registered securities.

    (a) Method of payment. The interest on registered securities is 
payable by checks drawn on the United States Treasury to the order of 
the registered owners, except as otherwise provided herein. Interest 
checks are prepared by the Department in advance of the interest payment 
data and are ordinarily mailed in time to reach the addresses

[[Page 157]]

on that date. Interest on a registered security which has not matured or 
been called and which is presented for any transaction during the period 
the books for that loan are closed will be paid by check drawn to the 
order of the registered owner of record. Upon receipt of notice of the 
death or incompetency of an individual named as registered owner, a 
change in the name or in the status of a partnership, corporation, or 
unincorporated association, the removal, resignation, succession, or 
death of a fiduciary or trustee, delivery of interest checks will be 
withheld pending receipt and approval of evidence showing who is 
entitled to receive the interest checks. If the inscriptions on 
securities do not clearly identify the owners, delivery of interest 
checks will be withheld pending reissue of the securities in the correct 
registration. The final installment of interest, unless otherwise 
provided in the offering circular or notice of call, will be paid by 
check drawn to the order of the registered owner of record and mailed in 
advance of the interest payment date in time to reach the addressee on 
or about that date. Interest on securities presented for prerefunding or 
advance refunding will be adjusted as provided in the prerefunding or 
advance refunding offer.
    (b) Change of address. To assure timely delivery of interest checks, 
owners should promptly notify the Bureau of any change of address. (Form 
PD 345 may be used.) The notification must be signed by the registered 
owner or a joint owner or an authorized representative, and should show 
the owner's taxpayer identifying number, the old and new addresses, the 
serial number and denomination of each security, the titles of the 
securities (for example: 4\1/4\ percent Treasury Bonds of 1987-92, dated 
August 15, 1962), and the registration of each security. Notifications 
by attorneys in fact, trustees, or by the legal representatives of the 
estates of deceased, incompetent, or minor owners should be supported by 
proof of their authority, unless, in the case of trustees or legal 
representatives, they are named in the registration.
    (c) Collection of interest checks--(1) General. Interest checks may 
be collected in accordance with the regulations governing the 
endorsement and payment of Government warrants and checks, which are 
contained in the current revision of Department Circular No. 21 (part 
240 of this chapter).
    (2) By voluntary guardians of incompetents. Interest checks drawn to 
the order of a person who has become incompetent and for whose estate no 
legal guardian or similar representative has been appointed should be 
returned to the Bureau with a full explanation of the circumstances. For 
collection of interest, the Department will recognize the relative 
responsible for the incompetent's care and support or some other person 
as voluntary guardian for the incompetent. (Application may be made on 
Form PD 1461.)
    (d) Nonreceipt, loss, theft, or destruction of interest checks. If 
an interest check is not received within a reasonable period after an 
interest payment date, or if a check is lost, stolen, or destroyed after 
receipt, notification should be sent to the Bureau of the Public Debt, 
Division of Customer Service, Parkersburg, WV 26102. Notification should 
include the name and address of the owner, his taxpayer identifying 
number, and the serial number, denomination, and title of the security 
upon which the interest was payable. If the check is subsequently 
received or recovered, the Bureau should be notified.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.38  Interest on bearer securities.

    Unless the offering circular and notice of call provide otherwise, 
interest on coupon securities is payable in regular course of business 
upon presentation and surrender of the interest coupons as they mature. 
Such coupons are payable at participating Federal Reserve banks or by 
the Bureau.\8\ Interest on Treasury bills, and any other bearer 
securities which may be sold and issued on a discount basis and which 
are payable at par at maturity,

[[Page 158]]

is represented by the difference between the purchase price and the par 
value, and no coupons are attached.
---------------------------------------------------------------------------

    \8\ Banking institutions will usually cash the coupons without 
charge as an accommodation to their customers.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]

Appendix to Subpart E of Part 306--Interest--Computation of Interest on 
      Treasury Bonds, Treasury Notes, and Treasury Certificates of 
 Indebtedness, and Computation of Discount on Treasury Bills--Interest 
                                 Tables

                 computation of interest on annual basis

      One Day's Interest is \1/365\ or \1/366\ of 1-Year's Interest

    Computation of interest on Treasury bonds, notes, and certificates 
of indebtedness will be made on an annual basis in all cases where 
interest is payable in one amount for the full term of the security, 
unless such term is an exact half-year (6 months), and it is provided 
that interest shall be computed on a semi-annual basis.
    If the term of the securities is exactly 1 year, the interest is 
computed for the full period at the specified rate regardless of the 
number of days in such period.
    If the term of the securities is less than 1 full year, the annual 
interest period for purposes of computation is considered to be the full 
year from but not including the date of issue to and including the 
anniversary of such date.
    If the term of the securities is more than 1 full year, computation 
is made on the basis of one full annual interest period, ending with the 
maturity date, and a fractional part of the preceding full annual 
interest period.
    The computation of interest for any fractional part of an annual 
interest period is made on the basis of 365 actual days in such period, 
or 366 days if February 29 falls within such annual period.

               computation of interest on semiannual basis

  One Day's Interest is \1/181\, \1/182\, \1/183\ or \1/184\ or \1/2\ 
                             Year's Interest

    Computation of interest on Treasury bonds, notes, and certificates 
of indebtedness will be made on a semiannual basis in all cases where 
interest is payable for one or more full half-year (6 months) periods, 
or for one or more full half-year periods and a fractional part of a 
half-year period. A semiannual interest period is an exact half-year or 
6 months, for computation purposes, and may comprise 181, 182, 183 or 
184 actual days.
    An exact half-year's interest at the specified rate is computed for 
each full period of exactly 6 months, irrespective of the actual number 
of days in the half-year.
    If the initial interest covers a fractional part of a half-year, 
computation is made on the basis of the actual number of days in the 
half-year (exactly 6 months) ending on the day such initial interest 
becomes due. If the initial interest covers a period in excess of 6 
months, computation is made on the basis of one full half-year, ending 
with the interest due date, and a fractional part of the preceding full 
half-year period.
    Interest for any fractional part of a full half-year period is 
computed on the basis of the exact number of days in the full period, 
including February 29 whenever it falls within such a period.
    The number of days in any half-year period is shown in the following 
table:

                                                For the Half-Year
----------------------------------------------------------------------------------------------------------------
                                                                   Beginning and ending    Beginning and ending
                                                                   days are 1st or 15th    days are last days of
                                                                  of months listed under    months listed under
                                                                      interest period         interest period
                         Interest period                             (number of days)        (number of days)
                                                                 -----------------------------------------------
                                                                    Regular                 Regular
                                                                     year      Leap year     year      Leap year
----------------------------------------------------------------------------------------------------------------
January to July.................................................         181         182         181         182
February to August..............................................         181         182         184         184
March to September..............................................         184         184         183         183
April to October................................................         183         183         184         184
May to November.................................................         184         184         183         183
June to December................................................         183         183         184         184
July to January.................................................         184         184         184         184
August to February..............................................         184         184         181         182
September to March..............................................         181         182         182         183
October to April................................................         182         183         181         182
November to May.................................................         181         182         182         183
December to June................................................         182         183         181         182
                                                                 -----------------------------------------------
1 year (any 2 consecutive half-years)...........................         365         366         365         366
----------------------------------------------------------------------------------------------------------------


[[Page 159]]

    The following are dates for end-of-the-month interest computations.

------------------------------------------------------------------------
                                            Interest-computation period
      When interest period ends on--         will be from but will not
                                                     include--
------------------------------------------------------------------------
January 31...............................  July 31.
February 28 in 365-day year..............  August 31.
February 29..............................   Do.
March 30, 31.............................  September 30.
April 30.................................  October 31.
May 30, 31...............................  November 30.
June 30..................................  December 31.
July 31..................................  January 31.
August 29, 30, or 31.....................  February 28 in 365-day year.
                                           February 29 in leap year.
September 30.............................  March 31.
October 30, 31...........................  April 30.
November 30..............................  May 31.
December 30, 31..........................  June 30.
------------------------------------------------------------------------

                         use of interest tables

    In the appended tables decimals are set forth for use in computing 
interest for fractional parts of interest periods. The decimals cover 
interest on $1,000 for 1 day in each possible semiannual (Table I), and 
annual (Table II) interest period, at all rates of interest, in steps of 
\1/8\ percent, from \1/8\ to 9 percent. The amount of interest accruing 
on any date (for a fractional part of an interest period) on $1,000 face 
amount of any issue of Treasury bonds, Treasury notes, or Treasury 
certificates of indebtedness may be ascertained in the following way:
    (1) The date of issue, the dates for the payment of interest, the 
basis (semiannual or annual) upon which interest is computed, and the 
rate of interest (percent per annum) may be determined from the text of 
the security, or from the official circular governing the issue.
    (2) Determine the interest period of which the fraction is a part, 
and calculate the number of days in the full period to determine the 
proper column to be used in selecting the decimal for 1 day's interest.
    (3) Calculate the actual number of days in the fractional period 
from but not including the date of issue or the day on which the last 
preceding interest payment was made, to and including the day on which 
the next succeeding interest payment is due or the day as of which the 
transaction which terminates the accrual of additional interest is 
effected.
    (4) Multiply the appropriate decimal (1 day's interest on $1,000) by 
the number of days in the fractional part of the interest period. The 
appropriate decimal will be found in the appended table for interest 
payable semiannually or annually, as the case may be, opposite the rate 
borne by the security, and in the column showing the full interest 
period of which the fractional period is a part. (For interest on any 
other amount, multiply the amount of interest on $1,000 by the other 
amount expressed as a decimal of $1,000.)

                                treasury

    The methods of computing discount rates on U.S. Treasury bills are 
given below:
    Computation will be made on an annual basis in all cases. The annual 
period for bank discount is a year of 360 days, and all computations of 
such discount will be made on that basis. The annual period for true 
discount is 1 full year from but not including the date of issue to and 
including the anniversary of such date. Computation of true discount for 
a fractional part of a year will be made on the basis of 365 days in the 
year, or 366 days if February 29 falls within the year.

                              bank discount

    The bank discount rate on a Treasury bill may be ascertained by: (1) 
Subtracting the sale price of the bill from its face value to obtain the 
amount of discount; (2) dividing the amount of discount by the number of 
days the bill is to run to obtain the amount of discount per day; (3) 
multiplying the amount of discount per day by 360 (the number of days in 
a commercial year of 12 months of 30 days each) to obtain the amount of 
discount per year; and (4) dividing the amount of discount per year by 
the face value of the bill to obtain the bank discount rate.

For example:

91-day bill:
  Principal amount--maturity value..........................     $100.00
  Price at issue--amount received...........................       99.50
                                                             -----------
    Amount of discount......................................         .50
$0.50/91x360/$100=.01978 or 1.978 percent
 

                              true discount

    The true discount rate on a Treasury bill of not more than one-half 
year in length may be ascertained by (1 and 2) obtaining the amount of 
discount per day by following the first two steps described under ``Bank 
Discount''; (3) multiplying the amount of discount per day by the actual 
number of days in the year from date of issue (365 ordinarily, but 366 
if February 29 falls within the year from date of issue) to obtain the 
amount of discount per year; and (4) dividing the amount of discount per 
year by the sale price of the bill to obtain the true discount rate.

For example:

91-day bill:
  Principal amount--maturity value..........................     $100.00
  Price at issue--amount received...........................       99.50
                                                             -----------
    Amount of discount......................................         .50
$0.50/91x365/$99.50=.02016 or 2.016 percent
 


[[Page 160]]


   Table I--Decimal for 1 Day's Interest on $1,000 at Various Rates of Interest, Payable Semiannually or on a
 Semiannual Basis, in Regular Years of 365 Days and in Leap Years of 366 Days (to Determine Applicable Number of
                           Days, See ``Computation of Interest on Semiannual Basis'')
----------------------------------------------------------------------------------------------------------------
                                                Half-year of     Half-year of     Half-year of     Half-year of
          Rate per annum (percent)                184 days         183 days         182 days         181 days
----------------------------------------------------------------------------------------------------------------
\1/8\.......................................   $0.003 396 739   $0.003 415 301   $0.003 434 066   $0.003 453 039
\1/4\.......................................     .006 793 478     .006 830 601     .006 868 132     .006 906 077
\3/8\.......................................     .010 190 217     .010 245 902     .010 302 198     .010 359 116
\1/2\.......................................     .013 586 957     .013 661 202     .013 736 264     .013 812 155
\5/8\.......................................     .016 983 696     .017 076 503     .017 170 330     .017 265 193
\3/4\.......................................     .020 380 435     .020 491 803     .020 604 396     .020 718 232
\7/8\.......................................     .023 777 174     .023 907 104     .024 038 462     .024 171 271
1...........................................     .027 173 913     .027 322 404     .027 472 527     .027 624 309
1\1/8\......................................     .030 570 652     .030 737 705     .030 906 593     .031 077 348
1\1/4\......................................     .033 967 391     .034 153 005     .034 340 659     .034 530 387
1\3/8\......................................     .037 364 130     .037 568 306     .037 774 725     .037 983 425
1\1/2\......................................     .040 760 870     .040 983 607     .041 208 791     .041 436 464
1\5/8\......................................     .044 157 609     .044 398 907     .044 642 857     .044 889 503
1\3/4\......................................     .047 554 348     .047 814 208     .048 076 923     .048 342 541
1\7/8\......................................     .050 951 087     .051 229 508     .051 510 989     .051 795 580
2...........................................     .054 347 826     .054 644 809     .054 945 055     .055 248 619
2\1/8\......................................     .057 744 565     .058 060 109     .058 379 121     .058 701 657
2\1/4\......................................     .061 141 304     .061 475 410     .061 813 187     .062 154 696
2\3/8\......................................     .064 538 043     .064 890 710     .065 247 253     .065 607 735
2\1/2\......................................     .067 934 783     .068 306 011     .068 681 319     .069 060 773
2\5/8\......................................     .071 331 522     .071 721 311     .072 115 385     .072 513 812
2\3/4\......................................     .074 728 261     .075 136 612     .075 549 451     .075 966 851
2\7/8\......................................     .078 125 000     .078 551 913     .078 983 516     .079 419 890
3...........................................     .081 521 739     .081 967 213     .082 417 582     .082 872 928
3\1/8\......................................     .084 918 478     .085 382 514     .085 851 648     .086 325 967
3\1/4\......................................     .088 315 217     .088 797 814     .089 285 714     .089 779 006
3\3/8\......................................     .091 711 957     .092 213 115     .092 719 780     .093 232 044
3\1/2\......................................     .095 108 696     .095 628 415     .096 153 846     .096 685 083
3\5/8\......................................     .098 505 435     .099 043 716     .099 021 978     .100 138 122
3\3/4\......................................     .101 902 174     .102 459 016     .103 021 978     .103 591 160
3\7/8\......................................     .105 298 913     .105 874 317     .106 456 044     .107 044 190
4...........................................     .108 695 652     .109 289 617     .109 890 110     .110 497 238
4\1/8\......................................     .112 092 391     .112 704 918     .113 324 176     .113 950 236
4\1/4\......................................     .115 489 130     .116 120 219     .116 758 242     .117 403 375
4\3/8\......................................     .118 885 870     .119 535 519     .120 192 308     .120 856 317
4\1/2\......................................     .122 282 609     .122 950 820     .123 626 374     .124 309 394
4\5/8\......................................     .125 679 348     .126 366 120     .127 060 440     .127 762 432
4\3/4\......................................     .129 076 087     .129 781 421     .130 494 505     .131 215 471
4\7/8\......................................     .132 472 826     .133 196 721     .133 928 571     .134 668 500
5...........................................     .135 869 565     .136 612 022     .137 362 637     .138 121 548
5\1/8\......................................     .139 266 304     .140 027 322     .140 796 703     .141 574 586
5\1/4\......................................     .142 663 043     .143 442 623     .144 230 769     .145 027 624
5\3/8\......................................     .146 059 783     .146 857 923     .147 664 835     .148 480 663
5\1/2\......................................     .149 456 522     .150 273 224     .151 098 901     .151 933 702
5\5/8\......................................     .152 853 261     .153 688 525     .154 532 967     .155 386 748
5\3/4\......................................     .156 250 000     .157 103 825     .157 967 033     .158 839 706
5\7/8\......................................     .159 646 739     .160 519 126     .161 401 099     .162 292 876
6...........................................     .163 043 478     .163 934 426     .164 835 165     .165 745 856
6\1/8\......................................      166 440 217     .167 349 727     .168 269 231     .169 198 895
6\1/4\......................................     .169 836 957     .170 765 027     .171 703 297     .172 651 934
6\3/8\......................................     .173 233 696     .174 180 328     .175 137 363     .176 104 972
6\1/2\......................................     .176 630 435     .177 595 628     .178 571 429     .179 558 011
6\5/8\......................................     .180 027 174     .181 010 929     .182 005 495     .183 011 050
6\3/4\......................................     .183 423 913     .184 426 230     .185 439 560     .186 464 088
6\7/8\......................................     .186 820 652     .187 841 530     .188 873 626     .189 917 127
7...........................................     .190 217 391     .191 256 831     .192 307 692     .193 370 166
7\1/8\......................................     .193 614 130     .194 672 131     .195 741 758     .196 823 204
7\1/4\......................................     .197 010 870     .198 087 432     .199 175 824     .200 276 243
7\3/8\......................................     .200 407 609     .201 502 732     .202 609 890     .203 729 282
7\1/2\......................................     .203 804 348     .204 918 033     .206 043 956     .207 182 320
7\5/8\......................................     .207 201 087     .208 333 333     .209 478 022     .210 635 359
7\3/4\......................................     .210 597 826     .211 748 634     .212 912 088     .214 088 398
7\7/8\......................................     .213 994 565     .215 163 934     .216 346 154     .217 541 436
8...........................................     .217 391 304     .218 579 235     .219 780 220     .220 994 475
8\1/8\......................................     .220 788 043     .221 994 536     .223 214 286     .224 447 514
8\1/4\......................................     .224 184 783     .225 409 836     .226 648 352     .227 900 552
8\3/8\......................................     .227 581 522     .228 825 137     .230 082 418     .231 353 591

[[Page 161]]

 
8\1/2\......................................     .230 978 261     .232 240 437     .233 516 484     .234 806 630
8\5/8\......................................     .234 375 000     .235 655 738     .236 950 549     .238 259 669
8\3/4\......................................     .237 771 739     .239 071 038     .240 384 615     .241 712 707
8\7/8\......................................     .241 168 478     .242 486 339     .243 818 681     .245 165 746
9...........................................     .244 565 217     .245 901 639     .247 252 747     .248 618 785
9\1/8\......................................     .247 961 957     .249 316 940     .250 686 813     .252 071 823
9\1/4\......................................     .251 358 696     .252 732 240     .254 120 879     .255 524 862
9\3/8\......................................     .254 755 435     .256 147 541     .257 554 945     .258 977 901
9\1/2\......................................     .258 152 174     .259 562 842     .260 989 011     .262 430 939
9\5/8\......................................     .261 548 913     .262 978 142     .264 423 077     .265 883 978
9\3/4\......................................     .264 945 652     .266 393 443     .267 857 143     .269 337 017
9\7/8\......................................     .268 342 391     .269 808 743     .271 291 209     .272 790 055
10..........................................     .271 739 130     .273 224 044     .274 725 275     .276 243 094
10\1/8\.....................................     .275 135 870     .276 639 344     .278 159 341     .279 696 133
10\1/4\.....................................     .278 853 609     .280 054 645     .281 593 407     .283 149 171
10\3/8\.....................................     .281 929 348     .283 469 945     .285 027 473     .286 602 210
10\1/2\.....................................     .285 326 087     .286 885 246     .288 461 538     .290 055 249
10\5/8\.....................................     .288 722 826     .290 300 546     .291 895 604     .293 508 287
10\3/4\.....................................     .292 119 565     .293 715 847     .295 329 670     .296 961 326
10\7/8\.....................................     .295 516 304     .297 131 148     .298 763 736     .300 414 365
11..........................................     .298 913 043     .300 546 448     .302 197 802     .303 867 403
11\1/8\.....................................     .302 309 783     .303 961 749     .305 631 868     .307 320 442
11\1/4\.....................................     .305 706 522     .307 377 049     .309 065 934     .310 773 481
11\3/8\.....................................     .309 103 261     .310 792 350     .312 500 000     .314 226 519
11\1/2\.....................................     .312 500 000     .314 207 650     .315 934 066     .317 679 558
11\5/8\.....................................     .315 896 739     .317 622 951     .319 368 132     .321 132 597
11\3/4\.....................................     .319 293 478     .321 038 251     .322 802 198     .324 585 635
11\7/8\.....................................     .322 690 217     .324 453 552     .326 236 264     .328 038 674
12..........................................     .326 086 957     .327 868 852     .329 670 330     .331 491 713
----------------------------------------------------------------------------------------------------------------


  Table II--Decimal for 1 Day's Interest on $1,000 at Various Rates of
  Interest, Payable Annually or on an Annual Basis, in Regular Years of
                 365 Days and in Leap Years of 366 Days
------------------------------------------------------------------------
                                         Regular year,    Leap year, 366
       Rate per annum (percent)             365 days           days
------------------------------------------------------------------------
\1/8\.................................   $0.003 424 658   $0.003 415 301
\1/4\.................................     .006 849 315     .006 830 601
\3/8\.................................     .010 273 973     .010 245 902
\1/2\.................................     .013 698 630     .013 661 202
\5/8\.................................     .017 123 288     .017 076 503
\3/4\.................................     .020 547 945     .020 491 803
\7/8\.................................     .023 972 603     .023 907 104
1.....................................     .027 397 260     .027 322 404
1\1/8\................................     .030 821 918     .030 737 705
1\1/4\................................     .034 246 575     .034 153 005
1\3/8\................................     .037 671 233     .037 568 306
1\1/2\................................     .041 095 890     .040 983 607
1\5/8\................................     .044 520 548     .044 398 907
1\3/4\................................     .047 945 205     .047 814 208
1\7/8\................................     .051 369 863     .051 229 508
2.....................................     .054 794 521     .054 644 809
2\1/8\................................     .058 219 178     .058 060 109
2\1/4\................................     .061 643 836     .061 475 410
2\3/8\................................     .065 068 493     .064 890 710
2\1/2\................................     .068 493 151     .068 306 011
2\5/8\................................     .071 917 808     .071 721 311
2\3/4\................................     .075 342 466     .075 136 612
2\7/8\................................     .078 767 123     .078 551 913
3.....................................     .082 191 781     .081 967 213
3\1/8\................................     .085 616 438     .085 382 514
3\1/4\................................     .089 041 096     .088 797 814
3\3/8\................................     .092 465 753     .092 213 115
3\1/2\................................     .095 890 411     .095 628 415
3\5/8\................................     .099 315 068     .099 043 716
3\3/4\................................     .102 739 726     .102 459 016
3\7/8\................................     .106 164 384     .105 874 317
4.....................................     .109 589 041     .109 289 617
4\1/8\................................     .113 013 699     .112 704 918
4\1/4\................................     .116 438 356     .116 120 219
4\3/8\................................     .119 863 014     .119 535 519
4\1/2\................................     .123 287 671     .122 950 820
4\5/8\................................     .126 712 329     .126 366 120
4\3/4\................................     .130 136 986     .129 781 421
4\7/8\................................     .133 561 644     .133 196 721
5.....................................     .136 986 301     .136 612 022
5\1/8\................................     .140 410 959     .140 027 322
5\1/4\................................     .143 835 616     .143 442 623
5\3/8\................................     .147 260 274     .146 857 923
5\1/2\................................     .150 684 932     .150 273 224
5\5/8\................................     .154 109 589     .153 688 525
5\3/4\................................     .157 534 247     .157 103 825
5\7/8\................................     .160 958 904     .160 519 126
6.....................................     .164 383 562     .163 934 426
6\1/8\................................     .167 808 219     .167 349 727
6\1/4\................................     .171 232 877     .170 765 027
6\3/8\................................     .174 657 534     .174 180 328
6\1/2\................................     .178 082 192     .177 595 628
6\5/8\................................     .181 506 849     .181 010 929
6\3/4\................................     .184 931 507     .184 426 230

[[Page 162]]

 
6\7/8\................................     .188 356 164     .187 841 530
7.....................................     .191 780 822     .191 256 831
7\1/8\................................     .195 205 479     .194 672 131
7\1/4\................................     .198 630 137     .198 087 432
7\3/8\................................     .202 054 795     .201 502 732
7\1/2\................................     .205 479 452     .204 918 033
7\5/8\................................     .208 904 110     .208 333 333
7\3/4\................................     .212 328 767     .211 748 634
7\7/8\................................     .215 753 425     .215 163 934
8.....................................     .219 178 082     .218 579 235
8\1/8\................................     .222 602 740     .221 994 536
8\1/4\................................     .226 027 397     .225 409 836
8\3/8\................................     .229 452 055     .228 825 137
8\1/2\................................     .232 876 712     .232 240 437
8\5/8\................................     .236 301 370     .235 655 738
8\3/4\................................     .239 726 027     .239 071 038
8\7/8\................................     .243 150 685     .242 486 339
9.....................................     .246 575 342     .245 901 639
9\1/8\................................     .250 000 000     .249 316 940
9\1/4\................................     .253 424 658     .252 732 240
9\3/8\................................     .256 849 315     .256 147 541
9\1/2\................................     .260 273 973     .259 562 842
9\5/8\................................     .263 698 630     .262 978 142
9\3/4\................................     .267 123 288     .266 393 443
9\7/8\................................     .270 547 945     .269 808 743
10....................................     .273 972 603     .273 224 044
10\1/8\...............................     .277 397 260     .276 639 344
10\1/4\...............................     .280 821 918     .280 054 645
10\3/8\...............................     .284 246 575     .283 469 945
10\1/2\...............................     .287 671 233     .286 885 246
10\5/8\...............................     .291 095 890     .290 300 546
10\3/4\...............................     .294 520 548     .293 715 847
10\7/8\...............................     .297 945 205     .297 131 148
11....................................     .301 369 863     .300 546 448
11\1/8\...............................     .304 794 521     .303 961 749
11\1/4\...............................     .308 219 178     .307 377 049
11\3/8\...............................     .311 643 836     .310 792 350
11\1/2\...............................     .315 068 493     .314 207 650
11\5/8\...............................     .318 493 151     .317 622 951
11\3/4\...............................     .321 917 808     .321 038 251
11\7/8\...............................     .325 342 466     .324 453 552
12....................................     .328 767 123     .327 868 852
------------------------------------------------------------------------


[38 FR 7078, Mar. 15, 1973; 38 FR 8153, Mar. 29, 1973; 38 FR 10004, Apr. 
23, 1973, as amended at 44 FR 34125, June 14, 1979]



         Subpart F_Assignments of Registered Securities_General



Sec. 306.40  Execution of assignments.

    The assignment of a registered security should be executed by the 
owner, or his or her authorized representative, in the presence of an 
individual authorized to certify assignments. All assignments must be 
made on the backs of the securities, unless otherwise authorized by the 
Bureau. An assignment by mark (X) must be witnessed not only by a 
certifying individual, but also by at least one other person, who should 
add an endorsement substantially as follows: ``Witness to signature by 
mark,'' followed by the witness' signature and address.

[59 FR 59036, Nov. 15, 1994, as amended by 64 FR 38126, July 15, 1999]



Sec. 306.41  Form of assignment.

    Registered securities may be assigned in blank, to bearer, to a 
specified transferee, or to the Secretary of the Treasury for redemption 
or for exchange for other securities offered at maturity, upon call or 
pursuant to an advance refunding or prerefunding offer. Assignments to 
``The Secretary of the Treasury,'' ``The Secretary of the Treasury for 
transfer,'' or ``The Secretary of the Treasury for exchange'' will not 
be accepted unless supplemented by specific instructions by or in behalf 
of the owner.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.42  Alterations and erasures.

    If an alteration or erasure has been made in an assignment, the 
assignor should appear before an authorized certifying officer and 
execute a new assignment to the same assignee. If the new assignment is 
to other than the assignee whose name has been altered or erased, a 
disclaimer from the first-named assignee should be obtained. Otherwise, 
an affidavit of explanation by the person responsible for the alteration 
or erasure should be submitted for consideration.



Sec. 306.43  Voidance of assignments.

    An assignment of a security to or for the account of another person, 
not completed by delivery, may be voided by a disclaimer of interest 
from that person. This disclaimer should be executed in the presence of 
an officer authorized to certify assignments of securities. Unless 
otherwise authorized by the Bureau, the disclaimer must be written, 
typed, or stamped on the back of the security in substantially the 
following form:

    The undersigned as assignee of this security hereby disclaims any 
interest herein.

                                                             (Signature)


[[Page 163]]


    I certify that the above-named person as described, whose identity 
is well known or proved to me, personally appeared before me the ------ 
day of ------------ (Month and year) at -------------------- (Place) and 
signed the above disclaimer of interest.
(seal)__________________________________________________________________
(Signature and official designation of certifying officer)


In the absence of a disclaimer, an affidavit or affidavits should be 
submitted for consideration explaining why a disclaimer cannot be 
obtained, reciting all other material facts and circumstances relating 
to the transaction, including whether or not the security was delivered 
to the person named as assignee and whether or not the affiants know of 
any basis for the assignee claiming any right, title, or interest in the 
security. After an assignment has been voided, in order to dispose of 
the security, an assignment by or on behalf of the owner will be 
required.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.44  Discrepancies in names.

    The Department will ordinarily require an explanation of 
discrepancies in the names which appear in inscriptions, assignments, 
supporting evidence or in the signatures to any assignments. (Form PD 
385 may be used for this purpose.) However, where the variations in the 
name of the registered owner, as inscribed on securities of the same or 
different issues, are such that both may properly represent the same 
person, for example, ``J. T. Smith'' and ``John T. Smith,'' no proof of 
identity will be required if the assignments are signed exactly as the 
securities are inscribed and are duly certified by the same certifying 
officer.



Sec. 306.45  Certifying individuals.

    (a) General. The following individuals may certify assignments of, 
or forms with respect to, securities:
    (1) Officers and employees of depository institutions, corporate 
central credit unions, and institutions that are members of Treasury-
recognized signature guarantee programs who have been authorized:
    (i) Generally to bind their respective institutions by their acts;
    (ii) Unqualifiedly to guarantee signatures to assignments of 
securities; or
    (iii) To certify assignments of securities.
    (2) Officers and authorized employees of Federal Reserve Banks and 
branches.
    (3) Officers of Federal Land Banks, Federal Intermediate Credit 
Banks and Banks for Cooperatives, and Federal Home Loan Banks.
    (4) Commissioned officers and warrant officers of the Armed Forces 
of the United States but only with respect to signatures executed by 
Armed Forces personnel, civilian field employees, and members of their 
families.
    (5) U.S. Attorneys, Collectors of Customs, and Regional 
Commissioners, District Directors, and Service Center Directors, 
Internal Revenue Service.
    (6) Judges and Clerks of U.S. Courts.
    (7) Such other persons as the Commissioner of the Public Debt or his 
designee may authorize.
    (b) Foreign countries. The following individuals are authorized to 
certify assignments of, or forms with respect to, securities executed in 
a foreign country:
    (1) United States diplomatic or consular officials.
    (2) Managers and officers of foreign branches of depository 
institutions and institutions that are members of Treasury-recognized 
signature guarantee programs.
    (3) Notaries public and other officers authorized to administer 
oaths, provided their official position and authority are certified by a 
United States diplomatic or consular official under seal of the office.
    (c) Duties and liabilities of certifying individuals--(1) General. 
Except as specified in paragraph (c)(2) of this section, a certifying 
individual shall require that the security or related form be signed in 
the certifying individual's presence after he or she has established the 
identity of the person seeking the certification. An employee who is not 
an officer should insert the words ``Authorized signature'' in the space 
provided for the title. A certifying individual and the organization for 
which he or she is acting are jointly and severally liable for any loss 
the United

[[Page 164]]

States may incur as a result of the individual's negligence in making 
the certification.
    (2) Signature guaranteed. The assignment or related form need not be 
executed in the presence of a certifying individual if he or she 
unqualifiedly guarantees the signature, in which case the certifying 
individual shall, after the signature, add the following endorsement: 
``Signature guaranteed, First National Bank of Smithville, Smithville, 
NH, by A.B. Doe, President'', and add the date. In guaranteeing a 
signature, the certifying individual and the organization for which he 
or she is acting warrant to the Department that the signature is genuine 
and that the signer had the legal capacity to execute the assignment or 
related form.
    (3) Absence of signature guaranteed by depository institution. A 
security or related form need not be actually signed by the owner in any 
case where a certifying individual associated with a depository 
institution has placed an endorsement on the security or the form 
reading substantially as follows: ``Absence of signature by owner and 
validity of transaction guaranteed, Second State Bank of Jonesville, 
Jonesville, NC, by B.R. Butler, Vice President''. The endorsement should 
be dated, and the seal of the institution should be added. This form of 
endorsement is an unconditional guarantee to the Department that the 
institution is acting for the owner under proper authorization.
    (d) Evidence of certifying individual's authority. The authority of 
a certifying individual to act is evidenced by affixing to the 
certification the following:
    (1) Officers and employees of depository institutions. The 
institution's seal or signature guarantee stamp; if the institution is 
an authorized paying agent for U.S. Savings Bonds, a legible imprint of 
the paying agent's stamp; or, if the institution is a member of the 
Securities Transfer Agents Medallion Program (STAMP), a legible imprint 
of the STAMP signature guarantee stamp.
    (2) Officers and authorized employees of institutions that are 
members of Treasury-recognized signature guarantee programs. A legible 
imprint of the program's signature guarantee stamp, e.g., the STAMP, 
SEMP, or MSP stamp for members of the Securities Transfer Agents 
Medallion Program, the Stock Exchanges Medallion Program, or the New 
York Stock Exchange Incorporated Medallion Signature Program, 
respectively.
    (3) Officers and authorized employees of Federal Reserve Banks. 
Whatever is prescribed in procedures established by the Department.
    (4) Officers and employees of corporate central credit unions and 
other entities listed in paragraph (a)(3) of this section. The entity's 
seal.
    (5) Notaries public, diplomatic or consular officials. The official 
seal or stamp of the office. If the certifying individual has no seal or 
stamp, then the official's position must be certified by some other 
authorized individual, under seal or stamp, or otherwise proved to the 
satisfaction of the Department.
    (6) Commissioned or warrant officers of the United States Armed 
Forces. A statement which sets out the officer's rank and the fact that 
the person executing the assignment or form is one whose signature the 
officer is authorized to certify under the regulations in this part.
    (7) A judge or clerk of the court. The seal of the court.
    (8) Any other certifying individual. The official seal or stamp of 
the office. If the certifying individual has no seal or stamp, then the 
certifying individual's position and signature must be certified by some 
other authorized individual under official seal or stamp, or otherwise 
proved to the satisfaction of the Department.
    (e) Interested persons not to act as certifying individual. Neither 
the transferor, the transferee, nor any person having an interest in a 
security involved in the transaction may act as a certifying individual. 
However, an authorized officer or employee of a depository institution 
or of an institution that is a member of a Treasury-recognized signature 
guarantee program may act as a certifying individual on a security or 
related form for transfer of a security to

[[Page 165]]

the institution, or any security or related form executed by another 
individual on behalf of the institution.

[59 FR 59037, Nov. 15, 1994]



          Subpart G_Assignments by or in Behalf of Individuals



Sec. 306.55  Signatures, minor errors and change of name.

    The owner's signature to an assignment should be in the form in 
which the security is inscribed or assigned, unless such inscription or 
assignment is incorrect or the name has since been changed. In case of a 
change of name, the signature to the assignment should show both names 
and the manner in which the change was made, for example, ``John Young, 
changed by order of court from Hans Jung.'' Evidence of the change will 
be required. However, no evidence is required to support an assignment 
if the change resulted from marriage and the signature, which must be 
duly certified by an authorized officer, is written to show that fact, 
for example, ``Mrs. Mary J. Brown, changed by marriage from Miss Mary 
Jones.''



Sec. 306.56  Assignment of securities registered in the names of or 
assigned to two or more persons.

    (a) Transfer or exchange. Securities registered in the names of or 
assigned to two or more persons may be transferred during the lives of 
all the joint owners only upon assignments by all or on their behalf by 
authorized representatives. Upon proof of the death of one, the 
Department will accept an assignment by or in behalf of the survivor or 
survivors, unless the form of registration or assignment includes words 
which precludes the right of survivorship.\9\ In the latter case, in 
addition to assignment by or in behalf of the survivor or survivors, an 
assignment in behalf of the decedent's estate will be required.
---------------------------------------------------------------------------

    \9\ See Sec. 306.11(a) (2) for forms of registration expressing or 
precluding survivorship.
---------------------------------------------------------------------------

    (b) Advance refunding or prerefunding offers. No assignments are 
required for exchange of securities registered in the names of or 
assigned to two or more persons if the securities to be received in the 
exchange are to be registered in the same names and form. If securities 
in a different form are to be issued, all persons named must assign, 
except that in case of death paragraph (a) of this section shall apply.
    (c) Redemption or redemption-exchange--(1) Alternative registration 
or assignment. Securities registered in the names of or assigned to two 
or more persons in the alternative, for example, ``John B. Smith or Mrs. 
Mary J. Smith'' or ``John B. Smith or Mrs. Mary J. Smith or the 
survivor,'' may be assigned by one of them at maturity or upon call, for 
redemption or redemption-exchange, for his own account or otherwise, 
whether or not the other joint owner or owners are deceased.
    (2) Joint registration or assignment. Securities registered in the 
names of or assigned to two or more persons jointly, for example, ``John 
B. Smith and Mrs. Mary J. Smith,'' or ``John B. Smith and Mrs. Mary J. 
Smith as tenants in common,'' or ``John B. Smith and Mary J. Smith as 
partners in community,'' may be assigned by one of them during the lives 
of all only for redemption at maturity or upon call, and then only for 
redemption for the account of all. No assignments are required for 
redemption-exchange for securities to be registered in the same names 
and forms as appear in the registration or assignment of the securities 
surrendered. Upon proof of the death of a joint owner, the survivor or 
survivors may assign securities so registered or assigned for redemption 
or redemption-exchange for any account, except that, if words which 
preclude the right of survivorship \9\ appear in the registration or 
assignment, assignment in behalf of the decedent's estate also will be 
required.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.57  Minors and incompetents.

    (a) Assignments by natural guardian of securities registered in name 
of minor. Securities registered in the name of a minor for whose estate 
no legal guardian or similar representative has qualified may be 
assigned by the natural guardian upon qualification. (Form PD 2481 may 
be used for this purpose.)

[[Page 166]]

    (b) Assignments of securities registered in name of natural guardian 
of minor. Securities registered in the name of a natural guardian of a 
minor may be assigned by the natural guardian for any authorized 
transaction except one for the apparent benefit of the natural guardian. 
If the natural guardian in whose name the securities are registered is 
deceased or is no longer qualified to act as natural guardian, the 
securities may be assigned by the person then acting as natural 
guardian. The assignment by the new natural guardian should be supported 
by proof of the death or disqualification of the former natural guardian 
and by evidence of his own status as natural guardian. (Form PD 2481 may 
be used for this purpose.) No assignment by a natural guardian will be 
accepted after receipt of notice of the minor's attainment of majority, 
removal of his disability of minority, disqualification of the natural 
guardian to act as such, qualification of a legal guardian or similar 
representative, or the death of the minor.
    (c) Assignments by voluntary guardian of incompetents. Registered 
securities belonging to an incompetent for whose estate no legal 
guardian or similar representative is legally qualified may be assigned 
by the relative responsible for his care and support or some other 
person as voluntary guardian:
    (1) For redemption, if the proceeds of the securities are needed to 
pay expenses already incurred, or to be incurred during any 90-day 
period, for the care and support of the incompetent or his legal 
dependents.
    (2) For redemption-exchange, if the securities are matured or have 
been called, or pursuant to an advance refunding or prerefunding offer, 
for reinvestment in other securities to be registered in the form ``A, 
an incompetent (123-45-6789) under voluntary guardianship.''

An application on Form PD 1461 by the person seeking authority to act as 
voluntary guardian will be required.
    (d) Assignments by legal guardians of minors or incompetents. 
Securities registered in the name and title of the legal guardian or 
similar representative of the estate of a minor or incompetent may be 
assigned by the representative for any authorized transaction without 
proof of his qualification. Assignments by a representative of any other 
securities belonging to a minor or incompetent must be supported by 
properly certified evidence of qualification. The evidence must be dated 
not more than 1 year before the date of the assignments and must contain 
a statement showing the appointment is in full force unless (1) it shows 
the appointment was made not more than 1 year before the date of the 
assignment, or (2) the representative or a corepresentative is a 
corporation. An assignment by the representative will not be accepted 
after receipt of notice of termination of the guardianship, except for 
transfer to the former ward.

[38 FR 7078, Mar. 15, 1973, as amended at 64 FR 38126, July 15, 1999]



Sec. 306.58  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
transactions in Treasury Bonds, Investment Series B- 1975-80.



      Subpart H_Assignments in Behalf of Estates of Deceased Owners



Sec. 306.65  Decedent's estate.

    (a) Estate is being administered. (1) A legal representative of a 
deceased owner's estate may request payment of matured securities to the 
estate, or may assign securities to or for the benefit of the persons 
entitled.
    (2) Appropriate proof of appointment for the legal representative of 
the estate is required. Letters of appointment must be dated not more 
than one year prior to the date of submission of the letters of 
appointment.
    (b) Estate has been settled previously. If the estate has been 
settled previously through judicial proceedings, the persons entitled 
may request payment of matured securities, or may request assignment of 
unmatured securities. A certified copy of the court-approved final 
accounting for the estate, the court's decree of distribution, or other 
appropriate evidence is required.
    (c) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the

[[Page 167]]

estate is to be appointed, the person appointed to receive or distribute 
the assets of a decedent's estate without regular administration under 
summary or small estates procedures under applicable local law may 
request payment of matured securities, or may request assignment of the 
securities. Appropriate evidence is required.
    (d) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000, administration of the decedent's estate will 
be required. The redemption value of savings bonds and the principal 
amount of marketable securities will be used to determine the value of 
securities, and will be determined as of the date of death. 
Administration may also be required at the discretion of the Department 
for any case.
    (e) Voluntary representative for small estates that are not being 
otherwise administered--(1) General. A voluntary representative is a 
person qualified according to paragraph (e)(3) of this section, to 
request payment of a decedent's matured securities or to make an 
assignment of a decedent's unmatured securities. The voluntary 
representative procedures are for the convenience of the Department; 
entitlement to the decedent's securities and held payments, if any, is 
determined by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. Voluntary representative procedures may 
be used only if:
    (i) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (ii) The total redemption value of the Treasury securities and held 
payments, if any, held directly on our records that are the property of 
the decedent's estate is $100,000 or less as of the date of death; and
    (iii) There is a person eligible to serve as the voluntary 
representative according to paragraph (e)(3) of this section.
    (2) Authority of voluntary representative. A voluntary 
representative may:
    (i) Request payment of the decedent's matured securities on behalf 
of the persons entitled by the law of the jurisdiction in which the 
decedent was domiciled at the date of death;
    (ii) Assign the decedent's securities to the persons entitled by the 
law of the jurisdiction in which the decedent was domiciled at the date 
of death.
    (3) Order of precedence for voluntary representative. An individual 
eighteen years of age or older may act as a voluntary representative 
according to the following order of precedence: a surviving spouse; if 
there is no surviving spouse, then a child of the decedent; if there are 
none of the above, then a descendant of a deceased child of the 
decedent; if there are none of the above, then a parent of the decedent; 
if there are none of the above, then a brother or sister of the 
decedent; if there are none of the above, then a descendant of a 
deceased brother or sister of the decedent; if there are none of the 
above, then a next of kin of the decedent, as determined by the law of 
the jurisdiction in which the decedent was domiciled at the date of 
death. As used in this order of precedence, child means a natural or 
adopted child of the decedent.
    (4) Liability. By serving, the voluntary representative warrants 
that the distribution of payments or securities is to or on behalf of 
the persons entitled by the law of the jurisdiction in which the 
decedent was domiciled at the date of death. The United States is not 
liable to any person for the improper distribution of payments or 
securities. Upon payment or assignment of the securities at the request 
of the voluntary representative, the United States is released to the 
same extent as if it had paid or delivered to a representative of the 
estate appointed pursuant to the law of the jurisdiction in which the 
decedent was domiciled at the date of death. The voluntary 
representative shall indemnify and hold harmless the United States and 
all creditors and persons entitled to the estate of the decedent. The 
amount of the indemnification is limited to an amount no greater than 
the value received by the voluntary representative.

[[Page 168]]

    (f) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for the amount of the debt, providing the 
debt has not been barred by applicable local law. The claim may only be 
satisfied by the proceeds of matured securities.

[70 FR 57429, Sept. 30, 2005]



Sec. Sec. 306.66-306.67  [Reserved]



Sec. 306.68  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
transactions in Treasury Bonds, Investment Series B- 1975-80.



     Subpart I_Assignments by or in Behalf of Trustees and Similar 
                               Fiduciaries



Sec. 306.75  Individual fiduciaries.

    (a) General. Securities registered in, or assigned to, the names and 
titles of individual fiduciaries will be accepted for any authorized 
transaction upon assignment by the designated fiduciaries without proof 
of their qualification. If the fiduciaries in whose names the securities 
are registered, or to whom they have been assigned, have been succeeded 
by other fiduciaries, evidence of successorship must be furnished. If 
the appointment of a successor is not required under the terms of the 
trust instrument or otherwise and is not contemplated, assignments by 
the surviving or remaining fiduciary or fiduciaries must be supported by 
appropriate proof. This requires:
    (1) Proof of the death, resignation, removal or disqualification of 
the former fiduciary and
    (2) Evidence that the surviving or remaining fiduciary or 
fiduciaries are fully qualified to administer the fiduciary estate, 
which may be in the form of a certificate by them showing the 
appointment of a successor has not been applied for, is not contemplated 
and is not necessary under the terms of the trust instrument or 
otherwise.

Assignments of securities registered in the titles, without the names of 
the fiduciaries, for example, ``Trustees of the George E. White Memorial 
Scholarship Fund under deed of trust dated 11/10/40, executed by John W. 
White,'' must be supported by proof that the assignors are the qualified 
and acting trustees of the designated trust estate, unless they are 
empowered to act as a unit in which case the provisions of Sec. 306.76 
shall apply. (Form PD 2446 may be used to furnish proof of incumbency of 
fiduciaries.) Assignments by fiduciaries of securities not registered or 
assigned in such manner as to show that they belong to the estate for 
which the assignors are acting must also be supported by evidence that 
the estate is entitled to the securities.
    (b) Life tenants. Upon termination of a life estate by reason of the 
death of the life tenant in whose name a security is registered, or to 
whom it has been assigned, the security will be accepted for any 
authorized transaction upon assignment by the remainderman, supported by 
evidence of entitlement.



Sec. 306.76  Fiduciaries acting as a unit.

    Securities registered in the name of or assigned to a board, 
committee or other body authorized to act as a unit for any public or 
private trust estate may be assigned for any authorized transaction by 
anyone authorized to act in behalf of such body. Except as otherwise 
provided in this section, the assignments must be supported by a copy of 
a resolution adopted by the body, properly certified under its seal, or, 
if none, sworn to by a member of the body having access to its records. 
(Form PD 2495 may be used.) If the person assigning is designated in the 
resolution by title only, his incumbency must be duly certified by 
another member of the body. (Form PD 2446 may be used.) If the 
fiduciaries of any trust estate are empowered to act as a unit, although 
not designated as a board, committee or other body, securities 
registered in their names or assigned to them as such, or in their 
titles without their names, may be assigned by anyone authorized by the 
group to act in its behalf. Such assignments may be supported by a sworn 
copy of a resolution adopted by the

[[Page 169]]

group in accordance with the terms of the trust instrument, and proof of 
their authority to act as a unit may be required. As an alternative, 
assignments by all the fiduciaries, supported by proof of their 
incumbency, if not named on the securities, will be accepted.

[38 FR 7078, Mar. 15, 1973; 38 FR 10004, Apr. 23, 1973]



Sec. 306.77  Corepresentatives and fiduciaries.

    If there are two or more executors, administrators, guardians or 
similar representatives, or trustees of an estate, all must unite in the 
assignment of any securities belonging to the estate. However, when a 
statute, a decree of court, or the instrument under which the 
representatives or fiduciaries are acting provides otherwise, 
assignments in accordance with their authority will be accepted. If the 
securities have matured or been called and are submitted for redemption 
for the account of all, or for redemption-exchange or pursuant to an 
advance refunding or prerefunding offer, and the securities offered in 
exchange are to be registered in the names of all, no assignment is 
required.



Sec. 306.78  Nontransferable securities.

    The provisions of this subpart, so far as applicable, govern 
assignments of Treasury Bonds, Investment Series B- 1975-80.



   Subpart J_Assignments in Behalf of Private or Public Organizations



Sec. 306.85  Private corporations and unincorporated associations 
(including nominees).

    Securities registered in the name of, or assigned to, an 
unincorporated association, or a private corporation in its own right or 
in a representative or fiduciary capacity, or as nominee, may be 
assigned in its behalf for any authorized transaction by any duly 
authorized officer or officers. Evidence, in the form of a resolution of 
the governing body, authorizing the assigning officer to assign, or to 
sell, or to otherwise dispose of the securities will ordinarily be 
required. Resolutions may relate to any or all registered securities 
owned by the organization or held by it in a representative or fiduciary 
capacity. (Form PD 1010, or any substantially similar form, may be used 
when the authority relates to specific securities; Form PD 1011, or any 
substantially similar form, may be used for securities generally.) If 
the officer derives his authority from a charter, constitution or 
bylaws, a copy, or a pertinent extract therefrom, properly certified, 
will be required in lieu of a resolution. If the resolution or other 
supporting document shows the title of an authorized officer, without 
his name, it must be supplemented by a certificate of incumbency. (Form 
PD 1014 may be used.)



Sec. 306.86  Change of name and succession of private organizations.

    If a private corporation or unincorporated association changes its 
name or is lawfully succeeded by another corporation or unincorporated 
association, its securities may be assigned in behalf of the 
organization in its new name or that of its successor by an authorized 
officer in accordance with Sec. 306.85. The assignment must be 
supported by evidence of the change of name or successorship.



Sec. 306.87  Partnerships (including nominee partnerships).

    An assignment of a security registered in the name of or assigned to 
a partnership must be executed by a general partner. Upon dissolution of 
a partnership, assignment by all living partners and by the persons 
entitled to assign in behalf of any deceased partner's estate will be 
required unless the laws of the jurisdiction authorize a general partner 
to bind the partnership by any act appropriate for winding up 
partnership affairs. In those cases where assignments by or in behalf of 
all partners are required this fact must be shown in the assignment; 
otherwise, an affidavit by a former general partner must be furnished 
identifying all the persons who had been partners immediately prior to 
dissolution. Upon voluntary dissolution, for any jurisdiction where a 
general partner may not act in winding up partnership affairs, an 
assignment by a liquidating partner, as such, must be supported by a

[[Page 170]]

duly executed agreement among the partners appointing the liquidating 
partner.



Sec. 306.88  Political entities and public corporations.

    Securities registered in the name of, or assigned to, a State, 
county, city, town, village, school district or other political entity, 
public body or corporation, may be assigned by a duly authorized 
officer, supported by evidence of his authority.



Sec. 306.89  Public officers.

    Securities registered in the name of, or assigned to, a public 
officer designated by title may be assigned by such officer, supported 
by evidence of incumbency. Assignments for the officer's own apparent 
individual benefit will not be recognized.



Sec. 306.90  Nontransferable securities.

    The provisions of this subpart apply to Treasury Bonds, Investment 
Series B-1975-80.



                       Subpart K_Attorneys in Fact



Sec. 306.95  Attorneys in fact.

    (a) General. Assignments by an attorney in fact will be recognized 
if supported by an adequate power of attorney. Every power must be 
executed in the presence of an authorized certifying officer under the 
conditions set out in Sec. 306.45 for certification of assignments. 
Powers need not be submitted to support redemption-exchanges or 
exchanges pursuant to advance refunding or prefunding offers where the 
securities to be issued are to be registered in the same names and forms 
as appear in the inscriptions or assignments of the securities 
surrendered. In all other cases, the original power, or a photocopy 
showing the grantor's autograph signature, properly certified, must be 
submitted, together with the security assigned on the owner's behalf by 
the attorney in fact. An assignment by a substitute attorney in fact 
must be supported by an authorizing power of attorney and power of 
substitution. An assignment by an attorney in fact or a substitute 
attorney in fact for the apparent benefit of either will not be accepted 
unless expressly authorized. (Form PD 1001 or 1003, as appropriate, may 
be used to appoint an attorney in fact. An attorney in fact may use Form 
PD 1006 or 1008 to appoint a substitute. However, any form sufficient in 
substance may be used.) If there are two or more joint attorneys in fact 
or substitutes, all must unite in an assignment, unless the power 
authorizes less than all to act. A power of attorney or of substitution 
not coupled with an interest will be recognized until the Bureau 
receives proof of revocation or proof of the grantor's death or 
incompetency.
    (b) For legal representatives and fiduciaries. Assignments by an 
attorney in fact or substitute attorney in fact for a legal 
representative or fiduciary, in addition to the power of attorney and of 
substitution, must be supported by evidence, if any, as required by 
Sec. Sec. 306.57(d), 306.66(b), 306.75, and 306.76. Powers must 
specifically designate the securities to be assigned.
    (c) For corporations or unincorporated associations. Assignments by 
an attorney in fact or a substitute attorney in fact in behalf of a 
corporation or unincorporated association, in addition to the power of 
attorney and power of substitution, must be supported by one of the 
following documents certified under seal of the organization, or, if it 
has no seal, sworn to by an officer who has access to the records:
    (1) A copy of the resolution of the governing body authorizing an 
officer to appoint an attorney in fact, with power of substitution, if 
pertinent, to assign, or to sell, or to otherwise dispose of, the 
securities, or
    (2) A copy of the charter, constitution, or bylaws, or a pertinent 
extract therefrom, showing the authority of an officer to appoint an 
attorney in fact, or
    (3) A copy of the resolution of the governing body directly 
appointing an attorney in fact.

If the resolution or other supporting document shows only the title of 
the authorized officer, without his name, a certificate of incumbency 
must also be furnished. (Form PD 1014 may be used.) The power may not be 
broader than the resolution or other authority.
    (d) For public corporations. A general power of attorney in behalf 
of a public

[[Page 171]]

corporation will be recognized only if it is authorized by statute.



Sec. 306.96  Nontransferable securities.

    The provisions of this subpart shall apply to nontransferable 
securities, subject only to the limitations imposed by the terms of the 
particular issues.



             Subpart L_Transfer Through Judicial Proceedings



Sec. 306.100  Transferable securities.

    The Department will recognize valid judicial proceedings affecting 
the ownership of or interest in transferable securities, upon 
presentation of the securities together with evidence of the 
proceedings. In the case of securities registered in the names of two or 
more persons, the extent of their respective interests in the securities 
must be determined by the court in proceedings to which they are parties 
or must otherwise be validly established.\10\
---------------------------------------------------------------------------

    \10\ Title in a finder claiming ownership of a registered security 
will not be recognized. A finder claiming ownership of a bearer security 
or a registered security assigned in blank or so assigned as to become 
in effect payable to bearer must perfect his title in accordance with 
the provisions of State law. If there are no such provisions, the 
Department will not recognize his title to the security.
---------------------------------------------------------------------------



Sec. 306.101  Evidence required.

    Copies of a final judgment, decree, or order of court and of any 
necessary supplementary proceedings must be submitted. Assignments by a 
trustee in bankruptcy or a receiver of an insolvent's estate must be 
supported by evidence of his qualification. Assignments by a receiver in 
equity or a similar court officer must be supported by a copy of an 
order authorizing him to assign, or to sell, or to otherwise dispose of, 
the securities. Where the documents are dated more than 6 months prior 
to presentation of the securities, there must also be submitted a 
certificate dated within 6 months of presentation of the securities, 
showing the judgment, decree, or order, or evidence of qualification, is 
in full force. Any such evidence must be certified under court seal.



Sec. 306.102  Nontransferable securities.

    The provisions of this subpart shall apply to Treasury Bonds, 
Investment Series B-1975-80, except that prior to maturity any reference 
to assignments shall be deemed to refer to assignments of the bonds for 
exchange for the current series of 1\1/2\ percent 5-year EA or EO 
Treasury notes.



            Subpart M_Requests for Suspension of Transactions



Sec. 306.105  Requests for suspension of transactions in registered 
securities.

    (a) Timely notice. If prior to the time a registered security 
bearing an apparently valid assignment has been functioned, a claim is 
received from the owner or his authorized representative showing that:
    (1) The security was lost, stolen, or destroyed and that it was 
unassigned, or not so assigned as to have become in effect payable to 
bearer, or
    (2) The assignment was affected by fraud, the transaction for which 
the security was received will be suspended.

The interested parties will be given a reasonable period of time in 
which to effect settlement of their interests by agreement, or to 
institute judicial proceedings.
    (b) Late notice. If, after a registered security has been 
transferred, exchanged, or redeemed in reliance on an apparently valid 
assignment, an owner notifies the Bureau that the assignment was 
affected by fraud or that the security had been lost or stolen, the 
Department will undertake only to furnish available information.
    (c) Forged assignments. A claim that an assignment of a registered 
security is a forgery will be investigated. If it is established that 
the assignment was in fact forged and that the owner did not authorize 
or ratify it, or receive any benefit therefrom, the Department will 
recognize his ownership and grant appropriate relief.



Sec. 306.106  Requests for suspension of transactions in bearer 
securities.

    (a) Securities not overdue. Neither the Department nor any of its 
agents will

[[Page 172]]

accept notice of any claim or of pending judicial proceedings by any 
person for the purpose of suspending transactions in bearer securities, 
or registered securities so assigned as to become in effect payable to 
bearer which are not overdue as defined in Sec. 306.25.\11\ However, if 
the securities are received and retired, the department will undertake 
to notify persons who appear to be entitled to any available information 
concerning the source from which the securities were received.
---------------------------------------------------------------------------

    \11\ It has been the longstanding policy of the Department to assume 
no responsibility for the protection of bearer securities not in the 
possession of persons claiming rights therein and to give no effect to 
any notice of such claims. This policy was formalized on April 27, 1867, 
when the Secretary of the Treasury issued the following statement:
    ``In consequence of the increasing trouble, wholly without practical 
benefit, arising from notices which are constantly received at the 
Department respecting the loss of coupon bonds, which are payable to 
bearer, and of Treasury notes issued and remaining in blank at the time 
of loss, it becomes necessary to give this public notice, that the 
Government cannot protect and will not undertake to protect the owners 
of such bonds and notes against the consequences of their own fault or 
misfortune.''
    ``Hereafter all bonds, notes, and coupons, payable to bearer, and 
Treasury notes issued and remaining in blank, will be paid to the party 
presenting them in pursuance of the regulations of the Department, in 
the course of regular business; and no attention will be paid to caveats 
which may be filed for the purpose of preventing such payment.''
---------------------------------------------------------------------------

    (b) Overdue securities. Reports that bearer securities, or 
registered securities so assigned as to become in effect payable to 
bearer, were lost, stolen, or possibly destroyed after they became 
overdue as defined in Sec. 306.25 will be accepted by the Bureau for 
the purpose of suspending redemption of the securities if the claimant 
establishes his interest. If the securities are presented, their 
redemption will be suspended and the presenter and the claimant will 
each be given an opportunity to establish ownership.



Subpart N_Relief for Loss, Theft, Destruction, Mutilation, or Defacement 
                              of Securities



Sec. 306.110  Statutory authority and requirements.

    Relief is authorized, under certain conditions, for the loss, theft, 
destruction, mutilation or defacement of U.S. securities, whether 
before, at, or after maturity. A bond of indemnity, in such form and 
with such surety, sureties or security as may be required to protect the 
interests of the United States, is required as a condition of relief on 
account of any bearer security or any registered security assigned in 
blank or so assigned as to become in effect payable to bearer, and is 
ordinarily required in the case of unassigned registered securities.



Sec. 306.111  Procedure for applying for relief.

    Prompt report of the loss, theft, destruction, mutilation or 
defacement of a security should be made to the Bureau. The report should 
include:
    (a) The name and present address of the owner and his address at the 
time the security was issued, and, if the report is made by some other 
person, the capacity in which he represents the owner.
    (b) The identity of the security by title of loan, issue date, 
interest rate, serial number and denomination, and in the case of a 
registered security, the exact form of inscription and a full 
description of any assignment, endorsement or other writing.
    (c) A full statement of the circumstances.

All available portions of a mutilated, defaced or partially destroyed 
security must also be submitted.



Sec. 306.112  Type of relief granted.

    (a) Prior to call or maturity. After a claim on account of the loss, 
theft, destruction, mutilation, or defacement of a security which has 
not matured or been called has been satisfactorily established and the 
conditions for granting relief have been met, a security of like 
description will be issued to replace the original security.

[[Page 173]]

    (b) At or after call or maturity. Payment will be made on account of 
the loss, theft, destruction, mutilation, or defacement of a called or 
matured security after the claim has been satisfactorily established and 
the conditions for granting relief have been met.
    (c) Interest coupons. Where relief has been authorized on account of 
a destroyed, mutilated or defaced coupon security which has not matured 
or been called, the replacement security will have attached all 
unmatured interest coupons if it is established to the satisfaction of 
the Secretary of the Treasury that the coupons were attached to the 
original security at the time of its destruction, mutilation or 
defacement. In every other case only those unmatured interest coupons 
for which the Department has received payment will be attached. The 
price of the coupons will be their value as determined by the Department 
at the time relief is authorized using interest rate factors based on 
then current market yields on Treasury securities of comparable 
maturities.



Sec. 306.113  Cases not requiring bonds of indemnity.

    A bond of indemnity will not be required as a condition of relief 
for the loss, theft, destruction, mutilation, or defacement of 
registered securities in any of the following classes of cases unless 
the Secretary of the Treasury deems it essential in the public interest:
    (a) If the loss, theft, destruction, mutilation, or defacement, as 
the case may be, occurred while the security was in the custody or 
control of the United States, or a duly authorized agent thereof (not 
including the Postal Service when acting solely in its capacity as 
public carrier of the mails), or while in the course of shipment 
effected under regulations issued pursuant to the Government Losses in 
Shipment Act (parts 260, 261, and 262 of this chapter).
    (b) If substantially the entire security is presented and 
surrendered and the Security of the Treasury is satisfied as to the 
identity of the security and that any missing portions are not 
sufficient to form the basis of a valid claim against the United States.
    (c) If the security is one which by the provisions of law or by the 
terms of its issue is nontransferable or is transferable only by 
operation of law.
    (d) If the owner or holder is the United States, a Federal Reserve 
bank, a Federal Government corporation, a State, the District of 
Columbia, a territory or possession of the United States, a municipal 
corporation, or, if applicable, a political subdivision of any of the 
foregoing, or a foreign government.



                     Subpart O_Book-Entry Procedure



Sec. 306.115  Definition of terms.

    For the purposes of this subpart, the definitions provided in 31 CFR 
357.3 are applicable, with the following additions:
    Definitive Treasury security means a Treasury bond, note, 
certificate of indebtedness, or bill issued under 31 U.S.C. chapter 31 
in engraved or printed form.
    Eligible book-entry Treasury security means a security maintained in 
TRADES that was originally issued prior to August 15, 1986, which by the 
terms of its offering circular is available in either definitive or 
book-entry form.

[61 FR 43637, Aug. 23, 1996]



Sec. 306.116  Scope and effect of book-entry procedure.

    (a) Except as provided in Sec. 306.117, the provisions of 31 CFR 
part 357, subparts A, B, and D apply.
    (b) This subpart is effective January 1, 1997.

[61 FR 43637, Aug. 23, 1996]



Sec. 306.117  Withdrawal of eligible book-entry Treasury securities for 
conversion to registered form.

    (a) Eligible book-entry Treasury securities may be withdrawn from 
TRADES by requesting delivery of like definitive Treasury securities.
    (b) Public Debt shall, upon receipt of appropriate instructions to 
withdraw eligible book-entry Treasury securities from book-entry form in 
TRADES, convert such securities into registered Treasury securities and 
deliver them in accordance with such instructions; no

[[Page 174]]

such conversion shall affect existing interests in such Treasury 
securities.
    (c) All requests for withdrawal of eligible book-entry Treasury 
securities must be made prior to the maturity or date of call of the 
securities.
    (d) Treasury securities which are to be delivered upon withdrawal 
may be issued in registered form, to the extent permitted by the 
applicable offering circular.

[61 FR 43637, Aug. 23, 1996; 64 FR 38126, July 15, 1999]



                   Subpart P_Miscellaneous Provisions



Sec. 306.125  Additional requirements.

    In any case or any class of cases arising under these regulations 
the Secretary of the Treasury may require such additional evidence and a 
bond of indemnity, with or without surety, as may in his judgment be 
necessary for the protection of the interests of the United States.



Sec. 306.126  Waiver of regulations.

    The Secretary of the Treasury reserves the right, in his discretion, 
to waive or modify any provision or provisions of these regulations in 
any particular case or class of cases for the convenience of the United 
States or in order to relieve any person or persons of unnecessary 
hardship, if such action is not inconsistent with law, does not impair 
any existing rights, and he is satisfied that such action would not 
subject the United States to any substantial expense or liability.



Sec. 306.127  Preservation of existing rights.

    Nothing contained in these regulations shall limit or restrict 
existing rights which holders of securities heretofore issued may have 
acquired under the circulars offering such securities for sale or under 
the regulations in force at the time of acquisition.



Sec. 306.128  Supplements, amendments or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional supplemental, amendatory or revised regulations 
with respect to U.S. securities. The Secretary also may lower the 
minimum and multiple requirements for stripping marketable Treasury 
notes and bonds issued prior to March 1, 1993, through an announcement 
as provided in Sec. 356.31 of this title.

[65 FR 66175, Nov. 3, 2000]



PART 308_GENERAL REGULATIONS GOVERNING FULL-PAID INTERIM CERTIFICATES
--Table of Contents




Sec.
308.1 Issue.
308.2 Exchange for definitive securities.
308.3 Exchanges of denominations.
308.4 Applicable regulations.
308.5 Reservations.

    Authority: 80 Stat. 379; sec. 8. 50 Stat. 481, as amended; secs. 1, 
18, 5, 40 Stat. 288, as amended, 1309, as amended, 290, as amended; sec. 
32, 30 Stat. 466, as amended; 5 U.S.C. 301; 31 U.S.C. 738a, 752, 753, 
754, 756.

    Source: 6 FR 5289, Oct. 17, 1941, unless otherwise noted.



Sec. 308.1  Issue.

    Federal Reserve Banks, as Fiscal Agents of the United States, and 
the Treasury Department may issue full-paid interim certificates in lieu 
of definitive securities, against full-paid allotments of subscriptions, 
when specifically authorized by the Secretary of the Treasury in 
connection with the issue, hereafter, to the public, of United States 
securities. Interim certificates shall be in such form, and in such 
denominations, as the Secretary of the Treasury may determine when an 
issue is authorized.



Sec. 308.2  Exchange for definitive securities.

    Upon surrender of a full-paid interim certificate to a Federal 
Reserve Bank, or to the Treasury Department, Washington, DC 20226, the 
definitive securities described therein, when prepared, will be 
delivered. Exchanges shall be made on like par amount basis.



Sec. 308.3  Exchanges of denominations.

    Pending availability of definitive securities, exchanges of 
authorized denominations of interim certificates, from higher to lower 
will be permitted.

[[Page 175]]



Sec. 308.4  Applicable regulations.

    Except as may otherwise be provided, and in so far as applicable, 
the general regulations of the Treasury Department, as contained in part 
306 of this subchapter, as amended or revised, shall apply to full-paid 
interim certificates.



Sec. 308.5  Reservations.

    The Secretary of the Treasury reserves the right to withdraw or 
amend at any time or from time to time any or all of the provisions of 
this part.



PART 309_ISSUE AND SALE OF TREASURY BILLS--Table of Contents




Sec.
309.1 Authority for issue and sale.
309.2 Description of Treasury bills (General).
309.3 Denominations and exchange.
309.4 Taxation.
309.5 Acceptance of Treasury bills for various purposes.
309.6 Public notice of offering.
309.7 Tenders; submission through Federal Reserve Banks and branches and 
          to the Bureau of the Public Debt.
309.8 Tenders; when cash deposit is required.
309.9 Tenders; acceptance by the Secretary of the Treasury.
309.10 Tenders; reservation of right to reject.
309.11 Tenders; payment of accepted tenders.
309.12 Relief on account of loss, theft or destruction, etc.
309.13 Functions of Federal Reserve Banks.
309.14 Reservation as to terms of circular.

    Authority: 80 Stat. 379; sec. 8, 50 Stat. 481, as amended; sec. 5, 
40 Stat. 290, as amended; 5 U.S.C. 301; 31 U.S.C. 738a, 754.

    Source: 41 FR 44006, Oct. 5, 1976, unless otherwise noted.



Sec. 309.1  Authority for issue and sale.

    The Secretary of the Treasury is authorized by the Second Liberty 
Bond Act, as amended, to issue Treasury bills of the United States on an 
interest-bearing basis, on a discount basis, or on a combination 
interest-bearing and discount basis, at such price or prices and with 
interest computed in such manner and payable at such time or times as he 
may prescribe; and to fix the form, terms, and conditions thereof, and 
to offer them for sale on a competitive or other basis, under such 
regulations and upon such terms and conditions as he may prescribe. 
Pursuant to said authorization, the Secretary of the Treasury may, from 
time to time, by public notice, offer Treasury bills for sale, and 
invite tenders therefor, through the Federal Reserve Banks and branches 
and through the Department of the Treasury, Bureau of the Public Debt. 
The Treasury bills so offered, and the tenders made, will be subject to 
the terms and conditions and to the general rules and regulations herein 
set forth, except as they may be modified in the public notices issued 
by the Secretary of the Treasury in connection with particular 
offerings.\1\
---------------------------------------------------------------------------

    \1\ Accordingly, these regulations do not constitute a specific 
offering of Treasury bills.
---------------------------------------------------------------------------



Sec. 309.2  Description of Treasury bills (General).

    Treasury bills are bearer obligations of the United States promising 
to pay a specified amount on a specified date. They will be payable at 
maturity upon presentation to the Bureau of the Public Debt, Washington, 
DC 20226, or to any Federal Reserve Bank or branch. Treasury bills are 
issued only by Federal Reserve Banks and branches and the Bureau of the 
Public Debt pursuant to tenders accepted by the Secretary of the 
Treasury, and shall not be valid unless the issue date and the maturity 
date are entered thereon. Treasury bills bearing the same issue date and 
the same maturity date shall constitute a series.



Sec. 309.3  Denominations and exchange.

    Treasury bills will be issued in denominations (maturity value) of 
$10,000, $15,000, $50,000, $100,000, $500,000, and $1,000,000. Exchanges 
from higher to lower and lower to higher denominations of the same 
series (bearing the same issue and maturity dates) will be permitted at 
Federal Reserve Banks and branches and at the Bureau of the Public Debt, 
Washington, DC 20226. Insofar as applicable, the general regulations of 
the Treasury Department governing transactions in bonds and notes will 
govern transactions in Treasury bills.

[[Page 176]]



Sec. 309.4  Taxation.

    The income derived from Treasury bills, whether interest or gain 
from the sale or other disposition of the bills, shall not have any 
exemption, as such, and loss from the sale or other disposition of 
Treasury bills shall not have any special treatment, as such, under the 
Internal Revenue Code, or laws amendatory or supplementary thereto. The 
bills shall be subject to estate, inheritance, gift or other excise 
taxes, whether Federal or State, but shall be exempt from all taxation 
now or hereafter imposed on the principal or interest thereof by any 
State, or any of the possessions of the United States, or by any local 
taxing authority. For purposes of taxation the amount of discount at 
which Treasury bills are originally sold by the United States shall be 
considered to be interest.



Sec. 309.5  Acceptance of Treasury bills for various purposes.

    (a) Acceptable as security for public deposits. Treasury bills will 
be acceptable at maturity value to secure deposits of public monies.
    (b) Acceptable in payment of taxes. The Secretary of the Treasury, 
in his discretion, when inviting tenders for Treasury bills, may provide 
that Treasury bills of any series will be acceptable at maturity value, 
whether at or before maturity, under such rules and regulations as he 
shall prescribe or approve, in payment of income taxes payable under the 
provisions of the Internal Revenue Code. Treasury bills which by the 
terms of their issue are acceptable in payment of income taxes may be 
surrendered to any Federal Reserve Bank or Branch, acting as fiscal 
agent of the United States, or to the Bureau of the Public Debt, 
Washington, DC 20226, 15 days or less before the date on which the taxes 
become due.
    (1) In the case of payments of corporation income taxes (including 
payments of estimates) for taxable years ending on or after December 31, 
1967, the bills shall be accompanied by a preinscribed Form 503, Federal 
Tax Deposit, Corporation Income Taxes, on which the face amount of the 
bills being surrendered should be entered in the space provided for the 
amount of the tax deposit. The office receiving the bills and Form 503 
will acknowledge receipt of the bills to the owner corporation and 
effect the tax deposit on the date on which the taxes become due. 
Accordingly, in these cases, it will no longer be necessary to submit 
receipts for Treasury bills to the Internal Revenue Service with the 
corporation's declaration or tax return.
    (2) In the case of payments of all other income taxes the office 
receiving the bills will issue receipts (in duplicate) to the owners. 
The original of the receipt shall be submitted, by the owner, in lieu of 
the bills, together with the tax return, to the District Director, 
Internal Revenue Service.
    (c) Discounting by Federal Reserve Bank of notes secured by Treasury 
bills. Notes securied by Treasury bills are eligible for discount or 
rediscount at Federal Reserve Banks as provided under the provisions of 
section 13 of the Federal Reserve Act, as are notes securied by bonds 
and notes of the United States.
    (d) Acceptable in connection with foreign obligations held by United 
States. Treasury bills will be acceptable at maturity, but not before, 
in payment of interest or of principal on account of obligations of 
foreign governments held by the United States.



Sec. 309.6  Public notice of offering.

    When Treasury bills are to be offered, tenders therefor will be 
invited through public notice given by the Secretary of the Treasury. 
Such public notices may be issued by the Secretary of the Treasury in 
the name of ``the Treasury Department'' with the same force and effect 
as if issued in the name of the Secretary of the Treasury. In such 
notice there will be set forth the amount of Treasury bills for which 
tenders are then invited, the date of issue, the date or dates when such 
bills will become due and payable, the date and closing hour for the 
receipt of tenders at the Federal Reserve Banks and branches and at the 
Bureau of the Public Debt, Washington, DC 20226, and the date on which 
payment for accepted tenders must be made or completed.

[[Page 177]]



Sec. 309.7  Tenders; submission through Federal Reserve Banks and 
branches and to the Bureau of the Public Debt.

    Tenders in response to any such public notice will be received at 
the Federal Reserve Banks, or Branches thereof and at the Bureau of the 
Public Debt, Washington, DC 20226, and unless received before the time 
fixed for closing will be disregarded. Each tender must be for a minimum 
amount of $10,000. Tenders over $10,000 must be in multiples of $5,000 
(maturity value). In the case of competitive tenders the price or prices 
offered by the bidder for the amount or amounts (at maturity value) 
applied for must be stated, and must be expressed on the basis of 100, 
with not more than three decimals, e.g., 99.925. Fractions may not be 
used.



Sec. 309.8  Tenders; when cash deposit is required.

    Tenders should be submitted on the printed forms and forwarded in 
the special envelopes which will be supplied on application to any 
Federal Reserve Bank, or Branch or to the Bureau of the Public Debt, 
Washington, DC 20226. If a special envelope is not available, the 
inscription ``Tender for Treasury Bills'' should be placed on the 
envelope used. The instructions set forth in the public notice 
announcing the offering should be observed with respect to the 
submission of tenders. Banking institutions generally may submit tenders 
for account of customers provided the names of the customers are set 
forth in such tenders. Others than banking institutions, will not be 
permitted to submit tenders except for their own account. Tenders from 
incorporated banks and trust companies, and from responsible and 
recognized dealers in investment securities will be received without 
deposit. Tenders from all others must be accompanied by a payment of 
such percent of the face amount of the Treasury bills applied for as the 
Secretary of the Treasury may from time to time prescribe: Provided, 
however, That such deposit will not be required if the tender is 
accompanied by an express guaranty of payment in full by an incorporated 
bank or trust company. Forfeiture of the prescribed payment may be 
declared by the Secretary of the Treasury, if payment is not completed, 
in the case of accepted tenders, on the prescribed date.



Sec. 309.9  Tenders; acceptance by the Secretary of the Treasury.

    At the time fixed for closing, as specified in the public notice, 
all tenders received by the Federal Reserve Banks and Branches and by 
the Bureau of the Public Debt will be opened. The Secretary of the 
Treasury will determine the acceptable prices offered and will make 
public announcement thereof those submitting tenders will be advised of 
the acceptance or rejection thereof, and payment on accepted tenders 
must be made or completed on the date specified in the public notice.



Sec. 309.10  Tenders; reservation of right to reject.

    In considering the acceptance of tenders, the highest prices offered 
will be accepted in full down to the amount required, and if the same 
price appears in two or more tenders and it is necessary to accept only 
a part of the amount offered at such price, the amount accepted at such 
price will be prorated in accordance with the respective amounts applied 
for. However, the Secretary of the Treasury expressly reserves the right 
on any occasion to accept non-competitive tenders entered in accordance 
with specific offerings, to reject any or all tenders or parts of 
tenders, and to award less than the amount applied for; and any action 
he may take in any such respect or respects shall be final.



Sec. 309.11  Tenders; payment of accepted tenders.

    Settlement for accepted tenders in accordance with the bids must be 
made or completed at the appropriate Federal Reserve Bank or branch or 
at the Bureau of the Public Debt in cash or other immediately available 
funds on or before the date specified, except that the Secretary of the 
Treasury, in his discretion, when inviting tenders for Treasury bills, 
may provide:
    (a) That any qualified depositary may make such settlement by 
credit, on behalf of itself and its customers, up to any amount for 
which it shall be qualified in excess of existing deposits,

[[Page 178]]

when so notified by the Federal Reserve Bank of its District or
    (b) That such settlement may be made in maturing Treasury bills 
accepted in exchange.

Whenever the Secretary provides for settlement in maturing Treasury 
bills, cash adjustments will be made for differences between the par 
value of the maturing bills and the issue price of the new bills.



Sec. 309.12  Relief on account of loss, theft or destruction, etc.

    (a) Relief on account of the loss, theft, destruction, mutilation or 
defacement of Treasury bills may be given only under the authority of, 
and subject to the conditions set forth in section 8 of the act of July 
8, 1937 (50 Stat. 481), as amended (31 U.S.C. 738a) and the regulations 
pursuant thereto in (Treasury Department Circular No. 300 insofar as 
applicable.
    (b) In case of the loss, theft, destruction, mutilation or 
defacement of Treasury bills, immediate advice, with a full description 
of the bill or bills involved, should be sent to the Bureau of the 
Public Debt, Division of Securities Operations, Department of the 
Treasury, Washington, DC 20226, either direct or though any Federal 
Reserve Bank or Branch, and, if relief under the statutes may be given, 
instructions and necessary blank forms will be furnished.



Sec. 309.13  Functions of Federal Reserve Banks.

    Federal Reserve Banks and Branches, as fiscal agents of the United 
States, are authorized to perform all such acts as may be necessary to 
carry out the provisions of this circular and of any public notice or 
notices issued in connection with any offering of Treasury bills.



Sec. 309.14  Reservation as to terms of circular.

    The Secretary of the Treasury reserves the right further to amend, 
supplement, revise or withdraw all or any of the provisions of this 
circular at any time, or from time to time.



PART 312_FEDERAL SAVINGS AND LOAN ASSOCIATIONS AND FEDERAL CREDIT UNIONS 
AS FISCAL AGENTS OF THE UNITED STATES--Table of Contents




    Note: Pursuant to the regulations in this part, the Acting Secretary 
of the Treasury on September 15, 1936, designated for employment as 
fiscal agents of the United States for the purpose of taking 
applications solely from their own members and forwarding remittances 
for, and making delivery of, United States Savings Bonds, all Federal 
savings and loan associations and Federal credit unions in good standing 
having five hundred or more members, and further designated all Federal 
savings and loan associations in good standing for employment as fiscal 
agents of the United States, for the purpose of collecting delinquent 
accounts arising out of insurance and loan transactions of the 
Administrator under Title I of the National Housing Act, and making 
investigations and rendering reports respecting the said delinquencies 
as may be directed from time to time by the Administrator.
    Pursuant to these same regulations, the Fiscal Assistant Secretary 
has now designated for employment, as fiscal agents of the United 
States, for the purpose of taking applications from nonmembers, as well 
as their own members, and forwarding remittances for, and making 
delivery of United States Savings Bonds, all Federal credit unions in 
good standing.
Sec.
312.1 Authority.
312.2 [Reserved]
312.3 Collections, investigations, and reports for the Federal Housing 
          Administration.
312.4 Bond of indemnity.
312.5 Fiscal agents to serve without compensation.
312.6 Applications other than to Federal Reserve Banks.

    Authority: Secs. 5(k), 17, 48 Stat. 646, 1222; 12 U.S.C. 1464(k), 
1767.

    Source: 1 FR 1587, Sept. 17, 1936; 57 FR 34684, Aug. 6, 1992, unless 
otherwise noted.

    Cross References: For National Credit Union Administration, see 12 
CFR chapter VII. For Farm Credit Administration, see 12 CFR chapter VI. 
For Federal Home Loan Bank Board, see 12 CFR chapter V. For Federal 
Housing Commissioner, Office of Assistant Secretary for Housing, 
Department of Housing and Urban Development, see 24 CFR chapter II.



Sec. 312.1  Authority.

    (a) Home Owners' Loan Act. Section 5(k) of the Home Owners' Loan Act 
of

[[Page 179]]

1933, as amended (48 Stat. 645; 12 U.S.C. 1464(k), is as follows:

    (k) When designated for that purpose by the Secretary of the 
Treasury, any Federal savings and loan association * * * may be employed 
as fiscal agent of the Government under such regulations as may be 
prescribed by said Secretary and shall perform all such reasonable 
duties as fiscal agent of the Government as may be required of it * * *.

    (b) Federal Credit Union Act. Section 17 of the Federal Credit Union 
Act (48 Stat. 1222; 12 U.S.C. 1767) is as follows:

    Each Federal credit union organized under this Act, when requested 
by the Secretary of the Treasury, shall act as fiscal agent of the 
United States and shall perform such services as the Secretary of the 
Treasury may require in connection with * * * the lending, borrowing, 
and repayment of money by the United States, including the issue, sale, 
redemption or repurchase of bonds, notes, Treasury certificates of 
indebtedness, or other obligations of the United States * * *.



Sec. 312.2  [Reserved]



Sec. 312.3  Collections, investigations, and reports for the Federal 
Housing Administration.

    Federal savings and loan associations, when designated for 
employment as fiscal agents of the United States for the purpose of 
collecting delinquent accounts arising out of insurance and loan 
transactions of the Administrator under Title I of the National Housing 
Act (48 Stat. 1246, 1247; 12 U.S.C. 1702-1706), and making 
investigations and rendering reports respecting the said delinquencies 
as may be directed from time to time by the Administrator, shall 
promptly forward remittances in the form collected to the Commissioner 
of the Federal Housing Administration, except, that remittances received 
in cash should be forwarded in the form of money order or check.



Sec. 312.4  Bond of indemnity.

    No Federal savings and loan association or Federal credit union 
which may have been designated for employment mentioned in this part 
shall perform, or make any effort to perform any of the acts included in 
such employment, or advertise in any manner that it is authorized to 
perform such acts until it has qualified by the execution of, delivery 
to, and approval of a bond of indemnity in favor of the United States 
with satisfactory surety, or with the pledge of collateral security as 
provided in part 225 of this chapter, conditioned upon the faithful 
performance of the obligor's duties as fiscal agent of the United States 
in the principal amount of $1,000 and until the Federal Home Loan Bank 
Board or the Bureau of Federal Credit Unions, Department of Health, 
Education, and Welfare, respectively, shall have certified to the 
Secretary of the Treasury that such association or credit union is in 
good standing and is eligible, under the terms and conditions prescribed 
by the Secretary, to qualify for the performance of the designated acts. 
The Federal Home Loan Bank Board and the Bureau of Credit Unions, 
respectively, shall keep the Secretary of the Treasury currently advised 
of the changes in the lists of associations and credit unions which are 
eligible, under the aforesaid terms and conditions, to qualify for the 
performance of the designated acts.

[32 FR 3447, Mar. 2, 1967]



Sec. 312.5  Fiscal agents to serve without compensation.

    All of the fiscal agency employment mentioned in this part shall be 
performed without compensation, reimbursement for expenses, or allowance 
of service charges.



Sec. 312.6  Applications other than to Federal Reserve Banks.

    Nothing contained in this part shall be construed as preventing such 
associations and credit unions, if they desire to assume such 
responsibility, from acting as agents of prospective purchasers in 
making applications to, and obtaining United States Savings Bonds from 
post offices or other designated places of issuance.



PART 315_REGULATIONS GOVERNING U.S. SAVINGS BONDS, SERIES A, B, C, D, E, 
F, G, H, J, AND K, AND U.S. SAVINGS NOTES--Table of Contents




                      Subpart A_General Information

Sec.
315.0 Applicability.

[[Page 180]]

315.1 Official agencies.
315.2 Definitions.
315.3 Converting definitive savings bonds to book-entry bonds in New 
          Treasury Direct.

                         Subpart B_Registration

315.5 General rules.
315.6 Restrictions on registration.
315.7 Authorized forms of registration.

                Subpart C_Limitations on Annual Purchases

315.10 Limitations.
315.11 Excess purchases.

               Subpart D_Limitations on Transfer or Pledge

315.15 Transfer.
315.16 Pledge.

  Subpart E_Limitations on Judicial Proceedings_No Stoppage or Caveats 
                                Permitted

315.20 General.
315.21 Payment to judgment creditors.
315.22 Payment or reissue pursuant to judgment.
315.23 Evidence.

 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds

315.25 General.
315.26 Application for relief--after receipt of bond.
315.27 Application for relief--nonreceipt of bond.
315.28 Recovery or receipt of bond before or after relief is granted.
315.29 Adjudication of claims.

                           Subpart G_Interest

315.30 Series E bonds and savings notes.
315.31 Series H bonds.
315.32 Series A, B, C, D, F, G, J, and K bonds.

                Subpart H_General Provisions for Payment

315.35 Payment (redemption).
315.36 Payment during life of sole owner.
315.37 Payment during lives of both coowners.
315.38 Payment during lifetime of owner of beneficiary bond.
315.39 Surrender for payment.
315.40 Special provisions for payment.
315.41 Partial redemption.
315.42 Nonreceipt or loss of check issued in payment.
315.43 Effective date of request for payment.
315.44 Withdrawal of request for payment.

              Subpart I_Reissue and Denominational Exchange

315.45 General.
315.46 Effective date of request for reissue.
315.47 Authorized reissue--during lifetime.
315.48 Restrictions on reissue.
315.49 Correction of errors.
315.50 Change of name.
315.51 Requests for reissue.

                      Subpart J_Certifying Officers

315.55 Individuals authorized to certify.
315.56 General instructions and liability.
315.57 When a certifying officer may not certify.
315.58 Forms to be certified.

     Subpart K_Minors, Incompetents, Aged Persons, Absentees, et al.

315.60 Conditions for payment to representative of an estate.
315.61 Payment after death.
315.62 Payment to minors.
315.63 Payment to a parent or other person on behalf of a minor.
315.64 Payment, reinvestment, or exchange--voluntary guardian of an 
          incapacitated person.
315.65 Reissue.

            Subpart L_Deceased Owner, Coowner or Beneficiary

315.70 General rules governing entitlement.
315.71 Decedent's estate.
315.72 [Reserved]

                          Subpart M_Fiduciaries

315.75 Payment or reissue during the existence of the fiduciary estate.
315.76 Payment or reissue after termination of the fiduciary estate.
315.77 Exchanges by fiduciaries.

      Subpart N_Private Organizations (Corporations, Associations, 
    Partnerships, etc.) and Governmental Agencies, Units and Officers

315.80 Payment to corporations or unincorporated associations.
315.81 Payment to partnerships.
315.82 Reissue or payment to successors of corporations, unincorporated 
          associations, or partnerships.
315.83 Reissue or payment on dissolution of corporation or partnership.
315.84 Payment to certain institutions.
315.85 Reissue in name of trustee or agent for reinvestment purposes.
315.86 Reissue upon termination of investment agency.

[[Page 181]]

315.87 Payment to governmental agencies, units, or their officers.

                   Subpart O_Miscellaneous Provisions

315.90 Waiver of regulations.
315.91 Additional requirements; bond of indemnity.
315.92 Preservation of rights.
315.93 Supplements, amendments, or revisions.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 45 FR 64091, Sept. 26, 1980, unless otherwise noted.



                      Subpart A_General Information



Sec. 315.0  Applicability.

    The regulations in this circular, Department of the Treasury 
Circular No. 530, and the provisions of the respective offering 
circulars, govern--
    (a) Definitive (paper) United States Savings Bonds of Series E that 
have not been converted to book-entry savings bonds in New Treasury 
Direct, and Series H and United States Savings Notes, and
    (b) United States Savings Bonds of Series A, B, C, D, F, G, J, and 
K, all of which have matured and are no longer earning interest.

The regulations in Department of the Treasury Circular, Public Debt 
Series No. 3-80 (31 CFR, part 353), govern United States Savings Bonds 
of Series EE and Series HH.

[45 FR 64091, Sept. 26, 1980, as amended at 70 FR 14941, Mar. 23, 2005]



Sec. 315.1  Official agencies.

    (a) The Bureau of the Public Debt of the Department of the Treasury 
is responsible for administering the Savings Bonds Program. Authority to 
process most transactions has been delegated to Federal Reserve Banks 
and Branches in the list below, as fiscal agents of the United States.
    (b) Communications concerning transactions and requests for forms 
should be addressed to:
    (1) A Federal Reserve Bank or Branch in the list below; the Bureau 
of the Public Debt. 200 Third Street, Parkersburg, WV 26101; or the 
Bureau of the Public Debt, Washington, DC 20226.
    (2)(i) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         Vt, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (ii) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10534, Mar. 4, 1994]



Sec. 315.2  Definitions.

    As used in these regulations--
    (a) Bond means a United States Savings Bond of any series except EE 
and HH, unless the context indicates otherwise. General references to 
bonds and direct references to Series E bonds also include United States 
Savings Notes, unless specifically excluded.
    (b) Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us

[[Page 182]]

and converted to a book-entry savings bond to be maintained by Treasury 
solely as a computer record.
    (c) Extended maturity period means any period after the original 
maturity date during which the owner may retain a bond and continue to 
earn interest on the maturity value or extended maturity value under 
applicable provisions of the circular offering the bond for sale.
    (d) Extended maturity value is the value of a bond at the end of the 
applicable extended maturity period.
    (e) Final extended maturity date is the date on which a bond will 
mature and cease to bear interest at the end of the final extended 
maturity period.
    (f) Incompetent means an individual who is incapable of handling his 
or her business affairs because of a legal, mental or medically-
established physical disability, except that a minor is not an 
incompetent solely because of age.
    (g) Issuing agent means an organization that has been qualified 
under the provisions of Department of the Treasury Circular, Public Debt 
Series No. 4-67, current revision (31 CFR part 317), to issue savings 
bonds.
    (h) Original maturity date means the date on which the bond reaches 
the end of the term for which it was initially offered and, unless 
further extended, ceases to earn interest.
    (i) Paying agent means a financial institution that has been 
qualified under the provisions of Department of the Treasury Circular 
No. 750, current revision (31 CFR part 321), to make payment of savings 
bonds.
    (j) Payment means redemption, unless otherwise indicated by context.
    (k) Person means any legal entity including, but without limitation, 
and individual, corporation (public or private), partnership, 
unincorporated association, or fiduciary estate.
    (l) Personal trust estates means trust estates established by 
natural persons in their own right for the benefit of themselves or 
other natural persons in whole or in part, and common trust funds 
comprised in whole or in part of such trust estates.
    (m) Reissue means the cancellation and retirement of a bond and the 
issuance of a new bond or bonds of the same series, same issue date, and 
same total face amount.
    (n) Representative of the estate of a minor, incompetent, aged 
person, absentee, et al. means the court-appointed or otherwise 
qualified person, regardless of title, who is legally authorized to act 
for the individual. The term does not include parents in their own 
right, voluntary or natural guardians, or the executors or 
administrators of decedents' estates.
    (o) Surrender means the actual receipt of a bond with an appropriate 
request for payment or reissue by either a Federal Reserve Bank or 
Branch, the Bureau of the Public Debt, or, if a paying agent is 
authorized to handle the transaction, the actual receipt of the bond and 
the request for payment by the paying agent.
    (p) Taxpayer identifying number means a social security account 
number or an employer identification number.
    (q) Voluntary guardian means an individual who is recognized as 
authorized to act for an incompetent, as provided by Sec. 315.64.
    (r) Voluntary representative means the person qualified by the 
Department of the Treasury to request payment or distribution of a 
decedent's savings bonds pursuant to Sec. 315.71.

[45 FR 64091, Sept. 26, 1980, as amended at 70 FR 14941, Mar. 23, 2005; 
70 FR 57430, Sept. 30, 2005]



Sec. 315.3  Converting definitive savings bonds to book-entry bonds 
in New Treasury Direct.

    Series E savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is www.treasurydirect.gov. Bond owners who wish to 
convert their definitive savings bonds should follow online instructions 
for conversion. Regulations governing converted bonds are found at 31 
CFR part 363.

[70 FR 14941, Mar. 23, 2005]

[[Page 183]]



                         Subpart B_Registration



Sec. 315.5  General rules.

    (a) Registration is conclusive of ownership. Savings bonds are 
issued only in registered form. The registration must express the actual 
ownership of, and interest in, the bond. The registration is conclusive 
of ownership, except as provided in Sec. 315.49.
    (b) Requests for registration. Registrations requested must be 
clear, accurate and complete, conform substantially with one of the 
forms set forth in this subpart, and include the taxpayer identifying 
number of the owner or first-named coowner. The taxpayer identifying 
number of the second-named coowner or beneficiary is not required but 
its inclusion is desirable. The registration of all bonds owned by the 
same person, organization, or fiduciary should be uniform with respect 
to the name of the owner and any description of the fiduciary capacity. 
An individual should be designated by the name he or she is ordinarily 
known by or uses in business, including at least one full given name. 
The name may be preceded or followed by any applicable title, such as 
Miss, Mr., Mrs., Ms., Dr., Rev., M.D., or D.D.. A suffix, such as Sr. or 
Jr., must be included when ordinarily used or when necessary to 
distinguish the owner from another member of his family. A married 
woman's own given name, not that of her husband, must be used; for 
example, Mary A. Jones or Mrs. Mary A. Jones, NOT Mrs. Frank B. Jones. 
The address must include, where appropriate, the number and street, 
route, or any other local feature, city, State, and ZIP Code.



Sec. 315.6  Restrictions on registration.

    (a) Natural persons. Only an individual in his or her own right may 
be designated as coowner or beneficiary along with any other individual, 
whether on original issue or reissue, except as provided in Sec. 
315.7(g).
    (b) Residence. The designation of an owner or first-named coowner is 
restricted, on original issue only, to persons (whether individuals or 
others) who are--
    (1) Residents of the United States, its territories and possessions, 
the Commonwealth of Puerto Rico, and the former Canal Zone;
    (2) Citizens of the United States residing abroad;
    (3) Civilian employees of the United States or members of its armed 
forces, regardless of their residence or citizenship; and
    (4) Residents of Canada or Mexico who work in the United States but 
only if the bonds are purchased on a payroll deduction plan and the 
owner provides a taxpayer identifying number.

A nonresident alien may be designated coowner or beneficiary or, on 
authorized reissue, owner, unless the nonresident alien is a resident of 
an area with respect to which the Department of the Treasury restricts 
or regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities. See Department of the 
Treasury Circular No. 655, current revision (31 CFR part 211). 
Registration is not permitted in any form which includes the name of any 
alien who is a resident of any restricted area.
    (c) Minors. (1) Minors may purchase with their wages, earnings, or 
other funds belonging to them and under their control bonds registered 
in their names alone or with a coowner or beneficiary.
    (2) Bonds purchased by another person with funds belonging to a 
minor not under legal guardianship or similar fiduciary estate must be 
registered, without a coowner or beneficiary, in the name of the minor 
or a natural guardian on behalf of a minor.
    (3) Bonds purchased with funds of another may be registered to name 
the minor as owner, coowner, or beneficiary. If the minor is under legal 
guardianship or similar fiduciary estate, the registration must include 
an appropriate reference to it.
    (4) Bonds purchased as a gift to a minor under a gifts-to-minors 
statute must be registered as prescribed by the statute and no coowner 
or beneficiary may be named.
    (5) Bonds purchased by a representative of a minor's estate must be 
registered in the name of the minor and must include in the registration 
an appropriate reference to the guardianship

[[Page 184]]

or similar fiduciary estate. Bonds purchased by a representative of the 
estates of two or more minors, even though appointed in a single 
proceeding, must be registered in the name of each minor separately with 
appropriate reference to the guardianship or similar fiduciary estate.
    (d) Incompetents. Bonds may be registered to a name as owner, 
coowner, or beneficiary an incompetent for whose estate a guardian or 
similar representative has been appointed, except that a coowner or 
beneficiary may not be named on bonds purchased with funds belonging to 
the incompetent. The registration must include appropriate reference to 
the guardianship or similar fiduciary estate. Bonds should not be 
registered in the name of an incompetent unless there is a 
representative for his or her estate, except as provided in Sec. 
315.64.



Sec. 315.7  Authorized forms of registration.

    (a) General. Subject to any limitations or restrictions contained in 
these regulations on the right of any person to be named as owner, 
coowner, or beneficiary, bonds should be registered as indicated below. 
A savings bond inscribed in a form not substantially in agreement with 
one of the forms authorized by this subpart is not considered validly 
issued.
    (b) Natural persons. A bond may be registered in the names of 
individuals in their own right, but only in one of the forms authorized 
by this paragraph.
    (1) Single ownership form. A bond may be registered in the name of 
one individual. Example:

    John A. Jones 123-45-6789.

    (2) Coownership form. A bond may be registered in the names of two 
individuals in the alternative as coowners. The form of registration ``A 
and B'' is not authorized. Examples:

John A. Jones 123-45-6789 or Ella S. Jones 987-65-4321.
John A. Jones 123-45-6789 or (Miss, Ms. or Mrs.) Ella S. Jones.
Ella S. Jones 987-65-4321 or John A. Jones.

    (3) Beneficiary form. A bond may be registered in the name of one 
individual payable on death to another. ``Payable on death to'' may be 
abbreviated to ``P.O.D.'' Examples:

John A. Jones 123-45-6789 payable on death to Mrs. Ella S. Jones.
John A. Jones 123-45-6789 P.O.D. Ella S. Jones 987-65-4321.

    (c) Fiduciaries (including legal guardians and similar 
representatives, certain custodians, natural guardians, executors, 
administrators, and trustees)--(1) General. A bond may be registered in 
the name of any person or persons or any organization acting as 
fiduciary of a single fiduciary estate, but not where the fiduciary will 
hold the bond merely or principally as security for the performance of a 
duty, obligation, or service. Registration should conform to a form 
authorized by this paragraph. A coowner or beneficiary may be named only 
in accordance with the applicable provisions of Sec. 315.6(c) and (d). 
A common trust fund established and maintained by a financial 
institution authorized to act as a fiduciary will be considered a single 
fiduciary estate within the meaning of these regulations.
    (2) Legal guardians, conservators, similar representives, certain 
custodians. A bond may be registered in the name and title or capacity 
of the legally appointed or authorized representative of the estate of a 
minor, incompetent, aged or infirm person, absentee, et al., or in the 
name of that individual followed by an appropriate reference to the 
estate. Examples:

Tenth National Bank, guardian (or conservator, trustee, etc.) of the 
estate of George N. Brown 123-45-6789, a minor (or an incompetent, aged 
person, infirm person, or absentee).
Henry C. Smith, conservator of the estate of John R. White 123-45-6789, 
an adult, pursuant to Sec. 633.572 of the Iowa Code.
John F. Green 123-45-6789, a minor (or an incompetent) under 
custodianship by designation of the Veterans Administration.
Frank M. Redd 123-45-6789, an incompetent for whom Eric A. Redd has been 
designated trustee by the Department of the Army pursuant to 37 U.S.C. 
602.
Arnold A. Ames, as custodian for Barry B. Bryan 123-45-6789, under the 
California Uniform Gifts to Minors Act.
Thomas J. Reed, as custodian for Lawrence W. Reed 123-45-6789, a minor, 
under the laws of Georgia.
Richard A. Rowe 123-45-6789, for whom Reba L. Rowe is representative 
payee for social

[[Page 185]]

security benefits (or black lung benefits, as the case may be). (If the 
beneficiary is a minor, the words ``a minor'' should appear immediately 
after the social security number.)
Henry L. Green 123-45-6789 or George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Henry L. Green 123-45-6789 P.O.D. George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Redd State Hospital and School, selected payee for John A. Jones 123-45-
6789, a Civil Service annuitant, pursuant to 5 U.S.C. 8345(e).

    (3) Natural guardians. A bond may be registered in the name of 
either parent of a minor, as natural guardian. The registration of a 
bond in this form is considered as establishing a fiduciary 
relationship. A coowner or beneficiary may be named but only if the 
funds used to purchase the bond do not belong to the minor. Examples:

John A. Jones, as natural guardian for Henry M. Jones 123-45-6789.
Melba Smith, as natural guardian for Thelma Smith 123-45-6789 P.O.D. 
Bartholomew Smith.

    (4) Executors and administrators. A bond may be registered in the 
name of the representative appointed by a court to act for an estate of 
a decedent, or in the name of an executor authorized to administer a 
trust under the terms of a will although not named trustee. The name and 
capacity of all the representatives as shown in the letters of 
appointment must be included in the registration and be followed by an 
adequate identifying reference to the estate. Examples:

John H. Smith and Calvin N. Jones, executors of the will (or 
administrators of the estate) of Robert J. Smith, deceased 12-3456789.
John H. Smith, executor of the will of Robert J. Smith, deceased, in 
trust for Mrs. Jane L. Smith, with remainder over 12-3456789.

    (5) Trustee or life tenants under wills, deeds of trust, agreements, 
or similar instruments. A bond may be registered in the name and title 
of the trustee of a trust estate, or in the name of a life tenant, 
followed by an adequate identifying reference to the authority governing 
the trust or life tenancy. Examples:

Thomas J. White and Tenth National Bank, trustees under the will of 
Robert J. Smith, deceased 12-3456789.
Jane N. Black 123-45-6789, life tenant under the will of Robert J. 
Black, deceased.
Tenth National Bank, trustee under agreement with Paul E. White, dated 
2/1/76, 12-3456789.
Carl A. Black and Henry B. Green, trustees under agreement with Paul E. 
White, dated 2/1/76, 12-3456789.
Paul E. White, trustee under declaration of trust dated 2/1/76, 12-
3456789.

    (i) If the trust instrument designates by title only an officer of a 
board or an organization as trustee, only the title of the officer 
should be used. Example:

Chairman, Board of Trustees, First Church of Christ, Scientist, of 
Chicago, Illinois, in trust under the will of Robert J. Smith, deceased 
12-3456789.

    (ii) The names of all trustees, in the form used in the trust 
instrument, must be included in the registration, except as follows:
    (A) If there are several trustees designated as a board or they are 
required to act as a unit, their names may be omitted and the words 
``Board of Trustees'' substituted for the word ``trustee''. Example:

Board of Trustees of Immediate Relief Trust of Federal Aid Association, 
under trust indenture dated 2/1/76, 12-3456789.

    (B) If the trustees do not constitute a board or are not required to 
act as a unit, and are too numerous to be designated in the registration 
by names and title, some or all the names may be omitted. Examples:

John A. Smith, Henry B. Jones, et al., trustees under the will of Edwin 
O. Mann, deceased 12-3456789.
    Trustees under the will of Edwin O. Mann, deceased 12-3456789.

    (6) Employee thrift, savings, vacation and similar plans. A bond may 
be registered in the name and title, or title alone, of the trustee of 
an eligible employee thrift, savings, vacation or similar plan, as 
defined in Sec. 316.5, of Department of the Treasury Circular No. 653, 
current revision. If the instrument creating the trust provides that the 
trustees shall serve for a limited term, their names may be omitted. 
Examples:

Tenth National Bank, trustee of Pension Fund of Safety Manufacturing 
Company,

[[Page 186]]

U/A with the company, dated March 31, 1976, 12-3456789.
Trustees of Retirement Fund of Safety Manufacturing Company, under 
directors' resolution adopted March 31, 1976, 12-3456789.
County Trust Company, Trustee of the Employee Savings Plan of Jones 
Company, Inc., U/A dated January 17, 1976, 12-3456789.
Trustee of the Employee Savings Plan of Brown Brothers, Inc., U/A dated 
January 20, 1976, 12-3456789.

    (7) Funds of lodges, churches, societies, or similar organizations. 
A bond may be registered in the title of the trustees, or a board of 
trustees, holding funds in trust for a lodge, church, or society, or 
similar organization, whether or not incorporated. Examples:

Trustees of the First Baptist Church, Akron, Ohio, acting as a Board 
under section 15 of its bylaws 12-3456789.
Trustees of Jamestown Lodge No. 1000, Benevolent and Protective Order of 
Elks, under section 10 of its bylaws 12-3456789.
Board of Trustees of Lotus Club, Washington, Indiana, under Article 10 
of its constitution 12-3456789.

    (8) Investment agents for religious, educational, charitable and 
non-profit organizations. A bond may be registered in the name of a 
bank, trust company, or other financial institution, or an individual, 
as agent under an agreement with a religious, educational, charitable or 
non-profit organization, whether or not incorporated, if the agent holds 
funds for the sole purpose of investing them and paying the income to 
the organization. The name and designation of the agent must be followed 
by an adequate reference to the agreement. Examples:

Tenth National Bank, fiscal agent U/A with the Evangelical Lutheran 
Church of the Holy Trinity, dated 12/28/76, 12-3456789.
Sixth Trust Company, Investment Agent U/A dated September 16, 1976, with 
Central City Post, Department of Illinois, American Legion, 12-3456789.
John Jones, Investment Agent U/A dated September 16, 1976, with Central 
City Post, Department of Illinois, American Legion, 12-3456789.

    (9) Funds of school groups or activities. A bond may be registered 
in the title of the principal or other officer of a public, private, or 
parochial school holding funds in trust for a student body fund or for a 
class, group, or activity. If the amount purchased for any one fund does 
not exceed $2,500 (face amount), no reference need be made to a trust 
instrument. Examples:

Principal, Western High School, in trust for the Class of 1976 Library 
Fund, 12-3456789.
Director of Athletics, Western High School, in trust for Student 
Activities Association, under resolution adopted 5/12/76, 12-3456789.

    (10) Public corporations, bodies, or officers as trustees. A bond 
may be registered in the name of a public corporation or a public body, 
or in the title of a public officer, acting as trustee under express 
authority of law, followed by an appropriate reference to the statute 
creating the trust. Examples:

Rhode Island Investment Commission, trustee of the General Sinking Fund 
under Title 35, Ch. 8, Gen. Laws of Rhode Island.
Superintendent of the Austin State Hospital Annex, in trust for the 
Benefit Fund under Article 3183C, Vernon's Civ. Stat. of Texas Ann.

    (d) Private organizations (corporations, associations, 
partnerships)--(1) General. A bond may be registered in the name of any 
private organization in its own right. The full legal name of the 
organization as set forth in its charter, articles of incorporation, 
constitution, partnership agreement, or other authority from which its 
powers are derived, must be included in the registration and may be 
followed by a parenthetical reference to a particular account other than 
a trust account.
    (2) Corporations. A bond may be registered in the name of a 
business, fraternal, religious, non-profit, or other private 
corporation. The words ``a corporation'' must be included in the 
registration unless the fact of incorporation is shown in the name. 
Examples:

Smith Manufacturing Company, a corporation 12-3456789.
Green and Redd, Inc. 12-3456789 (Depreciation Acct.).

    (3) Unincorporated associations. A bond may be registered in the 
name of a club, lodge, society, or a similar self-governing association 
which is unincorporated. The words ``an unincorporated association'' 
must be included in the registration. This form of registration must not 
be used for a trust fund, board of trustees, a partnership, or a sole 
proprietorship. If the association is chartered by or affiliated with a

[[Page 187]]

parent organization, the name or designation of the subordinate or local 
organization must be given first, followed by the name of the parent 
organization. The name of the parent organization may be placed in 
parentheses and, if well known, may be abbreviated. Examples:

The Lotus Club, an unincorporated association, 12-3456789.
Local 447, Brotherhood of Railroad Trainmen, an unincorporated 
association, 12-3456789.
Eureka Lodge 317 (A.F. and A.M.), an unincorporated association, 12-
3456789.

    (4) Partnerships. A bond may be registered in the name of a 
partnership. The words ``a partnership'' must be included in the 
registration. Examples:

Smith & Jones, a partnership, 12-3456789.
Acme Novelty Company, a partnership, 12-3456789.

    (5) Sole proprietorships. A bond may be registered in the name of an 
individual who is doing business as a sole proprietor. A reference may 
be made to the trade name under which the business is conducted. 
Example:
    John Jones d.b.a. Jones Roofing Company, 123-45-6789

    (e) Institutions (churches, hospitals, homes, schools, etc.). A bond 
may be registered in the name of a church, hospital, home, school, or 
similar institution conducted by a private organization or by private 
trustees, regardless of the manner in which it is organized or governed 
or title to its property is held. Descriptive words, such as ``a 
corporation'' or ``an unincorporated association'', must not be included 
in the registration. Examples:

Shriners' Hospital for Crippled Children, St. Louis, MO, 12-3456789.
St. Mary's Roman Catholic Church, Albany, NY, 12-3456789.
Rodeph Shalom Sunday School, Philadelphia, PA, 12-3456789.

    (f) States, public bodies and corporations, and public officers. A 
bond may be registered in the name of a State, county, city, town, 
village, school district, or other political entity, public body, or 
corporation established by law (including a board, commission, 
administration, authority, or agency) which is the owner or official 
custodian of public funds, other than trust funds, or in the full legal 
title of the public officer having custody of the funds. Examples:

State of Maine.
Town of Rye, NY (Street Improvement Fund).
Maryland State Highway Administration.
Treasurer, City of Chicago.

    (g) The United States Treasury. A person who desires to have a bond 
become the property of the United States upon his or her death may 
designate the United States Treasury as coowner or beneficiary. 
Examples:

George T. Jones 123-45-6789 or the United States Treasury.
George T. Jones 123-45-6789 P.O.D. the United States Treasury.



                Subpart C_Limitations on Annual Purchases



Sec. 315.10  Limitations.

    Specific limitations have been placed on the amounts of bonds of 
each series and savings notes that might be purchased in any one year in 
the name of any one person or organization. The amounts applicable to 
each series of bonds and savings notes for each specific year, which has 
varied from time to time, can be found in the appropriate offering 
circulars, as revised and amended.



Sec. 315.11  Excess purchases.

    The Commissioner of the Public Debt may permit excess purchases to 
stand in any particular case or class of cases.



               Subpart D_Limitations on Transfer or Pledge



Sec. 315.15  Transfer.

    Savings bonds are not transferable and are payable only to the 
owners named on the bonds, except as specifically provided in these 
regulations and then only in the manner and to the extent so provided.



Sec. 315.16  Pledge.

    (a) General. A savings bond may not be hypothecated, pledged, or 
used as security for the performance of an obligation, except as 
provided in paragraph (b) of this section.

[[Page 188]]

    (b) Pledge under Treasury Circular No. 154. A bond may be pledged by 
the registered owner in lieu of surety under the provisions of 
Department of the Treasury Circular No. 154, current revision (31 CFR 
part 225), if the bond approving officer is the Secretary of the 
Treasury. In this case, an irrevocable power of attorney shall be 
executed authorizing the Secretary of the Treasury to request payment.



  Subpart E_Limitations on Judicial Proceedings_No Stoppage or Caveats 
                                Permitted



Sec. 315.20  General.

    The following general rules apply to the recognition of a judicial 
determination on adverse claims affecting savings bonds:
    (a) The Department of the Treasury will not recognize a judicial 
determination that gives effect to an attempted voluntary transfer inter 
vivos of a bond, or a judicial determination that impairs the rights of 
survivorship conferred by these regulations upon a coowner or 
beneficiary. All provisions of this Subpart are subject to these 
restrictions.
    (b) The Department of the Treasury will recognize a claim against an 
owner of a savings bond and conflicting claims of ownership of, or 
interest in, a bond between coowners or between the registered owner and 
the beneficiary, if established by valid, judicial proceedings, but only 
as specifically provided in this subpart. Section 315.23 specifies the 
evidence required to establish the validity of the judicial proceedings.
    (c) The Department of the Treasury and the agencies that issue, 
reissue, or redeem savings bonds will not accept a notice of an adverse 
claim or notice of pending judicial proceedings, nor undertake to 
protect the interests of a litigant not in possession of a savings bond.



Sec. 315.21  Payment to judgment creditors.

    (a) Purchaser or officer under levy. The Department of the Treasury 
will pay (but not reissue) a savings bond to the purchaser at a sale 
under a levy or to the officer authorized under appropriate process to 
levy upon property of the registered owner or coowner to satisfy a money 
judgment. Payment will be made only to the extent necessary to satisfy 
the money judgment. The amount paid is limited to the redemption value 
60 days after the termination of the judicial proceedings. Payment of a 
bond registered in coownership form pursuant to a judgment or a levy 
against only one coowner is limited to the extent of that coowner's 
interest in the bond. That interest must be established by an agreement 
between the coowners or by a judgment, decree, or order of a court in a 
proceeding to which both coowners are parties.
    (b) Trustee in bankruptcy, receiver, or similar court officer. The 
Department of the Treasury will pay, at current redemption value, a 
savings bond to a trustee in bankruptcy, a receiver of an insolvent's 
estate, a receiver in equity, or a similar court officer under the 
provisions of paragraph (a) of this section.



Sec. 315.22  Payment or reissue pursuant to judgment.

    (a) Divorce. The Department of the Treasury will recognize a divorce 
decree that ratifies or confirms a property settlement agreement 
disposing of bonds or that otherwise settles the interests of the 
parties in a bond. Reissue of a savings bond may be made to eliminate 
the name of one spouse as owner, coowner, or beneficiary, or to 
substitute the name of one spouse for that of the other spouse as owner, 
coowner, or beneficiary pursuant to the decree. However, if the bond is 
registered in the name of one spouse with another person as coowner, 
there must be submitted either:
    (1) A request for reissue by the other person or
    (2) A certified copy of a judgment, decree, or court order entered 
in proceedings to which the other person and the spouse named on the 
bond are parties, determining the extent of the interest of that spouse 
in the bond.

Reissue will be permitted only to the extent of that spouse's interest. 
The evidence required under Sec. 315.23 must be submitted in every 
case. When the divorce decree does not set out the terms of the property 
settlement agreement,

[[Page 189]]

a certified copy of the agreement must be submitted. Payment, rather 
than reissue, will be made if requested.
    (b) Gift causa mortis. A savings bond belonging solely to one 
individual will be paid or reissued at the request of the person found 
by a court to be entitled by reason of a gift causa mortis from the sole 
owner.
    (c) Date for determining rights. When payment or reissue under this 
section is to be made, the rights of the parties will be those existing 
under the regulations current at the time of the entry of the final 
judgment, decree, or court order.



Sec. 315.23  Evidence.

    (a) General. To establish the validity of judicial proceedings, 
certified copies of the final judgment, decree, or court order, and of 
any necessary supplementary proceedings, must be submitted. If the 
judgment, decree, or court order was rendered more than six months prior 
to the presentation of the bond, there must also be submitted a 
certificate from the clerk of the court, under court seal, dated within 
six months of the presentation of the bond, showing that the judgment, 
decree, or court order is in full force.
    (b) Trustee in bankruptcy or receiver of an insolvent's estate. A 
request for payment by a trustee in bankruptcy or a receiver of an 
insolvent's estate must be supported by appropriate evidence of 
appointment and qualification. The evidence must be certified by the 
clerk of the court, under court seal, as being in full force on a date 
that is not more than six months prior to the presentation of the bond.
    (c) Receiver in equity or similar court officer. A request for 
payment by the receiver in equity or a similar court officer, other than 
a receiver of an insolvent's estate, must be supported by a copy of an 
order that authorizes the presentation of the bond for redemption, 
certified by the clerk of the court, under court seal, as being in full 
force on a date that is not more than six months prior to the 
presentation of the bond.



 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds



Sec. 315.25  General.

    Relief, by the issue of a substitute bond or by payment, is 
authorized for the loss, theft, destruction, mutilation, or defacement 
of a bond after receipt by the owner or his or her representative. As a 
condition for granting relief, the Commissioner of the Public Debt, as 
designee of the Secretary of the Treasury, may require a bond of 
indemnity, in the form, and with the surety, or security, he considers 
necessary to protect the interests of the United States. In all cases 
the savings bond must be identified by serial number and the applicant 
must submit satisfactory evidence of the loss, theft, or destruction, or 
a satisfactory explanation of the mutilation or defacement.



Sec. 315.26  Application for relief--after receipt of bond.

    (a) Serial number known. If the serial number of the lost, stolen, 
or destroyed bond is known, the claimant should execute an application 
for relief on the appropriate form and submit it to the Bureau of the 
Public Debt, Parkersburg, WV 26101.
    (b) Serial number not known. If the bond serial number is not known, 
the claimant must provide sufficient information to enable the Bureau of 
the Public Debt to identify the bond by serial number. See Sec. 
315.29(c). The Bureau will furnish the proper application form and 
instructions.
    (c) Defaced or mutilated bond. A defaced bond and all available 
fragments of a mutilated bond should be submitted to the Bureau.
    (d) Execution of claims application. The application must be made by 
the person or persons (including both coowners, if living) authorized 
under these regulations to request payment of the bonds. In addition--
    (1) If the bond is in beneficiary form and the owner and beneficiary 
are both living, both will ordinarily be required to join in the 
application.
    (2) If a minor named on a bond as owner, coowner, or beneficiary is 
not of

[[Page 190]]

sufficient competency and understanding to request payment, both parents 
will ordinarily be required to join in the application.
    (e) If the application is approved, relief will be granted by the 
issuance of a bond bearing the same issue date as the bond for which the 
claim was filed or by the issuance of a check in payment.



Sec. 315.27  Application for relief--nonreceipt of bond.

    If a bond issued on any transaction is not received, the issuing 
agent must be notified as promptly as possible and given all information 
available about the nonreceipt. An appropriate form and instructions 
will be provided. If the application is approved, relief will be granted 
by the issuance of a bond bearing the same issue date as the bond that 
was not received.



Sec. 315.28  Recovery or receipt of bond before or after relief is 
granted.

    (a) Recovery prior to granting relief. If a bond reported lost, 
stolen, destroyed, or not received, is recovered or received before 
relief is granted, the Bureau of the Public Debt, Parkersburg, WV 26101, 
must be notified promptly.
    (b) Recovery subsequent to granting of relief. A bond for which 
relief has been granted is the property of the United States and, if 
recovered, must be promptly submitted to the Bureau of the Public Debt, 
Parkersburg, WV 26101, for cancellation.



Sec. 315.29  Adjudication of claims.

    (a) General. The Bureau of the Public Debt will adjudicate claims 
for lost, stolen or destroyed bonds on the basis of records created and 
regularly maintained in the ordinary course of business.
    (b) Claims filed ten years after payment. A bond for which no claim 
has been filed within ten years of the recorded date of redemption will 
be presumed to have been properly paid. If a claim is subsequently 
filed, a photographic copy of the bond will not be available to support 
the disallowance. This provision will be effective 60 days after the 
effective date of the Eleventh Revision of Department of the Treasury 
Circular No. 530 (31 CFR part 315).
    (c) Claims filed six years after final maturity. No claim filed six 
years or more after the final maturity of a savings bond will be 
entertained, unless the claimant supplies the serial number of the bond.



                           Subpart G_Interest



Sec. 315.30  Series E bonds and savings notes.

    Series E bonds and savings notes are discount securities. The 
accrued interest is added to the issue price at stated intervals and is 
payable only at redemption as part of the redemption value. All Series E 
bonds and savings notes have been extended and continue to earn interest 
until their final maturity dates, unless redeemed earlier. Information 
regarding extended maturity periods, investment yields and redemption 
values is found in Department of the Treasury Circular No. 653, current 
revision (31 CFR part 316) for Series E bonds, and in Department of the 
Treasury Circular, Public Debt Series No. 3-67, current revision (31 CFR 
part 342) for savings notes.



Sec. 315.31  Series H bonds.

    (a) General. Series H bonds are current income bonds issued at par 
(face amount). Interest on a Series H bond is paid semiannually 
beginning six months from the issue date. Interest ceases at final 
maturity, or if the bond is redeemed prior to final maturity, as of the 
end of the interest period last preceding the date of redemption. For 
example, if a bond on which interest is payable on January 1 and July 1 
is redeemed on September 1, interest ceases as of the preceding July 1, 
and no interest will be paid for the period from July 1 to September 1. 
However, if the redemption date falls on an interest payment date, 
interest ceases on that date. Information regarding authorized extended 
maturity periods and investment yields is found in Department Circular 
No. 905, current revision (31 CFR part 332).
    (b) Payment of interest. Series H bond interest accounts are 
maintained by the Bureau of the Public Debt, Parkersburg, WV. Interest 
is paid on each payment date by check drawn to the order of the owner or 
both coowners or,

[[Page 191]]

upon request, by the Automated Clearing House (ACH) method to the owner 
or coowner's account at a financial institution. Checks will be mailed 
to the delivery address provided to the Bureau.
    (c) Delivery of interest--(1) Notices affecting the delivery of 
interest payments. To ensure appropriate action, notices affecting the 
delivery of interest payments on Series H bonds must be received by the 
Bureau of the Public Debt, Parkersburg, WV, 26102-1328, at least one 
month prior to the interest payment date. Each notice must include the 
owner or coowner's name and the taxpayer identifying number appearing on 
the account under which records of the bonds are maintained.

(Approved by the Office of Management and Budget under control number 
1535-0094)

    (2) Owner or coowner deceased--(i) Sole owner. Upon receipt of 
notice of the death of the owner of a bond, payment of interest will be 
suspended until satisfactory evidence is submitted as to who is 
authorized to receive and collect interest payments on behalf of the 
estate of the decedent, in accordance with the provisions of subpart L.
    (ii) Coowner. Upon receipt of notice of the death of the ooowner to 
whom interest payments have been directed, payment of interest will be 
suspended until delivery instructions are received from the other 
coowner, if living. If both coowners are deceased, payment of interest 
will be suspended until satisfactory evidence is submitted as to who is 
authorized to receive and collect interest payments on behalf of the 
estate of the last deceased coowner, in accordance with the provisions 
of subpart L.
    (iii) Owner with beneficiary. Interest on a bond registered in 
beneficiary form is paid to the owner during his or her lifetime. Upon 
receiving notice of the owner's death, the Bureau of the Public Debt 
will suspend payment of interest until the bond is presented for payment 
or reissue by the beneficiary, if surviving, or some other proper party. 
Interest so withheld will be paid to the person entitled to the bond.
    (d) Representative appointed for the estate of a minor, incompetent, 
absentee, et al. Interest on Series H bonds is paid in accordance with 
the provisions of Sec. 315.60 to the representative appointed for the 
estate of an owner who is a minor, incompetent, absentee, et al. If the 
registration of the bonds does not include reference to the owner's 
status, the bonds should be submitted for reissue to a designated 
Federal Reserve Bank so that interest payments may be properly 
delivered. They must be accompanied by proof of appointment as required 
by Sec. 315.60.
    (e) Adult incapacitated owner having no representative. If an adult 
owner of a Series H bond is incompetent to receive and collect interest 
payments, and no legal guardian or similar representative has been 
appointed to act for him or her, the relative, or other person, 
responsible for the owner's care and support may apply to the Bureau of 
the Public Debt for recognition as voluntary guardian for the purpose of 
receiving and collecting the payments.
    (f) Reissue during interest period. Physical reissue of a Series H 
bond may be made without regard to interest payment dates. The Series H 
accounts maintained by the Bureau of the Public Debt will be closed in 
the first week of the month preceding each interest payment date, and 
payments will be made pursuant to the information contained in the 
accounts as of the date they are closed.
    (g) Endorsement of checks. Interest checks must be endorsed in 
accordance with the regulations governing the payment of fiscal agency 
checks contained in 31 CFR part 355.
    (h) Deposit account information for ACH payments--(1) Payments on 
same account. Payments on all Series H bonds assigned to the same 
account maintained by the Bureau will be made to the same deposit 
account at a financial institution.
    (2) Deposit account held by individuals in their own right. Where 
the Series H bonds are registered in the name of individual(s) as sole 
owner, or as owner and beneficiary, and the deposit account at the 
financial institution is held in the name of individual(s) in their own 
right, the owner's name must appear on the deposit account. Where the 
bonds are registered in the names of two individuals as coowners and the 
deposit account is held in the name of

[[Page 192]]

individual(s) in their own right, the registration of the bonds and the 
title of the account must contain at least one name that is common to 
both. The deposit account to which the interest payments are directed 
should preferably be established in a form identical to the registration 
of the bonds to ensure that rights of ownership and survivorship can be 
more easily identified and preserved. Neither the United States nor any 
Federal Reserve Bank shall be liable for any loss sustained because the 
interest(s) of the holder(s) of a deposit account to which payments are 
directed are not the same as the owner(s) of the bonds.
    (3) Deposit account held by organization. Where the deposit account 
to which interest payments are to be directed is held in the name of the 
financial institution itself, acting as sole trustee or as co-trustee, 
or is in the name of a commercially-managed investment fund, the owner 
or coowner should inquire whether the financial institution is able to 
receive ACH payments; if not, the owner or coowner should make 
alternative arrangements.
    (4) Financial institution cannot accept ACH payments. If after 
submission of deposit account information, it is determined that ACH 
payments cannot be accepted by the designated financial institution, 
pending receipt of new deposit account information, payment will be made 
by check drawn to the registered owner or both coowners and mailed to 
the address of record.
    (5) Cancellation of ACH arrangement. An ACH arrangement shall remain 
in effect until it is terminated by a request from the owner or coowner 
submitted to the Bureau of the Public Debt, Parkersburg, WV 26102-1328.
    (6) Rules. Series H interest payments made by the ACH method are 
governed by the regulations at 31 CFR part 370.
    (7) Nonreceipt or loss of interest payment. The Bureau of the Public 
Debt, Parkersburg, WV 26102 should be notified if:
    (i) An interest check is not received or is lost after receipt or
    (ii) An ACH payment is not credited to the designated account and 
the financial institution has no record of receiving it. The notice 
should include the owner or coowner's name and taxpayer identifying 
number and the interest payment date.

[54 FR 40255, Sept. 29, 1989, as amended at 59 FR 10535, Mar. 4, 1994; 
64 FR 40486, July 26, 1999]



Sec. 315.32  Series A, B, C, D, F, G, J, and K bonds.

    All bonds of these series have matured and no longer earn interest.



                Subpart H_General Provisions for Payment



Sec. 315.35  Payment (redemption).

    (a) General. Payment of a savings bond will be made to the person or 
persons entitled under the provisions of these regulations, except that 
checks in payment will not be delivered to addresses in areas with 
respect to which the Department of the Treasury restricts or regulates 
the delivery of checks drawn against funds of the United States. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211). Payment will be made without regard to any notice of adverse 
claims to a bond and no notification of stoppage or caveat against 
payment of a bond will be made.
    (b) Series A, B, C, D, F, and J. A bond of Series A, B, C, D, F, or 
J will be paid at face value.
    (c) Series E and Savings Notes. A Series E bond will be paid at any 
time after two months from issue date at the appropriate redemption 
value shown in Department of the Treasury Circular No. 653 (31 CFR part 
316), current revision. A savings note will be paid at anytime at the 
appropriate redemption value shown in Department of the Treasury 
Circular, Public Debt Series No. 3-67, current revision (31 CFR part 
342).
    (d) Series G and K. A bond of Series G or K will be paid at face 
value plus the final semiannual interest due. For Series G bonds, the 
final interest paid with principal is $1.25 per $100; for Series K 
bonds, the final interest is $6.90 per $500.
    (e) Series H. A Series H bond will be redeemed at face value at any 
time after six (6) months from issue date. In

[[Page 193]]

any case where Series H bonds are surrendered to a designated Federal 
Reserve Bank or Branch or the Department of the Treasury for redemption 
in the month prior to an interest payment date, redemption will not be 
deferred but will be made in regular course, unless the presenter 
specifically requests that the transaction be delayed until that date. A 
request to defer redemption made more than one month preceding the 
interest payment date will not be accepted.

[45 FR 64091, Sept. 26, 1980, as amended at 51 FR 23753, July 1, 1986; 
59 FR 10535, Mar. 4, 1994]



Sec. 315.36  Payment during life of sole owner.

    A savings bond registered in single ownership form (i.e., without a 
coowner or beneficiary) will be paid to the owner during his or her 
lifetime upon surrender with an appropriate request.



Sec. 315.37  Payment during lives of both coowners.

    A savings bond registered in coownership form will be paid to either 
coowner upon surrender with an appropriate request, and, upon payment 
(as determined in Sec. 315.43), the other coowner will cease to have 
any interest in the bond. If both coowners request payment and payment 
is to be made by check, the check will be drawn in the form, ``John A. 
Jones and Mary C. Jones''.



Sec. 315.38  Payment during lifetime of owner of beneficiary bond.

    A savings bond registered in beneficiary form will be paid to the 
registered owner during his or her lifetime upon surrender with an 
appropriate request. Upon payment (as determined in Sec. 315.43), the 
beneficiary will cease to have any interest in the bond.



Sec. 315.39  Surrender for payment.

    (a) Procedure for bonds of Series A to E, inclusive, in the names of 
individual owners or coowners only. An individual who is the owner or 
coowner of a bond of Series A, B, C, D, or E may present the bond to an 
authorized paying agent for redemption. The presenter must be prepared 
to establish his or her identity in accordance with Treasury 
instructions and identification guidelines. The owner or coowner must 
sign the request for payment on the bond or, if authorized, on a 
separate detached request, and add his or her address. In addition, in 
the case of a Series E bond or savings note, the presenter must record 
his or her social security number on the face of the security, provided 
it does not already appear in the inscription. Paying agents are 
authorized to refuse payment in any case where the presenter's number is 
not provided. If the request for payment has been signed, or signed and 
certified, before presentation of the bond, the paying agent must be 
satisfied that the person presenting the bond for payment is the owner 
or coowner and may require the person to sign the request for payment 
again. If the bond is in order for payment, the paying agent will make 
immediate payment at the current redemption value without charge to the 
presenter. Paying agents are not authorized to process any case 
involving partial redemption or any case in which supporting evidence is 
required.
    (b) Procedure for all other cases. In the case of a bond to which 
the procedure in paragraph (a) of this section does not apply, or if 
otherwise preferred, the owner or coowner, or other person entitled to 
payment, should appear before an officer authorized to certify requests 
for payment, establish his or her identity, sign the request for 
payment, and provide information as to the addresss to which the check 
in payment is to be mailed. In addition, in the case of a Series E bond 
or savings note, the presenter must record his or her social security 
number on the face of the security, provided it does not already appear 
in the inscription. The bond must be forwarded to a designated Federal 
Reserve Bank or Branch or the Bureau of the Public Debt. Usually, 
payment will be expedited by submission to a designated Federal Reserve 
Bank or Branch. In all cases, the cost and risk of presentation of a 
bond will be borne by the owner. Payment will be made by check drawn to 
the order of the registered owner or other person entitled and will be 
mailed to the address requested.

[[Page 194]]

    (c) Date of request. Requests executed more than six months before 
the date of receipt of a bond for payment will not be accepted. Neither 
will a bond be accepted if payment is requested as of a date more than 
three months in the future.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.40  Special provisions for payment.

    (a) Owner's signature not required. A bond may be paid by a paying 
agent or a designated Federal Reserve Bank without the owner's signature 
to the request for payment, if the bond bears the special endorsement of 
a financial institution specifically qualified to place such an 
endorsement on savings bonds under the provisions of Department of the 
Treasury Circular No. 888, current revision (31 CFR part 330).
    (b) Signature by mark. A signature by mark (X) must be witnessed by 
at least one disinterested person and a certifying officer. See subpart 
J. The witness must attest to the signature by mark substantially as 
follows: ``Witness to signature by mark,'' followed by his or her 
signature and address.
    (c) Name change. If the name of the owner, coowner, or other person 
entitled to payment, as it appears in the registration or in evidence on 
file in the Bureau of the Public Debt, has been changed in any legal 
manner, the signature to the request for payment must show both names 
and the manner in which the change was made; for example, ``Mary T. 
Jones Smith (Mary T. J. Smith or Mary T. Smith) changed by marriage from 
Mary T. Jones,'' or ``John R. Young, changed by order of court from Hans 
R. Jung.'' See Sec. 315.50.
    (d) Attorneys-in-fact. A request for payment, reinvestment, or 
exchange executed by an attorney-in-fact will be recognized if it is 
accompanied by a copy of the power of attorney that meets the following 
requirements:
    (1) The power of attorney must bear the grantor's signature, 
properly certified or notarized, in accordance with applicable State 
law;
    (2) The power of attorney must grant, by its terms, authority for 
the attorney-in-fact to sell or redeem the grantor's securities, sell 
his or her personal property, or, otherwise contain similar authority; 
and
    (3) In the case of a grantor who has become incapacitated, the power 
of attorney must conform with pertinent provisions of State law 
concerning its durability. Generally, in such circumstances, the power 
of attorney should provide that the authority granted will not be 
affected by the subsequent incompetence or incapacity of the grantor. 
Medical evidence or other proof of the grantor's condition may be 
required in any case.

[45 FR 64091, Sept. 26, 1980, as amended at 57 FR 39602, Sept. 1, 1992; 
59 FR 10535, Mar. 4, 1994]



Sec. 315.41  Partial redemption.

    A bond of any series may be redeemed in part at current redemption 
value, but only in an amount corresponding to one or more authorized 
denominations, upon surrender of the bond to a designated Federal 
Reserve Bank or Branch or to the Bureau of the Public Debt in accordance 
with Sec. 315.39(b). In any case in which partial redemption is 
requested, the phrase ``to the extent of $---- (face amount) and reissue 
of the remainder'' should be added to the request. Upon partial 
redemption of the bond, the remainder will be reissued as of the 
original issue date, as provided in subpart I.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.42  Nonreceipt or loss of check issued in payment.

    If a Treasury check in payment of a bond surrendered for redemption 
is not received within a reasonable time or is lost after receipt, 
notice should be given to the same agency to which the bond was 
surrendered for payment. The notice should give the date the bond was 
surrendered for payment, and describe the bond by series, denomination, 
serial number, and registration, including the taxpayer identifying 
number of the owner.



Sec. 315.43  Effective date of request for payment.

    The Department of the Treasury will treat the receipt of a bond with 
an appropiate request for payment by:

[[Page 195]]

    (a) A Federal Reserve Bank or Branch,
    (b) The Bureau of the Public Debt, or
    (c) A paying agent authorized to pay that bond, as the date upon 
which the rights of the parties are fixed for the purpose of payment.



Sec. 315.44  Withdrawal of request for payment.

    (a) Withdrawal by owner or coowner. An owner or coowner, who has 
surrendered a bond to a Federal Reserve Bank or Branch or to the Bureau 
of the Public Debt or an authorized paying agent with an appropriate 
request for payment, may withdraw the request if notice of intent to 
withdraw is received by the same agency prior to payment either in cash 
or through the issuance of the redemption check.
    (b) Withdrawal on behalf of deceased owner or incompetent. A request 
for payment may be withdrawn under the same conditions as in paragraph 
(a) of this section by the executor or administrator of the estate of a 
deceased owner or by the person or persons who would have been entitled 
to the bond under subpart L, or by the legal representative of the 
estate of a person under legal disability, unless surrender of the bond 
for payment has eliminated the interest of a surviving coowner or 
beneficiary. See Sec. 315.70 (b) and (c).



              Subpart I_Reissue and Denominational Exchange



Sec. 315.45  General.

    Reissue of a bond may be made only under the conditions specified in 
these regulations, and only at:
    (a) A Federal Reserve Bank or Branch, or
    (b) The Bureau of the Public Debt.

Reissue will not be made if the request is received less than one full 
calendar month before the final maturity date of a bond. The request, 
however, will be effective to establish ownership as though the reissue 
had been made.



Sec. 315.46  Effective date of request for reissue.

    The Department of the Treasury will treat the receipt by:
    (a) A Federal Reserve Bank or Branch or
    (b) The Bureau of the Public Debt of a bond and an acceptable 
request for reissue as determining the date upon which the rights of the 
parties are fixed for the purpose of reissue.

For example, if the owner or either coowner of a bond dies after the 
bond has been surrendered for reissue, the bond will be regarded as 
having been reissued in the decedent's lifetime.



Sec. 315.47  Authorized reissue--during lifetime.

    A bond belonging to an individual may be reissued in any authorized 
form of registration upon an appropriate request for the purposes 
outlined below:
    (a) Single ownership. A bond registered in single ownership form may 
be reissued--
    (1) To add a coowner or beneficiary;
    (2) To name a new owner, with or without a coowner or beneficiary, 
but only if:
    (i) The new owner is related to the previous owner by blood 
(including legal adoption) or marriage,
    (ii) The previous owner and the new owner are parties to a divorce 
or annulment, or
    (iii) The new sole owner is the trustee of a personal trust estate 
which was created by the previous owner or which designates as 
beneficiary either the previous owner or a person related to him or her 
by blood (including legal adoption) or marriage.
    (b) Coownership--(1) Reissue--to name a related individual as owner 
or coowner. During the lifetime of both coowners, a coownership bond may 
be reissued in the name of another individual related by blood 
(including legal adoption) or marriage to either coowner--
    (i) As single owner,
    (ii) As owner with one of the original coowners as beneficiary, or
    (iii) As a new coowner with one of the original coowners.
    (2) Reissue--to name either coowner alone or with another individual 
as coowner or beneficiary. During the lifetime of both coowners, a 
coownership bond may be reissued in the name of either coowner alone or 
with another individual as coowner or beneficiary if--
    (i) After issue of the submitted bond, either coowner named thereon 
marries, or the coowners are divorced or legally

[[Page 196]]

separated from each other, or their marriage is annulled; or
    (ii) Both coowners on the submitted bond are related by blood 
(including legal adoption) or marriage to each other.
    (3) Reissue--to name the trustee of a personal trust estate. A bond 
registered in coownership form may be reissued to name a trustee of a 
personal trust estate created by either coowner or by some other person 
if:
    (i) Either coowner is a beneficiary of the trust, or
    (ii) A beneficiary of the trust is related by blood or marriage to 
either coowner.
    (c) Beneficiary. A bond registered in beneficiary form may be 
reissued--
    (1) To name the beneficiary as coowner;
    (2) To eliminate the name of the owner and to name as owner a 
custodian for the beneficiary, if a minor, under a statute authorizing 
gifts to minors;
    (3) To eliminate the beneficiary or to substitute another individual 
as beneficiary, but only if the request is supported by the certified 
consent of the beneficiary or by proof of his or her death; or
    (4) To eliminate the names of the owner and the beneficiary and to 
name as new owner the trustee of the personal trust estate which was 
created by the previous owner or which designates as beneficiary either 
the previous owner or a person related to him or her by blood (including 
legal adoption) or marriage, but only if the request is supported by the 
certified consent of the beneficiary or by proof of his or her death.



Sec. 315.48  Restrictions on reissue.

    (a) Denominational exchange. Reissue is not permitted solely to 
change denominations.
    (b) United States Treasury. Reissue may not be made to eliminate the 
United States Treasury as coowner or beneficiary.



Sec. 315.49  Correction of errors.

    A bond may be reissued to correct an error in registration upon 
appropriate request, supported by satisfactory proof of the error.



Sec. 315.50  Change of name.

    An owner, coowner, or beneficiary whose name is changed by marriage, 
divorce, annulment, order of court, or in any other legal manner after 
the issue of bond should submit the bond with a request for reissue to 
substitute the new name for the name inscribed on the bond. Documentary 
evidence may be required in any appropriate case.



Sec. 315.51  Requests for reissue.

    A request for reissue of bonds in coownership form during the 
lifetime of the coowners must be signed by both coowners, except that a 
request solely to eliminate the name of one coowner may be signed by 
that coowner only. A bond registered in beneficiary form may be reissued 
upon the request of the owner, supported by the certified consent of the 
beneficiary or by proof of his or her death. Public Debt forms are 
available for requesting reissue.



                      Subpart J_Certifying Officers



Sec. 315.55  Individuals authorized to certify.

    The following individuals are authorized to act as certifying 
officers for the purpose of certifying a request for payment, reissue, 
or a signature to a Public Debt form:
    (a) Officers generally authorized--(1) At banks, trust companies, 
and member organizations of the Federal Home Loan Bank System. (i) Any 
officer of a bank incorporated in the United States, the territories or 
possessions of the United States, or the Commonwealth of Puerto Rico.
    (ii) Any officer of a trust company incorporated in the United 
States, the territories or possessions of the United States, or the 
Commonwealth of Puerto Rico.
    (iii) Any officer of an organization that is a member of the Federal 
Home Loan Bank System. This includes Federal savings and loan 
associations.
    (iv) Any officer of a foreign branch or a domestic branch of an 
institution described in paragraphs (a) (1)(i) through (iii) of this 
section.

[[Page 197]]

    (v) Any officer of a Federal Reserve Bank, a Federal Land Bank, or a 
Federal Home Loan Bank.
    (vi) Any employee of an institution described in paragraphs 
(a)(1)(i) through (v) of this section, who is expressly authorized to 
certify by the institution.

Certification by these officers or designated employees must be 
authenticated by a legible imprint either of a corporate stamp of the 
institution or of the issuing or paying agent's stamp. An employee 
authorized to certify requests must sign his or her name over the title 
``Designated Employee''.
    (2) At issuing agents that are not banks or trust companies. Any 
officer of an organization, not a bank or a trust company, that is 
qualified as an issuing agent for savings bonds. The agent's stamp must 
be imprinted in the certification.
    (3) By United States officials. Any judge, clerk, or deputy clerk of 
a United States court, including United States courts for the 
territories and possessions of the United States, and the Commonwealth 
of Puerto Rico or any United States Commissioner or United States 
Attorney.
    (b) Officers with limited authority--(1) In the Armed Forces. Any 
commissioned officer or warrant officer of the Armed Forces of the 
United States, but only for members of the respective services, their 
families, and civilian employees at posts, bases, or stations. The 
certifying officer must indicate his or her rank and state that the 
individual signing the request is one of the class whose request the 
certifying officer is authorized to certify.
    (2) At Veterans Administration facilities, Federal penal 
institutions, and United States Public Health Service hospitals. Any 
officer in charge of a home, hospital, or other facility of the Veterans 
Administration, but only for the patients, or employees of the facility; 
any officer of a Federal penal institution or a United States Public 
Health Service hospital expressly authorized to certify by the Secretary 
of the Treasury or his designee, but only for the inmates, patients or 
employees of the institution involved. Officers of Veterans 
Administration facilities, Federal penal institutions, and Public Health 
Service hospitals must use the stamp of the particular institution or 
service.
    (c) Authorized officers in foreign countries. Any United States 
diplomatic or consular representative, or the officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate stamp or is 
certified to the Department of the Treasury. If none of these 
individuals is available, a notary public or other officer authorized to 
administer oaths may certify, but his or her official character and 
jurisdiction must be certified by a United States diplomatic or consular 
officer under seal of his or her office.
    (d) Authorized officers in particular localities. The Governor and 
the Treasurer of Puerto Rico; the Governor and the Commissioner of 
Finance of the Virgin Islands; the Governor and the Director of Finance 
of Guam; and the Governor and the Director of Administrative Services of 
American Samoa; and designated officers of the Panama Canal Commission.
    (e) Special provisions. If no certifying officer is readily 
accessible, the Commissioner of the Public Debt, Deputy Commissioner, 
any Assistant Commissioner, or other designated official of the Bureau 
or of a Federal Reserve Bank or Branch is authorized to make special 
provision for any particular case.



Sec. 315.56  General instructions and liability.

    (a) Certification procedure. Certifying officers at financial 
institutions qualified as paying agents should observe the Treasury's 
payment instructions and identification guidelines in certifying savings 
bonds and savings notes being forwarded to a designated Federal Reserve 
Bank for any transaction. Other certifying officers should provide 
certification services for persons with whom they have substantial 
personal acquaintance, and for other persons whose identities have been 
unmistakably established. A notation showing exactly how identification 
was established should be placed on the back of the security or Public 
Debt form, or in

[[Page 198]]

a separate record. As part of the certification, the certifying officer 
must affix his or her official signature, title and address, the exact 
date of execution and, where one is available, a corporate stamp or 
issuing or paying agent's stamp.
    (b) Liability. The certifying officer and, if such person is an 
officer or an employee of an organization, the organization will be held 
fully responsible for the adequacy of the identification.

[45 FR 64091, Sept. 26, 1980, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 315.57  When a certifying officer may not certify.

    Certifying officers may not certify the requests for payment of 
bonds, or appropriate Public Debt forms if, in their own right or in a 
representative capacity, they
    (a) Have an interest in the bonds, or
    (b) Will, by virtue of the requests being certified, acquire an 
interest in the bonds.



Sec. 315.58  Forms to be certified.

    When required in the instructions on a Public Debt form, the form 
must be signed before an authorized certifying officer.



     Subpart K_Minors, Incompetents, Aged Persons, Absentees, et al.



Sec. 315.60  Conditions for payment to representative of an estate.

    (a) General. The representative of an estate of an owner who is a 
minor, an aged person, incompetent, absentee, et al., may receive upon 
request--
    (1) If the registration shows the name and capacity of the 
representative;
    (2) If the registration shows the capacity but not the name of the 
representative and the request is accompanied by appropriate evidence; 
or
    (3) If the registration includes neither the name of the 
representative nor his or her capacity but the request is accompanied by 
appropriate evidence.
    (b) Evidence. Appropriate evidence for paragraphs (a) (2) and (3) of 
this section includes a certified copy of the letters of appointment or, 
if the representative is not appointed by a court, other proof of 
qualification. Except in thee case of corporate fiduciaries, the 
evidence must show that the appointment is in full force and be dated 
not more than one year prior to the presentation of the bond for 
payment. The request for payment appearing on the back of a bond must be 
signed by the representative as such, for example, ``John S. Jones, 
guardian (committee) of the estate of Henry W. Smith, a minor (an 
incompetent).''



Sec. 315.61  Payment after death.

    After the death of the ward, and at any time prior to the 
representative's discharge, the representative of the estate will be 
entitled to obtain payment of a bond to which the ward was solely 
entitled.



Sec. 315.62  Payment to minors.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of the 
minor's estate, payment will be made to the minor upon his or her 
request, provided the minor is of sufficient competency to sign the 
request for payment and to understand the nature of the transaction. In 
general, the fact that the request for payment has been signed by a 
minor and certified will be accepted as sufficient proof of competency 
and understanding.



Sec. 315.63  Payment to a parent or other person on behalf of a minor.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of his or 
her estate, and if the minor is not of sufficient competency to sign the 
request for payment and to understand the nature of the transaction, 
payment will be made to either parent with whom the minor resides or to 
whom legal custody has been granted. If the minor does not reside with 
either parent, payment will be made to the person who furnishes the 
chief support for the minor. The request must appear on the back of the 
bond in one of the following forms:
    (a) Request by parent.

    I certify that I am the mother of John C. Jones (with whom he 
resides) (to whom legal custody has been granted). He is ---- years of

[[Page 199]]

age and is not of sufficient understanding to make this request.

Mary Jones on behalf of John C. Jones.

    (b) Request by other person.

    I certify that John C. Jones does not reside with either parent and 
that I furnish his chief support. He is ---- years of age and is not of 
sufficient understanding to make this request.

Alice Brown, grandmother, on behalf of John C. Jones.



Sec. 315.64  Payment, reinvestment, or exchange--voluntary guardian of 
an incapacitated person.

    (a) Payment of bonds. When an adult owner of bonds is incapable of 
requesting payment as a result of incapacity and there is no other 
person legally qualified to do so, the relative, or other person, 
responsible for the owner's care and support may submit an application 
for recognition as voluntary guardian for the purpose of redeeming the 
owner's bonds, if the total redemption value of all of the owner's bonds 
does not exceed $20,000. The redemption value of the bonds shall be 
determined as of the date the bonds are received, accompanied by an 
appropriate request for payment. If the total redemption value exceeds 
$20,000, a legal representative must be appointed, as set forth in Sec. 
315.60.
    (b) Reinvestment of bonds. If the bonds have finally matured and it 
is desired to redeem them and reinvest the proceeds in other savings 
bonds, the new bonds must be registered in the name of the incapacitated 
person, followed by words showing that he or she is under voluntary 
guardianship; for example, ``John Jones 123-45-6789, under voluntary 
guardianship''. A living coowner or beneficiary named on the matured 
bonds must be designated on the new bonds, unless such person furnishes 
a certified statement consenting to omission of his or her name. If an 
amount insufficient to purchase an additional bond of any authorized 
denomination of either series remains after the reinvestment, the 
voluntary guardian may furnish additional funds sufficient to purchase 
another bond of either series of the lowest available denomination. If 
additional funds are not furnished, the remaining amount will be paid to 
the voluntary guardian for the use and benefit of the incapacitated 
person.
    (c) Exchange of bonds. The provisions for reinvestment of the 
proceeds of matured bonds are equally applicable to any authorized 
exchange of bonds of one series for those of another.

[57 FR 39602, Sept. 1, 1992]



Sec. 315.65  Reissue.

    A bond on which a minor or other person under legal disability is 
named as the owner or coowner, or in which he or she has an interest, 
may be reissued under the following conditions:
    (a) A minor for whose estate no representative has been appointed 
may request reissue if the minor is of sufficient competency to sign his 
or her name to the request and to understand the nature of the 
transaction.
    (b) A bond on which a minor is named as beneficiary or coowner may 
be reissued in the name of a custodian for the minor under a statute 
authorizing gifts to minors upon the request of the adult whose name 
appears on the bond as owner or coowner.
    (c) A minor coowner for whose estate no representative has been 
appointed, may be named sole owner upon the request of the competent 
coowner.
    (d) Reissue to eliminate the name of a minor or incompetent for 
whose estate a legal representative has been appointed is permitted only 
if supported by evidence that a court has authorized the representative 
of the minor's or incompetent's estate to request the reissue. See Sec. 
315.23.

Except to the extent provided in paragraphs (a) through (d), of this 
section, reissue will be restricted to a form of registration which does 
not adversely affect the existing ownership or interest of a minor who 
is not of sufficient understanding to make a request, or other person 
under legal disability. Requests for reissue should be executed by the 
person authorized to request payment under Sec. Sec. 315.60 and 315.63, 
or the person who may request recognition as voluntary guardian under 
Sec. 315.64.

[45 FR 64091, Sept. 26, 1980. Redesignated at 57 FR 39602, Sept. 1, 
1992]

[[Page 200]]



            Subpart L_Deceased Owner, Coowner or Beneficiary



Sec. 315.70  General rules governing entitlement.

    The following rules govern ownership or entitlement where one or 
both of the persons named on a bond have died without the bond having 
been surrendered for payment or reissue:
    (a) Single owner bond. If the owner of a bond registered in single 
ownership form has died, the bond becomes the property of that 
decedent's estate, and payment or reissue will be made as provided in 
this subpart.
    (b) Coowner bond--(1) One coowner deceased. If one of the coowners 
named on a bond has died, the surviving coowner will be recognized as 
its sole and absolute owner, and payment or reissue will be made as 
though the bond were registered in the name of the survivor alone. Any 
request for reissue by the surviving coowner must be supported by proof 
of death of the other coowner.
    (2) Both coowners deceased. If both coowners named on a bond have 
died, the bond becomes the property of the estate of the coowner who 
died last, and payment or reissue will be made as if the bond were 
registered in the name of the last deceased coowner alone. Proof of 
death of both coowners will be required to establish the order of death.
    (3) Simultaneous death of both coowners. If both coowners die under 
conditions where it cannot be established, either by presumption of law 
or otherwise, which coowner died first, the bond becomes the property of 
both equally, and payment or reissue will be made accordingly.
    (c) Beneficiary bond--(1) Owner deceased. If the owner of a bond 
registered in beneficiary form has died and is survived by the 
beneficiary, upon proof of death of the owner, the beneficiary will be 
recognized as the sole and absolute owner of the bond. Payment or 
reissue will be made as though the bond were registered in the 
survivor's name alone. A request for payment or reissue by the 
beneficiary must be supported by proof of death of the owner.
    (2) Beneficiary deceased. If the beneficiary's death occurs before, 
or simultaneous with, that of the registered owner, payment or reissue 
will be made as though the bond were registered in the owner's name 
alone. Proof of death of the owner and beneficiary is required to 
establish the order of death.
    (d) Nonresident aliens. If the person who becomes entitled to a bond 
because of the death of an owner is an alien who is a resident of an 
area with respect to which the Department of the Treasury restricts or 
regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities, delivery of the redemption 
check will not be made so long as the restriction applies. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211).



Sec. 315.71  Decedent's estate.

    (a) Estate is being administered. (1) A legal representative of a 
deceased owner's estate may request payment of savings bonds to the 
estate, or may distribute the savings bonds to the persons entitled.
    (2) Appropriate proof of appointment for the legal representative of 
the estate is required. Letters of appointment must be dated not more 
than one year prior to the date of submission of the letters of 
appointment.
    (b) Estate has been settled previously. If the estate has been 
settled previously through judicial proceedings, the persons entitled 
may request payment or reissue of the savings bonds. A certified copy of 
the court-approved final accounting for the estate, the court's decree 
of distribution, or other appropriate evidence is required.
    (c) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the estate is to be appointed, the person appointed 
to receive or distribute the assets of a decedent's estate without 
regular administration under summary or small estates procedures under 
applicable local law may request payment or reissue of savings bonds. 
Appropriate evidence is required.
    (d) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000,

[[Page 201]]

administration of the decedent's estate will be required. The redemption 
value of savings bonds and the principal amount of marketable securities 
will be used to determine the value of securities, and will be 
determined as of the date of death. Administration may also be required 
at the discretion of the Department for any case.
    (e) Voluntary representative for small estates that are not being 
otherwise administered--(1) General. A voluntary representative is a 
person qualified according to paragraph (e)(3) of this section, to 
redeem or to distribute a decedent's savings bonds. The voluntary 
representative procedures are for the convenience of the Department; 
entitlement to the decedent's savings bonds and held payments, if any, 
is determined by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. Voluntary representative procedures may 
be used only if:
    (i) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (ii) The total redemption value of the Treasury securities and held 
payments, if any, held directly on our records that are the property of 
the decedent's estate is $100,000 or less as of the date of death; and
    (iii) There is a person eligible to serve as the voluntary 
representative according to paragraph (e)(3) of this section.
    (2) Authority of voluntary representative. A voluntary 
representative may:
    (i) Redeem the decedent's savings bonds on behalf of the persons 
entitled by the law of the jurisdiction in which the decedent was 
domiciled at the date of death;
    (ii) Distribute the decedent's savings bonds to the persons entitled 
by the law of the jurisdiction in which the decedent was domiciled at 
the date of death.
    (3) Order of precedence for voluntary representative. An individual 
eighteen years of age or older may act as a voluntary representative 
according to the following order of precedence: A surviving spouse; if 
there is no surviving spouse, then a child of the decedent; if there are 
none of the above, then a descendant of a deceased child of the 
decedent; if there are none of the above, then a parent of the decedent; 
if there are none of the above, then a brother or sister of the 
decedent; if there are none of the above, then a descendant of a 
deceased brother or sister of the decedent; if there are none of the 
above, then a next of kin of the decedent, as determined by the law of 
the jurisdiction in which the decedent was domiciled at the date of 
death. As used in this order of precedence, child means a natural or 
adopted child of the decedent.
    (4) Liability. By serving, the voluntary representative warrants 
that the distribution of payments or savings bonds is to the persons 
entitled by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. The United States is not liable to any 
person for the improper distribution of payments or savings bonds. Upon 
payment or distribution of the savings bonds at the request of the 
voluntary representative, the United States is released to the same 
extent as if it had paid or delivered to a representative of the estate 
appointed pursuant to the law of the jurisdiction in which the decedent 
was domiciled at the date of death. The voluntary representative shall 
indemnify and hold harmless the United States and all creditors and 
persons entitled to the estate of the decedent. The amount of the 
indemnification is limited to an amount no greater than the value 
received by the voluntary representative.
    (f) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for payment for the amount of the debt, 
providing the debt has not been barred by applicable local law.

[70 FR 57430, Sept. 30, 2005]

[[Page 202]]



Sec. 315.72  [Reserved]



                          Subpart M_Fiduciaries



Sec. 315.75  Payment or reissue during the existence of the fiduciary 
estate.

    (a) Payment or reissue before maturity--(1) Request from the 
fiduciary named in the registration. A request for reissue or payment 
prior to maturity must be signed by all of the fiduciaries unless by 
statute, decree of court, or the terms of the governing instrument, any 
lesser number may properly execute the request. If the fiduciaries named 
in the registration are still acting, no further evidence will be 
required. In other cases, evidence to support the request will be 
required, as specified:
    (i) Fiduciaries by title only. If the bond is registered only in the 
titles, without the names, of fiduciaries not acting as a board, 
satisfactory evidence of their incumbency must be furnished, except in 
the case of bonds registered in the title of public officers as 
trustees.
    (ii) Boards, committees, commissions, etc. If a bond is registered 
in the name of a governing body which is empowered to act as a unit, and 
which holds title to the property of a religious, educational, 
charitable or nonprofit organization or a public corporation, the 
request should be signed in the name of the body by an authorized 
person. Ordinarily, a signed and certified request will be accepted 
without further evidence.
    (iii) Corporate fiduciaries. If a bond is registered in the name of 
a public or private corporation or a governmental body as fiduciary, the 
request must be signed by an authorized officer in the name of the 
organization as fiduciary. Ordinarily, a signed and certified request 
will be accepted without further evidence.
    (2) Trustee of a common trust fund. A bond held by a financial 
institution in a fiduciary capacity may be reissued in the name of the 
institution as trustee of its common trust fund to the extent that 
participation in the common trust fund is authorized by law or 
regulation. The request for reissue should be executed by the 
institution and any cofiduciary.
    (3) Successor fiduciary. If the fiduciary in whose name the bond is 
registered has been replaced by another fiduciary, satisfactory evidence 
of successorship must be furnished.
    (b) Payment at or after final maturity. At or after final maturity, 
a request for payment signed by any one or more of the fiduciaries will 
be accepted. Payment will be made by check drawn as the bond is 
registered.



Sec. 315.76  Payment or reissue after termination of the fiduciary 
estate.

    A bond registered in the name or title of a fiduciary may be paid or 
reissued to the person who has become entitled by reason of the 
termination of a fiduciary estate. Requests for reissue made by a 
fiduciary pursuant to the termination of a fiduciary estate should be 
made on the appropriate form. Requests for payment or reissue by other 
than the fiduciary must be accompanied by evidence to show that the 
person has become entitled in accordance with applicable State law or 
otherwise. When two or more persons have become entitled, the request 
for payment or reissue must be signed by each of them.



Sec. 315.77  Exchanges by fiduciaries.

    Fiduciaries are authorized to request an exchange of bonds of one 
series for those of another, pursuant to any applicable Department of 
the Treasury offering. A living coowner or beneficiary named on the 
bonds submitted in exchange may be retained in the same capacity on the 
new bonds.



      Subpart N_Private Organizations (Corporations, Associations, 
    Partnerships, etc.) and Governmental Agencies, Units and Officers



Sec. 315.80  Payment to corporations or unincorporated associations.

    A bond registered in the name of a private corporation or an 
unincorporated association will be paid to the corporation or 
unincorporated association upon a request for payment on its behalf by 
an authorized officer. The signature to the request should be in the 
form, for example, ``The Jones Coal

[[Page 203]]

Company, a corporation, by John Jones, President'', or ``The Lotus Club, 
an unincorporated association, by William A. Smith, Treasurer''. A 
request for payment so signed and certified will ordinarily be accepted 
without further evidence of the officer's authority.



Sec. 315.81  Payment to partnerships.

    A bond registered in the name of an existing partnership will be 
paid upon a request for payment signed by a general partner. The 
signature to the request should be in the form, for example, ``Smith and 
Jones, a partnership, by John Jones, a general partner''. A request for 
payment so signed and certified will ordinarily be accepted as 
sufficient evidence that the partnership is still in existence and that 
the person signing the request is authorized.



Sec. 315.82  Reissue or payment to successors of corporations, 
unincorporated associations, or partnerships.

    A bond registered in the name of a private corporation, an 
unincorporated associations, or a partnership which has been succeeded 
by another corporation, unincorporated association, or partnership by 
operation of law or otherwise, in any manner whereby the business or 
activities of the original organization are continued without 
substantial change, will be paid to or reissued in the name of the 
succeeding organization upon appropriate request on its behalf, 
supported by satisfactory evidence of successorship. The appropriate 
form should be used.



Sec. 315.83  Reissue or payment on dissolution of corporation or 
partnership.

    (a) Corporations. A bond registered in the name of a private 
corporation which is in the process of dissolution will be paid to the 
authorized representative of the corporation upon a request for payment, 
supported by satisfactory evidence of the representative's authority. At 
the termination of dissolution proceedings, the bond may be reissued 
upon the request of the authorized representative in the names of those 
persons, other than creditors, entitled to the assets of the 
corporation, to the extent of their respective interests. Proof will be 
required that all statutory provisions governing the dissolution of the 
corporation have been complied with and that the persons in whose names 
reissue is requested are entitled and have agreed to the reissue. If the 
dissolution proceedings are under the direction of a court, a certified 
copy of an order of the court, showing the authority of the 
representative to make the distribution requested must be furnished.
    (b) Partnerships. A bond registered in the name of a partnership 
which has been dissolved by death or withdrawal of a partner, or in any 
other manner--
    (1) Will be paid upon a request for payment by any partner or 
partners authorized by law to act on behalf of the dissolved 
partnership, or
    (2) Will be paid to or reissued in the names of the persons entitled 
as the result of such dissolution to the extent of their respective 
interests, except that reissue will not be made in the names of 
creditors.

The request must be supported by satisfactory evidence of entitlement, 
including proof that the debts of the partnership have been paid or 
properly provided for. The appropriate form should be used.



Sec. 315.84  Payment to certain institutions.

    A bond registered in the name of a church, hospital, home, school, 
or similar institution, without reference in the registration to the 
manner in which it is organized or governed or to the manner in which 
title to its property is held, will be paid upon a request for payment 
signed on behalf of such institution by an authorized representative. A 
request for payment signed by a pastor of a church, superintendent of a 
hospital, president of a college, or by any official generally 
recognized as having authority to conduct the financial affairs of the 
particular institution will ordinarily be accepted without further proof 
of authority. The signature to the request should be in the form, for 
example, ``Shriners' Hospital for Crippled Children, St. Louis, MO, by 
William A. Smith, Superintendent'', or ``St. Mary's Roman Catholic 
Church,

[[Page 204]]

Albany, NY, by the Rev. John Smyth, Pastor''.



Sec. 315.85  Reissue in name of trustee or agent for reinvestment 
purposes.

    A bond registered in the name of a religious, educational, 
charitable or nonprofit organization, whether or not incorporated, may 
be reissued in the name of a financial institution, or an individual, as 
trustee or agent. There must be an agreement between the organization 
and the trustee or agent holding funds of the organization, in whole or 
in part, for the purpose of investing and reinvesting the principal and 
paying the income to the organization. Reissue should be requested on 
behalf of the organization by an authorized officer using the 
appropriate form.



Sec. 315.86  Reissue upon termination of investment agency.

    A bond registered in the name of a financial institution, or 
individual, as agent for investment purposes only, under an agreement 
with a religious, an educational, a charitable, or a nonprofit 
organization, may be reissued in the name of the organization upon 
termination of the agency. The former agent should request such reissue 
and should certify that the organization is entitled by reason of the 
termination of the agency. If such request and certification are not 
obtainable, the bond will be reissued in the name of the organization 
upon its own request, supported by satisfactory evidence of the 
termination of the agency. The appropriate form should be used.



Sec. 315.87  Payment to governmental agencies, units, or their officers.

    (a) Agencies and units. A bond registered in the name of a State, 
county, city, town, village, or in the name of a Federal, State, or 
local governmental agency, such as a board, commission, or corporation, 
will be paid upon a request signed in the name of the governmental 
agency or unit by an authorized officer. A request for payment so signed 
and certified will ordinarily be accepted without further proof of the 
officer's authority.
    (b) Officers. A bond registered in the official title of an officer 
of a governmental agency or unit will be paid upon a request for payment 
signed by the officer. The request for payment so signed and certified 
will ordinarily be accepted as proof that the person signing is the 
incumbent of the office.



                   Subpart O_Miscellaneous Provisions



Sec. 315.90  Waiver of regulations.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may waive or modify any provision or provisions of these 
regulations. He may do so in any particular case or class of cases for 
the convenience of the United States or in order to relieve any person 
or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity, (b) 
if it does not impair any existing rights, and (c) if he is satisfied 
that such action would not subject the United States to any substantial 
expense or liability.



Sec. 315.91  Additional requirements; bond of indemnity.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may require
    (a) Such additional evidence as he may consider necessary or 
advisable, or
    (b) A bond of indemnity, with or without surety, in any case in 
which he may consider such a bond necessary for the protection of the 
interests of the United States.



Sec. 315.92  Preservation of rights.

    Nothing contained in these regulations shall be construed to limit 
or restrict existing rights which holders of savings bonds previously 
issued may have acquired under circulars offering the bonds for sale or 
under the regulations in force at the time of the purchase.



Sec. 315.93  Supplements, amendments, or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional, supplemental, amendatory, or revised rules and 
regulations governing the United States Savings Bonds and Savings Notes 
to which this circular applies.

[[Page 205]]



PART 316_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES E--Table of 
Contents




Sec.
316.1 Offering of bonds.
316.2 Description of bonds.
316.3 Governing regulations.
316.4 Registration.
316.5 Limitation on holdings.
316.6 Purchase of bonds.
316.7 Delivery of bonds.
316.8 Extended terms and yields for outstanding bonds.
316.9 Taxation.
316.10 Payment or redemption.
316.11 Reservation as to issue of bonds.
316.12 Fiscal agents.
316.13 Reservation as to terms of offer.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 57 FR 14276, Apr. 17, 1992, unless otherwise noted.



Sec. 316.1  Offering of bonds.

    The Secretary of the Treasury offered for sale to the people of the 
United States, United States Savings Bonds of Series E, hereinafter 
generally referred to as ``Series E bonds'' or ``bonds''.
    This offer was terminated as of December 31, 1979, except that, as 
to bonds purchased under payroll savings plans and employee plans, the 
offer was terminated as of June 30, 1980.



Sec. 316.2  Description of bonds.

    (a) General. Definitive (paper) Series E bonds bear a facsimile of 
the signature of the Secretary of the Treasury and of the Seal of the 
Department of the Treasury. They were issued only in registered form and 
are nontransferable.
    (b) Denominations and prices. Series E bonds were issued on a 
discount basis. The denominations and issue prices were:

 
                       Denomination                          Issue price
 
$25.......................................................        $18.75
50........................................................         37.50
75........................................................         56.25
100.......................................................         75.00
200.......................................................        150.00
500.......................................................        375.00
1,000.....................................................        750.00
10,000....................................................      7,500.00
100,000\1\................................................     75,000.00
 
\1\ The $100,000 denomination was available only for purchase by
  trustees of employee savings and savings and vacation plans (see
  paragraph (b) of Sec.  316.5).

    (c) Inscription and issue. At the time of issue, the issuing agent:
    (1) Inscribed on the face of each bond the name, social security 
number and address of the owner, and the name of the beneficiary, if 
any, or the name, social security number and address of the first-named 
coowner and the name of the other coowner (the inscription of the social 
security number was required for bonds issued on or after January 1, 
1974);
    (2) Entered the issue date in the upper right-hand portion of the 
bond; and
    (3) Imprinted the agent's validation indicia in the lower right-hand 
portion to show the date the bond was actually inscribed. A bond was 
valid only if an authorized issuing agent received payment therefor and 
duly inscribed, dated and imprinted validation indicia on the bond.
    (d) Term. A Series E bond was dated as of the first day of the month 
in which payment of the purchase price was received by an agent 
authorized to issue the bonds. This date is the issue date. The bonds 
mature as shown in Sec. 316.8. The bond may not be called for 
redemption by the Secretary of the Treasury prior to maturity or the end 
of any extended maturity period (see paragraph (a) of Sec. 316.8). The 
bond may be redeemed at the owner's option at any time at fixed 
redemption values.
    (e) Investment yield (interest). The investment yield (interest) on 
Series E bonds is defined in paragraphs (c) and (d) of Sec. 316.8. 
Beginning in the third month from its issue date, a bond increased in 
redemption value on the first day of each month, up to and including the 
thirtieth month from issue date, so as to provide for such period an 
investment yield of no less than 4 percent per annum, compounded 
semiannually. Thereafter, its redemption value increases at the 
beginning of each successive half-year period. The interest is paid as 
part of the redemption value.

[57 FR 14276, Apr. 17, 1992, as amended at 70 FR 14941, Mar. 23, 2005]



Sec. 316.3  Governing regulations.

    (a) The regulations in 31 CFR part 315 apply to definitive Series E 
bonds that

[[Page 206]]

have not been converted to book-entry bonds.
    (b) The regulations in 31 CFR part 363 apply to definitive Series E 
bonds that have been converted to book-entry bonds through New Treasury 
Direct.

[70 FR 14941, Mar. 23, 2005]



Sec. 316.4  Registration.

    Series E bonds were permitted to be registered as set forth in 
subpart B of 31 CFR part 315, also published as Department of the 
Treasury Circular No. 530, current revision.



Sec. 316.5  Limitation on holdings.

    (a) General limitation. The amount of Series E bonds, originally 
issued during any one calendar year, that could be held by any one 
person, computed in accordance with the governing regulations, ranged 
from $5,000 (face amount) to $20,000 (face amount), depending upon the 
issue date.
    (b) Special limitation for employee savings plans. A special 
limitation for employee savings plans was provided, which was $2,000 
(face amount) multiplied by the highest number of participants in any 
employee savings plan, as defined in paragraph (b)(1) of this section, 
at any time during the year in which the bonds were issued. The plan had 
to be established, as set forth below.
    (1) Definition of plan and conditions of eligibility. (i) The 
employee savings plan must have been established by the employer for the 
exclusive and irrevocable benefit of employees or their beneficiaries, 
afforded employees the means of making regular savings from their wages 
through payroll deduction, and provided for employer contributions to be 
added to such savings.
    (ii) The entire assets thereof must have been credited to the 
individual accounts of participating employees and the assets so 
credited could be distributed only to the employees or their 
beneficiaries, except as otherwise provided herein.
    (iii) Series E bonds were to be purchased only with assets credited 
to the accounts of participating employees and only if the amount taken 
from any account at any time for that purpose was equal to the purchase 
price of a bond or bonds in an authorized denomination or denominations, 
and shares therein were credited to the accounts of the individuals from 
whom the purchase price thereof was derived, in amounts corresponding 
with such shares. For example, if $37.50 credited to the account of John 
Jones was commingled with funds credited to the accounts of other 
employees to make a total of $7,500, with which a Series E bond in the 
denomination of $10,000 (face amount) was purchased in December 1978 and 
registered in the name and title of the trustee, the plan must have 
provided, in effect, that John Jones' account would be credited to show 
that he was the owner of a Series E bond in the denomination of $50 
(face amount) bearing the issue date of December 1, 1978.
    (iv) Each participating employee has an irrevocable right at any 
time to demand and receive from the trustee all assets credited to his 
or her account or the value thereof, if he or she so prefers, without 
regard to any condition other than the loss or suspension of the 
privilege of participating further in the plan. However, a plan was not 
deemed to be inconsistent herewith if it limited or modified the 
exercise of any such right by providing that the employer's contribution 
did not vest absolutely until the employee had made contributions under 
the plan in each of not more than 60 calendar months succeeding the 
month for which the employer's contribution was made.
    (v) Upon the death of an employee, his or her beneficiary has the 
absolute and unconditional right to demand and receive from the trustee 
all assets credited to the account of the employee, or the value 
thereof, if he or she so prefers.
    (vi) When settlement is made with an employee, or his or her 
beneficiary, with respect to any bond registered in the name and title 
of the trustee in which the employee has a share (see paragraphs (b)(1) 
(ii) and (iii) of this section), the bond must be submitted for 
redemption or reissue to the extent of such share. If an employee or his 
or her beneficiary is to receive distribution in kind, bonds bearing the 
same issue dates as those credited to the employee's account will be 
reissued in the name of the distributee to the extent

[[Page 207]]

to which he or she is entitled, in any authorized form of registration, 
upon the request and certification of the trustee, in accordance with 
the governing reguations.
    (2) Definitions of terms used in paragraph (b)--related provisions. 
(i) The term savings plan includes any regulations issued under the plan 
with regard to Series E bonds. A trustee desiring to purchase bonds in 
excess of the general limitation in any calendar year should have 
submitted to the Federal Reserve Bank of the district a copy of the 
plan, any such regulations, and the trust agreement, all certified to be 
true copies, in order to establish eligibility.
    (ii) The term assets means all funds, including the employee 
contributions and employer contributions and assets purchased therewith, 
as well as accretions thereto, such as dividends on stock, the increment 
in value on bonds and all other income; but, notwithstanding any other 
provision of this paragraph, the right to demand and receive all assets 
credited to the account of an employee shall not be construed to require 
the distribution of assets in kind when it would not be possible or 
practicable to make such distribution; for example, Series E bonds may 
not be reissued in unauthorized denominations, and fractional shares of 
stock are not readily distributable in kind.
    (iii) The term beneficiary means the person or persons, if any, 
designated by the employee in accordance with the terms of the plan to 
receive the benefits of the trust upon his or her death, or the estate 
of the employee, and the term distributee means the employee, or his or 
her beneficiary.



Sec. 316.6  Purchase of bonds.

    Series E bonds were purchased, as follows:
    (a) Over-the-counter for cash--(1) Bonds registered in names of 
natural persons in their own right only. At such incorporated banks, 
trust companies, and other agencies as had been duly qualified as 
issuing agents.
    (2) Bonds registered in names of trustees of employee savings plans. 
At such incorporated bank, trust company, or other agency, duly 
qualified as an issuing agent, provided the agent was trustee of an 
approved employee savings plan eligible for the special limitation in 
paragraph (b) of Sec. 316.5 and prior approval to issue the bonds was 
obtained from the Federal Reserve Bank of the agent's district.
    (3) Bonds registered in all authorized forms. At Federal Reserve 
Banks and Branches and at the Department of the Treasury, Washington, DC 
20226.
    (b) On mail order. By mail upon application to any Federal Reserve 
Bank or Branch or to the Department of the Treasury, accompanied by a 
remittance to cover the issue price. Any form of exchange, including 
personal checks, was accepted, subject to collection. Checks or other 
forms of exchange were to be drawn to the order of the Federal Reserve 
Bank or the United States Treasury, as the case may be. Checks payable 
by endorsement were not acceptable. Any depositary qualified pursuant to 
the provisions of 31 CFR part 203, also published as Department of the 
Treasury Circular No. 92, current revision, was permitted to make 
payment by credit for bonds applied for on behalf of its customers up to 
any amount for which it was qualified in excess of existing deposits, 
when so notified by the Federal Reserve Bank of its district.
    (c) Savings stamps. The sale of United States Savings Stamps was 
terminated effective June 30, 1970. However, outstanding stamps affixed 
in fully or partially completed albums could be used to purchase Series 
E bonds at banks or other financial institutions authorized to issue 
such bonds. Stamps may be redeemed at banks and other financial 
institutions, through designated Federal Reserve Banks and the Bureau of 
the Public Debt, Parkersburg, West Virginia.

[57 FR 14276, Apr. 17, 1992, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 316.7  Delivery of bonds.

    Issuing agents were authorized to deliver Series E bonds either 
over-the-counter in person, or by mail at the risk and expense of the 
United States, to the address given by the purchaser, but only within 
the United States, its territories and possessions, and the Commonwealth 
of Puerto Rico. No mail deliveries elsewhere were made. If purchased by 
citizens of the United

[[Page 208]]

States temporarily residing abroad, the bonds were delivered to such 
address in the United States as the purchaser directed.



Sec. 316.8  Extended terms and yields for outstanding bonds.

    (a) General. The terms extended maturity period, second extended 
maturity period, third extended maturity period and fourth extended 
maturity period, when used herein, refer to periods of 10 years or less 
after the original maturity dates during which owners may retain their 
bonds and continue to earn interest. No special action is required to 
take advantage of any extensions heretofore or herein granted. Series E 
bonds cease to accrue interest upon reaching final maturity.
    (b) Extended maturity periods--(1) Bonds issued from May 1, 1941 
through April 1, 1952. Series E bonds with issue dates of May 1, 1941, 
through April 1, 1952, reached or will reach final maturity 40 years 
after their respective issue dates, as shown below.

------------------------------------------------------------------------
                                        Life of   Final maturity dates--
       Issue dates--1st day of        bonds yrs.        1st day of
------------------------------------------------------------------------
May 1941-Apr. 1952..................          40  May 1981-Apr. 1992.
------------------------------------------------------------------------

    (2) Bonds issued from May 1, 1952 through November 1, 1965. Bonds 
with issue dates of May 1, 1952, through November 1, 1965, will receive 
an additional extension of maturity ranging from 4 months to 2 years and 
3 months, as shown below, so that these bonds will reach final maturity 
40 years after their respective issue dates.

------------------------------------------------------------------------
                                       Previous
                                      maturities      Previous maturity
      Issue dates--lst day of      ----------------   dates--1st day of
                                     yrs.    mos.
------------------------------------------------------------------------
May 1952-Jan. 1957................      39       8  Jan. 1992-Sept.
                                                     1996.
Feb. 1957-May 1959................      38      11  Jan. 1996-Apr. 1998.
Jun. 1959-Nov. 1965...............      37       9  Mar. 1997-Aug. 2003.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                               Additional
                                                extended
                                                maturity       Life of
          Issue dates--1st day of                period      bonds--yrs.
                                            ----------------
                                              yrs.    mos.
------------------------------------------------------------------------
May 1952-Jan. 1957.........................  ......       4           40
Feb. 1957-May 1959.........................       1       1           40
Jun. 1959-Nov. 1965........................       2       3          40.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                              Final maturity dates--1st
          Issue dates--1st day of                      day of
------------------------------------------------------------------------
May 1952-Jan. 1957........................  May 1992-Jan. 1997.
Feb. 1957-May 1959........................  Feb. 1997-May 1999.
Jun. 1959-Nov. 1965.......................  June. 1999-Nov. 2005.
------------------------------------------------------------------------

    (3) Bonds issued from December 1, 1965 through June 1, 1980. Bonds 
with issue dates of December 1, 1965, through June 1, 1980, will receive 
an additional extension of maturity ranging from 3 years to 5 years, as 
shown below, so that these bonds will reach final maturity 30 years 
after their respective issue dates.

------------------------------------------------------------------------
                                       Previous
                                      maturities      Previous maturity
      Issue dates--1st day of      ----------------   dates--1st day of
                                     yrs.    mos.
------------------------------------------------------------------------
Dec. 1965-May 1969................      27  ......  Dec. 1992-May 1996.
June. 1969-Nov. 1973..............      25      10  Apr. 1995-Sept.
                                                     1999.
Dec. 1973-Jun. 1980...............      25  ......  Dec. 1998-Jun. 2005.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                               Additional
                                                extended
                                                maturity       Life of
          Issue dates--1st day of                period      bonds--yrs.
                                            ----------------
                                              yrs.    mos.
------------------------------------------------------------------------
Dec. 1965-May 1969.........................       3  ......           30
Jun. 1969-Nov. 1973........................       4       2           30
Dec. 1973-Jun. 1980........................       5  ......           30
------------------------------------------------------------------------


------------------------------------------------------------------------
                                              Final maturity dates--1st
          Issue dates--1st day of                      day of
------------------------------------------------------------------------
Dec. 1965-May 1969........................  Dec. 1995-May 1999.
Jun. 1969-Nov. 1973.......................  Jun. 1999-Nov. 2003.
Dec. 1973-Jun. 1980.......................  Dec. 2003-Jun. 2010.
------------------------------------------------------------------------

    (c) Guaranteed minimum investment yield--(1) General. Except as 
provided in paragraph (c)(2) of this section, the guaranteed minimum 
investment yields for outstanding Series E bonds are as follows:
    (i) For Series E bonds that were in original or extended maturity 
periods prior to November 1, 1982, the guaranteed minimum investment 
yield was 8.5 percent per annum, compounded semiannually, effective for 
the period from the first semiannual interest accrual date on or after 
May 1, 1981, through the end of such periods, unless the bonds reached 
final maturity before November 1, 1981. \3\ For bonds that entered 
extensions, see paragraphs

[[Page 209]]

(c)(1)(ii) through (c)(1)(iv) of this section.
---------------------------------------------------------------------------

    \3\ Series E bonds issued from May 1, 1941, through October 1, 1941, 
had reached final maturity May 1, 1981, through October 1, 1981, before 
the 8.5 percent yield had become effective.
    \4-5\ [Reserved]
---------------------------------------------------------------------------

    (ii) For Series E bonds that entered extended maturity periods 
during the period of November 1, 1982, through October 1, 1986, the 
guaranteed minimum yield was or is 7.5 percent per annum, compounded 
semiannually, for such periods, including bonds that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--          Extension             of--
------------------------------------------------------------------------
Mar. 1953-Nov. 1957..............  3rd.............  Nov. 1982-Oct.
                                                      1986.
Feb. 1965-Dec. 1970..............  2nd.............  Nov. 1982-Oct.
                                                      1986.
Nov. 1977-June 1980..............  1st.............  Nov. 1982-June
                                                      1985.
------------------------------------------------------------------------

    (iii) For Series E bonds that entered into extended maturity periods 
during the period of November 1, 1986, through February 1, 1993, the 
guaranteed minimum yield was or is 6 percent per annum, compounded 
semiannually, for such periods, including bonds that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--       Extension \4\            of--
------------------------------------------------------------------------
May 1952-Aug. 1953..............  4th (final) \5\..  Jan. 1992-Apr.
                                                      1993.
Dec. 1957-May 1965..............  3rd..............  Nov. 1986-Feb.
                                                      1993.
Dec. 1965-Feb. 1966.............  3rd (final)......  Dec. 1992-Feb.
                                                      1993.
Jan. 1971-Feb. 1978.............  2nd..............  Nov. 1986-Feb.
                                                      1993.
------------------------------------------------------------------------
\4\ Interest for interest accrual periods of less than 6 months is
  prorated.
\5\ All Series E bonds issued between May 1, 1941 and April 1, 1953,
  have matured and are no longer earning interest.

    (iv) For Series E bonds entering extended maturity periods on or 
after March 1, 1993, the guaranteed minimum yield is 4 percent per 
annum, compounded semiannually, or the guaranteed minimum investment 
yield in effect at the beginning of the period, including bonds that 
enter extended maturity periods, as shown below: \6\
---------------------------------------------------------------------------

    \6\ Series E bonds with issue dates of July 1 and August 1, 1953, 
entered a final maturity period of 4 months on March 1, and April 1, 
1993, respectively, and received a minimum investment yield of 6 percent 
per annum, compounded semiannually, for that period.
    \7\[Reserved]

------------------------------------------------------------------------
                                                      Entered on 1st day
    Issue dates--1st day of--        Extension \7\           of--
------------------------------------------------------------------------
Sep. 1953-May 1965..............  4th (final).......  May 1993-Feb.
                                                       2003.
Jun. 1965-Nov. 1965.............  3rd...............  Mar. 1993-Aug.
                                                       1993.
Jun. 1965-Nov. 1965.............  4th (final).......  Mar. 2003-Aug.
                                                       2003.
Mar. 1966-Feb. 1978.............  3rd (final).......  Mar. 1993-Feb.
                                                       2003.
Mar. 1978-Jun. 1980.............  2nd...............  Mar. 1993-Jun.
                                                       1995
Mar. 1978-Jun. 1980.............  3rd (final).......  Mar. 2003-Jun.
                                                       2005.
------------------------------------------------------------------------
\7\ See footnote 2 above.

    (2) Eleven-year bonus. If a bond bearing an issue date of January 1, 
1951, or thereafter, was held for the 11-year period from the first 
semianual interest accrual period that began on or after January 1, 
1980, its guaranteed minimum investment yield for such period was 
increased by one-half of one percent per annum, compounded semiannually.
    (d) Market-based variable investment yield. In order to be eligible 
for the market-based variable investment yield, Series E savings bonds 
had to be held at least five years beginning with the first semiannual 
interest accrual date occurring on or after November 1, 1982. The 
market-based variable investment yield shall be determined by the 
Secretary of the Treasury as follows:
    (1) For each 6-month period, starting with the period beginning May 
1, 1982, the average market yield on outstanding marketable Treasury 
securities with a remaining term to maturity of approximately 5 years 
during such period is determined. Such determination by the Secretary of 
the Treasury or his or her delegate shall be final and conclusive.
    (2) For bonds which entered an extended maturity period prior to May 
1, 1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occurring on or after November 
1, 1987, will be 85 percent, rounded to the nearest one-fourth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (d)(1) of this section, for the 
appropriate number of 6-month periods

[[Page 210]]

involved, starting with the period beginning May 1, 1982.
    (3) For bonds which entered an extended maturity period on or after 
May 1, 1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occurring on or after November 
1, 1989, will be 85 pecent, rounded to the nearest one-hundredth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (d)(1) of this section, for the 
appropriate number of 6-month periods involved, starting with the period 
beginning May 1, 1982.
    (e) Determination of redemption values during any extended maturity 
period. The redemption value of a bond on a given interest accrual date 
during any extended maturity period will be the higher of the value 
produced by using the applicable guaranteed minimum investment yield or 
the value produced by using the appropriate market-based variable 
investment yield. The calculation of these values is described below:
    (1) Guaranteed minimum investment yield and resulting values during 
an extended maturity period. A bond has a guaranteed minimum investment 
yield for each of its extended maturity periods. The applicable 
guaranteed minimum investment yields for the current extended maturity 
period and any subsequent periods are specified in paragraph (c) of this 
section. In order to determine the value of a bond during an extended 
maturity period, the value of the bond either at the end of the next 
preceding maturity period or when the guaranteed minimum investment 
yield last increased,\8\ whichever occurs later, is determined using the 
applicable guaranteed minimum investment yield. This value is then used 
as the base upon which interest accrues during the extended maturity 
period at the guaranteed minimum investment yield in effect for savings 
bonds at the beginning of that period. The resulting semiannual values 
are then compared with the corresponding values determined by using the 
applicable market-based variable investment yields.
---------------------------------------------------------------------------

    \8\ The 11-year bonus was the last increase in the guaranteed 
minimum investment yield (see paragraph (b)(2)). Series E bonds which 
were eligible to receive this bonus received it on the first semiannual 
interest accrual date occuring on or after January 1, 1991.
---------------------------------------------------------------------------

    (2) Market-based variable investment yield and resulting values 
during an extended maturity period. The market-based variable investment 
yield from the first semiannual interest accrual date occuring on or 
after November 1, 1982 to each semiannual interest accrual date 
occurring on or after November 1, 1987, is determined as specified in 
paragraph (d) of this section. The value of a bond on its first 
seimannual interest accrual date occurring on or after November 1, 1982 
is used as the base upon which interest accrues during an extended 
maturity period at the applicable market-based variable investment 
yield. If redeemed, the bond will receive the higher of the two values 
produced by using the applicable guaranteed minimum investment yield and 
the applicable market-based variable investment yield.
    (f) Market-based variable investment yields and tables of redemption 
values. The market-based variable investment yields for bonds redeemed 
during each 6-month period, beginning on May 1 and November 1 of each 
year, are made available prior to each of those dates by the Bureau of 
the Public Debt, Parkersburg, West Virginia 26106-1328, accompanied by 
tables of the redemption values of bonds for the following 6 months, 
based on either the applicable market-based variable investment yields 
or guaranteed minimum investment yields.

[57 FR 14276, Apr. 17, 1992, as amended at 58 FR 60936, 60937, Nov. 18, 
1993]



Sec. 316.9  Taxation.

    (a) General. For the purpose of determining taxes and tax 
exemptions, the increment in value represented by the difference between 
the price paid for Series E bonds and the redemption value received 
therefor constitutes interest. Such interest is subject to all taxes 
imposed under the Internal Revenue Code of 1986, as amended. The bonds 
are subject to estate, inheritance, gift, or other excise taxes, whether 
Federal or State, but are exempt

[[Page 211]]

from all other taxation now or hereafter imposed on the principal or 
interest thereof by any State, or any of the possesions of the United 
States, or by any local taxing authority.
    (b) Federal income tax on bonds. An owner of Series E bonds who is a 
cash-basis taxpayer may use either of the following two methods of 
reporting the increase in the redemption value of the bonds for Federal 
income tax purposes:
    (1) Defer reporting the increase to the year of final maturity, 
actual redemption, or other disposition, whichever is earlier; or
    (2) Elect to report the increases each year as they accrue, in which 
case the election applies to all Series E bonds then owned and those 
subsequently acquired, as well as to any other similar obligations 
purchased on a discount basis. If the method in paragraph (b)(1) of this 
section is used, the taxpayer may change to the method in paragraph 
(b)(2) of this section without obtaining permission from the Internal 
Revenue Service. However, once the election to use the method in 
paragraph (b)(2) of this section is made, the taxpayer may not change 
the method of reporting without permission from the Internal Revenue 
Service. For further information on Federal income taxes, the Service 
Center Director, or District Director, Internal Revenue Service, of the 
taxpayer's district may be contacted.



Sec. 316.10  Payment or redemption.

    (a) General. A Series E bond may be redeemed in accordance with its 
terms at the appropriate redemption value shown in the applicable table 
described in paragraph (f) of Sec. 316.8. The redemption values of 
bonds in the denomination of $100,000 are not shown in the tables. 
However, the redemption value of a bond in that denomination will be 
equal to ten times the redemption value of a $10,000 bond of the same 
issue date. A bond in a denomination higher that $25 (face amount) may 
be redeemed in part but only in the amount of an authorized denomination 
or multiple thereof.
    (b) Federal Reserve Banks and Branches and United States Treasury. 
Owners of Series E bonds may obtain payment upon presentation and 
surrender of the bonds to a Federal Reserve Bank or Branch referred to 
in Sec. 316.12 or to the Department of the Treasury with the request 
for payment on the bonds duly executed and certified in accordance with 
the governing regulations.
    (c) Incorporated banks, savings and loan associations and other 
financial institutions. (1) A financial institution qualified as a 
paying agent under the provisions of 31 CFR part 321, also published as 
Department of the Treasury Circular, Public Debt Series No. 750, as 
revised, will pay the current redemption value of a Series E bond 
presented for payment by an individual whose name is inscribed on the 
bond as owner or coowner, provided:
    (i) The bond is in order for payment; and
    (ii) The presenter establishes his or her identity to the 
satisfaction of the agent, in accordance with Treasury instructions and 
identification guidelines, and signs and completes the requests for 
payment.
    (2) A paying agent may (but is not required to) pay a Series E bond, 
at current redemption value, upon the request of a legal representative 
designated in the bond's registration by name and capacity, a court-
appointed legal representative of the last-deceased registrant's estate, 
or a beneficiary, if he or she survives the owner, provided:
    (i) The bond is in order for payment; and
    (ii) The presenter establishes his or her identity to the 
satisfaction of the agent, in accordance with Treasury instructions, 
indentification guidelines, and otherwise complies with evidentiary 
requirements.

[57 FR 14276, Apr. 17, 1992, as amended at 59 FR 10535, Mar. 4, 1994]



Sec. 316.11  Reservation as to issue of bonds.

    The Secretary of the Treasury reserved the right to reject any 
application for purchase of Series E bonds, in whole or in part, and to 
refuse to issue, or permit to be issued hereunder, any such bonds in any 
case or any class or classes of cases if such action was deemed to be in 
the public interest.

[[Page 212]]

Any action in any such respect was final.



Sec. 316.12  Fiscal agents.

    (a) Federal Reserve Banks and Branches referred to below, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury in connection 
with the redemption and payment of Series E bonds.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, such services will be phased out 
over the period prior to that date.

[59 FR 10535, Mar. 4, 1994]



Sec. 316.13  Reservation as to terms of offer.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of this offering of bonds, or of any 
amendments or supplements thereto.



PART 317_REGULATIONS GOVERNING AGENCIES FOR ISSUE OF UNITED STATES 
SAVINGS BONDS--Table of Contents




Sec.
317.0 Purpose and effective date.
317.1 Definitions.
317.2 Organizations authorized to act.
317.3 Procedure for qualifying and serving as issuing agent.
317.4 Issuing agents currently qualified.
317.5 Termination of qualification.
317.6 Issuance of bonds.
317.7 Obtaining and accounting for bond stock.
317.8 Remittance of sales proceeds and registration records.
317.9 Role of Federal Reserve Banks.
317.10 Reservation.

    Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12 U.S.C. 391; 12 U.S.C. 
1767; 31 U.S.C. 3105.

    Source: 54 FR 40830, Oct. 3, 1989, unless otherwise noted.



Sec. 317.0  Purpose and effective date.

    The regulations in this part govern the manner in which an 
organization may qualify and act as an agent for the sale and issue of 
Series EE and Series I United States Savings Bonds.

[63 FR 38041, July 14, 1998]



Sec. 317.1  Definitions.

    (a) Bond(s) means Series EE United States Savings Bonds and Series I 
United States Savings Bonds.
    (b) Federal Reserve Bank refers to the Federal Reserve Bank or 
Branch providing savings bond services to the district in which the 
issuing agent or the applicant organization is located. See Sec. 
317.9(a).
    (c) Issuing agent refers to an organization that has been qualified 
by a designated Federal Reserve Bank or the Commissioner of the Bureau 
of the Public Debt to sell savings bonds. An issuing agent acts as an 
agent of the purchaser in handling the remittance. The definition 
encompasses:

[[Page 213]]

    (1) Each organization that accepts and processes purchase orders for 
bonds sold over-the-counter, but does not inscribe bonds, and
    (2) Each organization that is authorized to inscribe bonds sold 
over-the-counter or through payroll savings plans.
    (d) Offering circular refers to Department of the Treasury Circular, 
Public Debt Series No. 1-80, current revision, for Series EE savings 
bonds, and to Department of the Treasury Circular, Public Debt Series 
No. 1-98 for Series I savings bonds.
    (e) Organization means an entity, as described in Sec. 317.2, that 
may qualify as an issuing agent of bonds.

[63 FR 64550, Nov. 20, 1998]



Sec. 317.2  Organizations authorized to act.

    The following organizations are eligible to apply for qualification 
and to serve as savings bond issuing agents:
    (a) Banks, credit unions, trust companies and savings institutions, 
if they are chartered by or incorporated under the laws of the United 
States, any State or Territory of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico.
    (b) Agencies of the United States and State and local governments.
    (c) Employers operating payroll savings plans for the purchase of 
United States Savings Bonds, as well as organizations operating payroll 
savings plans on behalf of employers.
    (d) Other organizations specifically and individually qualified by 
the Commissioner of the Bureau of the Public Debt whenever the 
Commissioner deems such a qualification to be in the public interest. In 
selecting an issuing agent, the Commissioner may use such process that 
the Commissioner deems to be appropriate. The selected issuing agent 
will be subject to such conditions that the Commissioner deems to be 
appropriate.

[63 FR 64550, Nov. 20, 1998, as amended at 65 FR 2035, Jan. 13, 2000]



Sec. 317.3  Procedure for qualifying and serving as issuing agent.

    (a) Execution of application agreement. An organization seeking 
issuing agent qualification generally shall obtain from and file with a 
designated Federal Reserve Bank an application-agreement form. However, 
if an organization seeks qualification under Sec. 317.2(d) or because 
of its status as an organization operating a payroll savings plan on 
behalf of an employer under Sec. 317.2(c), it shall make application 
directly to the Bureau of the Public Debt for approval by the 
Commissioner of the Bureau of the Public Debt. An application-agreement 
sent directly to the Bureau of the Public Debt shall be supplemented by 
such other information as the Bureau of the Public Debt may request.
    (1) The terms of each application agreement shall include the 
provisions prescribed by section 202 of Executive Order No. 11246, 
entitled ``Equal Employment Opportunity'' (3 CFR, subchapter B, 42 
U.S.C. 2000e note).
    (2) The provisions of the Privacy Act of 1974, as amended (5 U.S.C. 
552a), and regulations issued pursuant thereto (31 CFR part 1, subpart 
C).
    (b) Certificate of qualification. Upon approval of an application-
agreement, the designated Federal Reserve Bank or the Bureau of the 
Public Debt will issue a certificate of qualification to the 
organization. Until the receipt of such a certificate, an organization 
shall not perform any act as an issuing agent, or advertise in any 
manner that it is authorized to so act or that it has applied for 
qualification as an issuing agent. After receipt of a certificate of 
qualification, an organization may perform the functions of an issuing 
agent. Under the terms of the application-agreement, the proceeds of the 
sale of bonds are at all times the property of the United States for 
which the organization shall be fully accountable.
    (c) Adverse action or change in qualification. An organization will 
be notified by the designated Federal Reserve Bank or the Bureau of the 
Public Debt if its application-agreement to act as issuing agent is not 
approved, or if, after issuance, its certificate of qualification is 
terminated.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10535, 10536, Mar. 4, 
1994; 63 FR 64550, Nov. 20, 1998]

[[Page 214]]



Sec. 317.4  Issuing agents currently qualified.

    Each organization, qualified as an issuing agent under a trust 
agreement currently in effect, is authorized to continue to act in that 
capacity without requalification. By so acting, it shall be subject to 
the terms and conditions of the previously executed application-
agreement and these regulations in the same manner and to the same 
extent as though it had requalified hereunder.



Sec. 317.5  Termination of qualification.

    (a) By the United States. The Secretary of the Treasury or a 
delegate may terminate the qualification of an issuing agent at any 
time, upon due notice to the agent. If this action is taken, the agent 
will be required to make a final accounting for the balance of savings 
bond stock for which it is charged, based on the records of the 
designated Federal Reserve Bank. The agent must surrender all unissued 
bonds and remit the issue price of any remaining bonds included in its 
accountability.
    (b) At request of issuing agent. A designated Federal Reserve Bank 
will terminate the qualification of an issuing agent upon its request, 
provided the agent is in full compliance with the terms of its agreement 
and the applicable regulations and instructions, and renders a final 
accounting.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 317.6  Issuance of bonds.

    (a) General. Each issuing agent shall comply with all regulations 
and instructions issued by the Department of the Treasury directly, or 
through the designated Federal Reserve Bank, concerning the sale, 
inscription, dating, and validation of bonds; the acceptance, 
processing, and transmittal of over-the-counter purchase orders; the 
remittance of sales proceeds; and the disposition of paper and 
electronic registration records. No issuing agent shall have authority 
to sell bonds other than as provided in the offering circular.
    (b) Fees. Each issuing agent, other than a Federal agency, will be 
paid fees. Only issuing agents are eligible to collect fees. With prior 
approval, agents that are authorized to inscribe bonds and receive fee 
payments will also be paid a bonus for presorting savings bond mailings. 
Schedules reflecting the amount of the fees and presort bonuses, and the 
basis on which they are computed and paid, will be published separately 
in the Federal Register.
    (c) No charge to customers. Any issuing agent that accepts fees from 
the Department of the Treasury for selling savings bonds, and/or 
accepting over-the-counter purchase orders, shall not make any charge to 
customers for the same service.

[54 FR 40830, Oct. 3, 1989, as amended at 55 FR 39960, Oct. 1, 1990; 58 
FR 63529, Dec. 2, 1993; 59 FR 10536, Mar. 4, 1994; 63 FR 64550, Nov. 20, 
1998]



Sec. 317.7  Obtaining and accounting for bond stock.

    An issuing agent that is authorized to inscribe bonds sold over-the-
counter or through payroll savings plans may obtain bond stock from the 
designated Federal Reserve Bank. The bond stock is, at all times, the 
property of the United States. The organization shall be fully 
accountable for the bond stock consigned to it in accordance with all 
regulations and instructions issued by the Department of the Treasury.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 317.8  Remittance of sales proceeds and registration records.

    An issuing agent shall account for and remit bond sales proceeds and 
registration records promptly in accordance with regulations and 
instructions issued by the Department of the Treasury, either directly 
or through the designated Federal Reserve Banks. Failure to comply with 
these instructions may subject an agent to penalties, including 
termination of its qualification as an issuing agent.

[[Page 215]]

 Appendix to Sec. 317.8--Remittance of Sales Proceeds and Registration 
 Records, Department of the Treasury Circular, Public Debt Series No. 4-
  67, Third Revision (31 CFR Part 317), Fiscal Service, Bureau of the 
                               Public Debt

                     Subpart A--General Information

    1. Purpose. This appendix is issued for the guidance of 
organizations qualified as issuing agents of Series EE and I United 
States Savings Bonds under the provisions of Department of the Treasury 
Circular, Public Debt Series No. 4-67, current revision. Its purpose is 
to supplement the provisions of Sec. 317.8 of the Circular relating to 
the remittance of savings bond sales proceeds and registration records, 
including the interest charge to be collected for late remittances.
    2. Definition of terms. As used in this appendix:
    (a) Issue Date is the date as of which a bond begins to earn 
interest. It is the date entered by the issuing agent in the upper right 
corner of the bond.
    (b) Validation Date is the date as of which a bond is actually 
inscribed for issue. It is entered by the issuing agent immediately 
below the ``Issue Date'' in the area marked ``Issuing Agent's Dating 
Stamp''.
    (c) Over-the-counter sale means any sale of savings bonds other than 
payroll sales.
    (d) Payroll sale includes all issues of savings bonds paid for with 
deductions withheld from the pay of employees of organizations which 
maintain (i) payroll savings plans or (ii) thrift, savings, vacation, or 
similar plans.
    (e) Issuing agent, as provided in Sec. 317.1(c) of the Circular, 
refers to an organization that has been qualified by a designated 
Federal Reserve Bank or the Commissioner of the Bureau of the Public 
Debt to sell savings bonds.
    (f) Immediately available funds are remittances of funds which are 
available for the use by the Department of the Treasury immediately upon 
receipt by the Department or its fiscal agents, and include, but are not 
limited to:
    (1) A change to the remitter's (or a correspondent depository 
institution's) reserve account with a Federal Reserve Bank;
    (2) A Federal funds check;
    (3) A United States Government check; or
    (4) A postal money order.
    (g) Financial institutions refers to banks, trust companies, credit 
unions, and savings institutions chartered by or incorporated under the 
laws of the United States, or those of any State or Territory of the 
United States, the District of Columbia, or the Commonwealth of Puerto 
Rico.
    (h) Nonfinancial institutions refers to any issuing agent not 
described under paragraph (g) of this appendix.
    3. Determination of issue date. The obligation of the United States 
to pay interest on a savings bond is determined by its issue date. That 
date is the first day of the month in which a qualified issuing agent 
receives or accumulates the full purchase price of the bond. In the case 
of a bond purchased under a payroll savings plan operated by an 
organization which is not an issuing agent, the issue date should be 
fixed as of the month in which the organization accumulates the full 
purchase price of the bond. Such funds must, however, be remitted to the 
issuing agent in time to permit such dating.
    4. Forms of remittance. Issuing agents shall remit sales proceeds in 
timely fashion as follows:
    (a) Issuing agents which are financial institutions must remit in 
immediately available funds.
    (b) Issuing agents which are nonfinancial institutions should remit 
in immediately available funds.
    (c) The Commissioner of the Public Debt, as designee of the 
Secretary of the Treasury, may waive or modify this provision. The 
Commissioner may do so in any particular case or class of cases for the 
convenience of the United States or in order to relieve any agent or 
agents of unusual hardship:
    (1) If such action would not be inconsistent with law or equity,
    (2) If it does not impair any existing rights, and
    (3) If the Commissioner is satisfied that such action would not 
subject the United States to any substantial expense or liability.
    5. Remittance date. Sales proceeds should be remitted on the date 
shown on the transmittal document, i.e., PD F 3252-OC or PD F 5255-RDS 
for over-the-counter sales or PD F 4848 for payroll sales. If there is a 
significant time difference between the date on the transmittal document 
and the date of receipt in the designated Federal Reserve Bank, the 
transmittal date may be determined, for purposes of this appendix, by 
the postmark, if the remittance is mailed, or the receipt date, if the 
remittance is forwarded by courier, messenger, or similar means.

                    Subpart B--Over-the-Counter Sales

    1. Regional Delivery (RDS) participants. An agent participating in 
the Regional Delivery System (RDS) is authorized to sell bonds over-the-
counter. It will accept and review customer purchase orders, but it will 
not inscribe the bonds. Purchase order information will be forwarded to 
a designated Federal Reserve Bank for inscription of the bonds. An 
authorized RDS participant shall remit sales proceeds and purchase 
orders (on paper or in an electronically processible format) to a 
designated Federal Reserve Bank within five (5) business days of receipt 
from the customer.

[[Page 216]]

    2. Issues-on-Tape Program participants. An agent that has been 
authorized by the Bureau of the Public Debt to inscribe bonds sold over-
the-counter and report such sales on magnetic tape shall remit sales 
proceeds and electronic issue records no less often than once a week on 
a schedule established by the designated Federal Reserve Bank.

             Subpart C--Remittance of Payroll Sales Proceeds

    1. Application of requirements. The remittance requirements for 
payroll sales apply only to issuing agents. An employer that maintains a 
payroll savings plan but does not issue bonds shall be notified by the 
servicing issuing agent that it must remit sales proceeds to the issuing 
agent in sufficient time to permit compliance with the requirements.
    2. Remittance of payroll sales deductions. Issuing agents shall 
remit sales proceeds throughout the month shown in the issue date as 
soon as the full amount of the purchase price of the bonds has been 
received or accumulated. In no case should such proceeds be remitted 
later than the second business day of the month following the month 
shown in the issue date. The issuing agent shall ensure that its system 
properly accounts for and recognizes when the full purchase price has 
been received, or has been accumulated, so that timely remittance can be 
made. The issuing agent shall transmit registration records in an 
electronically processible format within thirty (30) days following the 
month shown on the issue date.

                 Subpart D--Interest on Late Remittances

    1. Rate of interest. Interest will be assessed for each day's delay 
in the remittance of sales proceeds, based on the actual date of 
remittance. The rate of interest to be used will be the current value of 
funds to the Department of the Treasury, as set forth each quarter in 
the Treasury Financial Manual. The rate applied will be that in effect 
during the entire period in which the remittance is late. The interest 
assessment will be collected by the designated Federal Reserve Bank.
    2. Waiver. Interest will be waived in the situations described below 
as well as in any specific case where, in the judgment of the 
Commissioner of the Public Debt, the circumstances warrant such action. 
The Commissioner's decision on any waiver action shall be final.
    (a) Bonds inscribed by issuing agent--(i) Payroll sales. If, during 
any three (3) month period, the interest assessed on an issuing agent's 
late remittance of proceeds from payroll savings plan sales or thrift, 
savings, vacation, or similar plan sales accumulates to less than $50 
for each type of sales, the interest assessed for the first month will 
be waived. The interest assessed for each type of sales for the 
remaining two (2) months will then be carried forward to the next period 
of three (3) consecutive months.
    (ii) Over-the-counter issues. The interest assessed on an agent's 
late remittance of over-the-counter sales proceeds transmitted during a 
given month will be waived if it is less than $50.
    (b) Bonds inscribed by the designated Federal Reserve Bank. The 
interest assessed on late remittance of all sales proceeds transmitted 
during a given month will be waived if it is less than $25.
    (c) Suspension of waiver. The Commissioner may suspend the 
application of the waiver in the case of any agent that consistently 
fails to meet the remittance requirements.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994; 63 
FR 38041, July 14, 1998; 63 FR 64550, Nov. 20, 1998]



Sec. 317.9  Role of Federal Reserve Banks.

    (a) Role as fiscal agents. In their capacity as fiscal agents of the 
United States, the Federal Reserve Banks referred to below are 
authorized to perform such duties, including the issuance of 
instructions and forms, as may be necessary to fulfill the purposes and 
requirements of these regulations.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV,
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.

[[Page 217]]

 
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (c) Specific activities of designated Federal Reserve Banks. The 
specific activities of designated Federal Reserve Banks include:
    (1) Qualifying issuing agents;
    (2) Supplying agents with bond stock, maintaining records of agent 
accountability, and monitoring compliance with stock consignment rules;
    (3) Instructing agents regarding the sale and issue of bonds, the 
custody and control of bond stock, and the accounting for and remittance 
of sales proceeds; and
    (4) Providing guidelines covering the amount of bond stock agents 
may ordinarily requisition and maintain.

[54 FR 40830, Oct. 3, 1989, as amended at 59 FR 10536, Mar. 4, 1994; 63 
FR 38041, July 14, 1998]



Sec. 317.10  Reservation.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of these regulations.



PART 321_PAYMENTS BY BANKS AND OTHER FINANCIAL INSTITUTIONS OF UNITED 
STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES (FREEDOM SHARES)
--Table of Contents




                      Subpart A_General Information

Sec.
321.0 Purpose.
321.1 Definitions.

                 Subpart B_Procedures for Qualification

321.2 Eligible organizations.
321.3 Procedure for qualifying and serving as paying agent.
321.4 Paying agents previously qualified.
321.5 Termination of qualification.

                      Subpart C_Scope of Authority

321.6 General.
321.7 Authorized cash payments.
321.8 Redemption-exchange of Series E and EE savings bonds and savings 
          notes.
321.9 Specific limitations on payment authority.
321.10 Responsibilities of paying agents.

             Subpart D_Payment and Transmittal of Securities

321.11 Payment.
321.12 Redemption value of securities.
321.13 Cancellation of redeemed securities.
321.14 Transmittal to and settlement by Federal Reserve Bank.

           Subpart E_Losses Resulting From Erroneous Payments

321.15 Liability for losses.
321.16 Report of erroneous payment.
321.17 Investigation of potential loss.
321.18 Determination of loss.
321.19 Certification of signatures.
321.20 Applicability of provisions.
321.21 Replacement and recovery of losses.

                       Subpart F_Forwarding Items

321.22 Forwarding securities not payable by an agent.

                   Subpart G_Miscellaneous Provisions

321.23 Paying agent fees and charges.
321.24 Claims on account of lost securities.
321.25 Role of Federal Reserve Banks.
321.26 Preservation of rights.
321.27 Supplements, amendments, or revisions.

Appendix to Part 321--Appendix to Department of the Treasury Circular 
          No. 750, Fourth Revision

    Authority: 2 U.S.C. 901; 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 
3105, 3126.

    Source: 53 FR 37511, Sept. 26, 1988, unless otherwise noted.



                      Subpart A_General Information



Sec. 321.0  Purpose.

    These regulations govern the manner in which financial institutions 
may qualify and act as paying agents for the redemption of:
    (a) United States Savings Bonds of Series A, B, C, D, E, EE, and I, 
and United States Savings Notes (Freedom

[[Page 218]]

Shares), presented for cash payment; and
    (b) Eligible Series E and EE savings bonds and savings notes 
presented for redemption in exchange for Series HH savings bonds under 
the provisions of Department of the Treasury Circular, Public Debt 
Series No. 2-80 (31 CFR part 352).

[53 FR 37511, Sept. 26, 1988, as amended at 63 FR 38042, July 14, 1998]



Sec. 321.1  Definitions.

    (a) ACH payment or ACH means an Automated Clearing House method of 
transferring funds under the provisions of 31 CFR part 210.
    (b) Beneficiary means an individual whose name is inscribed on a 
security as the person to whom it is payable in his or her right upon 
the prior death of the other individual designated thereon as owner, 
shown commonly in the form: ``A P.O.D. [payable on death to] B.''
    (c) Cash payment means payment in currency, by check or by credit to 
a checking, savings or share account.
    (d) Central Site refers to the Federal Reserve Bank of Cleveland, 
Pittsburgh Branch, EZ CLEAR Department.
    (e) EZ CLEAR refers to the system by which financial institutions 
present redeemed securities to a Federal Reserve Bank through the 
commercial check collection system in the same manner as other cash 
items.
    (f) Federal Reserve Bank or Branch refers to the Federal Reserve 
Bank to which the agent is instructed to transmit redeemed securities; 
or to which the agent is instructed to forward securities for payment or 
other transactions, and includes parent Banks, Branches and Regional 
Check Processing Centers, as appropriate.
    (g) Legal Representative or representative means the court-appointed 
(or otherwise qualified) person, regardless of title, who is legally 
authorized to act for the estate of a minor, incompetent, aged person, 
absentee, et al., the court-appointed executor or administrator, 
regardless of title, who is legally authorized to act for a decedent's 
estate; and the trustee of a personal trust estate.
    (h) Mixed cash letter refers to a bundle containing nonsegregated 
redeemed securities, cash items, and other items submitted to a Federal 
Reserve Bank via the commercial check collection system.
    (i) Paying agent or agent means:
    (1) A financial institution that is qualified under the provisions 
of this part as originally issued, or any subsequent revision, to make 
payment of securities, and includes branches located within the United 
States, its territories and possessions, and the Commonwealth of Puerto 
Rico; and
    (2) Any banking facilities of such institutions establishing at 
military installations overseas, provided the offering of such 
redemption services has been authorized by the Department of the 
Treasury.
    (j) Presenter means the individual requesting the redemption or 
redemption-exchange of securities.
    (k) Presenting institution means the organization from which the 
Federal Reserve Bank receives redeemed securities to be processed via EZ 
CLEAR. If a paying agent submits separately sorted or mixed cash letters 
directly to the Bank, using its own ABA code, it is the presenting 
institution. If a correspondent financial institution submits cash 
letters on behalf of another institution using the correspondent's ABA 
code, the correspondent is the presenting institution.
    (l) Redemption and payment are used interchangeably for payment of a 
security in accordance with the terms of its offering and governing 
regulations, including redemption-exchange.
    (m) Redemption-exchange means the authorized redemption of eligible 
securities for the purpose of applying the proceeds in payment for other 
securities offered in exchange by the Treasury.
    (n) Registrant means a person whose name is inscribed on a security 
as owner, coowner, or beneficiary.
    (o) Security means a United States Savings Bond of Series A, B, C, 
D, E, EE, or I and/or a United States Savings Note (Freedom Share).
    (p) Separately sorted cash letter refers to a bundle of redeemed 
securities that have been segregated from all other items prior to 
transmittal to a Federal Reserve Bank via EZ CLEAR.

[[Page 219]]

    (q) Taxpayer identifying number means a social security account 
number or an employer identification number.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 35395, Aug. 29, 1990; 59 FR 10536, Mar. 4, 1994; 63 FR 38042, July 
14, 1998]



                 Subpart B_Procedures for Qualification



Sec. 321.2  Eligible organizations.

    (a) Organizations eligible to apply for qualification and to serve 
as paying agents are commercial banks, trust companies, savings banks, 
savings and loan associations, building and loan associations (including 
cooperative banks), credit unions, cash depositories, industrial banks, 
or similar financial institutions which:
    (1) Are incorporated under Federal law or the laws of a State, 
territory or possession of the United States, the District of Columbia, 
or the Commonwealth of Puerto Rico;
    (2) In the usual course of business accept, subject to withdrawal, 
funds for desposit or the purchase of shares;
    (3) Are under the supervision of the banking department or 
equivalent authority of the jurisdiction in which they are incorporated; 
and
    (4) Maintain regular offices for the transaction of business.
    (b)(1) An organization that desires to redeem securities must first 
qualify as a paying agent. An organization that has qualified and is 
serving as a paying agent must:
    (i) MICR-encode data on securities accepted for payment,
    (ii) Submit them directly to the Check Department of the appropriate 
Federal Reserve Bank or Branch or the Regional Check Processing Center, 
and
    (iii) Receive payment of fees by ACH, or arrange to obtain one or 
more of these services from another financial institution.
    (2) All presenting institutions, as defined in Sec. 321.1, must 
qualify as savings bond paying agents and enroll in EZ CLEAR.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10536, Mar. 4, 1994]



Sec. 321.3  Procedure for qualifying and serving as paying agent.

    (a) Execution of application-agreement. An eligible organization 
wishing to act as a paying agent shall obtain from, execute, and file an 
application-agreement with the appropriate Federal Reserve Office 
referred to in Sec. 321.25. The terms of each application-agreement 
shall include a reference to the following provisions to which paying 
agents are subject:
    (1) The provisions prescribed by section 202 of Executive Order 
11246, entitled ``Equal Employment Opportunity'', as amended (42 U.S.C. 
2000e note); and
    (2) The provisions of the Privacy Act of 1974, as amended (5 U.S.C. 
552a), and regulations issued pursuant thereto (31 CFR part 1, subpart 
C).

For the purpose of these regulations, eligible institutions in Puerto 
Rico and the Virgin Islands shall make application to the Federal 
Reserve Bank Branch in Buffalo, New York and eligible institutions in 
Guam shall make application to the Federal Reserve Bank of Kansas City.
    (b) Qualification. Each Federal Reserve Bank referred to in Sec. 
321.25, as fiscal agent of the United States, is authorized to qualify 
any eligible organization, located in the Reserve Bank's geographical 
area, as shown in Sec. 321.25, which possesses adequate authority under 
its charter to act as paying agent. Upon approval of an application-
agreement, the Bank will issue a certificate of qualification to the 
organization. Such a certificate automatically qualifies the branches of 
the organization to redeem securities as provided in this part.
    (c) Announcement of authority. Upon receipt of a certificate of 
qualification from a Federal Reserve Bank referred to in Sec. 321.25, a 
financial institution may announce or advertise its authority to redeem 
eligible securities for cash and to process eligible Series E and EE 
savings bonds and savings notes presented for redemption in exchange for 
Series HH savings bonds under the provisions of Department of the 
Treasury Circular, Public Debt Series No. 2-80 (31 CFR part 352).

[[Page 220]]

    (d) Adverse action. An organization will be notified by the 
appropriate Federal Reserve Bank referred to in Sec. 321.25, in 
writing, if its application-agreement to act as paying agent is not 
approved.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35395, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994; 63 FR 38042, July 14, 1998]



Sec. 321.4  Paying agents previously qualified.

    Institutions qualified as paying agents under previous revisions of 
this Part are authorized to continue to act in that capacity without 
requalification. By so acting, they shall be subject to the terms and 
conditions of their previously executed application-agreements and these 
regulations in the same manner and to the same extent as though they had 
requalified hereunder.



Sec. 321.5  Termination of qualification.

    (a) By the Treasury. The Secretary of the Treasury, or a designee, 
may authorize a Federal Reserve Bank referred to in Sec. 321.25 to 
terminate the qualification of any paying agent at any time, following 
prior written notice of such action to the agent.
    (b) At request of paying agent. A Federal Reserve Bank referred to 
in Sec. 321.25 will terminate the qualification of a paying agent upon 
its written request, provided the agent renders a final accounting for 
all redeemed securities and is found to have fully complied with the 
terms of its agreement and the applicable regulations and instructions.
    (c) Reservation. Termination of the qualification as paying agent of 
any institution shall not prejudice the right of the Treasury to recover 
the amounts of any erroneous payment(s) made by the institution.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



                      Subpart C_Scope of Authority



Sec. 321.6  General.

    Securities are issued only in registered form (subject to 31 CFR 
359.11), are not transferable, may not be hypothecated or used as 
collateral for a loan, and, except as otherwise specifically provided in 
the governing regulations and this part, are payable to the owner or 
coowner named on the security. The regulations governing Series EE and 
HH bonds are contained in Department of the Treasury Circular, Public 
Debt Series No. 3-80, current revision (31 CFR part 353); those 
governing Series I bonds are contained in Department of the Treasury 
Circular, Public Debt Series No. 2-98 (31 CFR part 360); and, those 
governing all other series of U.S. savings securities are contained in 
Department of the Treasury Circular No. 530, current revision (31 CFR 
part 315).

[63 FR 38042, July 14, 1998]



Sec. 321.7  Authorized cash payments.

    (a) General. Subject to the terms and conditions appearing on the 
securities, the governing regulations, and the provisions of this part, 
and any instructions issued in connection therewith, an agent may make 
payment of savings bonds of Series A, B, C, D, E, EE, and I, and savings 
notes, presented for cash redemption. Except as provided in paragraphs 
(b) through (d), and (f) of this section, the securities must be 
presented by an individual whose name is inscribed on the securities as 
owner or coowner, and who is known to the agent, or who can establish 
his or her identity in accordance with Treasury instructions and 
guidelines (See Sec. 321.11(b)).
    (b) Change of name by marriage. If the name of the presenter has 
been changed by marriage from that shown on the security, and the agent 
knows or establishes that the presenter and the person whose name 
appears on the security are one and the same individual, the agent may 
pay the security in accordance with paragraph (a) of this section. The 
signature to the request for payment should show both names, e.g., 
``Mary J. Smith, changed by marriage from Mary T. Jones.''
    (c) Parent of a minor. Payment of a security bearing the name of a 
minor child, who is not of sufficient competency and understanding to 
sign the request for payment and comprehend the nature of the act, may 
be made to either parent with whom the minor resides or to whom custody 
has been

[[Page 221]]

granted, provided the form of registration does not indicate that a 
guardian or similar representative of the estate of the minor has been 
appointed or is otherwise legally qualified. Payment under this 
subsection may not be made to any person other than a parent. The parent 
requesting payment must sign the request for payment in the form, e.g., 
``John A. Jones, on behalf of John C. Jones.'' The following endorsement 
must be typed or imprinted on the back of the security:

    I certify that I am the (father or mother) of John C. Jones and the 
person (with whom he resides) (to whom custody has been granted). He is 
---- years of age and is not of sufficient competency and understanding 
to sign the request.

    (d) Payment to beneficiary. An agent may redeem a security 
registered ``A P.O.D. [payable on death to] B'' for cash at the request 
of the surviving beneficiary following the owner's death. A copy of the 
owner's death certificate, certified under seal of the State or local 
registrar, must be furnished to support the request for payment.
    (e) Payment to a legal representative designated on a security by 
name and title. An agent may redeem a security registered in the name 
and title of a legal representative as defined in Sec. 321.1(f), if the 
legal representative is known to the agent, or can establish identity in 
accordance with Treasury instructions and guidelines. The request for 
payment on the back of each security must be signed by the legal 
representative designated by name and title in the registration on the 
front of the security, or by a person authorized or empowered to act for 
a corporate legal representative so designated. The full title of the 
legal representative should be shown adjacent to each signature and, in 
the case of a corporate legal representative, the full corporate name, 
as well as the title, i.e., vice president, trust officer, etc., should 
be shown. Examples:

    Henry C. Smith, conservator of the estate of John R. White, an 
adult, pursuant to Sec. 633.572 of the Iowa Code.
    Tenth National Bank by Arnold A. Ames, Vice President, guardian of 
the estate of Barry B. Bryan, a minor.

    (f) Payment to a legal representative of a decedent's estate not 
designated on a security. An agent may redeem a security bearing the 
names of deceased persons in the registration, if the legal 
representative of the estate of the last deceased registrant:
    (1) Presents the security;
    (2) Signs the request for payment on the back of the security, 
showing the representative's full title adjacent to the signature; and
    (3) Presents acceptable evidence of the legal representative's 
appointment and of the dates of death of all persons named in the 
security's registration, in accordance with this part and the appendix.

In the case of a corporate legal representative, the full corporate 
name, as well as the title, must be shown. Examples:

    John H. Smith and Charles N. Jones, co-executors of the will of 
Robert J. Smith, deceased.
    Tenth National Bank by John F. Green, Trust Officer, executor of the 
will of George N. Brown, deceased.

    (g) Interest reporting. A paying agent is required to report 
interest in the amount of $10 or more, paid as part of the redemption 
value of securities, to the payee and to the Internal Revenue Service, 
in accordance with 26 CFR 1.6049-4. (See Item 26 of the appendix to this 
part for information concerning the education feature of Series EE 
savings bonds issued on or after January 1, 1990, and of Series I 
savings bonds.)

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35395, Aug. 29, 1990; 
63 FR 38042, July 14, 1998]



Sec. 321.8  Redemption-exchange of Series E and EE savings bonds and 
savings notes.

    (a) General. Subject to the provisions of Circular No. 2-80 (31 CFR 
part 352), the governing regulations, and the provisions of this part 
and its appendix, an agent may make payment of eligible securities 
presented for redemption in exchange for Series HH bonds. Securities 
eligible for exchange are:
    (1) Series EE bonds bearing issue dates of January 1, 2003, or 
earlier, presented no earlier than six months from their issue dates;

[[Page 222]]

    (2) Series EE bonds bearing issue dates of February 1, 2003, or 
thereafter, presented no earlier than 12 months from their issue dates; 
and
    (3) Series E bonds and savings notes presented no later than one 
year from the month in which they reached final maturity. The total 
redemption value of the securities presented for exchange must be at 
least $500.
    (b) Requirements for redemption-exchange. An agent shall not accept 
and redeem eligible securities on exchange unless:
    (1) The securities are accompanied by a completed exchange 
subscription signed by the presenter;
    (2) The presenter is the owner, the legal representative (excluding 
a representative of a decedent's estate), the surviving coowner or 
beneficiary, or the principal coowner (as defined in Sec. 352.7(e)(2) 
in 31 CFR part 352 (Circular No. 2-80)) of the securities presented for 
exchange and is to be named as owner or first-named coowner on the 
Series HH bonds; and
    (3) The request for payment on each security is signed by the 
presenter. A presenter who is a legal representative should show the 
full title adjacent to each signature and, in the case of a corporate 
legal representative, should show the full corporate name, as well as 
the title. If the name of the presenter has been changed by marriage, or 
if the presenter is named as beneficiary or legal representative on the 
securities, the agent may process the transaction in accordance with the 
provisions of Sec. 321.7 (b), (d), or (e) of this part. If the agent is 
authorized and elects to use the special endorsement procedure, set out 
in 31 CFR part 330 (Circular No. 888, current revision), the requests 
for payment do not need to be signed; however, this special endorsement 
may not be used in lieu of the presenter's signature on the exchange 
subscription.
    (c) Interest reporting. To the extent that it represents interest of 
$10 or more, a paying agent is required to report cash, refunded in an 
exchange transaction, to the presenter and to the Internal Revenue 
Service under the provisions of 26 CFR 1.6049-4.
    (d) Completion of transaction. An agent shall transmit for 
settlement via EZ CLEAR securities redeemed on exchange and, at the same 
time, forward the exchange application (PD F 3253) and any additional 
cash needed to complete the transaction, to the Fiscal Agency Department 
of the servicing Federal Reserve Bank referred to in Sec. 321.25. 
Securities redeemed on exchange may be commingled with cash redemptions 
in mixed or separately sorted cash letters.''

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994; 68 FR 2666, Jan. 17, 2003; 68 FR 7427, Feb. 
14, 2003]



Sec. 321.9  Specific limitations on payment authority.

    An agent is not authorized to redeem a security for cash or on 
redemption-exchange:
    (a)(1) If it is a Series EE bond or a Series I bond issued on 
January 1, 2003, or earlier, presented for payment prior to six months 
from its issue date; or
    (2) If it is a Series EE bond or a Series I bond issued on February 
1, 2003, or thereafter, presented for payment prior to 12 months from 
its issue date.
    (b) If it is a savings bond of Series F, G, H, J, K, or HH.
    (c) If the presenter is acting under a power of attorney.
    (d) If the agent does not know or cannot establish the identity of 
the presenter as a person entitled to request payment as provided in 
Sec. 321.7.
    (e) If the presenter does not sign his or her name in ink as it is 
inscribed on the security (except as provided in Sec. 321.7 (b) or (c) 
of this part, or appears in evidence of appointment (see Sec. 
321.7(f)), and show a home or business address.
    (f) If the taxpayer identifying number of the presenter, or the 
estate represented by the presenter, is not known to the agent and the 
presenter refuses to furnish the number.
    (g) If the security bears a material irregularity, such as an 
illegible, incomplete or unauthorized inscription, issue date, or 
issuing agent's validating data, or if any essential part of the 
security appears to have been altered or is mutilated or defaced in such 
a manner as to create doubt or arouse suspicion.

[[Page 223]]

    (h) If the security is registered in the name of a corporation, 
association, partnership, or other organization in its own right.
    (i) If Treasury regulations require the submission of documentary 
evidence to support the redemption, except as provided in Sec. 321.7 
(d) or (f) of this part, as in the case of incompetents, minors under 
legal guardianship, or the change of a registrant's name other than by 
marriage.
    (j) If the presenter is a minor who, in the opinion of the agent, is 
not of sufficient competency and understanding to sign the request for 
payment and comprehend the nature of the act.
    (k) If it is known to the agent that the presenter has been legally 
declared incompetent to manage his or her affairs.
    (l) If partial redemption is requested.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
63 FR 38042, July 14, 1998; 68 FR 2666, Jan. 17, 2003; 68 FR 7427, Feb. 
14, 2003]



Sec. 321.10  Responsibilities of paying agents.

    (a) Payment of securities. A paying agent is required to redeem 
eligible securities during its regular business hours for any presenter, 
whether or not a customer, who can establish his or her identity as the 
owner or co-owner named on the securities, in accordance with the 
provisions of this part, and the appendix to this part, and the Treasury 
Identification Guide for Cashing United States Savings Bonds. An agent 
is encouraged, but is not required, to redeem eligible securities during 
its regular business hours for a surviving beneficiary, a legal 
representative designated in the registration of securities presented, 
or a legal representative of the last deceased registrant's estate who 
can provide acceptable evidence (see Sec. 321.7 (d) or (f)) and 
establish identity in accordance with this part.
    (b) Restrictions. A paying agent shall not advance money, make loans 
on, or discount the redemption value of securities, nor in any manner 
assist others to do so. An agent shall not pay a presenter the current 
value of a security and then defer presentation to the Treasury for the 
purpose of obtaining for its own profit an increased value.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990]



             Subpart D_Payment and Transmittal of Securities



Sec. 321.11  Payment.

    (a) Examination. Before making a payment of a security, a paying 
agent shall examine the security to determine that it is eligible for 
redemption and is one the agent is authorized to pay under the 
provisions of this part.
    (b) Identification and evidence of entitlement. The agent shall 
determine that the presenter of the security is entitled to request 
payment, as provided in Sec. 321.7 of this part. Unless the presenter 
is a person whose identity is well-known to the agent or is an 
established customer, he or she should be asked to furnish satisfactory 
identification in accordance with the Treasury instructions and 
guidelines. At the time of payment, the agent should make a notation on 
the back of the security, or in its own records, specifying precisely 
what was relied on to establish the presenter's identity.
    (c) Evidence--Payment to a beneficiary. The agent shall determine 
that the presenter of the security as beneficiary is entitled to request 
payment, as provided in Sec. 321.7(d). In addition to establishing the 
presenter's identification, as required by paragraph (b) of this 
section, the agent shall require presentation of the owner's death 
certificate in accordance with this part and the appendix.
    (d) Evidence--Payment to a legal representative of the last deceased 
registrant's estate. The agent shall determine whether the legal 
representative is entitled to request payment, as provided in Sec. 
321.7(f). In addition to establishing the presenter's identification, as 
required by paragraph (b) of this section, the agent shall require 
evidence of appointment as well as evidence of the dates of death of all 
persons named in the registrations of the securities presented. Evidence 
of the representative's appointment must be either a court certificate 
or a copy of the letters of appointment, certified to be

[[Page 224]]

true and correct under seal of the court or clerk of court. If the 
original appointment was made more than one year prior to the 
presentation of the securities it must also bear the court clerk's 
statement that the appointment is in full force and effect. This 
statement must be under seal of the court or clerk of court and dated 
within six months of the presentation. Such evidence of appointment must 
pertain to the estate of the last deceased registrant designated on the 
securities. A copy of a death certificate, certified under seal of the 
State or local registrar, is the only acceptable evidence of the date of 
death.
    (e) Execution of request. (1) The agent shall require:
    (i) That the request for payment on the back of each security be 
signed by the presenter in the presence of one of its officers or 
authorized employees; and
    (ii) That the presenter's address be furnished. Fiduciaries must 
sign as provided in Sec. 321.7 (e) and (f).
    (2) If the agent is qualified under 31 CFR part 330 (Circular No. 
888, current revision) and elects to use the special endorsement 
procedure, the request for payment need not be signed. If the request 
has already been signed when the security is presented, it should be 
signed again.
    (f) Certification of request. An agent is not required to complete 
the certification to the requests for payment on securities it redeems. 
When an agent transmits redeemed securities for settlement, as indicated 
in Sec. 321.14 of this part, such agent shall be understood by such 
submission to have represented and certified that the identity of the 
presenter, and his or her entitlement to request payment, have been 
established in accordance with this part and the appendix hereto.

[53 FR 37511, Sept. 26, 1988, as amended at 55 FR 35396, Aug. 29, 1990; 
59 FR 10537, Mar. 4, 1994]



Sec. 321.12  Redemption value of securities.

    The redemption value of each savings security is determined by the 
terms of its offering and the length of time it has been outstanding. 
The Bureau of the Public Debt determines redemption values for Series A-
E bonds, eligible Series EE and I bonds, and savings notes, that should 
be used in redeeming savings securities.

[63 FR 38042, July 14, 1998]



Sec. 321.13  Cancellation of redeemed securities.

    An agent shall cancel each redeemed security by imprinting the word 
``PAID'' on its face and entering the amount and date of the actual 
payment and the agent's name, location, and four-digit code number 
assigned by the appropriate Federal Reserve Bank. The recordation of 
this data shall constitute a certification by the agent that the 
security was redeemed in accordance with the provisions of this part, 
that the presenter's identity and entitlement to request payment were 
duly established, and that the proceeds were paid to the presenter or 
remitted to an appropriate Federal Reserve Bank in payment for Series HH 
bonds.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



Sec. 321.14  Transmittal to and settlement by Federal Reserve Bank.

    In accordance with Federal Reserve Bank instructions, a paying agent 
shall transmit with an EZ CLEAR cash letter securities redeemed for cash 
and on redemption-exchange, either directly or through a correspondent 
institution, to the Check Department of the appropriate Bank or Branch, 
or to a Regional Check Processing Center (RCPC). Upon receipt of the 
securities, the Bank, Branch, or RCPC will arrange for immediate 
settlement with the presenting institution. Such settlement shall be 
made by a credit to the presenting institution's Reserve or other 
clearing account in the total amount paid, as reflected on the cash 
letter, and shall be subject to adjustment via a charge or credit to 
that account if any discrepancy is subsequently discovered.

[59 FR 10537, Mar. 4, 1994]

[[Page 225]]



           Subpart E_Losses Resulting From Erroneous Payments



Sec. 321.15  Liability for losses.

    Under the governing statute, as amended (31 U.S.C. 3126(a)), an 
agent cannot be relieved of liability for a loss resulting from an 
erroneous payment unless the Secretary of the Treasury can make a 
determination that the loss resulted from no fault or negligence on the 
agent's part.



Sec. 321.16  Report of erroneous payment.

    If an agent discovers an erroneous payment of securities, it should 
immediately advise the Bureau of the Public Debt, Parkersburg, WV 26106-
1328, (304) 420-6402. If the circumstances of the payment warrant such 
action, the agent should also notify the nearest office of the United 
States Secret Service.



Sec. 321.17  Investigation of potential loss.

    (a) Notice to an agent. When it determines that a loss has occurred, 
because of the erroneous payment of securities, the Bureau of the Public 
Debt will notify the agent in writing and identify the securities.
    (b) Investigative procedure. The Bureau of the Public Debt may 
request the United States Secret Service to investigate potential 
losses. Upon request, the agent shall make available to the Bureau of 
the Public Debt, or its investigative agent, all records and information 
pertaining to the transaction in question, including the disposition of 
the redemption proceeds. If the proceeds were deposited in an account 
maintained by the agent, the information made available shall include 
the ultimate disposition of the redemption proceeds from the account.



Sec. 321.18  Determination of loss.

    Upon completion of the investigation, and after consideration of the 
results, the Bureau of the Public Debt shall advise the agent through 
which the payment occurred:
    (a) That no final loss to the United States has occurred, and, 
accordingly, that the agent is relieved from liability for the payment, 
or that no claim for reimbursement shall be made unless and until a loss 
has been sustained; or
    (b) That while a final loss to the United States has occurred, the 
agent is not required to make reimbursement therefor, as the Secretary 
of the Treasury, or his designee, has determined that such loss resulted 
from no fault or negligence on the part of such agent; or
    (c) That a final loss to the United States has occurred, and that, 
the Secretary of the Treasury, or his designee, has been unable to make 
an affirmative finding that such loss resulted from no fault or 
negligence on the part of such agent, reimbursement must be made 
promptly, except where credit for the payment had not previously been 
extended.



Sec. 321.19  Certification of signatures.

    The regulations in this subpart shall, to the extent appropriate, 
apply to losses resulting from payments made in reliance on 
certifications of signatures by an officer or designated employee of any 
financial institution authorized to certify requests for payment.



Sec. 321.20  Applicability of provisions.

    The provisions of this subpart shall apply to securities redeemed by 
any Federal Reserve Bank referred to in Sec. 321.25, as fiscal agent, 
or any Treasury office authorized to redeem securities, as well as to 
paying agents.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



Sec. 321.21  Replacement and recovery of losses.

    (a) If a final loss results from the redemption of a security, and 
the paying agent redeeming the security is not relieved of liability for 
such loss under 31 U.S.C. 3126(a), the Bureau of the Public Debt will 
demand that the paying agent promptly reimburse the United States in the 
amount of the final loss and will take such other action as may be 
necessary to collect such amount as set out in the procedure described 
in Paragraph 21 of the appendix to this part.
    (b) If a final loss has resulted from the redemption of a security, 
and no reimbursement has been or will be

[[Page 226]]

made, the loss shall be subject to replacement out of the fund 
established by the Government Losses in Shipment Act, as amended.

[61 FR 37197, July 16, 1996]



                       Subpart F_Forwarding Items



Sec. 321.22  Forwarding securities not payable by an agent.

    Any securities an agent is not authorized to pay under the 
provisions of this part should be forwarded for redemption to the Fiscal 
Agency Department of a Federal Reserve Bank referred to in Sec. 321.25. 
The requests for payment on the securities should be properly certified. 
Any documentary evidence required to support the redemption should 
accompany the securities. If the securities are presented for 
redemption-exchange, they must also be accompanied by a completed and 
signed exchange subscription and any additional cash needed to complete 
the transaction. Unpaid securities so forwarded must not be commingled 
with redeemed securities transmitted for settlement.

[53 FR 37511, Sept. 26, 1988, as amended at 59 FR 10537, Mar. 4, 1994]



                   Subpart G_Miscellaneous Provisions



Sec. 321.23  Paying agent fees and charges.

    (a) Fees. Fees shall be paid as outlined in this section. A schedule 
setting out the fees, and the basis on which they are computed and paid, 
is separately published in the Federal Register. Current information is 
available from a Federal Reserve Bank referred to in Sec. 321.25.
    (1) Securities transmitted via EZ CLEAR. A fee will be paid for each 
security redeemed during a calendar month and transmitted via EZ CLEAR 
to a Federal Reserve Bank in separately sorted cash letters. Payment 
will be made to the presenting institution by ACH. No fees will be paid 
for redeemed securities received by a Bank in mixed cash letters.
    (2) To comply with the provisions of the Balanced Budget and 
Emergency Deficit Control Act of 1985, as amended (2 U.S.C. 901, et 
seq.), or the legislative resolution resulting therefrom, the Secretary 
may authorize, upon notice in the Federal Register, the discontinuance, 
reduction or delay of fee payments. Fee payments so affected may 
subsequently be paid in accordance with the schedule of fees as 
hereafter published, subject to the availability of funds therefor, and 
to the extent permitted by law. Fee payments for servicing occurring 
after notice of the resumption of such payments has been published in 
the Federal Register will be made in accordance with the schedule of 
fees published in such notice.
    (b) Charges to presenters. A paying agent shall not make any charge 
whatever to persons entitled to request payment of securities, for 
redeeming them under the provisions of this part.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 39960, Oct. 1, 1990; 59 FR 10537, Mar. 4, 1994]



Sec. 321.24  Claims on account of lost securities.

    If a security redeemed by an agent is lost, stolen or destroyed 
while in its custody or in transit prior to settlement, the agent's 
claim for reimbursement of the missing security's redemption value on 
the original payment date will be considered, provided the security can 
be identified by serial number.



Sec. 321.25  Role of Federal Reserve Banks.

    (a) The Federal Reserve Banks referred to below, as fiscal agents of 
the United States, shall perform such services in connection with this 
part as may be requested by the Secretary of the Treasury, or his 
designee. The Banks are authorized and directed to perform such duties, 
including the issuance of instructions and forms, as may be necessary to 
fulfill the purposes and requirements of these regulations.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

[[Page 227]]



------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------


[59 FR 10537, Mar. 4, 1994, as amended at 63 FR 38042, July 14, 1998]



Sec. 321.26  Preservation of rights.

    Nothing contained in this part shall limit or restrict any existing 
rights which holders of securities may have acquired under the offering 
circulars and the applicable regulations.



Sec. 321.27  Supplements, amendments, or revisions.

    The Secretary of the Treasury may, at any time or from time to time, 
revise, supplement, amend or withdraw, in whole or in part, the 
provisions of this part.

 Appendix to Part 321--Appendix to Department of the Treasury Circular 
                        No. 750, Fourth Revision

                Fiscal Service, Bureau of the Public Debt

                     Subpart A--General Information

    1. Purpose. This appendix is issued for the guidance of banks and 
other financial institutions qualified as paying agents of United States 
Savings Bonds and United States Savings Notes (Freedom Shares) under the 
provisions of 31 CFR part 321 [Department of the Treasury Circular No. 
750, Fourth Revision]. Its purpose is to provide information to 
supplement the regulations contained in the part and specific 
instructions for processing redemption and redemption-exchange 
transactions. The information and instructions are indexed to the 
sections and subsections of part 321 which they explain or expand.
    2. Other pertinent publications. In addition to part 321, agents 
should be familiar with the provisions of the following publications:
    (a) Offering circulars. Department of the Treasury Circulars, Public 
Debt Series Nos. 1-80 (31 CFR part 351, Series EE bonds), 2-80 (31 CFR 
part 352, Series HH bonds), 1-98 (31 CFR part 359, Series I bonds), and 
3-67 (31 CFR part 342, savings notes), and Department of the Treasury 
Circulars Nos. 653 (31 CFR part 316, Series E bonds) and 905 (31 CFR 
part 339, Series H bonds).
    (b) Regulations. Department of the Treasury Circular, Public Debt 
Series No. 3-80 (Series EE and HH bonds); Department of the Treasury 
Circular, Public Debt Series 2-98 (Series I bonds); Department of the 
Treasury Circulars Nos. 530 (all other series of savings securities) and 
888 (special endorsements); Federal Tax Regulations (26 CFR 1.6049); 
Federal Claims Collection Standards (4 CFR parts 101-105); Regulation J, 
Collection of Checks and Other Items and Wire Transfers of Funds (12 CFR 
part 210); and operating circulars issued by Federal Reserve Banks 
relating to the collection of cash items and Federal payments by ACH.

                 Subpart B--Procedures for Qualification

    3. Qualification of branches. [Sec. 321.3(b)] Qualification of an 
institution as a paying agent automatically qualifies only its domestic 
branches. A foreign branch of a qualified paying agent may redeem 
securities provided settlement is made through a qualified facility 
located in the Unied States.
    4. Paying agent code numbers. [Sec. Sec. 321.3(b) and 321.13] The 
appropriate Federal Reserve Bank will assign a four-digit code number to 
each agent it qualifies. A separate number will be assigned to each 
branch authorized to redeem and submit redeemed securities for its own 
account to a Federal Reserve Bank or Branch or to a Regional Check 
Processing Center. At the paying agent's request, only one four-digit 
code will be assigned for use by all of its branches. The presenting 
institution's ABA number will be used in the adjustment of discrepancies 
and in the computation and payment of fees for securities transmitted in 
separately sorted cash letters.

[[Page 228]]

    5. Requalification. [Sec. 321.3(b)] If there has been a change in 
the corporate name of an agent, whether through merger, consolidation, 
sale of assets, or in any other manner, the agent may be asked by the 
appropriate Federal Reserve Bank referred to in Sec. 321.25 to 
requalify to reflect the change. Ordinarily, requalification is not 
required unless (a) the change results in a corporation that, under 
State law, cannot retain the rights of the corporation that ceased to 
exist, or (b) in the case of a purchase of assets and assumption of 
liability, the purchaser corporation is not a qualified paying agent.
    6. Announcement of authority. [Sec. 321.3(c)] On and after the 
effective date of its qualification, a paying agent may appropriately 
announce or advertise its authority to redeem eligible securities for 
cash and in exchange for Series HH bonds. Such statements and notices 
should not, directly or indirectly, encourage the encashment of the 
securities. Two examples of acceptable statements for use in 
advertisements or displays are:
    (a) ``We are an authorized agent for payment of U.S. Savings Bonds 
and U.S. Savings Notes (Freedom Shares).''
    (b) ``This (bank/savings and loan association/credit union, etc.) is 
authorized to pay U.S. Savings Bonds and U.S. Savings Notes (Freedom 
Shares) and process eligible Series E and EE bonds and savings notes in 
exchange for Series HH bonds.''

                      Subpart C--Scope of Authority

    7. Authorized cash payments. [Sec. 321.7]
    (a) General. [Sec. 321.7(a)] The general authority of paying agents 
to redeem savings securities for cash extends to Series A, B, C, D, E, 
EE, and I bonds and savings notes presented by the owner, coowner, 
surviving beneficiary, parent on behalf of a minor, legal representative 
designated in the registrations of savings securities presented, or 
legal representative of the last deceased registrant's estate. The 
presenter must sign the requests for payment and establish his or her 
identity and, in the case of a beneficiary, parent or legal 
representative of the last deceased registrant's estate, entitlement to 
request payment.
    (b) Securities submitted by mail. [Sec. 321.7(a)] An agent may 
accept eligible securities submitted, for redemption by mail, from known 
customers. The agent should be satisfied that the customer is entitled 
to request payment and that he or she has signed the requests for 
payment. The agent should obtain written instructions to credit the 
redemption proceeds to the customer's account or to make some other 
disposition. For its protection, the agent should retain such 
instructions for as long as ten years in the event the transaction is 
later questioned.
    (c) Interest reporting. [Sec. 321.7(e)] Pursuant to 26 CFR 1.6049-4, 
an agent is required to report interest income in the amount of $10 or 
more paid as part of the redemption value of securities. Reports to 
payees should be made on Form 1099-INT or an IRS-approved substitute; 
reports to the Internal Revenue Service should be made in accordance 
with that agency's instructions. A separate report may be made for each 
transaction in which interest in the amount of $10 or more is paid, or 
all interest payments, made during a calendar year, may be aggregated 
and reported annually should the total amount be $10 or more.
    8. Redemption-exchange of Series E and EE savings bonds and savings 
notes. [Sec. 321.8]
    (a) General. [Sec. 321.8 (a) and (b)] The general authority of 
paying agents to redeem securities in exchange for Series HH bonds 
extends only to eligible Series E and EE savings bonds and savings notes 
presented with a completed Form PD 3253, ``Exchange Subscription for 
United States Savings Bonds of Series HH.'' Securities eligible for 
exchange are: (1) Series EE bonds issued January 1, 2003, or earlier, 
presented no earlier than six months from their issue dates; (2) Series 
EE bonds issued February 1, 2003, or thereafter, presented no earlier 
than 12 months from their issue dates; and (3) Series E bonds and 
savings notes presented no later than one year from the month in which 
they reached final maturity. The current redemption value of securities 
presented in one transaction must be at least $500. The presenter must 
establish his or her identity and entitlement to request the exchange 
and sign the exchange subcription and the requests for payment on the 
securities.
    (b) Securities in the name of a minor. [Sec. 321.8(b)] If an 
exchange subscription is submitted on behalf of a minor who is too young 
to comprehend the nature of the transaction, the form must be completed 
to request that the Series HH bonds be registered either in the minor's 
name alone or in exactly the same form as the securities presented for 
exchange. Agents are instructed to discourage exchange transactions 
involving minors who are too young to conduct them on their own.
    (c) Interest reporting. [Sec. 321.8(c)] Pursuant to 26 CFR 1.6049-4, 
an agent is required to report interest income in the amount of $10 or 
more included in any cash refunded in a redemption-exchange transaction. 
Reports to payees should be made on Form 1099-INT or an IRS-approved 
substitute; reports to the Internal Revenue Service should be made in 
accordance with that agency's instructions. A separate report may be 
made for each redemption-exchange transaction in which interest in the 
amount of $10 or more is refunded, or all interest paid in both cash 
transactions and redemption-exchanges during a calendar year may be 
aggregated and reported annually should the total amount be $10 or more.

[[Page 229]]

    9. Specific limitations on payment authority. [Sec. 321.9]
    (a) Allowable exceptions. [Sec. 321.9] Securities which an agent may 
not redeem because of the limitations in Sec. 321.9 should be forwarded 
to the Fiscal Agency Department of a Federal Reserve Bank referred to in 
Sec. 321.25 for handling. However, if an agent is willing to assume 
full responsibility, it may make payment of an eligible security which 
bears a minor irregularity, such as a misspelled name, a transposition 
of letters, etc., because of its knowledge of the facts, or because it 
wishes to rely on the integrity of the presenter.
    (b) Taxpayer identifying number of presenter. [Sec. 321.9(f)] An 
agent shall refuse payment of any security if the taxpayer identifying 
number of the presenter, or the estate represented by the presenter, is 
not known to the agent and the presenter is unwilling to furnish the 
number. A parent who requests payment on behalf of a minor in accordance 
with Sec. 321.7(c) of this part must provide the minor's social 
security number.
    (c) Payments to minors. [Sec. 321.9(j)] A minor may not request 
payment of securities if he or she is not of sufficient competency and 
understanding to comprehend the nature of the act. Because of individual 
differences in comprehension, the Treasury has not established any rule 
as to the exact age at which a minor should be able to redeem 
securities. An agent may interview a minor to ascertain his or her 
ability to understand the transaction.
    10. Responsibilities of paying agents. [Sec. 321.10]
    (a) Requirements for redeeming securities. [Sec. 321.10(a)] A 
paying agent shall redeem eligible savings securities during its regular 
business hours for a presenter who establishes his or her identity as 
the owner or coowner of the securities, in accordance with this part and 
this appendix. While a paying agent is not required to redeem eligible 
Series E and EE savings bonds and savings notes in exchange for Series 
HH bonds for any presenter, or Series E, EE, or I bonds or savings notes 
for cash upon the request of a surviving beneficiary or legal 
representative, it is encouraged to do so, provided the presenter can 
establish his/her identity and provide acceptable evidence to accordance 
with this part and this appendix (See Sec. 321.7 (d) and (f)). An agent 
is not required to redeem savings securities during Saturday and evening 
hours if it is open during such periods primarily as a service for its 
depositors.
    (b) Restrictions. [Sec. 321.10(b)] Violation of the regulatory 
prohibitions on making charges for redeeming securities; on advancing 
money on, making loans on, or discounting the redemption value of 
securities; and on deferring presentation of redeemed securities to 
obtain a larger credit, will be cause for disqualification and recovery 
of the redemption proceeds and profits realized therefrom.

            Subpart D--Payment and Transmittal of Securities

    11. Identification of presenter. [Sec. 321.11(b)]
    (a) Identification guide. [Sec. 321.11(b)] The Treasury Department 
has issued an identification guide, Form PD 3900, to assist paying 
agents in redeeming securities. Careful compliance with the instructions 
contained therein will enable agents to accommodate reasonable 
redemption requests and protect themselves from losses. Reliance on 
newly opened customer accounts as identification, or paying more than 
$1,000 in a single transaction based on documentary evidence alone, 
should be particularly avoided.
    (b) Record of identification practice and evidence presented. [Sec. 
321.11 (b) through (d)] At the time of payment, the agent should make a 
notation on the back of the security or in its own records specifying 
precisely what was relied on to establish the presenter's identity. The 
identification should be adequate to identify the payee under the 
circumstances of the transaction. If an agent redeems a security upon 
the request of a surviving beneficiary or a legal representative of the 
last deceased registrant's estate, it should also make a notation of the 
evidence presented to establish the payee's entitlement; this might 
include the document or case number on the death certificate(s) and/or 
evidence of the legal representative's appointment, the date(s) of 
death, and the names and locations of the issuing authorities. The 
notations should be sufficient to permit a determination of the evidence 
of identity and entitlement at a later date. Otherwise, the agent runs 
the risk that no evidence can be developed to show that it acted without 
fault or negligence, in which case it could not be relieved of liability 
should a loss occur.
    12. Request for payment. [Sec. 321.11(d)]
    (a) Signature. [Sec. 321.11(e)] Except where an agent qualified 
under 31 CFR part 330 (Circular No. 888) elects to use the special 
endorsement procedure, each security redeemed by the agent must bear the 
signature of the presenter. The name must be signed exactly as it is 
inscribed on the security, unless the provisions of 31 CFR part 330 and 
this appendix provide for an exception, such as in cases involving a 
change of name by marriage, a request by a parent on behalf of a minor, 
or a legal representative of the last deceased registrant's estate. An 
agent may be held liable if the request for payment is not properly 
signed. Legal representatives must sign as provided in Sec. 321.7 (e) 
and (f).
    (b) Address. [Sec. 321.11(d)] The presenter must enter a current 
home or business address in the space provided on the back of the 
security. If a single transaction includes a group of securities, the 
address must be

[[Page 230]]

shown on at least one security of each of the following types: (1) Paper 
securities issued prior to October 1957; (2) punch card or machine 
readable paper securities issued prior to January 1989; and (3) machine 
readable paper securities issued subsequent to December 1988.
    13. Redemption value of securities. [Sec. 321.12]
    (a) Redemption value tables. [Sec. 321.12] The Bureau of the Public 
Debt distributes redemption values in various formats and as part of 
programs for personal computers, for: (1) Series E bonds, (2) Series EE 
bonds, (3) Series I bonds, and (4) savings notes. Additional tables or 
information may be requested from the appropriate Federal Reserve Bank 
referred to in Sec. 321.25.
    (b) Use of tables. [Sec. 321.12] Care should be exercised to 
correctly determine the current redemption value of the security 
presented for the month in which it is redeemed. Incorrect payments can 
lead to costly and time-consuming adjustments for the agent, Department 
of the Treasury, and the appropriate Federal Reserve Bank referred to in 
Sec. 321.25.
    (c) Cash redemption. [Sec. 321.12] The correct redemption value of 
securities redeemed by an agent should be paid to the presenter in 
currency or, upon request, by check payable to the presenter or by 
credit to his or her account.
    (d) Redemption-exchange. [Sec. 321.12] The redemption values of 
eligible Series E and EE savings bonds and savings notes presented for 
exchange (Series I savings bonds are not eligible for exchange) for 
Series HH bonds shall be those payable in the month the agent accepts a 
correctly completed and signed exchange subscription, Public Debt Form 
3253. The total redemption value of securities presented for exchange in 
any one transaction must be at least $500. If the redemption value is 
$500 or an even multiple thereof, Series HH bonds must be requested in 
that exact amount. If the redemption value exceeds $500, but is not an 
even multiple of that amount, the presenter may add cash to increase the 
amount of the subscription to the next higher $500 multiple, or reduce 
the amount of the subscription to the next lower $500 multiple. The 
maximum amount which may be added to or refunded in an exchange 
transaction is $499.99. For example, if the total redemption value of 
the securities is $4,253.33, the presenter may request no less than 
$4,000 and no more than $4,500 in Series HH bonds. In the first 
instance, the agent will pay the presenter $253.33; in the second, it 
will collect $246.67 when it accepts the exchange subscription.
    14. Cancellation of redeemed securities. [Sec. 321.13]
    (a) Paying agent stamp. [Sec. 321.13] Each redeemed security must be 
cancelled by the imprint of a payment stamp. The stamp may not exceed 
1\1/8\ inches in any dimension and must include the following 
information in the arrangement shown:
Paid $------ (for recording amount paid).
Name, location, and four-digit paying agent code number assigned by the 
          appropriate Federal Reserve Bank referred to in Sec. 321.25 
          (subject to abbreviation and arrangement by the Bank).

Date ------ (for recording actual date of payment).
By ------ (for use by agent in recording initials, or signature, codes, 
symbols, etc., of the officer or employee who approved or made the 
payment).

    (b) Procurement of stamps. [Sec. 321.12] A paying agent may 
requisition stamps from the Fiscal Agency Department of the appropriate 
Federal Reserve Bank referred to in Sec. 321.25 or purchase its own 
stamps. Stamps not provided by the appropriate Federal Reserve Bank 
referred to in Sec. 321.25 must conform exactly in size and design to 
that prescribed or approved by the Bank. To insure legible impressions, 
stamps should be replaced when worn.
    (c) Imprinting payment stamp and recording payment date. [Sec. 
321.13] After determining that a security is eligible for payment, the 
agent should carefully imprint the payment stamp on its face in the open 
space immediately to the left of, and as close as possible to, the issue 
date and issuing agent validating data. It is important not to overprint 
any data on the security, particularly the serial number, since the 
security will subsequently be microfilmed. No other stamps shall be 
placed on the face of the security. Care should be taken to record 
legibly the correct amount, the exact date of redemption, and the 
signature, initials, or other identification of the agent's employee who 
approved or made the payment. A dark-colored ink must be used, and care 
should be taken not to smear the stamp impression or the writing.
    (d) Redemption-exchange. [Sec. 321.13] Eligible Series E and EE 
savings bonds and savings notes presented for redemption-exchange shall 
be stamped ``PAID'' in the same manner as securities redeemed for cash, 
but only when all elements of the transaction have been completed, 
including receipt of any additional cash. The exact date of redemption 
shall also be recorded on the exchange subscription to enable the 
appropriate Federal Reserve Bank referred to in Sec. 321.25 to 
establish the proper issue date for the Series HH bonds. An officer or 
other authorized employee of the agent shall also sign the exchange 
subscription, in his or her official capacity, and furnish other 
requested information that identifies the paying agent.
    (e) MICR-encoding of payment information. [Sec. 321.13] An agent 
shall MICR-encode the redemption value in the ``Amount'' field on the

[[Page 231]]

face of each security or arrange to have this service performed by 
another financial institution. If the agent transmits securities in 
mixed cash letters, it must also MICR-encode the routing/transit number 
assigned to the Bureau of the Public Debt's savings bond activity in the 
``R/T'' field on the face of all pre-October 1957 paper securities and 
those punch card securities on which it does not already appear. The 
Bureau's routing/transit number is 000090007. Care should be taken in 
repairing MICR-encoded items so as not to obliterate any data in 
surrounding MICR fields or elsewhere on the face of the security.
    15. Transmittal of securities to Federal Reserve Bank. [Sec. 
321.14] An agent shall transmit and receive settlement for redeemed 
securities via EZ CLEAR, i.e., the Check Department of a Federal Reserve 
Bank or Branch or the Regional Check Processing Center. Redeemed 
securities may be transmitted in separately sorted or mixed cash letters 
to the Check Department of a Federal Reserve Bank or Branch, or to a 
Regional Check Processing Center, either directly, or via a parent 
office or correspondent institution. An agent shall transmit redeemed 
securities under cover of the appropriate transmittal document. Eligible 
Series E and EE savings bonds and savings notes redeemed in exchange for 
Series HH bonds must be transmitted for settlement via EZ CLEAR at the 
same time as the exchange application (Public Debt Form 3253) and any 
additional cash needed to complete the transaction are forwarded to the 
Fiscal Agency Department of the servicing Federal Reserve Bank referred 
to in Sec. 321.25. Eligible Series E and EE savings bonds and savings 
notes redeemed on exchange may be commingled with cash redemptions in 
mixed or separately sorted cash letters.
    16. Transmittal of securities to Federal Reserve Bank via fiscal 
agency system. [Sec. 321.14] The Fiscal Agency Department of a Federal 
Reserve Bank or Branch will not accept for settlement securities an 
agent has redeemed.
    17. Transmittal of securities to Federal Reserve Bank via EZ CLEAR. 
[Sec. 321.14]
    (a) Form to be used. [Sec. 321.14] The presenting institution shall 
transmit all redeemed securities to the Check Department of a Federal 
Reserve Bank or Branch or Regional Check Processing Center in accordance 
with the Bank's instructions. Except as otherwise provided in the Bank's 
instructions and operating circulars, cash letters may be comprised of 
one or more bundles of separately sorted redeemed securities (separately 
sorted cash letter) or one or more bundles of mixed items (mixed cash 
letter). The cash letter shall show the name, address, and ABA number of 
the presenting institution, the date of presentation, the total number 
of pieces transmitted, the value of each of the bundles in the cash 
letter, and the total value of the cash letter.
    (b) Composition of cash letters. [Sec. 321.14] Series A, B, C, D, 
E, EE, and I bonds and savings notes redeemed for cash or eligible 
Series E and EE bonds and savings notes redeemed on exchange may be 
commingled in mixed cash letters containing commercial checks and other 
items or separately sorted cash letters containing only redeemed 
securities. Each cash letter shall also contain a listing prepared in 
accordance with the Federal Reserve Bank's instructions.
    (c) Transmittal of securities. [Sec. 321.14] Cash letters containing 
redeemed securities shall be transmitted to a Federal Reserve Bank in 
accordance with the Bank's circulars and instructions.
    (d) Timing of transmittals. [Sec. 321.14] Cash letters containing 
redeemed securities should be transmitted according to the same schedule 
used for other commercial check collection system items.
    (e) Settlement for the audit of paid securities--(1) Settlement. 
[Sec. 321.14] The Federal Reserve Bank will make immediate settlement 
for the total value of redeemed securities as shown on each cash letter. 
Settlement will be made by a credit to the reserve or clearing account 
of the agent or designated correspondent institution. Data concerning 
redeemed security transmittals will be sent to the Bureau of the Public 
Debt for audit. The amount will be subject to adjustment if 
discrepancies are discovered after settlement has been made.
    (2) Audit and adjustment [Sec. 321.14] The Bureau of the Public 
Debt will audit all redemption data received from the Central Site as 
promptly as possible. Each presenting institution will, in due course, 
be notified by the Bank of any adjustments required. The Bank will 
adjust via a charge or credit to the presenting institution's Reserve or 
clearing account any amounts previously credited to that account.
    (3) Requests for Adjustments. Depositors who discover errors in 
their EZ CLEAR cash letters subsequent to deposit should allow sixty 
(60) calendar days from the date of their EZ CLEAR cash letter before 
requesting adjustments for the cash letter. This will allow sufficient 
time for the Treasury to classify the savings bonds, forward adjustments 
to the Central Site and for the Central Site to research and function 
adjustments to the depositor.
    (4) Separately Sorting Depositors should submit adjustment requests 
directly to the Central Site Adjustments Department in correspondence. 
However, all requests for adjustments due to incorrect cash letter 
crediting should be directed to the servicing Federal Reserve Bank.
    (5) Mixed Depositors should submit adjustment requests to their 
servicing Federal Reserve Bank.

[[Page 232]]

    18. Record of securities paid. [Sec. Sec. 321.14 and 321.24] A 
record of the serial number and the amount paid for each redeemed 
security must be retained by the agent for one year so that settlement 
can be made if the security is lost in transit, and so that the agent 
can process any subsequent adjustment as described in paragraph 17(e)(2) 
above. For that purpose, agents are authorized to microfilm the face and 
back of each security they redeem. Such film records shall be kept 
confidential and prints therefrom may be made only with the permission 
of the Bureau of the Public Debt or an appropriate Federal Reserve Bank.

           Subpart E--Losses Resulting from Erroneous Payments

    19. Report of erroneous payment. [Sec. 321.16] Any erroneous payment 
that comes to the attention of an agent should be reported immediately 
to the Bureau of the Public Debt, Parkersburg, WV 26106-1328. The 
nearest office of the Secret Service should also be notified if the 
agent believes that a security presented for redemption may be 
counterfeit or stolen, or if the circumstances of the presentation are 
suspicious in any other respect.
    20. Notice to agent. [Sec 321.17(a)] The paying agent will be 
notified if an erroneous payment has occurred. The notice will generally 
be in writing from the Bureau of the Public Debt. If an investigation is 
to be made, the notice will enable the agent to notify its bonding 
company, assemble pertinent information concerning the transaction for 
presentation during the investigation, and take any other action it 
deems appropriate to protect its interest.
    21. Determination of liability. [Sec. 321.18 and Sec. 321.21]
    (a) Upon completing the investigation, the Bureau of the Public Debt 
will examine the available information and determine whether a paying 
agent may be relieved of liability for any loss that may have resulted. 
If the paying agent cannot be relieved of liability, demand will be made 
upon the paying agent to reimburse the Treasury promptly. Any amount not 
paid within 30 days following the mailing of the first demand letter is 
subject to the following charges.
    (1) Interest shall accrue from the date the first demand letter is 
mailed to the date reimbursement is made. The rate of interest to be 
used will be the current value of funds rate published annually or 
quarterly in the Federal Register and in effect during the entire period 
in which the remittance is late.
    (2) Administrative costs shall be assessed as set out in the first 
demand letter, if reimbursement is not made within 30 days of the date 
the first demand letter is mailed.
    (3) Penalty charges shall be assessed, in accordance with 31 U.S.C. 
3717(e), if reimbursement is not made within 120 days of the date the 
first demand letter is mailed. The penalty charge will accrue and be 
calculated from 30 days after the date the first demand letter is mailed 
to the date of reimbursement.
    (b) When a paying agent fails, within 120 days of the date the first 
demand letter is mailed, to make such reimbursement or to submit new 
evidence sufficient for Public Debt to change the determination of 
liability, by virtue of the paying agent's acceptance of settlement via 
credits to a Reserve, correspondent, or clearing account with a Federal 
Reserve Bank or Branch, the agent is deemed to have authorized the 
Federal Reserve Bank to debit the amount due from that account 
designated or utilized by the agent at the Federal Reserve Bank or 
Branch. An institution, designated by a paying agent to receive 
settlement on its behalf, in authorizing such paying agent to utilize 
its Reserve, correspondent, or clearing account on the books at the 
Federal Reserve Bank shall similarly be deemed to authorize such debits 
from that account.
    (c) Reconsideration of a determination of liability will be made in 
any case when a paying agent so requests and presents additional 
evidence and information regarding the transaction.
    22. Relief for lack of timely notice. [Sec 321.18] A paying agent 
will be relieved of liability to the United States for any loss 
resulting from the erroneous payment of securities where the Secretary 
of the Treasury, or his designee, determines that written notice of 
either liability or potential liability has not been given to the agent 
within ten years of the date of the erroneous payment.

                       Subpart F--Forwarding Items

    23. Securities forwarded to Federal Reserve Bank for payment. [Sec 
321.22]
    (a) General. [Sec 321.22] Securities presented for cash payment or 
redemption-exchange, that an agent is not authorized to redeem, shall be 
forwarded to the Fiscal Agency Department of the appropriate Federal 
Reserve Bank referred to in Sec. 321.25, with all required supporting 
documentation and any necessary payment instructions.
    (b) Signature to and certification of request for payment. [Sec 
321.22] An agent qualified under part 330 (Circular No. 888) may elect 
to specially endorse securities for presenters in lieu of requiring 
completion of the requests for payment. Unless this procedure is used, 
the presenter must sign the request on each security and the signature 
must be certified. Before completing the certification, the agent should 
establish the identity of the presenter. The Treasury's identification 
guidelines should be followed in view of the potential liability that 
attaches to such certification.
    (c) Address and Taxpayer identifying number. [Sec 321.22] In every 
case, a current address shall be furnished. The presenter's taxpayer

[[Page 233]]

identifying number (social security number or employer identification 
number) shall be provided if it is not included in the inscription.
    (d) Redemption-exchange. [Sec 321.22] For redemption-exchange 
transactions submitted as forwarding items, the issue date of the Series 
HH bonds will be the first day of the month in which a correctly 
completed and signed exchange subscription and full payment are received 
by the appropriate Federal Reserve Bank referred to in Sec. 321.25.
    (e) Partial redemption. [Sec. Sec. 321.9(l) and 321.22] Partial 
redemption of a security other than a $25 Series E bond or savings note, 
a $50 Series EE or I bond, or a $500 Series H or HH bond may be made by 
the appropriate Federal Reserve Bank referred to in Sec. 321.25. The 
amount paid must be equal to the redemption value of one or more 
authorized denominations on the date of the transaction. If a security 
is received by an agent for partial redemption, the words ``to the 
extent of $ (face amount) and reissue of the remainder'' should be added 
to the first sentence of the request for payment. The request should 
then be completed in the regular manner and the signature of the 
presenter certified or guaranteed. The security shall be forwarded to 
the Fiscal Agency Department of a Federal Reserve Bank.

                   Subpart G--Miscellaneous Provisions

    24. Fees and charges. [Sec 321.23] Service fees are not intended to 
compensate paying agents for the reporting of interest paid as part of 
the redemption value of securities as required by Federal Tax 
Regulations (26 CFR 1.0649-4).
    Fees will be paid to the presenting institution for securities 
redeemed during each calendar month that are submitted in separately 
sorted cash letters; such fee payments will be made only by ACH. No fees 
will be paid for securities received by the Federal Reserve Bank in 
mixed cash letters. The Bank will charge the presenting institution for 
processing redeemed securities received in mixed cash letters. Inquiries 
regarding separately sorted cash letters should be directed to the 
Pittsburgh Branch, Federal Reserve Bank of Cleveland, P.O. Box 867, 
Pittsburgh, PA 15230-0867. Inquiries regarding mixed cash letters should 
be directed to the Federal Reserve Bank or Branch or Regional Check 
Processing Center where the cash letters were directed.
    25. Claims on account of lost securities [Sec. 321.24] If a 
security redeemed by an agent is lost, stolen, or destroyed while in the 
custody of the agent, or in transit prior to settlement or audit, relief 
will be considered, provided the security can be identified by serial 
number. [See paragraph 18 of this appendix regarding the maintenance of 
records of redeemed securities]. The presenting institution should 
resubmit a photocopy of the security to obtain settlement in accordance 
with established procedures. Questions concerning the established 
procedures should be referred to the servicing Federal Reserve Bank.
    26. Education savings bond program. [Sec. 321.7(g)]
    (a) Section 6009 of the Technical Corrections and Miscellaneous 
Revenue Act of 1988, Public Law 100-647 (see 26 U.S.C. 135), permits 
taxpayers to exclude all, or a portion, of the interest earned on Series 
EE savings bonds bearing issue dates on or after January 1, 1990, and on 
Series I savings bonds from their income under certain conditions. This 
legislation did not create new savings bond redemption and interest 
reporting requirements for savings bond paying agents. However, if a 
bond owner indicates that he or she intends to seek the special tax 
treatment offered under this program, the paying agent is encouraged to 
provide assistance by:
    (1) Suggesting that he or she read IRS Form 8815 (particularly, the 
instructions on the form) as well as relevant portions of IRS 
Publication 17, ``Your Federal Income Tax ``, and Publication 550, 
``Investment Income and Expenses,'' for detailed information; and
    (2) Suggesting that the presenter make a record of eligible bonds 
redeemed either by using IRS Optional Form 8818, or otherwise.
    (b) Bond owners seeking to benefit from the special tax exclusion, 
available through the savings bond education feature, should be aware of 
the following basic rules:
    (1) Only interest earned on Series EE bonds bearing issue dates on 
or after January 1, 1990, is eligible for the exclusion of interest 
income, where the proceeds from the redemption of the bonds are used to 
pay qualified post-secondary education expenses. Interest received on 
bonds bearing issue dates prior to January 1, 1990, is not eligible.
    (2)(i) The bonds must be registered in the name of a taxpayer as 
sole owner, or in the name of the taxpayer as co-owner, with the 
taxpayer's spouse as the other co-owner. Bonds registered in the name of 
the taxpayer's child, as owner or co-owner, will not qualify for the 
exclusion. A taxpayer may purchase bonds registered in beneficiary form, 
i.e., ``A payable on death to B'', naming any individual, including a 
child, as beneficary.
    (ii) The bonds must be registered in the name of a taxpayer who has 
attained the age of 24 years at the time of issue. Generally, a taxpayer 
must be 24 years of age on or before the first day of the month in which 
the taxpayer purchases the bond, because savings bonds bear the issue 
date of the first day of the month in which purchased.
    (3) The bond must be redeemed by the owner or co-owner. It may not 
be transferred to-the educational institution.
    (4) If the entire amount of the proceeds of the eligible bonds is 
less than, or equal to,

[[Page 234]]

the qualified post-secondary educational expenses incurred by the owner, 
his or her spouse, or his or her dependent, all interest received is 
excludable, subject to the limitations in paragraph (b)(7) of this 
section. If the amount of the proceeds exceeds such qualified expenses, 
the excludable portion of the interest will be reduced by a pro rata 
amount.
    (5) Qualified educational expenses are limited to tuition and fees 
required for the enrollment of, or attendance by, the taxpayer, or the 
taxpayer's spouse or dependent, at an eligible educational institution. 
These expenses are calculated net of scholarships, fellowships, 
employer-provided educational assistance, and other tuition reduction 
amounts, and must be incurred during the tax year of the redemption of 
the bonds for which the interest exclusion is claimed.
    (6) Eligible educational institutions include those defined in 
sections 1201(a) and 481(a)(1) (C) and (D) of the Higher Education Act 
of 1965, as in effect on October 21, 1988, excluding proprietary 
institutions. Such eligible institutions include post-secondary 
institutions, and vocational schools that meet the standards for 
participation in Federal financial aid programs, excluding proprietary 
institutions. Additional gudiance concerning eligible institutions 
should be obtained from the Department of Education.
    (7)(i) Interest exclusion benefits are based on the modified 
adjusted gross income of the taxpayer. For taxpayers filing a joint 
Federal income tax return, the exclusion is gradually decreased for 
modified adjusted gross income between $60,000 and $90,000. Married 
taxpayers filing jointly who have modified adjusted gross incomes above 
$90,000 are ineligible for the exclusion. For single taxpayers and heads 
of households, the exclusion is gradually decreased for such incomes 
between $40,000 and $55,000. Single taxpayers with such incomes above 
$55,000 are ineligible for the exclusion. After 1990, these income 
limits will be adjusted for inflation.
    (ii) Married taxpayers must file a joint return in order to qualify 
for the exclusion. Married taxpayers filing separate returns will not 
qualify for the exclusion, regardless of their modified adjusted gross 
incomes.
    (8) The taxpayer is responsible for maintaining adequate records of 
bond redemption transactions to support claims for the exclusion, in 
accordance with applicable rules and regulations of the Internal Revenue 
Service.
    (9) The Internal Revenue Service should be consulted for advice 
concerning the eligibility and tax treatment of bonds for the income 
exclusion under the educational savings bond program.
    27. Additional information. [Sec 321.25] Requests for additional 
advice, clarification of the payment regulations or this Appendix, and 
other matters relating to the actions of a financial institution as 
paying agent should generally be made to the appropriate Federal Reserve 
Bank referred to in Sec. 321.25.

[53 FR 37511, Sept. 26, 1988; 53 FR 39581, Oct. 7, 1988, as amended at 
55 FR 35397, Aug. 29, 1990; 59 FR 10538, Mar. 4, 1994; 61 FR 37197, July 
16, 1996; 63 FR 38042, 38043, July 14, 1998; 68 FR 2666, Jan. 17, 2003; 
68 FR 7427, Feb. 14, 2003]



PART 323_DISCLOSURE OF RECORDS--Table of Contents




Sec.
323.1 Purpose of regulations.
323.2 Rules governing availability of information.
323.3 Materials available for inspection and copying.
323.4 Requests for identifiable records.
323.5 Fees.

    Authority: 80 Stat. 379; sec. 3, 60 Stat. 238, as amended; 5 U.S.C. 
301, 552.

    Source: 32 FR 9967, July 7, 1967, unless otherwise noted.



Sec. 323.1  Purpose of regulations.

    The regulations of this part are issued to implement 5 U.S.C. 552(a) 
(2) and (3). The requirements of 5 U.S.C. 552(a)(1) are met through the 
publication in the Federal Register of the statement of the 
organization, functions and procedures available of the Fiscal Service, 
including the Bureau of the Public Debt, and revisions thereof, and 
through the publication therein of substantive and procedural 
regulations of the Bureau. A synopsis of the statements of Bureau 
organization, functions and procedures available will be published 
annually by the Office of the Federal Register in the U.S. Government 
Organization Manual.



Sec. 323.2  Rules governing availability of information.

    (a) General. The records of the Bureau of the Public Debt required 
by 5 U.S.C. 552 to be made available to the public shall be made 
available in accordance with the regulations on the Disclosure of 
Records of the Office of the Secretary issued under 5 U.S.C. 552 and 
published as part I of title 31 of the Code of Federal Regulations, 32 
FR 9562, July 1, 1967, except as specifically provided in this part.

[[Page 235]]

    (b) Limitations on the availability of records relating to 
securities. Records relating to the purchase, ownership of, and 
transactions in Treasury securities or other securities handled by the 
Bureau of the Public Debt for government agencies or wholly or partially 
Government-owned corporations will ordinarily be disclosed only to the 
owners of such securities, their executors, administrators or other 
legal representatives or to their survivors or to investigative and 
certain other agencies of the Federal and State governments, to trustees 
in bankruptcy, receivers of insolvents' estates or where a proper order 
has been entered requesting disclosure of information to Federal and 
State courts. These records are confidential because they relate to 
private financial affairs of the owners under this Part. In addition, 
the information falls within the category of ``personnel and medical 
files and similar files the disclosure of which would constitute a 
clearly unwarranted invasion of personal privacy'' under the Freedom of 
Information Act (FOIA), 5 U.S.C. 552(b)(6). FOIA Exemption (b)(6) 
protects the privacy of living persons who own securities as well as the 
close survivors of deceased owners. Privacy interests, in the sense of 
the right to control, use, or disclose information about oneself, cease 
at death. However, the exemption protects the deceased person's family-
related privacy interests that survive death where disclosure would 
cause embarrassment, pain, grief, or disrupt the peace of mind, of the 
surviving family. The Bureau of the Public Debt will determine, under 
FOIA exemption (b)(6), whether disclosure of the records is in the 
public interest by balancing the surviving family members' privacy 
interest against the public's right to know the information.

[32 FR 9967, July 7, 1967, as amended at 68 FR 67944, Dec. 5, 2003]



Sec. 323.3  Materials available for inspection and copying.

    (a) Availability. The materials which are required under 5 U.S.C. 
552(a)(2) to be made available for inspection and copying are:
    (1) Final opinions or orders made in the adjudication of cases. Any 
issued by the Bureau of the Public Debt would be in the form of letters 
or memorandums setting out determinations made in disposing of any 
matter before the Bureau.
    (2) Statements of policy and interpretations which have been adopted 
by the Bureau but not published in the Federal Register.
    (3) Administrative staff manuals and instructions to the staff that 
affect any member of the public. Some Federal Reserve Bank memorandums 
and Public Debt memorandums will be made available under this provision.
    (b) Location. The materials listed in paragraph (a) of this section 
are available for inspection and copy during office hours in the Public 
Reading Room of the Treasury Department, 15th Street and Pennsylvania 
Avenue NW., Washington, DC 20220.



Sec. 323.4  Requests for identifiable records.

    (a) Procedure. (1) A written request for an identifiable record 
relating to a U.S. savings bond or note shall be addressed to the Deputy 
Commissioner, Bureau of the Public Debt, Chicago, IL 60605.
    (2) A request for an identifiable record relating to any Treasury 
Department security, other than a savings bond or note, or a security of 
a Government agency or a wholly or partially Government-owned 
corporation, the record of which is maintained by the Bureau of the 
Public Debt, shall be addressed to the Chief, Division of Loans and 
Currency, Bureau of the Public Debt, Washington, DC 20226.
    (3) A request for an identifiable record relating to any security of 
a Government agency or wholly or partially Government-owned corporation, 
the record for which is maintained by the Federal Reserve Bank of New 
York, shall be addressed to the Federal Reserve Bank of New York, New 
York, NY 10045.
    (4) A written request for any identifiable record that the Bureau of 
the Public Debt has other than those set out in paragraphs (a) (1), (2), 
and (3) of this section shall be addressed to the Commissioner of the 
Public Debt, Washington, DC 20220.

[[Page 236]]

    (5) A request may be presented in person at the office to which a 
written request would be addressed.
    (b) Determination of availability. Determination as to whether or 
not a requested record shall be disclosed will be made by the Officer to 
whom the request should be directed under paragraph (a) of this section, 
and by the Bureau of Public Debt Information Officer for requests 
directed to the Office of the Commissioner, subject to an appeal to the 
Commissioner of the Public Debt. The decision of the Commissioner shall 
constitute final agency action unless he refers the appeal to the Fiscal 
Assistant Secretary, in which case the decision of the Fiscal Assistant 
Secretary shall constitute final agency action.



Sec. 323.5  Fees.

    The fees provided in part 1 of title 31 of the CFR (32 FR 9562, July 
1, 1967), shall apply to all requests for identifiable records under 
this part except as follows:
    (a) No charge will be made for verifying the record of a savings 
bond or note identified by series and denomination and either the 
registration and issue date or the serial number at the request of the 
owner, coowner, or surviving beneficiary or person entitled to the 
security under the applicable regulations.
    (b) No charge will be made for verifying the record of a registered 
Treasury security, other than a savings bond or note, or a registered 
security of a Government agency or a wholly or partially Government-
owned corporation, identified as to loan and registration for an owner, 
joint owner or person entitled to the security under the applicable 
regulations.
    (c) No charge will be made for advising a person who has submitted 
satisfactory evidence of ownership as to the status of a bearer Treasury 
security or a bearer security of a Government agency or a wholly or 
partially Government-owned corporation.
    (d) No charge will be made for furnishing an owner, coowner, joint 
owner, surviving beneficiary, or person who is entitled to the security 
under the applicable regulations a photocopy or similar reproduction of 
any Treasury security, with any necessary supporting documents, which it 
is alleged was improperly paid or was reissued, transferred or redeemed 
on a forged or defective request, endorsement, or assignment.
    (e) Fees may be waived for other classes of requested records upon a 
finding by the Commissioner of the Public Debt that the person 
requesting the information is entitled to the record requested without 
charge.



PART 328_RESTRICTIVE ENDORSEMENTS OF U.S. BEARER SECURITIES--Table of 
Contents




Sec.
328.1 Scope of regulations.
328.2 Definitions.
328.3 Authorization for restrictive endorsements.
328.4 Effect of restrictive endorsements.
328.5 Forms of endorsement.
328.6 Requirements for endorsement.
328.7 Shipment of securities.
328.8 Loss, theft, or destruction of securities bearing restrictive 
          endorsements.
328.9 Miscellaneous.

    Authority: R.S. 3706; 40 Stat. 288, 502, 1309; 46 Stat. 20; 48 Stat. 
343; 49 Stat. 20; 56 Stat. 189; 73 Stat. 622; 85 Stat. 5, 74 (31 U.S.C. 
738a, 739, 752, 752a, 753, 754, 754a and 754b); and 5 U.S.C. 301.

    Source: 38 FR 10682, Apr. 30, 1973, unless otherwise noted.



Sec. 328.1  Scope of regulations.

    The regulations in this part are applicable only to U.S. bearer 
securities \1\ presented:
---------------------------------------------------------------------------

    \1\ Certain agencies of the United States and certain Government and 
Government-sponsored corporations also authorize the restrictive 
endorsement of bearer securities.
---------------------------------------------------------------------------

    (a) By or through banks for payment at or after their maturity or 
call date, or in exchange for any securities under any exchange 
offering,
    (b) By banks for conversion to book-entry securities,
    (c) By or through banks at any time prior to their maturity or call 
date for redemption at par and application of the entire proceeds in 
payment of Federal estate taxes, provided said securities by the terms 
of their issue are eligible for such redemption, and

[[Page 237]]

    (d) By Service Center Directors and District Directors, Internal 
Revenue Service, for redemption, with the proceeds to be applied in 
payment of taxes (other than securities presented under paragraph (c) of 
this section).

These regulations do not apply to bearer securities presented for any 
other transactions, or to registered securities assigned in blank, or to 
bearer, or so assigned as to become, in effect, payable to bearer.



Sec. 328.2  Definitions.

    Certain words and terms, as used in these regulations, are defined 
as follows:
    (a) Banks refer to, and include, incorporated banks (i.e., banks 
doing a general commercial banking business), incorporated trust 
companies (i.e., trust companies doing either a general banking business 
or a general trust business), and savings and loan associations, 
building and loan associations, and such other financial institutions as 
may be designated by the Federal Reserve banks. This definition is 
limited to institutions incorporated within the United States, its 
territories and possessions, the Commonwealth of Puerto Rico and the 
Canal Zone.
    (b) Bearer securities or securities are those which are payable on 
their face to bearer, the ownership of which is not recorded. They 
include Treasury bonds,Treasury notes, Treasury certificates of 
indebtedness, and Treasury bills.



Sec. 328.3  Authorization for restrictive endorsements.

    (a) By banks. Banks are authorized, under the conditions and in the 
form hereinafter provided, to place restrictive endorsements upon the 
face of bearer securities owned by themselves or their customers for the 
purpose of presentation to Federal Reserve banks or branches, or to the 
Bureau of the Public Debt, as follows:
    (1) For payment or redemption--at any time within 1 calendar month 
prior to their maturity date, or the date on which they become payable 
pursuant to a call for redemption, or at any time after their maturity 
or call date;
    (2) For exchange--during any period for their presentation pursuant 
to an exchange offering;
    (3) For redemption at par in payment of Federal estate taxes (only 
eligible securities)--at any time prior to their maturity or call 
redemption date; and
    (4) For conversion to book-entry securities under subpart O of part 
306 of this chapter--at any time prior to their maturity or call 
redemption date.
    (b) By Service Center Directors and District Directors, Internal 
Revenue Service. Service Center Directors and District Directors, 
Internal Revenue Service, are authorized, under the conditions and in 
the form hereinafter provided, to place restrictive endorsements upon 
the face of bearer securities for the purpose of presentation to Federal 
Reserve banks or branches, or to the Bureau of the Public Debt, for 
redemption and application of the proceeds in payment of taxes (other 
than securities presented for redemption at par and application of the 
proceeds in payment of Federal estate taxes).
    (c) Instructions from Federal Reserve banks. Federal Reserve banks 
will inform eligible banks and Service Center Directors and District 
Directors, Internal Revenue Service, in their respective districts as to 
the procedure to be followed under the authority granted by these 
regulations. Restrictive endorsements shall not be placed on securities 
until such information is received from the Federal Reserve banks.



Sec. 328.4  Effect of restrictive endorsements.

    Bearer securities bearing restrictive endorsements as herein 
provided will thereafter be nonnegotiable and payment, redemption, or 
exchange will be made only as provided in such endorsements.



Sec. 328.5  Forms of endorsement.

    (a) When presented by banks--(1) For payment or exchange. The 
endorsement placed on a bearer security presented for payment or 
exchange by a bank should be in the following form:

For presentation to the Federal Reserve Bank of --------------------, 
Fiscal Agent of

[[Page 238]]

the United States, for redemption or in exchange for securities of a new 
issue, in accordance with written instructions submitted by ------------
--------. (Insert name of presenting bank)

    (2) For redemption at par. The endorsement placed on a bearer 
security presented for redemption at par in payment of Federal estate 
taxes should be in the following form:

For presentation to the Federal Reserve Bank of ----------------, Fiscal 
Agent of the United States, for redemption at par in payment of Federal 
estate taxes, in accordance with written instructions submitted by ----
----------------------------. (Insert name of presenting bank)

    (b) For conversion to book-entry securities. The endorsement placed 
on a bearer security presented for conversion to a book-entry security 
shall be in the following form:

For presentation to the Federal Reserve Bank of ------------------, 
Fiscal Agent of the United States, for conversion to book-entry 
securities by ------------------. (Insert name of presenting bank)

    (c) When presented by Service Center Directors or District 
Directors, Internal Revenue Service. The endorsement placed on a bearer 
security by a Service Center Director or a District Director, Internal 
Revenue Service, should be in the following form:

For presentation to the Federal Reserve Bank of --------------;, Fiscal 
Agent of the United States, for redemption, the proceeds to be credited 
to the account of the Service Center Director, Internal Revenue Service, 
at ----------, for credit on the Federal ------------------ (Income, 
gifts, or other) taxes due from ------------------. (Name and address)



Sec. 328.6  Requirements for endorsement.

    (a) On bearer securities. The endorsement must be imprinted in the 
lefthand portion of the face of each security with the first line 
thereof parallel to the left edge of the security and in such manner as 
to be clearly legible and in such position that it will not obscure the 
serial number, series designation, or other identifying data, and cover 
the smallest possible portion of the text on the face of the security. 
The dimensions of the endorsement should be approximately 4 inches in 
width and 1\1/2\ inches in height, and must be imprinted by stamp or 
plate of such character as will render the endorsement substantially 
ineradicable. The name of the Federal Reserve bank of the district must 
appear on the plate or stamp used for the imprinting of the endorsement, 
and presentation to the appropriate branch of the Federal Reserve bank 
named will be considered as presentation to the bank. When securities 
are to be presented to the Bureau of the Public Debt, the words ``United 
States Treasury'' should be used in lieu of the words ``Federal Reserve 
Bank of --------------, Fiscal Agent of the United States.'' No 
subsequent endorsement will be recognized. If the form of endorsement on 
a security is different than that prescribed in Sec. 328.5, the 
provisions of Sec. Sec. 328.7 and 328.8 shall not apply to the 
security.
    (b) On coupons. Unmatured coupons attached to restrictively endorsed 
securities should be canceled by imprinting the prescribed endorsement 
in such manner that a substantial portion of the endorsement will appear 
on each such coupon. If any such coupons are missing, deduction of their 
face amount will be made in cases of redemption, and in cases of 
exchange, remittance equal to the face amount of the missing coupons 
must accompany the securities. All matured coupons, including coupons 
which will mature on or before the date of redemption or exchange 
(except as otherwise specifically provided in an announcement of an 
exchange offering), should be detached from securities upon which 
restrictive endorsements are to be imprinted.



Sec. 328.7  Shipment of securities.

    Securities bearing restrictive endorsements may be shipped, at the 
risk and expense of the shipper, by registered mail, messenger, armored 
car service, or express to the Federal Reserve bank of the district in 
which the presenting bank, the Service Center Director, or the District 
Director, Internal Revenue Service, is located, or to the appropriate 
branch of such Federal Reserve bank, shipments to the Bureau of the 
Public Debt, Washington, DC, should be made by messenger or armored car.

[[Page 239]]



Sec. 328.8  Loss, theft, or destruction of securities bearing 
restrictive endorsements.

    (a) General. Relief will be provided on account of securities 
bearing restrictive endorsements proved to have been lost, stolen or 
destroyed, upon the owner's application, in the same manner as 
registered securities which have not been assigned. (See subpart N of 
the current revision of Department Circular No. 300, the general 
regulations governing United States securities.) Except for bearer 
securities submitted for redemption at par in payment of Federal estate 
taxes, a bank will be considered the owner of securities handled on 
behalf of customers unless it otherwise requests. The application for 
relief (Form PD 2211) and instructions will be furnished by the Federal 
Reserve banks.
    (b) Bond of indemnity. Where securities bearing restrictive 
endorsements shipped by a bank have been lost, stolen, or destroyed, a 
bond of indemnity with surety satisfactory to the Secretary of the 
Treasury will be required from the owner. If such bond is executed by a 
bank or other corporation, the execution must be authorized by general 
or special resolution of the board of directors, or other body 
exercising similar functions under its bylaws. Ordinarily, no surety 
will be required on a bond executed by a presenting bank. The Secretary 
of the Treasury reserves the right, however, to require a surety in any 
case in which he considers such action necessary for the protection of 
the United States.



Sec. 328.9  Miscellaneous.

    The provisions of this circular are subject to the current revision 
of Department Circular No. 300. The Secretary of the Treasury reserves 
the right at any time to amend, supplement, or withdraw any or all of 
the provisions of these regulations.



PART 330_REGULATIONS GOVERNING PAYMENT UNDER SPECIAL ENDORSEMENT OF 
UNITED STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES (FREEDOM 
SHARES)--Table of Contents




Sec.
330.0 Purpose.
330.1 Definition of terms.
330.2 Qualification for use of special endorsement.
330.3 Special endorsement of securities.
330.4 Guaranty given to the United States.
330.5 Evidence of owner's or beneficiary's authorization to affix 
          special endorsement.
330.6 Securities eligible for special endorsement.
330.7 Payment or redemption--exchange by agent.
330.8 Payment or redemption--exchange by Federal Reserve Bank.
330.9 Fiscal agents.
330.10 Modifications of other circulars.
330.11 Supplements, amendments, or revisions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 3105.

    Source: 53 FR 37519, Sept. 26, 1988, unless otherwise noted.



Sec. 330.0  Purpose.

    The regulations in this part establish a procedure under which 
qualified paying agents may specially endorse United States Savings 
Bonds of certain series and United States Savings Notes (Freedom 
Shares), and either redeem the securities so endorsed, or forward them 
to a Federal Reserve Bank for redemption, with or without the owner's 
signature to the requests for payment.



Sec. 330.1  Definition of terms.

    As used in this part:
    (a) Federal Reserve Bank or Bank refers to the Federal Reserve Bank 
providing savings bond services to the district in which a paying agent 
is located. See Sec. 330.9.
    (b) Owner(s) means the person(s) named as registered owner or 
coowners on a bond or note, or as the designated beneficiary who has 
succeeded to ownership of the bond or note upon the death of the owner. 
For the purposes of special endorsement, but not payment, by a qualified 
agent, the term may also

[[Page 240]]

include fiduciaries, corporations, partnerships, associations, and other 
entities named on a security, where such registration is authorized.
    (c) Paying agent(s) or agent(s) refers to an eligible financial 
institution qualified under the provisions of this part to specially 
endorse securities and qualified, under the provisions of Department of 
the Treasury Circular No. 750, current revision (31 CFR part 321), to 
redeem eligible savings bonds and notes. The term includes the branches 
of a qualified agent that redeem bonds and notes and are themselves 
directly accountable for such redemptions.
    (d) Redemption and payment are used interchangeably for payment of a 
bond or note in accordance with the terms of its offering and the 
regulations governing it, and include redemption-exchange.
    (e) Redemption-exchange means any authorized redemption of eligible 
securities for the purpose of applying the proceeds in payment for other 
securities offered in exchange by the Treasury.
    (f) Savings bond(s) or bond(s) means a United States Savings Bond of 
Series A, B, C, D, E, EE, or I.
    (g) Savings notes(s) or notes(s) means a United States Savings Note 
(Freedom Share).
    (h) Security or securities means a savings bond or note, as defined 
in paragraphs (f) and (g) of this section.
    (i) Special endorsement means a procedure under which a security is 
redeemed by an agent, qualified under the provisions of this part, for 
cash or on redemption-exchange (or forwarded for redemption to a 
designated Federal Reserve Bank, where appropriate), utilizing a special 
stamp placed on the security in lieu of a request for payment signed by 
the owner.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10538, 10539, Mar. 4, 
1994; 63 FR 38044, July 14, 1998]



Sec. 330.2  Qualification for use of special endorsement.

    (a) Application for authority. Any financial institution qualified 
as a paying agent of savings bonds and notes under the provisions of 
Department of the Treasury Circular No. 750, current revision, may 
establish its eligibility to employ the special endorsement procedure by 
executing and submitting the appropriate application-agreement form to 
the designated Federal Reserve Bank. In executing the form, the agent 
certifies that, by duly executed resolution of its governing board or 
committee, it has been authorized to apply for the privilege of paying 
and processing securities in accordance with the provisions and 
conditions of this part (Circular No. 888, including all supplements, 
amendments, and revisions, and any related instructions). If the 
application is approved, the designated Federal Reserve Bank will issue 
a certificate of qualification.
    (b) Agents previously qualified. Paying agents qualified under 
previous revisions of this part are authorized to continue to act 
without requalification. They shall, however, be subject to the terms 
and conditions of the previously executed application and these 
regulations in the same manner and to the same extent as though they had 
requalified hereunder.
    (c) Termination of qualification. The Secretary of the Treasury 
reserves the right to withdraw the special endorsement authority from 
any paying agent at any time. Such authority will also be terminated at 
any time at the request of the paying agent. In either event, formal 
notice of the termination shall be given to the agent in writing by the 
designated Federal Reserve Bank.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.3  Special endorsement of securities.

    (a) Form of endorsement. Each security processed under the 
provisions of this part shall bear the following endorsement:

    Request by owner and validity of transaction guaranteed in 
accordance with T.D. Circular No. 888, as revised. (Name, location, and 
paying agent code number assigned by designated Federal Reserve Bank.)


This endorsement must be legibly impressed in black or other dark-
colored ink on the back of the security in the space provided for the 
owner to request payment.

[[Page 241]]

    (b) Endorsement stamps. Endorsement stamps may be obtained from the 
designated Federal Reserve Bank or, with its approval, purchased by the 
agent. Requests for stamps to be furnished or approved by the Bank must 
be made in writing by an officer of the paying agent. Stamps procured by 
an agent may not exceed a space bounded by 1\3/4\ inches vertically and 
3 inches horizontally. They must follow exactly the wording prescribed. 
They may also include space for the transaction date and the initials or 
signature of the officer or employee authorized to approve the 
transaction.
    (c) Securities registered in coownership or beneficiary form. In the 
case of securities registered in coownership or beneficiary form, the 
agent shall indicate which person, whose name is inscribed thereon, 
requested payment or exchange by encircling in black or other dark-
colored ink the name of that person (or both coowners, if the request is 
joint) in the inscription on the face of the securities.
    (d) Restrictions. Under no circumstances shall the special 
endorsement procedure be used to give effect to a transfer, 
hypothecation or pledge of a security, or to permit payment to any 
person other than the owner, coowner, or, where appropriate, 
beneficiary. Violation of these provisions will be cause for withdrawal 
of an agent's authority to process securities under the special 
endorsement procedure, and may involve additional penalties if the 
circumstances warrant such action.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.4  Guaranty given to the United States.

    By the act of paying or presenting to a designated Federal Reserve 
Bank, for payment or exchange, a security on which it has affixed the 
special endorsement, a payment agent shall be deemed to have:
    (a) Unconditionally guaranteed to the United States the validity of 
the transaction, including the identification of the owner and the 
disposition of the proceeds or the new bonds, as the case may be, in 
accordance with the presenter's instruction;
    (b) Assumed complete and unconditional liability to the United 
States for any loss which may be incurred by the United States as a 
result of the transaction; and
    (c) Unconditionally agreed to make prompt reimbursement for the 
amount of any loss, upon request of the Department of the Treasury.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 330.5  Evidence of owner's or beneficiary's authorization to affix 
special endorsement.

    (a) Form of authorization. The Treasury does not prescribe the form 
or type of instructions an agent must obtain from each owner, co-owner 
or beneficiary in order to use the special endorsement procedure. In the 
case of eligible Series E and EE savings bonds and savings notes 
presented for a redemption-exchange, the owner, coowner or beneficiary 
authorized to request the exchange (as specified in Circular No. 750, 
Sec. 321.8(b)), must sign the exchange subscription even though the 
eligible Series E and EE savings bonds and savings notes are specially 
endorsed.
    (b) Securities in coownership or beneficiary form. Securities 
registered in coownership or beneficiary form should be accepted for 
special endorsement only for immediate payment or exchange. Acceptance 
of bonds and notes for processing at some future date should be avoided 
as authority to utilize such endorsement generally expires upon the 
death of the owner or coowner on whose behalf securities were to be 
paid. Requests for payment of securities present by the surviving 
beneficiary must be supported by a certificate of death for the owner 
named thereon, as required by Circular No. 750, part 321 and the 
appendix to that part.
    (c) Record of authorization. Agents should maintain such records as 
may be necessary to establish the receipt of, and compliance with, 
instructions supporting the special endorsement. If the agent elects to 
make notations on the backs of the securities to serve as a record, the 
Bureau of the Public Debt will undertake to produce, on request, 
photocopies of such securities at any

[[Page 242]]

time up to ten years after the redemption date. However, the Bureau does 
not not assume responsibility for the adequacy of such notations, for 
the legibility of any photocopy, or for failure to produce a photocopy 
from its records.

[53 FR 37519, Sept. 26, 1988, as amended at 63 FR 38044, July 14, 1998]



Sec. 330.6  Securities eligible for special endorsement.

    (a) General authority. A qualified agent is authorized to affix the 
special endorsement to:
    (1) Savings bonds of Series A, B, C, D, E, EE, and I and savings 
notes to be redeemed for cash; and
    (2) Eligible savings bonds of Series E and EE and savings notes to 
be redeemed in exchange for Series HH bonds under the provisions of 
Circular No. 2-80 (31 CFR part 352).
    (b) Securities which may not be specially endorsed. The special 
endorsement procedure may not be used in any case in which payment or 
exchange:
    (1) Is requested by a parent on behalf of a minor child named on the 
security, or
    (2) Requires documentary evidence, under regulations contained in 
Circulars Nos. 530 and 3-80 (31 CFR parts 315 and 353, respectively), 
except as indicated in Sec. 330.5.
    (c) Securities owned by nonresident aliens. As securities owned by a 
nonresident alien individual, or a nonresident foreign corporation, 
partnership, or association, may be subject to the nonresident alien 
withholding tax, bonds and notes held or received by an agent for the 
account of such owners must be forwarded to the designated Federal 
Reserve Bank for redemption, even though the agent may specially endorse 
the securities.

[53 FR 37519, Sept. 26, 1988, as amended at 59 FR 10539, Mar. 4, 1994; 
63 FR 38044, July 14, 1998]



Sec. 330.7  Payment or redemption--exchange by agent.

    Specially endorsed securities may be paid in cash or, if they are 
eligible Series E and EE savings bonds or savings notes, redeemed in 
exchange for Series HH bonds pursuant to the authority and subject, in 
all other respects, to the provisions of Circular No. 750, current 
revision (31 CFR part 321), its appendix, and any other instructions 
issued under its authority. Each specially endorsed bond or note paid by 
an agent must have the agent's payment stamp imprinted on its face and 
show the date and amount paid. Securities so paid should be combined 
with other securities paid under that Circular and presented for 
settlement through EZ CLEAR. Securities redeemed by an agent in an 
exchange must be presented for settlement through EZ CLEAR separately 
from, but at the same times as, an exchange subscription and any 
remittance are forwarded to the Fiscal Agency Department of the 
appropriate Federal Reserve Bank.

[63 FR 38044, July 14, 1998]



Sec. 330.8  Payment or redemption--exchange by Federal Reserve Bank.

    Specially endorsed securities which an agent is not authorized to 
redeem for cash or on exchange should be forwarded to the Fiscal Agency 
Department of the designated Federal Reserve Bank. The transmittals must 
be accompanied by appropriate instructions governing the transaction and 
the disposition of the redemption proceeds or new bonds, as the case may 
be. The securities must be kept separate from others the agent has paid 
and must be submitted in accordance with instructions issued by the 
Bank.

[63 FR 38044, July 14, 1998]



Sec. 330.9  Fiscal agents.

    (a) The Federal Reserve Banks referred to below, as fiscal agents of 
the United States, are authorized to perform such services as may be 
requested by the Secretary of the Treasury, or his or her delegate, in 
connection with this part.
    (b) The following Federal Reserve Offices have been designated to 
provide savings bond services:

[[Page 243]]



------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 90 Hennepin Avenue,     Chicago.           half), IN
 Minneapolis MN 55401.                                   (northern
                                                         half), MI, MN,
                                                         MT, ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------


[59 FR 10539, Mar. 4, 1994, as amended at 63 FR 38044, July 14, 1998]



Sec. 330.10  Modifications of other circulars.

    The provisions of this part shall be considered as amending and 
supplementing: Department of the Treasury Circulars Nos. 530, 653, and 
750 (31 CFR parts 315, 316, and 321, respectively), and Department of 
the Treasury Circulars, Public Debt Series Nos. 1-80, 2-80, 3-80, 3-67, 
1-98, and 2-98 (31 CFR parts 351, 352, 353, 342, 359, and 360 
respectively), and any revisions thereof or amendments or supplements 
thereto, and those Circulars are hereby modified to the extent necessary 
to accord with the provisions of this part.

[63 FR 38044, July 14, 1998]



Sec. 330.11  Supplements, amendments, or revisions.

    The Secretary of the Treasury may, at any time, or from time to 
time, revise, supplement, amend or withdraw, in whole or in part, the 
provisions of this part.



PART 332_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES H--Table of 
Contents




Sec.
332.1 Offering of bonds.
332.2 Description of bonds.
332.3 Governing regulations.
332.4 Registration.
332.5 Limitation on holdings.
332.6 Purchase of bonds.
332.7 Delivery of bonds.
332.8 Extended terms and yield for outstanding bonds.
332.9 Taxation.
332.10 Payment or redemption.
332.11 Reservation as to issue of bonds.
332.12 Fiscal agents.
332.13 Reservation as to terms of offering.

    Authority: 31 U.S.C. 3105 and 5 U.S.C. 301.

    Source: 57 FR 14281, Apr. 17, 1992, unless otherwise noted.



Sec. 332.1  Offering of bonds.

    The Secretary of the Treasury offered for sale to the people of the 
United States, Unites States Savings Bonds of Series H, hereinafter 
generally referred to as ``Series H bonds'' or ``bonds''. This offer was 
terminated on December 31, 1979.



Sec. 332.2  Description of bonds.

    (a) General. Series H bonds bear a facsimile of the signature of the 
Secretary of the Treasury and of the Seal of the Department of the 
Treasury. They were issued only in registered form and are 
nontransferable.
    (b) Denominations and prices. Series H bonds were issued at face 
(par) amount and were available in denominations of $500, $1,000, $5,000 
and $10,000.
    (c) Inscription and issue. A bond is valid only if an authorized 
issuing agent received payment therefore and duly inscribed, dated, and 
imprinted validated indicia on the bond. The face of each bond was to be 
inscribed as set forth below:
    (1) The name, social security account number and address of the 
owner, and the name of the beneficiary, if any, or

[[Page 244]]

the name, social security account number, and address of the first-named 
coowner and the name of the other coowner. The inscription of the social 
security number was required for bonds issued on or after January 29, 
1963.
    (2) The issue date in the upper right-hand portion of the bond; and
    (3) The imprint of the agent's validation indicia in the lower 
right-hand portion to show the date the bond was actually inscribed.



Sec. 332.3  Governing regulations.

    Series H bonds are subject to the regulations of the Department of 
the Treasury, now or hereafter prescribed, governing United States 
Savings bonds of Series A, B, C, D, E, F, G, H, J and K, contained in 31 
CFR part 315, also published as Department of the Treasury Circular No. 
530, current revisions, except as otherwise specifically provided 
herein.



Sec. 332.4  Registration.

    Series H bonds were permitted to be registered as set forth in 
subpart B of 31 CFR part 315, also published as Department of the 
Treasury Circular No. 530.



Sec. 332.5  Limitation on holdings.

    The amount of Series H bonds, originally issued during any one 
calendar year, that could be held by any one person, at any one time, 
computed in accordance with the governing regulations, was limited as 
follows:
    (a) General limitation. From $5,000 to $30,000 depending upon the 
issue date.
    (b) Special limitation for gifts to exempt organizations under 26 
CFR 1.501(c)(3)-1. $200,000 for bonds received as gifts by an 
organization which at the time of purchase was an exempt organization 
under the terms of 26 CFR 1.501(c)(3)-1.
    (c) Exchange pursuant to 31 CFR part 339. Series H bonds issued in 
an exchange pursuant to the provisions of 31 CFR part 339, also 
published as Department of the Treasury Circular No. 1036, were exempt 
from the annual limitation.



Sec. 332.6  Purchase of bonds.

    (a) Issuing agents. Only Federal Reserve Banks and Branches, as 
fiscal agents of the United States, and the Department of the Treasury 
were authorized to issue Series H bonds. However, financial institutions 
were permitted to forward applications for purchase of the bonds to the 
Federal Reserve Bank of their district. The date of receipt, by the 
Reserve Bank or the Department of the Treasury, of the application and 
payment governed the issue date of the bond purchased.
    (b) Application for purchase and remittance. (1) The applicant for 
purchase of Series H Bonds furnished.
    (i) Instructions for registration of the bonds to be issued, which 
must have been in an authorized form;
    (ii) The appropriate social security or employer identification 
number;
    (iii) The post office address of the owner or first-named coowner; 
and
    (iv) The address(es) for delivery of the bonds and for mailing 
checks in payment of interest, if other than that of the owner or first-
named coowner.
    (2) The application was to be forwarded to a Federal Reserve Bank or 
Branch, or the Department of the Treasury, accompanied by a remittance 
to cover the purchase price. Any form of exchange, including personal 
checks, was acceptable, subject to collection. Checks or other forms of 
exchange were to be drawn to the order of the Federal Reserve Bank or 
the United States Treasury. Checks payable by endorsement were not 
acceptable. Any depositary qualified pursuant to 31 CFR part 203, also 
published as Department of the Treasury Circular No. 92, current 
revision, was permitted to make payment by credit for bonds applied for 
on behalf of its customers, up to any amount for which it was qualified 
in excess of existing deposits, when so notified by the Federal Reserve 
Bank of its district.



Sec. 332.7  Delivery of bonds.

    Authorized issuing agents delivered Series H bonds, either over-the-
counter in person or by mail, at the risk and expense of the United 
States, to the address given by the purchaser, but only within the 
United States, its territories and possessions, and the Commonwealth of 
Puerto Rico. No mail deliveries elsewhere were made. If purchased by 
citizens of the United States temporarily residing abroad, the bonds

[[Page 245]]

were delivered at such address in the United States as the purchaser 
directed.



Sec. 332.8  Extended terms and yield for outstanding bonds.

    (a) Extended maturity period--(1) General. The terms extended 
maturity period, and second extended maturity period, when used herein, 
refer to 10-year intervals after the original maturity dates during 
which owners may retain their bonds and continue to earn interest 
thereon. No special action is required of owners desiring to take 
advantage of any extensions heretofore or herein granted.
    (2) Two extensions. All Series H bonds may be retained for two 
extended maturity periods of 10 years each. All Series H bonds cease to 
earn interest upon reaching final maturity. Final maturities are shown 
below:

------------------------------------------------------------------------
                                     Life of bonds
      Issue dates--1st day of      ----------------    Final maturity
                                     yrs.    mos.     dates--1st day of
------------------------------------------------------------------------
Jun. 1952-Jan. 1957...............      29       8  Feb. 1982-Sep. 1986.
Feb. 1957-Dec. 1979...............      30  ......  Feb. 1987-Dec. 2009.
------------------------------------------------------------------------

    (b) Investment yields for outstanding bonds--General--interest 
rates. The investment yields on outstanding Series H bonds are as set 
out below:
    (1) For Series H bonds that were in original or extended maturity 
periods prior to November 1, 1982, the investment yield was 8.5 percent 
per annum, paid semiannually, effective for the period from the first 
semiannual interest payment date occurring on or after May 1, 1981, 
through the end of such periods. For bonds that entered extensions, see 
paragraphs (b)(2) through (b)(4) of this section.
    (2) For Series H bonds that entered extended maturity periods from 
November 1, 1982, through October 1, 1986, the investment yield was 7.5 
percent per annum, paid semiannually, for such periods, including bonds 
that entered into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Nov. 1962-Oct. 1966.............  2nd (final).......  Nov. 1982-Oct.
                                                       1986.
Nov. 1972-Oct. 1976.............  1st...............  Nov. 1982-Oct.
                                                       1986.
------------------------------------------------------------------------

    (3) For Series H bonds that entered extended maturity periods from 
November 1, 1986, through February 1, 1993, the investment yield was 6 
percent per annum, paid semiannually, for such periods, including bonds 
that entered into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Nov. 1966-Feb. 1973.............  2nd (final).......  Nov. 1986-Feb.
                                                       1993.
Nov. 1976-Dec. 1979.............  1st...............  Nov. 1986-Dec.
                                                       1989.
------------------------------------------------------------------------

    (4) For Series H bonds that entered or enter extended maturity 
periods on or after March 1, 1993, the guaranteed minimum investment 
yield is 4 percent per annum, paid semiannually, or the investment yield 
in effect at the beginning of such periods, including bonds that enter 
into an extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Mar. 1973-Dec. 1979.............  2nd (final).......  Mar. 1993-Dec.
                                                       1999.
------------------------------------------------------------------------

    (c) Tables of interest payments and investment yields. Tables of 
interest payments and investment yields are available from the Bureau of 
Public Debt and Federal Reserve Banks and Branches.

[57 FR 14281, Apr. 17, 1992, as amended at 58 FR 60937, Nov. 18, 1993]



Sec. 332.9  Taxation.

    The income derived from Series H bonds is subject to all taxes 
imposed under the Internal Revenue Code of 1986, as amended. The bonds 
are subject to estate, inheritance, gift, or other excise taxes, whether 
Federal or State, but are exempt from all other taxation now or 
hereafter imposed on the principal or interest thereof by any State, or 
any of the possessions of the United States, or by any local taxing 
authority.

[[Page 246]]



Sec. 332.10  Payment or redemption.

    A Series H bond became eligible for redemption at par at any time 
after six months from its issue date. To be redeemed, the bond must be 
presented and surrendered, with a duly executed request for payment, to 
a Federal Reserve Bank or Branch referred to in Sec. 332.12, or the 
Bureau of the Public Debt, Parkersburg, WV 26106-1328. In any case where 
bonds are surrendered for redemption in the month prior to an interest 
payment date, redemption will not be deferred but will be made in 
regular course, unless the presenter specifically requests that the 
transaction be delayed until that date. A request to defer redemption 
made more than one month preceding the interest payment date will not be 
accepted.

[57 FR 14281, Apr. 17, 1992, as amended at 59 FR 10539, Mar. 4, 1994]



Sec. 332.11  Reservation as to issue of bonds.

    The Secretary of the Treasury reserved the right to reject any 
application for Series H bonds, in whole or part, and to refuse to issue 
or permit to be issued hereunder any such bonds in any case or any class 
or classes of cases, if such action was deemed to be in the public 
interest. Any action in any such respect was final.



Sec. 332.12  Fiscal agents.

    (a) Federal Reserve Banks and Branches referred to below, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury, or his or her 
delegate, in connection with the reissue, redemption and payment of 
Series H bonds.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY, (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[59 FR 10539, Mar. 4, 1994]



Sec. 332.13  Reservation as to terms of offering.

    The Secretary of the Treasury may at any time, or from time to time, 
supplement or amend the terms of this offering of bonds, or of any 
amendments or supplements thereto.



PART 337_SUPPLEMENTAL REGULATIONS GOVERNING FEDERAL HOUSING ADMINISTRATION 
DEBENTURES--Table of Contents




Sec.
337.0 Scope of regulations.

                    Subpart A_Certificated Debentures

337.1 Applicability of Treasury regulations.
337.2 Transportation charges and risks.
337.3 Termination of transfers and denominational exchange transactions.
337.4 Presentation and surrender.
337.5 Assignments.

[[Page 247]]

337.6 Conversions to book-entry.
337.7 Servicing transactions.
337.8 Payment of mortgage insurance premiums.
337.9 Payment of final interest.
337.10 Payments.

                     Subpart B_Book-Entry Debentures

337.11 Original issue and conversions.
337.12 Applicability of TREASURY DIRECT regulations.
337.13 Payment of mortgage insurance premiums.

                    Subpart C_Additional Information

337.14 Address for further information.
337.15 General provisions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321; Sec. 516, Pub. L. 102-550, 
106 Stat. 3790.

    Source: 59 FR 42162, Aug. 17, 1994, unless otherwise noted.



Sec. 337.0  Scope of regulations.

    The United States Department of the Treasury is the agent of the 
Federal Housing Administration for transactions in any debentures which 
have been or may be issued pursuant to the authority conferred by the 
National Housing Act, 12 U.S.C. 1701 et seq., as amended from time to 
time, including Mutual Mortgage Insurance Fund Debentures, Housing 
Insurance Fund Debentures, War Housing Insurance Fund Debentures, 
Military Housing Insurance Fund Debentures, and National Defense Housing 
Insurance Fund Debentures. In accordance with the regulations adopted by 
the Federal Housing Commissioner and approved by the Secretary of the 
Treasury, such transactions are governed by regulations of the 
Department of the Treasury, so far as applicable. The Bureau of the 
Public Debt, Office of Public Debt Accounting operates the FHA debenture 
computer system and performs the day-to-day operations and transactions 
relating to the debentures.

[66 FR 56432, Nov. 8, 2001]



                    Subpart A_Certificated Debentures



Sec. 337.1  Applicability of Treasury regulations.

    The general regulations governing United States securities, part 306 
of this chapter, apply, as the regulations for similar transactions and 
operations in certificated debentures. To the extent that the provisions 
in this part differ from the provisions in part 306, the provisions in 
this part shall prevail.



Sec. 337.2  Transportation charges and risks.

    Debentures presented for redemption at call or maturity, or for 
authorized prior purchase, or for conversion to book-entry form, must be 
delivered at the expense and risk of the holder. Debentures bearing 
restricted assignments may be forwarded by registered mail, but for the 
owner's protection debentures bearing unrestricted assignments should be 
forwarded by insured registered mail.

[66 FR 56432, Nov. 8, 2001]



Sec. 337.3  Termination of transfers and denominational exchange 
transactions.

    Debentures, which by their terms are subject to call, may be called 
for redemption, in whole or in part, at par and accrued interest, on any 
interest date on three months' notice. No transfers or denominational 
exchanges in certificated debentures covered by a given call will be 
made on the books of the Department of the Treasury on or after the 
announcement of such call. However, this does not affect the right of a 
holder of such debenture to sell and assign it on or after the 
announcement of the call date.



Sec. 337.4  Presentation and surrender.

    (a) For redemption. To facilitate the redemption of called or 
maturing debentures, they may be presented and surrendered in the manner 
prescribed in this section in advance of the call or maturity date, as 
the case may be. Early presentation by holders will insure prompt 
payment of principal and interest when due. The debentures must first be 
assigned by the registered payee or his assignee, or by his duly 
constituted representative, if required, in the form and manner 
indicated in Sec. 337.5, and must then be submitted to the Bureau of 
the Public Debt at the address given in Sec. 337.14, accompanied

[[Page 248]]

by appropriate written advice. A transmittal advice for this purpose 
will accompany the notice of call.
    (b) For purchase. Debentures, the purchase of which has been 
authorized prior to call or maturity, may be assigned as instructed in 
paragraph (a) of this section and immediately submitted in accordance 
with procedures prescribed by HUD for this purpose.

[59 FR 42162, Aug. 17, 1994, as amended at 66 FR 56432, Nov. 8, 2001]



Sec. 337.5  Assignments.

    (a) If the registered payee, or an assignee holding a certificated 
debenture under proper assignment from the registered payee, desires 
that payment be made to such payee or assignee, the debenture need not 
be assigned. If the owner desires for any reason that payment be made to 
another, without intermediate assignment, the debentures should be 
assigned to ``The Federal Housing Commissioner for redemption (or, 
purchase) for the account of --------,'' inserting the name and address 
of the person to whom payment is to be made. Proof of the authority of 
the individual assigning on behalf of an owner will be required in 
accordance with part 306 of this chapter.
    (b) An assignment in blank or other assignment having similar effect 
will be recognized, but in that event the debenture would be, in effect, 
payable to bearer, and payment will be made in accordance with the 
instructions received from the person surrendering the debenture for 
redemption or purchase. For the owner's protection, such assignments 
should be avoided unless the owner is willing to lose the protection 
afforded by registration.
    (c) Debentures submitted for conversion to book-entry form should be 
assigned to ``The Federal Housing Commissioner for conversion to book-
entry debentures for the account of --------.'' The registration on the 
book-entry account and/or the account number in which the debentures 
should be deposited should be indicated.
    (d) All assignments must be made on the debentures themselves unless 
otherwise authorized by the Department of Treasury.



Sec. 337.6  Conversions to book-entry.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, all new debentures will 
be issued only in book-entry form, and may not thereafter be converted 
to certificated form.
    Certificated debentures may, upon the owner's request in accordance 
with Sec. 337.5(c), be converted to book-entry. If such action is 
taken, the owner shall be deemed to have irrevocably waived the right to 
hold such debenture in certificated form.



Sec. 337.7  Servicing transactions.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, any transfer or 
denominational exchange of certificated debentures generally will be 
made in book-entry form. If certificated debentures are desired, the 
owner should so request in writing, before the book-entry debentures are 
issued.



Sec. 337.8  Payment of mortgage insurance premiums.

    When certificated debentures are tendered for purchase prior to 
maturity in order that the proceeds thereof be applied to pay for 
mortgage insurance premiums, any difference between the amount of the 
debentures purchased and the amount of the mortgage insurance premium 
will generally be issued to the owner in the form of a book-entry 
debenture in the exact amount of such difference, provided it is one 
dollar ($1.00) or more. However, if the owner so requests, such 
difference will be settled with certificated debenture(s), together with 
a cash adjustment, if any. Such request should be made in writing, 
before the book-entry debenture in the amount of the difference is 
issued.



Sec. 337.9  Payment of final interest.

    Final interest on any debenture, whether purchased prior to or 
redeemed on or after the call or the maturity date, will be paid with 
the principal. In all cases the payment of principal and final interest 
will be mailed or directed to the payment address

[[Page 249]]

given in the form of advice accompanying the debenture surrendered.



Sec. 337.10  Payments.

    Payments on certificated debentures will be made by fiscal agency 
check in accordance with part 355 of this chapter, or, upon request, by 
direct deposit (electronic funds transfer) in accordance with part 370 
of this chapter. Information as to the deposit account at the financial 
institution designated to receive a direct deposit payment shall be 
provided on the appropriate form(s) designated by the Department.



                     Subpart B_Book-Entry Debentures



Sec. 337.11  Original issue and conversions.

    Upon implementation of the book-entry debenture system, to be 
announced in advance by separate public notice, all new debentures will 
be issued only in book-entry form in the exact amount payable to the 
owner. Once issued in book-entry form, a debenture may not be converted 
to certificated form.



Sec. 337.12  Applicability of TREASURY DIRECT regulations.

    The regulations governing the TREASURY DIRECT Book-Entry Securities 
System (TREASURY DIRECT) (part 357 of this chapter) apply to govern 
transactions in FHA book-entry debentures, with the following 
exceptions:
    (a) Securities account. (See Sec. 357.20 of this chapter.) An 
account in the book-entry debenture system may be established by the 
Department of the Treasury upon receipt of the request that a new 
debenture be issued or that a certificated debenture be converted to 
book-entry form. The statement of account shall contain information 
regarding the account as of the date of such statement. It will include 
a unique account number, but will not include price information.
    (b) Transfers. (See Sec. 357.22 of this chapter.) A book-entry 
debenture may be transferred only between accounts established in the 
FHA book-entry debenture system.
    (c) Debentures announced for call. Debentures, which by their terms 
are subject to call, may be called for redemption, in whole or in part, 
at par and accrued interest, on any interest date on three months' 
notice. For purposes of a transaction request affecting ownership and/or 
payment instructions with respect to a debenture announced for call, a 
proper request must be received not less than twenty (20) calendar days 
preceding the next payment date. If the twentieth day preceding a 
payment date falls on a Saturday, Sunday, or a Federal holiday, the last 
day set for the receipt of a transaction request will be the last 
business day preceding that date. If a transaction request is received 
less than twenty (20) calendar days preceding a payment date, the 
Department may, in its discretion, act on such request if sufficient 
time remains for processing. If a transaction request is received too 
late for completion of the requested transaction, principal and final 
interest on the called debentures will be paid to the owner of record 
and sent to the payment address of record.
    (d) Payments. (See Sec. 357.26 of this chapter.) Direct deposit 
(electronic funds transfer) payments with respect to debentures, e.g., 
principal, interest and cash adjustments, will be made without 
prenotification messages.



Sec. 337.13  Payment of mortgage insurance premiums.

    When book-entry debentures are being purchased prior to maturity to 
pay for mortgage insurance premiums, the difference between the amount 
of the debentures purchased and the mortgage insurance premiums shall be 
issued to the owner in the form of a book-entry debenture in the exact 
amount of such difference, provided it is one dollar ($1.00) or more.



                    Subpart C_Additional Information



Sec. 337.14  Address for further information.

    Further information regarding the issuance of, transactions in, and 
redemption of, FHA debentures may be obtained from the Bureau of the 
Public Debt, Office of Public Debt Accounting, 200 Third Street, P.O. 
Box 396, Parkersburg, West Virginia 26102-0396.

[66 FR 56432, Nov. 8, 2001]

[[Page 250]]



Sec. 337.15  General provisions.

    As fiscal agents of the United States, Federal Reserve Banks are 
authorized to perform any necessary acts under this part. The Secretary 
of the Treasury may at any time or from time to time prescribe 
supplemental and amendatory regulations governing the matters covered by 
this part, notice of which shall be communicated promptly to the 
registered owners of the debentures.

[66 FR 56432, Nov. 8, 2001]



PART 339_EXCHANGE OFFERING OF UNITED STATES SAVINGS BONDS, SERIES H
--Table of Contents




Sec.
339.0 Offering of Series H bonds in exchange for Series E bonds and 
          savings notes.
339.1 Definitions of words and terms as used in this circular.
339.2 Denominations.
339.3 Exchanges with privilege of deferring reporting of interest for 
          Federal income tax purposes.
339.4 Exchanges without tax deferral.
339.5 Governing regulations.
339.6 Fiscal agents.
339.7 Preservation of rights.
339.8 Reservation as to terms of offer.

    Authority: Secs. 18, 20, and 22 of the Second Liberty Bond Act, as 
amended (40 Stat. 1309, 48 Stat. 343, 49 Stat. 21, 73 Stat. 621, all as 
amended; 31 U.S.C. 753, 754b, 757c), and 5 U.S.C. 301.

    Source: 36 FR 23856, Dec. 15, 1971, unless otherwise noted.



Sec. 339.0  Offering of Series H bonds in exchange for Series E bonds 
and savings notes.

    The Secretary of the Treasury, pursuant to the authority of the 
Second Liberty Bond Act, as amended, hereby offers to the people of the 
United States, U.S. Savings Bonds of Series H in exchange for 
outstanding U.S. Savings Bonds of Series E and U.S. Savings Notes 
(freedom shares) without regard to the annual limitation on holdings for 
the Series H bonds. The Series H bonds offered hereunder are those 
described in Department Circular No. 905, current revision, except as 
otherwise specifically provided herein. This offering will continue 
until terminated by the Secretary of the Treasury.

    Editorial Note: The sale of U.S. Savings Bonds, Series H, was 
terminated at the close of business Dec. 31, 1979. See 44 FR 77158, Dec. 
31, 1979.



Sec. 339.1  Definitions of words and terms as used in this circular.

    Unless the context otherwise requires or indicates:
    (a) Securities mean outstanding U.S. Savings Bonds of Series E and 
U.S. Savings Notes (freedom shares).
    (b) Owner means an owner of securities, except a commercial bank in 
its own right (as distinguished from a representative or fiduciary 
capacity) and a nonresident alien who is a resident of an area with 
respect to which the Treasury Department restricts or regulates delivery 
of checks drawn against funds of the United States or any agency or 
instrumentality thereof. The term includes a registered owner, whether 
or not a natural person, either coowner (but only the principal coowner 
if Series H bonds are requested in a form of registration different from 
that on the securities submitted), a surviving beneficiary, or any other 
person who would be entitled to reissue under the regulation governing 
U.S. Savings Bonds,\1\ such as, but not limited to, any person entitled 
to succeed to the estate of a deceased owner.
---------------------------------------------------------------------------

    \1\ Department Circular No. 530, current revision (31 CFR part 315). 
Copies may be obtained from any Federal Reserve Bank or Branch or the 
Bureau of the Public Debt, Washington, DC 20220.
---------------------------------------------------------------------------

    (c) Commercial bank means a bank accepting demand deposits.
    (d) Interest means the increment in value on Series E savings bonds 
and on savings notes.
    (e) Principal coowner means a coowner who purchased the securities 
submitted for exchange with his own funds or received them as a gift, 
legacy or inheritance or as a result of judicial proceedings and had 
them reissued in coownership form, provided he has received no 
contribution in money or money's worth from the other coowner for 
designating him on the securities.



Sec. 339.2  Denominations.

    Series H bonds, available for use hereunder, are in denominations of 
$500, $1,000, $5,000 and $10,000.

[[Page 251]]



Sec. 339.3  Exchanges with privilege of deferring reporting of interest 
for Federal income tax purposes.

    (a) Tax-deferred exchanges. Pursuant to the provisions of section 
1037(a) of the Internal Revenue Code of 1954, the Secretary of the 
Treasury hereby grants to owners who have not been reporting the 
interest on their securities on an accrual basis for Federal income tax 
purposes the privilege of exchanging such securities for Series H bonds 
and of continuing to defer reporting of the interest on the securities 
exchanged (except interest referred to in paragraph (b)(5) of this 
section) for Federal income tax purposes to the taxable year in which 
the Series H bonds received in exchange are disposed of, are redeemed, 
or have reached final maturity, whichever is earlier.\2\
---------------------------------------------------------------------------

    \2\ The interest paid semiannually by check on all Series H bonds, 
whether issued in exchange under this or any other section, or 
otherwise, is subject to the Federal income tax for the taxable year in 
which it is received.
---------------------------------------------------------------------------

    (b) Rules governing the exchange. (1) Exchange subscription Form PD 
3253, completed and executed in accordance with the instructions 
thereon, the securities, any cash difference (see paragraph (b)(3) of 
this section), and any supporting evidence which may be required under 
the governing regulations \3\ may be presented or forwarded to any 
authorized agency. \4\
---------------------------------------------------------------------------

    \3\ For example, a beneficiary named on Series E bonds would have to 
submit proof of the death of the registered owner in order to exchange 
such bonds for Series H bonds.
    \4\ Agents authorized to pay Series E bonds and savings notes are 
authorized to accept and handle exchange subscriptions submitted by 
natural persons whose names are inscribed on the face of the bonds and 
notes as owners or coowners in their own right. However, as agents of 
subscribers they may forward any exchange subscription to a Federal 
Reserve Bank or Branch or the Bureau of the Public Debt, Washington, DC 
20226, for acceptance and handling.
---------------------------------------------------------------------------

    (2) A Series H bond issued upon exchange will be registered in the 
name of the owner of the securities submitted in any authorized form of 
registration. However, the principal coowner must be named as owner or 
coowner.
    (3) The total current redemption value of the securities submitted 
for exchange in any one transaction must amount to $500 or more. If the 
total current redemption value is in an even multiple of $500, Series H 
bonds must be requested in that exact amount. If the total current 
redemption value exceeds $500, but is not in an even multiple of $500, 
the owner has the option of furnishing cash necessary to obtain Series H 
bonds of the next higher $500 multiple, or of receiving payment of the 
difference between the total current redemption value and the next lower 
multiple of $500. For example, under the rules prescribed in this 
circular, if the securities submitted for exchange in one transaction 
total $4,253.33 current redemption value, the owner may elect to:
    (i) Receive $4,000 in Series H bonds and the amount of the 
difference, $253.33, or
    (ii) Pay the difference, $246.67, necessary to obtain $4,500 in 
Series H bonds.\5\
---------------------------------------------------------------------------

    \5\ If a paying agent accepts a subscription solely for the purpose 
of forwarding it, or if the owner forwards it direct, to a Federal 
Reserve Bank or Branch or to the Bureau of the Public Debt, the 
remittance for the difference, by check or other form of exchange (which 
will be accepted subject to collection), must be drawn to the order of 
the Federal Reserve Bank or the United States Treasury, as the case may 
be. The remittance must accompany the subscription and the securities to 
be exchanged.
---------------------------------------------------------------------------

    (4) Any amount paid to the owner as a cash adjustment (as in 
paragraph (3)(i) of this section) must be treated as income for Federal 
income tax purposes for the year in which it is received up to an amount 
not in excess of the total interest on the securities exchanged.\6\
---------------------------------------------------------------------------

    \6\ The amount, if any, paid to the owner in excess of the interest 
is a repayment on account of the purchase price of the securities 
exchanged, not income.
---------------------------------------------------------------------------

    (5) Each Series H bond issued under this section will be stamped 
``EX'' or ``EXCH'' to show that it was issued upon exchange. Each bond 
also will bear a legend showing how much of its issue price represents 
interest on the securities exchanged. This interest must be treated as 
income for Federal income tax purposes for the year in

[[Page 252]]

which the Series H bond is redeemed, is disposed of, or finally matures, 
whichever is earlier.
    (6) The Series H bonds will be dated as of the first day of the 
month in which the securities, the exchange subscription, any necessary 
cash difference and supporting evidence, if any, are accepted for 
exchange by an authorized agency.



Sec. 339.4  Exchanges without tax deferral.

    Exchanges by owners who:
    (a) Report the interest on all of their securities annually for 
Federal income tax purposes, or
    (b) Who elect to report all such interest in the year of the 
exchange, or
    (c) Who are tax-exempt under the provisions of the Internal Revenue 
Code of 1954 and the regulations issued thereunder,

Will be handled in the same manner and will be governed by the rules 
prescribed for exchanges under Sec. 339.3. However, the Series H bonds 
will not bear the legend referred to in Sec. 339.3(b)(5). Any part of 
the cash adjustment received which represents interest previously 
reported for Federal income tax purposes need not be accounted for. The 
Series H bonds may be registered in the name of the owner of the 
securities submitted in exchange in any authorized form of registration.



Sec. 339.5  Governing regulations.

    All Series H bonds issued under this circular are subject to the 
regulations, now or hereafter prescribed, contained in Department 
Circular No. 530, current revision (part 315 of this chapter).



Sec. 339.6  Fiscal agents.

    Federal Reserve Banks and Branches, as fiscal agents of the United 
States, are authorized to perform such services as may be requested of 
them in connection with exchanges under these regulations.



Sec. 339.7  Preservation of rights.

    The provisions of Treasury Department Circulars Nos. 530, 653, and 
905, as currently revised, are hereby modified and amended to the extent 
that they are not in accordance with this circular. However, nothing 
contained herein shall limit or restrict rights which owners of Series H 
bonds received in earlier exchanges have heretofore acquired.



Sec. 339.8  Reservation as to terms of offer.

    The Secretary of the Treasury reserves the right to reject any 
exchange subscription for Series H bonds, in whole or in part, and to 
refuse to issue or permit to be issued hereunder any such bonds in any 
case or any class or classes of cases if he deems such action to be in 
the public interest, and his action in any such respect shall be final.
    The foregoing revision and amendment is made for the purpose of 
granting to owners of savings notes the same privilege afforded owners 
of Series E savings bonds for exchanging their securities for Series H 
bonds with or without tax deferral. As good cause exists for making this 
change, which involves public property and contracts relating to the 
fiscal and monetary affairs of the United States, I find that notice and 
public procedures are unnecessary. This action is effected under the 
provisions of sections 18, 20, and 22 of the Second Liberty Bond Act, as 
amended (40 Stat. 1309, 48 Stat. 343, 49 Stat. 21, 73 Stat. 621, all as 
amended; 31 U.S.C. 753, 754b, 757c), and 5 U.S.C. 301.



PART 340_REGULATIONS GOVERNING THE SALE OF TREASURY BONDS THROUGH 
COMPETITIVE BIDDING--Table of Contents




Sec.
340.0 Authority for sale of Treasury bonds through competitive bidding.
340.1 Public notice--description of bonds--terms of offer.
340.2 Denominations and exchanges.
340.3 Taxation.
340.4 Acceptance as security for public deposits.
340.5 Notice of intent to bid.
340.6 Submission of bids.
340.7 Deposits--retention--return.
340.8 Acceptance of bids.
340.9 Bids--revocations--rejections--postponements--reoffers.
340.10 Payment for and delivery of bonds.
340.11 Failure to complete transaction.
340.12 Reservations as to terms of circular.

    Authority: Sec. 8, 50 Stat. 481, as amended; R.S. 3706; secs. 1, 4, 
18, 5, 40 Stat. 288, as amended, 290, as amended, 1309, as amended,

[[Page 253]]

290, as amended; secs. 19, 20, 48 Stat. 343, as amended; 31 U.S.C. 738a, 
739, 752, 752a, 753, 754, 754a, 754b.

    Source: 27 FR 12481, Dec. 18, 1962, unless otherwise noted.



Sec. 340.0  Authority for sale of Treasury bonds through competitive 
bidding.

    (a) The Secretary of the Treasury may, from time to time, by public 
notice, offer Treasury bonds for sale and invite bids therefor. The 
bonds so offered and the bids made will be subject to the terms and 
conditions and the rules and regulations herein set forth, except as 
they may be modified in the public notice or notices issued by the 
Secretary in connection with particular offerings.\1\ The bonds will be 
subject also to the general rules and regulations of the Treasury 
Department, now or hereafter prescribed, governing United States 
securities. They will be issued pursuant to the authority of the Second 
Liberty Bond Act, as amended.
---------------------------------------------------------------------------

    \1\ These regulations do not apply to Treasury bills, which are 
governed by Department Circular No. 418, Revised, and do not constitute 
a specific offering of bonds.
---------------------------------------------------------------------------

    (b) The terms public notice, notices, or announcement as used in 
this part mean the Public Notice of Invitation to Bid on Treasury bonds 
and any supplementary or amendatory notices or announcements with 
respect thereto, including, but not limited to any statement released to 
the press by the Secretary of the Treasury and notices sent to those who 
have filed notices of intent to bid or who have filed bids.



Sec. 340.1  Public notice--description of bonds--terms of offer.

    When bonds are offered for sale through competitive bidding, bids 
therefor will be invited through the form of a public notice or notices 
issued by the Secretary of the Treasury. The notice or notices will 
either fix the coupon rate of interest to be borne by the bonds or 
prescribe the conditions under which bidders may specify the rate and 
will set forth the terms and conditions of the bonds, including 
maturities, call features, if any, and the terms and conditions of the 
offer, including the amount of the issue for which bids are invited, the 
date and closing hour for receipt of bids, and the date on which the 
bonds will be delivered and payment for any accepted bid must be 
completed. When so specified in the public notice, it shall be a 
condition of each bid that, if accepted by the Secretary of the 
Treasury, the bidder will make a bona fide reoffering to the investing 
public.



Sec. 340.2  Denominations and exchanges.

    Bearer bonds with interest coupons attached, and bonds registered as 
to principal and interest, will be available in denominations of $500, 
$1,000, $5,000, $10,000, $100,000, and $1,000,000. Provisions will be 
made for the interchange of bonds of different denominations and of 
bearer and registered bonds, and for the transfer of registered bonds.



Sec. 340.3  Taxation.

    The income derived from the bonds will be subject to all taxes 
imposed under the Internal Revenue Code of 1954. The bonds will be 
subject to estate, inheritance, gift or other excise taxes, whether 
Federal or State, but will be exempt from all taxation now or hereafter 
imposed on the principal or interest thereof by any State, or any of the 
possessions of the United States, or by any local taxing authority.



Sec. 340.4  Acceptance as security for public deposits.

    The bonds will be acceptable to secure deposits of public moneys.



Sec. 340.5  Notice of intent to bid.

    Any individual, or organization, syndicate, or other group which 
intends to submit a bid, must, when required by the public notice, give 
written notice of such intent on Form PD 3555 at the place and within 
the time specified in the public notice. The filing of such notice will 
not constitute a commitment to bid.



Sec. 340.6  Submission of bids.

    (a) General. Bids will be received only at the place specified and 
not later than the time designated in the public notice. Each bid must 
be submitted on the official form referred to in the public notice and 
should be enclosed and sealed in the special envelope provided by the 
Treasury Department. Forms

[[Page 254]]

and envelopes may be obtained from any Federal Reserve Bank or Branch or 
the Bureau of the Public Debt, Treasury Department, Washington, DC 
20220. Bids shall be irrevocable.
    (b) Bidding. Bids, except noncompetitive bids when authorized, must 
be expressed as a percentage of the principal amount in not to exceed 
five decimals, e.g., 100.01038 percent. Provisions relating to the 
coupon rate of interest on the bonds, if not set forth in the public 
notice, will be made in a supplemental announcement. The public notice 
will indicate the timing of any such announcement. If the bidders are 
required to specify the coupon rate, each bidder shall specify a single 
coupon rate of interest, which shall be a multiple of \1/8\ of 1 percent 
but not in excess of 4\1/4\ percent. The Secretary of the Treasury may 
limit the premium above or the discount below par.
    (c) Group bids. A syndicate or other group submitting a bid must act 
through a representative who must be a member of the group. The 
representative must warrant to the Secretary of the Treasury that he has 
all necessary power and authority to act for each member and to bind the 
members jointly and severally. In addition to whatever other data may be 
required by the Secretary of the Treasury, in the case of a syndicate, 
the representative must file, within one hour after the time for opening 
of bids, at the place specified in the public notice for receipt of bids 
a final statement of the composition of the syndicate membership and the 
amount of each member's underwriting participation.



Sec. 340.7  Deposits--retention--return.

    Each bid must be accompanied by a deposit in the amount specified in 
the public notice. The deposit of any successful bidder will be retained 
as security for the performance of his obligation and will be applied 
toward payment of the bonds. All other deposits will be returned 
immediately. No interest will be allowed on account of any deposits.



Sec. 340.8  Acceptance of bids.

    (a) Opening of bids. Bids will be opened at the time and place 
specified in the public notice.
    (b) Method of determining accepted bids. The lowest basis cost of 
money \2\ computed from the date of the bonds to the date of maturity 
will be used in determining successful bids.
---------------------------------------------------------------------------

    \2\ In cases where bidders are required to specify the coupon rate, 
the lowest basis cost of money will be determined by reference to a 
specially prepared table of bond yields, a copy of which will be made 
available to all prospective bidders upon written request to the Federal 
Reserve Bank of New York, or the Bureau of the Public Debt, Treasury 
Department, Washington, DC 20220. Straightline interpolation will be 
applied if necessary.
---------------------------------------------------------------------------

    (c) Acceptance of successful bid. The Secretary of the Treasury, or 
his representative, will notify any successful bidder of acceptance in 
the manner and form specified in the public notice.



Sec. 340.9  Bids--revocations--rejections--postponements--reoffers.

    The Secretary of the Treasury, in his discretion, may (a) revoke the 
public notice of invitation to bid at any time before opening bids, (b) 
return all bids unopened either at or prior to the time specified for 
their opening, (c) reject any or all bids, (d) postpone the time for 
presentation and opening of bids, and (e) waive any immaterial or 
obvious defect in any bid. Any action the Secretary of the Treasury may 
take in these respects shall be final. In the event of a postponement, 
known bidders will be advised thereof and their bids returned unopened.



Sec. 340.10  Payment for and delivery of bonds.

    Payment for the bonds, including accrued interest, if any, must be 
made in immediately available funds on the date and at the place 
specified in the invitation. Delivery of bonds under this section will 
be made at the risk and expense of the United States at such place or 
places in the United States as may be provided in the invitation. 
Interim receipts, if necessary, will be issued pending delivery of the 
definitive bonds.



Sec. 340.11  Failure to complete transaction.

    If any successful bidder shall fail to pay in full for the bonds on 
the date

[[Page 255]]

and at the place specified in the invitation, the money deposited by or 
in behalf of such bidder shall be forfeited to the Treasury Department.



Sec. 340.12  Reservations as to terms of circular.

    The Secretary of the Treasury reserves the right, at any time, or 
from time to time, to amend, repeal, supplement, revise or withdraw all 
or any of the provisions of this part.



PART 341_REGULATIONS GOVERNING UNITED STATES RETIREMENT PLAN BONDS--Table 
of Contents




Sec.
341.0 Offering of bonds.
341.1 Description of bonds.
341.2 Registration.
341.3 Purchase of bonds.
341.4 Proof of purchase.
341.5 Limitation on holdings.
341.6 Nontransferability.
341.7 Judicial proceedings.
341.8 Payment or redemption during lifetime of owner.
341.9 Payment or redemption after death of owner.
341.10 Reissue.
341.11 Use of power of attorney.
341.12 Lost, stolen, or destroyed bonds.
341.13 Taxation.
341.14 Certifying officers.
341.15 General provisions.

Appendix to Part 341--Tables of Redemption Values

    Authority: Sec. 8, 50 Stat. 481, as amended; R.S. 3706; secs. 1, 4, 
18, 40 Stat. 288, as amended, 290, as amended, 1309, as amended; secs. 
19, 20, 48 Stat. 343, as amended; 31 U.S.C. 738a, 739, 752, 752a, 753, 
754a, 754b.

    Source: 28 FR 405, Jan. 16, 1963, unless otherwise noted.



Sec. 341.0  Offering of bonds.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, and pursuant to the Self-Employed 
Individuals Tax Retirement Act of 1962, offers for sale, effective as of 
January 1, 1963, bonds of the United States, designated as United States 
Retirement Plan Bonds. The bonds will be available for investment only 
to:
    (a) Bond purchase plans and
    (b) Pension and profit-sharing plans, as described in sections 405 
and 401, respectively, of the Internal Revenue Code of 1954.

This offering of bonds will terminate on April 30, 1982.

[28 FR 405, Jan. 16, 1963, as amended at 47 FR 18596, Apr. 30, 1982]



Sec. 341.1  Description of bonds.

    (a) Investment yield (interest). United States Retirement Plan 
Bonds, hereinafter sometimes referred to as Retirement Plan Bonds, will 
be issued at par. The investment yields (interest) are as follows:
    (1) Bonds with issue dates of January 1, 1963, through May 1, 1966--
3.75 percent per annum, compounded semiannually (see Table of Redemption 
Values in the appendix).
    (2) Bonds with issue dates of June 1, 1966, through December 1, 
1969--4.15 percent per annum, compounded semiannually (see Table A in 
the appendix).
    (3) Bonds with issue dates of January 1, 1970, through January 1, 
1974--5 percent per annum, compounded semiannually (see Table B).
    (4) Bonds with issue dates of February 1, 1974, through July 1, 
1979--6 percent per annum, compounded semiannually (see Table C).
    (5) Bonds with issue dates of August 1, 1979, through October 1, 
1980--6.5 percent per annum, compounded semiannually (see Table D).
    (6) Bonds with issue dates of November 1, 1980, through September 1, 
1981--8 percent per annum, compounded semiannually (see Table E).
    (7) Bonds with issue dates of October 1, 1981, or thereafter--9 
percent per annum, compounded semiannually (see Table F).

Interest will be paid only upon redemption of the bonds. The accrual of 
interest will continue until the bonds are redeemed or have reached 
maturity, whichever is earlier, in accordance with these regulations.
    (b) Term. The maturity date of any bond issued under this circular 
shall be indeterminate, but unless sooner redeemed in accordance with 
the regulations in this part, its investment yield will cease on the 
interest accrual date coinciding with, or, where no such coincidence 
occurs, the interest accrual date next preceding, the first day of the 
sixtieth (60th) month following the

[[Page 256]]

date of death of the person in whose name it is registered.
    (c) Denominations--issue date. Retirement Plan Bonds will be 
available only in registered form and in denominations of $50, $100, 
$500, and $1,000. At the time of issue, the issuing agent will enter in 
the upper right-hand portion of the bond the issue date (which shall be 
the first day of the month and year in which payment of the purchase 
price is received by an authorized issuing agent), and will imprint the 
agent's validating stamp in the lower right-hand portion. The issue 
date, as distinguished from the date in the agent's validating stamp, 
will determine the date from which interest will begin to accrue on the 
bond. A Retirement Plan Bond shall be valid only if an authorized 
issuing agent receives payment therefor, duly inscribes, dates, stamps, 
and delivers it.

[28 FR 405, Jan. 16, 1963, as amended at 46 FR 60573, Dec. 11, 1981]



Sec. 341.2  Registration.

    (a) General. The registration of Retirement Plan Bonds is limited to 
the names of natural persons in their own right, whether adults or 
minors, in either single ownership or beneficiary form. A bond 
registered in beneficiary form will be inscribed substantially as 
follows (for example): ``John A. Doe payable on death to (or P.O.D.) 
Richard B. Roe,'' No more than one beneficiary may be designated on a 
bond.
    (b) Inscription. The inscription on the face of each bond will show 
the name, address, date of birth, and the social security account number 
of the registered owner, as well as information as to whether he is a 
self-employed individual or an employee, and the amount he contributed 
(if any) out of his own funds toward the purchase price of the bond. In 
the case of any self-employed individual (who is treated as an employee 
for the purpose of sections 405 and 401 of the Internal Revenue Code of 
1954), this amount would be that portion of the purchase price he 
contributed (if any) as an employee and which he will not take into 
account in determining the amount deductible for Federal income tax 
purposes. The name of the beneficiary, if one is to be designated, will 
also be shown in the inscription.



Sec. 341.3  Purchase of bonds.

    (a) Agencies. Retirement Plan Bonds may be purchased over-the-
counter or by mail from Federal Reserve Banks and Branches and the 
Bureau of the Public Debt, Washington, DC 20226. Customers of commercial 
banks and trust companies may be able to arrange for the purchase of the 
bonds through such institutions, but only the Federal Reserve Banks and 
Branches and the Bureau of the Public Debt are authorized to act as 
official agencies, and the date of receipt of the application and 
payment by an official agency will govern the dating of the bonds 
issued.
    (b) Application. Applications for the purchase of Retirement Plan 
Bonds should be made on Form PD 3550, accompanied by a remittance to 
cover the purchase price. Personal checks will be accepted, subject to 
collection. Checks or other forms of exchange, should be drawn to the 
Federal Reserve Bank or United States Treasury, as the case may be. 
Checks payable by endorsement are not acceptable.
    (c) Delivery. Delivery of bonds will be made in person, or by mail 
at the risk and expense of the United States, at the address given by 
the purchaser, but only within the United States, its territories and 
possessions, the Commonwealth of Puerto Rico, and the Canal Zone. No 
mail deliveries elsewhere will be made. If the registered owner 
temporarily resides abroad, the bonds will be delivered to such address 
in the United States as the purchaser directs.



Sec. 341.4  Proof of purchase.

    At the time a Retirement Plan Bond is issued, the issuing agent will 
furnish therewith to the purchaser, and in cases where the purchaser is 
different from the person in whose name the bond is inscribed, to the 
registered owner as well, proof of the purchase on Form PD 3550. The 
form will show the names and addresses of the purchaser and of the 
registered owner, the latter's date of birth, social security account 
number and his classification (i.e., self-employed individual or 
employee) the number of bonds issued, a

[[Page 257]]

description thereof by issue date, serial numbers, denominations, and 
registration, together with information as to the amount of his 
contributions (if any) toward the purchase price of the bonds.



Sec. 341.5  Limitation on holdings.

    The limit on the amount of any Retirement Plan Bonds issued during 
1974, or in any one calendar year thereafter, that may be purchased in 
the name of any one person as registered owner is $10,000 (face value).

[39 FR 36114, Oct. 8, 1974]



Sec. 341.6  Nontransferability.

    United States Retirement Plan Bonds are not transferable, and may 
not be sold, discounted or pledged as collateral for a loan or as 
security for the performance of an obligation, or for any other purpose.



Sec. 341.7  Judicial proceedings.

    No judicial determinations will be recognized which would give 
effect to an attempted voluntary transfer inter vivos of a Retirement 
Plan Bond. Otherwise, a claim against a registered owner will be 
recognized when established by valid judicial proceedings, but in no 
case will payment be made to the purchaser at a sale under a levy or to 
the officer authorized to levy upon the property of the owner under 
appropriate process to satisfy a money judgement unless or until the 
bond has become eligible for redemption pursuant to the regulations in 
this part. Neither the Treasury Department nor any of its agencies will 
accept notices of adverse claims or of pending judicial proceedings or 
undertake to protect the interests of litigants who do not have 
possession of the bond.



Sec. 341.8  Payment or redemption during lifetime of owner.

    (a) At age 59\1/2\ or thereafter. A Retirement Plan Bond will be 
redeemable at its current redemption value upon the request of the 
registered owner (or a person recognized as entitled to act on his 
behalf), provided he is 59\1/2\ years of age or older. The owner's age 
will be determined from the date of birth shown on the face of the bond, 
provided, however, that the Secretary of the Treasury reserves the right 
in any case or class of cases to require proof, in the form of a duly 
certified copy of his birth certificate, that the owner has attained the 
age of 59\1/2\ years. If such evidence is unavailable, one of the 
following documents may be furnished in lieu thereof:
    (1) Church records of birth or baptism.
    (2) Hospital birth record or certificate.
    (3) Physician's or midwife's birth record.
    (4) Certification of Bible or other family record.
    (5) Military, naturalization or immigration records.
    (6) Other evidence of probative value. Similar documentary evidence 
will also be required to support any claim made by an owner that the 
date of birth shown on his bond is incorrect.
    (b) Prior to age 59\1/2\ years. A Retirement Plan Bond will be paid 
at its then current redemption value upon a registered owner's request 
(or by a person recognized as entitled to act on his behalf) prior to 
his attainment of age 59\1/2\ years upon submission of a physician's 
statement or any similar evidence showing that the owner has become 
disabled to such an extent that he is unable to engage in any 
substantial, gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or to be of long-continued and indefinite duration. The following are 
examples of impairments which would ordinarily be considered as 
preventing substantial, gainful activity:
    (1) Loss of use of two limbs.
    (2) Certain progressive diseases which have resulted in the physical 
loss or atrophy of a limb, such as diabetes, multiple sclerosis, or 
Buerger's disease.
    (3) Diseases of the heart, lungs, or blood vessels which have 
resulted in major loss of heart or lung reserve as evidenced by X-ray, 
electrocardiogram, or other objective findings, so that despite medical 
treatment breathlessness, pain, or fatigue is produced on slight 
exertion, such as walking several blocks, using public transportation, 
or doing small chores.

[[Page 258]]

    (4) Cancer which is inoperable and progressive.
    (5) Damage to the brain or brain abnormality which has resulted in 
severe loss of judgment, intellect, orientation, or memory.
    (6) Mental diseases (e.g., psychosis or severe psychoneurosis) 
requiring continued institutionalization or constant supervision of the 
individual.
    (7) Loss or diminution of vision to the extent that the affected 
individual has a central visual acuity of no better than 20/200 in the 
better eye after best correction, or has a limitation in the fields of 
vision such that the widest diameter of the visual fields subtends an 
angle no greater than 20 degrees.
    (8) Permanent and total loss of speech.
    (9) Total deafness uncorrectible by a hearing aid.

In any case coming under the provisions of this paragraph, the evidence 
referred to above must be submitted to the Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101, for 
approval before any bonds may be paid. If, after review of the evidence, 
the Secretary of the Treasury is satisfied that the owner's disability 
has been established, a letter will be furnished authorizing payment of 
his Retirement Plan Bonds. This letter must be presented each time any 
of the owner's bonds are submitted for payment to a Federal Reserve Bank 
or Branch or to the Bureau of the Public Debt.
    (c) Requests for payment--(1) By owner. When redemption of any 
Retirement Plan Bond is desired by the registered owner under paragraph 
(a) of this section, it should be presented with the request for payment 
on the back of the bond signed and duly certified, to a Federal Reserve 
Bank or Branch or to the Bureau of the Public Debt, Securities 
Transactions Branch, Washington, DC 20226, or Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101. If payment 
is requested under paragraph (b) of this section, the letter described 
therein should accompany the bond.
    (2) By person other than owner. When redemption of any Retirement 
Plan Bond is desired by the legal guardian, committee conservator, or 
similar representative of the owner's estate under paragraph (a) of this 
section, it should be presented, with the request signed as described 
below, to a Federal Reserve Bank or Branch or to the Bureau of the 
Public Debt. If payment is requested under paragraph (b) of this 
section, the letter described therein should accompany the bond.\1\ The 
request for payment, in either case, should be signed by the 
representative in his fiduciary capacity before an authorized certifying 
officer, and must be supported by a certificate or a certified copy of 
the letters of the appointment from the court making the appointment, 
under seal, or other proof of qualification if the appointment was not 
made by a court. Except in the case of corporate fiduciaries, such 
evidence should state that the appointment is in full force and should 
be dated not more than one year prior to the presentation of the bond 
for payment.
---------------------------------------------------------------------------

    \1\ In any case in which a legal representative has not been 
appointed for the estate of a registered owner who has attained the age 
of 59\1/2\ years, or who has become disabled, a person seeking payment 
of a bond on the owner's behalf should furnish a complete statement of 
the circumstances to the Bureau of the Public Debt, Division of 
Transactions and Rulings, Parkersburg, WV 26101. Appropriate 
instructions will then be furnished.
---------------------------------------------------------------------------

    (d) Partial redemption. A Retirement Plan Bond in a denomination 
greater than $50 (face value) which is otherwise eligible for redemption 
may be redeemed in part, at current redemption value, upon the request 
of the registered owner (or a person recognized as entitled to act on 
his behalf), but only in amounts corresponding to authorized 
denominations. In any case in which partial redemption is desired, 
before the request for payment is signed, the phrase ``to the extent of 
$---- (face value) and reissue of the remainder'' should be appended to 
the request. Upon partial redemption of the bond, the remainder will be 
reissued as of the original issue date. No partial redemption of a bond 
will be made after the death of the owner in whose name it is 
registered.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]

[[Page 259]]



Sec. 341.9  Payment or redemption after death of owner.

    (a) Order of precedence where owner not survived by beneficiary. If 
the registered owner of a Retirement Plan Bond dies before it has been 
presented and surrendered for payment, and there is no beneficiary shown 
thereon, or if the designated beneficiary predeceased the owner, the 
bond shall be paid in the following order of precedence:
    (1) To the duly appointed executor or administrator of the estate of 
the owner, who should sign the request for payment on the back of the 
bond in his representative capacity before an authorized certifying 
officer, such request to be supported by a court certificate or a 
certified copy of his letters of appointment, under seal of the court, 
which should show that the appointment is in full force and effect, and 
be dated within six months of its presentation;
    (2) If no legal representative of the deceased registered owner's 
estate has been or will be appointed, to the widow or widower of the 
owner;
    (3) If none of the above, to the child or children of the owner and 
the descendants of deceased children by representation;
    (4) If none of the above, to the parents of the owner, or the 
survivor of them;
    (5) In none of the above, to other next-of-kin of the owner, as 
determined by the laws of the domicile of such owner at the time of his 
death. In any case coming under the provisions of this paragraph, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary, if any, will 
be required where he predeceased the owner. Payment of bonds under 
paragraph (a)(1) of this section will be made by a Federal Reserve Bank 
or Branch or by the Bureau of the Public Debt, Securities Transactions 
Branch, Washington, DC 20226, or Bureau of the Public Debt, Division of 
Transactions and Rulings, Parkersburg, WV 26101. Payment of bonds under 
paragraphs (a)(2) to (5) of this section will be made upon receipt of 
applications on Form PD 3565, together with the bonds and supporting 
evidence, by the Bureau of the Public Debt.
    (b) Order of precedence where beneficiary survived owner. If the 
registered owner of a Retirement Plan Bond dies before it has been 
presented and surrendered for payment, and the beneficiary shown thereon 
survived the owner, the bond shall be paid in the following order of 
precedence:
    (1) To the designated beneficiary upon his presentation and 
surrender of the bond with the request for payment signed and duly 
certified, such payment to be made to the exclusion of any other person 
who may have been named beneficiary by the registered owner in a bond 
purchase plan, or under a pension or profit-sharing plan;
    (2) If the designated beneficiary survived the registered owner but 
failed to present the bond for payment during his own lifetime, payment 
will be made in the order of precedence specified in paragraphs (a) (1) 
to (5) of this section to the legal representative, surviving spouse, 
children, parents, or next-of-kin of such beneficiary, and in the manner 
provided therein.

In any case coming under the provisions of this paragraph, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary will also be 
required where he survived the owner but failed to present the bond for 
payment during his own lifetime. Payment of a bond to a designated 
beneficiary will be made by Federal Reserve Bank or Branch or by the 
Bureau of the Public Debt, Securities Transactions Branch, Washington, 
DC 20226, or Bureau of the Public Debt, Division of Transactions and 
Rulings, Parkersburg, WV 26101.
    (c) Ownership of redemption proceeds. The orders of precedence set 
forth in paragraphs (a) and (b) of this section, except in case where 
redemption is made for the account of a registered owner, are for the 
Department's convenience in discharging its obligation on a Retirement 
Plan Bond. The discharge of the obligation in accordance therewith shall 
be final so far as the Department is concerned, but those provisions do 
not otherwise purport to determine ownership of the redemption proceeds 
of a bond.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]

[[Page 260]]



Sec. 341.10  Reissue.

    (a) Addition or change of beneficiary. A Retirement Plan Bond will 
be reissued to add a beneficiary in the case of a single ownership bond, 
or to eliminate or substitute a beneficiary in the case of a bond 
registered in beneficiary form upon the owner's request on Form PD 3564. 
No consent will be required to support any reissue transaction from a 
beneficiary whose name is to be removed from the registration of a 
Retirement Plan Bond. If the registered owner dies after the bond has 
been presented and surrendered for reissue, upon receipt of notice 
thereof by the agency to which the request for reissue was submitted, 
such request shall be treated as ineffective, provided the notice of 
death is received by the Federal Reserve Bank or Branch or the Bureau of 
the Public Debt, Securities Transactions Branch, Washington, DC, 20226, 
or Bureau of the Public Debt, Division of Transactions and Rulings, 
Parkersburg, WV 26101, to which the request was sent, in sufficient time 
to withhold delivery, by mail or otherwise, of the reissued bond.
    (b) Error in issue--change of name. Reissue of a Retirement Plan 
Bond will be made where an error in issue has occurred, as well as in 
cases where the owner's name has been changed by marriage, divorce, 
annulment, order of court, or in any other legal manner, upon 
appropriate request supported by satisfactory evidence. Information as 
to the procedure to be followed in securing such reissue may be obtained 
from a Federal Reserve Bank or the Bureau of the Public Debt, Securities 
Transactions Branch, Washington, DC 20226, or Bureau of the Public Debt, 
Division of Transactions and Rulings, Parkersburg, WV 26101.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977; 42 
FR 57123, Nov. 1, 1977]



Sec. 341.11  Use of power of attorney.

    No designation of an attorney, agent, or other representative to 
request payment or reissue on behalf of the owner, beneficiary, or other 
person entitled under Sec. 341.9, other than as provided in the 
regulations in this part, will be recognized.



Sec. 341.12  Lost, stolen, or destroyed bonds.

    If a Retirement Plan Bond is lost, stolen, or destroyed, a 
substitute may be issued upon identification of the bond and proof of 
its loss, theft, or destruction. A description of the bond by 
denomination, serial number, issue date and registration should be 
furnished at the time the report of loss, theft, or destruction is made. 
Such reports should be sent to the Bureau of the Public Debt, Division 
of Transactions and Rulings, Parkersburg, WV 26101. Full instructions 
for obtaining substitute bonds will then be given.

[28 FR 405, Jan 16, 1963, as amended at 42 FR 21611, Apr. 28, 1977]



Sec. 341.13  Taxation.

    The tax treatment provided under section 405 of the Internal Revenue 
Code of 1954 shall apply to all Retirement Plan Bonds. The bonds are 
subject to estate, inheritance, or other excise taxes whether Federal or 
State, but are exempt from all taxation now or hereafter imposed on the 
principal or interest thereof by any State, municipality, or any local 
taxing authority. Inquiries concerning the application of any Federal 
tax of these bonds should be directed to the District Director of 
Internal Revenue of the taxpayer's district or to the Internal Revenue 
Service, Washington, DC 20224.



Sec. 341.14  Certifying officers.

    Officers authorized to certify requests for payment or for any other 
transaction involving Retirement Plan Bonds include:
    (a) Post offices. Any postmaster, acting postmaster, or inspector-
in-charge, or other post office official or clerk designated for that 
purpose. A post office official or clerk, other than a postmaster, 
acting postmaster, or inspector-in-charge, should certify in the name of 
the postmaster or acting postmaster, followed by his own signature and 
official title. Signatures of these officers should be authenticated by 
a legible imprint of the post office dating stamp.
    (b) Banks and trust companies. Any officer of a Federal Reserve Bank 
or Branch, or of a bank or trust company

[[Page 261]]

chartered under the laws of the United States or those of any State, 
Commonwealth, or Territory of the United States, as well as any 
employees of such bank or trust company expressly authorized to act for 
that purpose, who should sign over the title ``Designated Employee.'' 
Certifications by any of these officers or designated employees should 
be authenticated by either a legible imprint of the corporate seal, or, 
where the institution is an authorized issuing agent for United States 
Savings Bonds, Series E, by a legible imprint of its dating stamp.
    (c) Issuing agents of Series E savings bonds. Any officer of a 
corporation or any other organization which is an authorized issuing 
agent for United States Savings Bonds, Series E. All certifications by 
such officers must be authenticated by a legible imprint of the issuing 
agent's dating stamp.
    (d) Foreign countries. In a foreign country requests may be signed 
in the presence of and be certified by any United States diplomatic or 
consular representative, or the manager or other officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate seal or is 
certified to the Treasury Department. If such an officer is not 
available, requests may be signed in the presence of and be certified by 
a notary or other officer authorized to administer oaths, but his 
official character and jurisdiction should be certified by a United 
States diplomatic or consular officer under seal of his office.
    (e) Special provisions. The Commissioner of the Public Debt, the 
Chief of the Division of Securities Operations, or any Federal Reserve 
Bank or Branch is authorized to make special provision for certification 
in any particular case or class of cases where none of the officers 
authorized above is readily accessible.



Sec. 341.15  General provisions.

    (a) Regulations. All Retirement Plan Bonds shall be subject to the 
general regulations prescribed by the Secretary with respect to United 
States securities, which are set forth in Treasury Department Circular 
No. 300, current revision, to the extent applicable. Copies of the 
general regulations may be obtained upon request from any Federal 
Reserve Bank or Branch or the Bureau of the Public Debt.
    (b) Reservation as to issue of bonds. The Secretary of the Treasury 
reserves the right to reject any application for the purchase of 
Retirement Plan Bonds, in whole or in part, and to refuse to issue or 
permit to be issued any such bonds in any case or any class or classes 
of cases if he deems such action to be in the public interest, and his 
action in any such respect shall be final.
    (c) Additional requirements. In any case or any class of cases 
arising under this part the Secretary of the Treasury may require such 
additional evidence as may in his judgment be necessary, and may require 
a bond of indemnity, with or without surety, where he may consider such 
bond necessary for the protection of the United States.
    (d) Waiver of requirements. The Secretary of the Treasury reserves 
the right, in his discretion, to waive or modify any provision or 
provisions of this circular in any particular case or class of cases for 
the convenience of the United States, or in order to relieve any person 
or persons of unnecessary hardship, if such action is not inconsistent 
with law, does not impair any existing rights, and he is satisfied that 
such action would not subject the United States to any substantial 
expense or liability.
    (e) Fiscal agents. Federal Reserve Banks and Branches, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury in connection 
with the issue, delivery, redemption, reissue, and payment of Retirement 
Plan Bonds.
    (f) Reservation as to terms of circular. The Secretary of the 
Treasury may at any time, or from time to time, supplement or amend the 
terms of this part, or any amendments or supplements thereto.

[[Page 262]]

            Appendix to Part 341--Tables of Redemption Values

   Table of Redemption Values Providing an Investment Yield of 3\3/4\
  Percent per Annum for Bonds Bearing Issue Dates Beginning January 1,
                                  1963
 Table shows how the Retirement Plan Bonds bearing issue dates beginning
  January 1, 1963, by denomination, increase in redemption value during
successive half-year periods following issue. The redemption values have
 been determined to provide an investment yield of 3.75 percent \1\ per
annum, compounded semiannually, on the purchase price from issue date to
    the beginning of each half-year period. The period to maturity is
 indeterminate in accordance with the provisions of Sec.  341.1(b).\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (Values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     50.94    101.88    509.38   1,018.75
1 to 1\1/2\....................     51.89    103.79    518.93   1,037.85
1\1/2\ to 2....................     52.87    105.73    528.66   1,057.31
2 to 2\1/2\....................     53.86    107.71    538.57   1,077.14
2\1/2\ to 3....................     54.87    109.73    548.67   1,097.33
3 to 3\1/2\....................     55.90    111.79    558.95   1,117.91
3\1/2\ to 4....................     56.94    113.89    569.43   1,138.87
4 to 4\1/2\....................     58.01    116.02    580.11   1,160.22
4\1/2\ to 5....................     59.10    118.20    590.99   1,181.98
5 to 5\1/2\....................     60.21    120.41    602.07   1,204.14
5\1/2\ to 6....................     61.34    122.67    613.36   1,226.72
6 to 6\1/2\....................     62.49    124.97    624.86   1,249.72
6\1/2\ to 7....................     63.66    127.31    636.57   1,273.15
7 to 7\1/2\....................     64.85    129.70    648.51   1,297.02
7\1/2\ to 8....................     66.07    132.13    660.67   1,321.34
8 to 8\1/2\....................     67.31    134.61    673.06   1,346.11
8\1/2\ to 9....................     68.57    137.14    685.68   1,371.35
9 to 9\1/2\....................     69.85    139.71    698.53   1,397.07
9\1/2\ to 10...................     71.16    142.33    711.63   1,423.26
10 to 10\1/2\..................     72.50    144.99    724.97   1,449.95
10\1/2\ to 11..................     73.86    147.71    738.57   1,477.13
11 to 11\1/2\..................     75.24    150.48    752.42   1,504.83
11\1/2\ to 12..................     76.65    153.30    766.52   1,533.05
12 to 12\1/2\..................     78.09    156.18    780.90   1,561.79
12\1/2\ to 13..................     79.55    159.11    795.54   1,591.07
13 to 13\1/2\..................     81.05    162.09    810.45   1,620.91
13\1/2\ to 14..................     82.56    165.13    825.65   1,651.30
14 to 14\1/2\..................     84.11    168.23    841.13   1,682.26
14\1/2\ to 15..................     85.69    171.38    856.90   1,713.80
15 to 15\1/2\..................     87.30    174.59    872.97   1,745.94
15\1/2\ to 16..................     88.93    177.87    889.34   1,778.67
16 to 16\1/2\..................     90.60    181.20    906.01   1,812.02
16\1/2\ to 17..................     92.30    184.60    923.00   1,846.00
17 to 17\1/2\..................     94.03    188.06    940.31   1,880.61
17\1/2\ to 18..................     95.79    191.59    957.94   1,915.87
18 to 18\1/2\..................     97.59    195.18    975.90   1,951.80
18\1/2\ to 19..................     99.42    198.84    994.20   1,988.39
19 to 19\1/2\..................    101.28    202.57  1,012.84   2,025.67
19\1/2\ to 20..................    103.18    206.37  1,031.83   2,063.66
20 to 20\1/2\..................    105.12    210.23  1,051.17   2,102.35
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to January 1, 1983 (20 years after issue date
  of the first bonds) this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


  Table A--Table of Redemption Values Providing an Investment Yield of
 4.15 Percent Per Annum for Bonds Bearing Issue Dates Beginning June 1,
                                  1966
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
 Bonds bearing issue dates beginning June 1, 1966. The redemption values
  have been determined to provide an investment yield of approximately
  4.15 percent \1\ per annum, compounded semiannually, on the purchase
  price from issue date to the beginning of each half-year period. The
period to maturity is indeterminate in accordance with the provisions of
                  Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................     $0.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.04    102.08    510.38   1,020.75
1 to 1\1/2\....................     52.10    104.19    520.97   1,041.93
1\1/2\ to 2....................     53.18    106.36    531.78   1,063.55
2 to 2\1/2\....................     54.28    108.56    542.81   1,085.62
2\1/2\ to 3....................     55.41    110.81    554.07   1,108.15
3 to 3\1/2\....................     56.56    113.11    565.57   1,131.14
3\1/2\ to 4....................     57.73    115.46    577.31   1,154.61
4 to 4\1/2\....................     58.93    117.86    589.28   1,178.57
4\1/2\ to 5....................     60.15    120.30    601.51   1,203.02
5 to 5\1/2\....................     61.40    122.80    613.99   1,227.99
5\1/2\ to 6....................     62.67    125.35    626.73   1,253.47
6 to 6\1/2\....................     63.97    127.95    639.74   1,279.48
6\1/2\ to 7....................     65.30    130.60    653.01   1,306.03
7 to 7\1/2\....................     66.66    133.31    666.56   1,333.13
7\1/2\ to 8....................     68.04    136.08    680.39   1,360.73
8 to 8\1/2\....................     69.45    138.90    694.51   1,389.09
8\1/2\ to 9....................     70.89    141.78    708.92   1,417.85
9 to 9\1/2\....................     72.36    144.73    723.63   1,447.27
9\1/2\ to 10...................     73.86    147.73    738.65   1,477.30
10 to 10\1/2\..................     75.40    150.80    753.98   1,507.95
10\1/2\ to 11..................     76.96    153.92    769.62   1,539.24
11 to 11\1/2\..................     78.56    157.12    785.59   1,571.18
11\1/2\ to 12..................     80.19    160.38    801.89   1,603.78
12 to 12\1/2\..................     81.85    163.71    818.53   1,637.06
12\1/2\ to 13..................     83.55    167.10    835.52   1,671.03
13 to 13\1/2\..................     85.29    170.57    852.85   1,705.71
13\1/2\ to 14..................     87.05    174.11    870.55   1,741.10
14 to 14\1/2\..................     88.86    177.72    888.61   1,777.23
14\1/2\ to 15..................     90.71    181.41    907.05   1,814.10
15 to 15\1/2\..................     92.59    185.17    925.87   1,851.75
15\1/2\ to 16..................     94.51    189.02    945.09   1,890.17
16 to 16\1/2\..................     96.47    192.94    964.70   1,929.39
16\1/2\ to 17..................     98.47    196.94    984.71   1,969.43
17 to 17\1/2\..................    100.51    201.03  1,005.15   2,010.29
17\1/2\ to 18..................    102.60    205.20  1,026.00   2,052.01
18 to 18\1/2\..................    104.73    209.46  1,047.29   2,094.58
18\1/2\ to 19..................    106.90    213.80  1,069.02   2,138.05
19 to 19\1/2\..................    109.12    218.24  1,091.21   2,182.41
19\1/2\ to 20..................    111.38    222.77  1,113.85   2,227.70
20 to 20\1/2\ \2\..............    113.70    227.39  1,136.96   2,273.92
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to June 1, 1986 (20 years after issue date of
  the first bonds), this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


[[Page 263]]


  Table B--Table of Redemption Values Providing an Investment Yield of
 5.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning January
                                 1, 1970
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
   Bonds bearing issue dates beginning January 1, 1970. The redemption
      values have been determined to provide an investment yield of
  approximately 5.00 percent \1\ per annum, compounded semiannually, on
  the purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
           provisions of Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.25    102.50    512.50   1,025.00
1 to 1\1/2\....................     52.53    105.06    525.31   1,050.62
1\1/2\ to 2....................     53.84    107.69    538.45   1,076.89
2 to 2\1/2\....................     55.19    110.38    551.91   1,103.81
2\1/2\ to 3....................     56.57    113.14    565.70   1,131.41
3 to 3\1/2\....................     57.98    115.97    579.85   1,159.69
3\1/2\ to 4....................     59.43    118.87    594.34   1,188.69
4 to 4\1/2\....................     60.92    121.84    609.20   1,218.40
4\1/2\ to 5....................     62.44    124.89    624.43   1,248.86
5 to 5\1/2\....................     64.00    128.01    640.04   1,280.08
5\1/2\ to 6....................     65.60    131.21    656.04   1,312.09
6 to 6\1/2\....................     67.24    134.49    672.44   1,344.89
6\1/2\ to 7....................     68.93    137.85    689.26   1,378.51
7 to 7\1/2\....................     70.65    141.30    706.49   1,412.97
7\1/2\ to 8....................     72.42    144.83    724.15   1,448.30
8 to 8\1/2\....................     74.22    148.45    742.25   1,484.51
8\1/2\ to 9....................     76.08    152.16    760.81   1,521.62
9 to 9\1/2\....................     77.98    155.97    779.83   1,559.66
9\1/2\ to 10...................     79.93    159.86    799.33   1,598.65
10 to 10\1/2\..................     81.93    163.86    819.31   1,638.62
10\1/2\ to 11..................     83.98    167.96    839.79   1,679.58
11 to 11\1/2\..................     86.08    172.16    860.79   1,721.57
11\1/2\ to 12..................     88.23    176.46    882.31   1,764.61
12 to 12\1/2\..................     90.44    180.87    904.36   1,808.73
12\1/2\ to 13..................     92.70    185.39    926.97   1,853.94
13 to 13\1/2\..................     95.02    190.03    950.15   1,900.29
13\1/2\ to 14..................     97.39    194.78    973.90   1,947.80
14 to 14\1/2\..................     99.82    199.65    998.25   1,996.50
14\1/2\ to 15..................    102.32    204.64  1,023.20   2,046.41
15 to 15\1/2\..................    104.88    209.76  1,048.78   2,097.57
15\1/2\ to 16..................    107.50    215.00  1,075.00   2,150.01
16 to 16\1/2\..................    110.19    220.38  1,101.88   2,203.76
16\1/2\ to 17..................    112.94    225.88  1,129.43   2,258.85
17 to 17\1/2\..................    115.77    231.53  1,157.66   2,315.32
17\1/2\ to 18..................    118.66    237.32  1,186.60   2,373.21
18 to 18\1/2\..................    121.63    243.25  1,216.27   2,432.54
18\1/2\ to 19..................    124.67    249.34  1,246.67   2,493.35
19 to 19\1/2\..................    127.78    255.57  1,277.84   2,555.68
19\1/2\ to 20..................    130.98    261.96  1,309.79   2,619.57
20 to 20\1/2\..................    134.25    268.51  1,342.53   2,685.06
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to January 1, 1990 (20 years after issue date
  of the first bonds) this table will be extended to show redemption
  values for periods of holding of 20\1/2\ years and beyond.


 Table C--Table of Redemption Values Providing an Investment Yield of 6
  Percent Per Annum for Bonds Bearing Issue Dates Beginning February 1,
                                  1974
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
  Bonds bearing issue dates beginning February 1, 1974. The redemption
      values have been determined to provide an investment yield of
 approximately 6 percent \1\ per annum, compounded semiannually, on the
    purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
             provisions of Sec.  341.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.50    103.00    51.500   1,030.00
1 to 1\1/2\....................     53.05    106.10    530.50   1,061.00
1\1/2\ to 2....................     54.64    109.28    546.40   1,092.80
2 to 2\1/2\....................     56.28    112.56    562.80   1,125.60
2\1/2\ to 3....................     57.96    115.92    579.60   1,159.20
3 to 3\1/2\....................     59.70    119.40    597.00   1,194.00
3\1/2\ to 4....................     61.49    122.98    614.90   1,229.80
4 to 4\1/2\....................     63.34    126.68    633.40   1,266.80
4\1/2\ to 5....................     65.24    130.48    652.40   1,304.80
5 to 5\1/2\....................     67.20    134.40    672.00   1,344.00
5\1/2\ to 6....................     69.21    138.42    692.10   1,384.20
6 to 6\1/2\....................     71.29    142.58    712.90   1,425.80
6\1/2\ to 7....................     73.43    146.86    734.30   1,468.60
7 to 7\1/2\....................     75.63    151.26    756.30   1,512.60
712 to 8.......................     77.90    155.80    779.00   1,558.00
8 to 8\1/2\....................     80.24    160.48    802.40   1,604.80
8\1/2\ to 9....................     82.64    165.28    826.40   1,652.80
9 to 9\1/2\....................     85.12    170.24    851.20   1,702.40
9\1/2\ to 10...................     87.68    175.36    876.80   1,753.60
10 to 10\1/2\..................     90.31    180.62    903.10   1,806.20
10\1/2\ to 11..................     93.01    186.02    930.10   1,860.20
11 to 11\1/2\..................     95.81    191.62    958.10   1,916.20
11\1/2\ to 12..................     98.68    197.36    986.80   1,973.60
12 to 12\1/2\..................    101.64    203.28  1,016.40   2,032.80
12\1/2\ to 13..................    104.69    209.38  1,046.90   2,093.80
13 to 13\1/2\..................    107.83    215.66  1,078.30   2,156.60
13\1/2\ to 14..................    111.06    222.12  1,110.60   2,221.20
14 to 14\1/2\..................    114.40    228.80  1,144.00   2,288.00
14\1/2\ to 15..................    117.83    235.66  1,178.30   2,356.60
15 to 15\1/2\..................    121.36    242.72  1,213.60   2,427.20
15\1/2\ to 16..................    125.00    250.00  1,250.00   2,500.00
16 to 16\1/2\..................    128.75    257.50  1,287.50   2,575.00
16\1/2\ to 17..................    132.62    265.24  1,326.20   2,652.40
17 to 17\1/2\..................    136.60    273.20  1,366.00   2,732.00
17\1/2\ to 18..................    140.69    281.38  1,406.90   2,813.80
18 to 18\1/2\..................    144.91    289.82  1,449.10   2,898.20
18\1/2\ to 19..................    149.26    298.52  1,492.60   2,985.20
19 to 19\1/2\..................    153.74    307.48  1,537.40   3,074.80
19\1/2\ to 20..................    158.35    316.70  1,583.50   3,167.00
20 to 20\1/2\..................    163.10    326.20  1,631.00   3,262.00
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.


[[Page 264]]


  Table D--Table of Redemption Values Providing an Investment Yield of
 6.50 Percent Per Annum for Bonds Bearing Issue Dates Beginning Aug. 1,
                                  1979
 Table shows the increase in redemption value for each successive half-
   year term of holding following the date of issue on Retirement Plan
   Bonds bearing issue dates beginning August 1, 1979. The redemption
      values have been determined to provide an investment yield of
 approximately 6.50 percent \1\ per annum, compounded semi-annually, on
  the purchase price from issue date to the beginning of each half-year
 period. The period to maturity is indeterminate in accordance with the
           provisions of Sec.  341.1(b) of this circular.\2\
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50      $100      $500      $1,000
------------------------------------------------------------------------
First \1/2\....................    $50.00   $100.00   $500.00  $1,000.00
\1/2\ to 1.....................     51.62    103.24    516.20   1,032.40
1 to 1\1/2\....................     53.30    106.60    533.00   1,066.00
1\1/2\ to 2....................     55.04    110.08    550.40   1,100.80
2 to 2\1/2\....................     56.82    113.64    568.20   1,136.40
2\1/2\ to 3....................     58.68    117.36    586.80   1,173.60
3 to 3\1/2\....................     60.58    121.16    605.80   1,211.60
3\1/2\ to 4....................     62.54    125.08    625.40   1,250.80
4 to 4\1/2\....................     64.58    129.16    645.80   1,291.60
4\1/2\ to 5....................     66.68    133.36    666.80   1,333.60
5 to 5\1/2\....................     68.84    137.68    688.40   1,376.80
5\1/2\ to 6....................     71.08    142.16    710.80   1,421.60
6 to 6\1/2\....................     73.40    146.80    734.00   1,468.00
6\1/2\ to 7....................     75.78    151.56    757.80   1,515.60
7 to 7\1/2\....................     78.24    156.48    782.40   1,564.80
7\1/2\ to 8....................     80.78    161.56    807.80   1,615.60
8 to 8\1/2\....................     83.40    166.80    834.00   1,668.00
8\1/2\ to 9....................     86.12    172.24    861.20   1,722.40
9 to 9\1/2\....................     88.92    177.84    889.20   1,778.40
9\1/2\ to 10...................     91.80    183.60    918.00   1,836.00
10 to 10\1/2\..................     94.80    189.60    948.00   1,896.00
10\1/2\ to 11..................     97.88    195.76    978.80   1,957.60
11 to 11\1/2\..................    101.06    202.12  1,010.60   2,021.20
11\1/2\ to 12..................    104.34    208.68  1,043.40   2,086.80
12 to 12\1/2\..................    107.72    215.44  1,077.20   2,154.40
12\1/2\ to 13..................    111.22    222.44  1,112.20   2,224.40
13 to 13\1/2\..................    114.84    229.68  1,148.40   2,296.80
13\1/2\ to 14..................    118.58    237.16  1,185.80   2,371.60
14 to 14\1/2\..................    122.44    244.88  1,224.40   2,448.80
14\1/2\ to 15..................    126.42    252.84  1,264.20   2,528.40
15 to 15\1/2\..................    130.52    261.04  1,305.20   2,610.40
15\1/2\ to 16..................    134.76    269.52  1,347.60   2,695.20
16 to 16\1/2\..................    139.14    278.28  1,391.40   2,782.80
16\1/2\ to 17..................    143.66    287.32  1,436.60   2,873.20
17 to 17\1/2\..................    148.34    296.68  1,483.40   2,966.80
17\1/2\ to 18..................    153.16    306.32  1,531.60   3,063.20
18 to 18\1/2\..................    158.12    316.24  1,581.20   3,162.40
18\1/2\ to 19..................    163.26    326.52  1,632.60   3,265.20
19 to 19\1/2\..................    168.58    337.16  1,685.80   3,371.60
19\1/2\ to 20..................    174.06    348.12  1,740.60   3,481.20
20 to 20\1/2\..................    179.72    359.44  1,797.20   3,594.40
------------------------------------------------------------------------
\1\ Based on redemption values of $1,000 bond.
\2\ At a future date prior to Aug. 1, 1999 (20 years after issue date of
  the first bonds) this table will be extended to show redemption values
  for periods of holding of 20\1/2\ years and beyond.


  Table E--Table of Redemption Values Providing an Investment Yield of
 8.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning November
                                 1, 1980
  Note: This table shows how Retirement Plan Bonds bearing issue dates
   beginning November 1, 1980, by denomination, increase in redemption
     value during successive half-year periods following issue. The
redemption values have been determined to provide an investment yield of
 8.00 percent per annum, compounded semiannually, on the purchase price
from issue date to the beginning of each half-year period. The period to
   maturity is indeterminate in accordance with the provisions of Sec.
                                341.1(b).
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First half year................    $50.00   $100.00   $500.00  $1,000.00
.5 to 1.0......................     52.00    104.00    520.00   1,040.00
1.0 to 1.5.....................     54.08    108.16    540.80   1,081.60
1.5 to 2.0.....................     56.24    112.48    562.40   1,124.80
2.0 to 2.5.....................     58.50    117.00    585.00   1,170.00
2.5 to 3.0.....................     60.84    121.68    608.40   1,216.80
3.0 to 3.5.....................     63.26    126.52    632.60   1,265.20
3.5 to 4.0.....................     65.80    131.60    658.00   1,316.00
4.0 to 4.5.....................     68.42    136.84    684.20   1,368.40
4.5 to 5.0.....................     71.16    141.32    711.60   1,423.20
5.0 to 5.5.....................     74.02    148.04    740.20   1,480.40
5.5 to 6.0.....................     76.98    153.96    769.80   1,539.60
6.0 to 6.5.....................     80.06    160.12    800.60   1,601.20
6.5 to 7.0.....................     83.26    166.52    832.60   1,665.20
7.0 to 7.5.....................     86.58    173.16    865.80   1,731.60
7.5 to 8.0.....................     90.04    180.08    900.40   1,800.80
8.0 to 8.5.....................     93.64    187.28    936.40   1,872.80
8.5 to 9.0.....................     97.40    194.80    974.00   1,948.00
9.0 to 9.5.....................    101.30    202.60  1,013.00   2,026.00
9.5 to 10.0....................    105.34    210.68  1,053.40   2,106.80
10.0 to 10.5...................    109.56    219.12  1,095.60   2,191.20
10.5 to 11.0...................    113.94    227.88  1,139.40   2,278.80
11.0 to 11.5...................    118.50    237.00  1,185.00   2,370.00
11.5 to 12.0...................    123.24    246.48  1,232.40   2,464.80
12.0 to 12.5...................    128.16    256.32  1,281.60   2,563.20
12.5 to 13.0...................    133.30    266.60  1,333.00   2,666.00
13.0 to 13.5...................    138.62    277.24  1,386.20   2,772.40
13.5 to 14.0...................    144.16    288.32  1,441.60   2,883.20
14.0 to 14.5...................    149.94    299.88  1,499.40   2,998.80
14.5 to 15.0...................    155.94    311.88  1,559.40   3,118.80
15.0 to 15.5...................    162.16    324.32  1,621.60   3,243.20
15.5 to 16.0...................    168.66    337.32  1,686.60   3,373.20
16.0 to 16.5...................    175.40    350.80  1,754.00   3,508.00
16.5 to 17.0...................    182.42    364.84  1,824.20   3,648.40
17.0 to 17.5...................    189.72    379.44  1,897.20   3,794.40
17.5 to 18.0...................    197.30    394.60  1,973.00   3,946.00
18.0 to 18.5...................    205.20    410.40  2,052.00   4,104.00
18.5 to 19.0...................    213.40    426.80  2,134.00   4,268.00
19.0 to 19.5...................    221.94    443.88  2,219.40   4,438.80
19.5 to 20.0...................    230.82    461.64  2,308.20   4,616.40
20.0 to 20.5...................    240.06    480.12  2,400.60   4,801.20
------------------------------------------------------------------------


[[Page 265]]


  Table F--Table of Redemption Values Providing an Investment Yield of
 9.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning October
                                 1, 1981
  Note: This table shows how Retirement Plan Bonds bearing issue dates
beginning October 1, 1981, by denomination, increase in redemption value
   during successive half-year periods following issue. The redemption
   values have been determined to provide an investment yield of 9.00
 percent per annum, compounded semiannually, on the purchase price from
   issue date to the beginning of each half-year period. The period to
   maturity is indeterminate in accordance with the provisions of Sec.
                                341.1(b).
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $100.00   $500.00  $1,000.00
------------------------------------------------------------------------
First half year................    $50.00   $100.00   $500.00  $1,000.00
.5 to 1.0......................     52.24    104.48    522.40   1,044.80
1.0 to 1.5.....................     54.60    109.20    546.00   1,092.00
1.5 to 2.0.....................     57.06    114.12    570.60   1,141.20
2.0 to 2.5.....................     59.62    119.24    596.20   1,192.40
2.5 to 3.0.....................     62.30    124.60    623.00   1,246.00
3.0 to 3.5.....................     65.12    130.24    651.20   1,302.40
3.5 to 4.0.....................     68.04    136.08    680.40   1,360.80
4.0 to 4.5.....................     71.10    142.20    711.00   1,422.00
4.5 to 5.0.....................     74.30    148.60    743.00   1,486.00
5.0 to 5.5.....................     77.64    155.28    776.40   1,552.80
5.5 to 6.0.....................     81.14    162.28    811.40   1,622.80
6.0 to 6.5.....................     84.80    169.60    848.00   1,696.00
6.5 to 7.0.....................     88.60    177.20    886.00   1,772.00
7.0 to 7.5.....................     92.60    185.20    926.00   1,852.00
7.5 to 8.0.....................     96.76    193.52    967.60   1,935.20
8.0 to 8.5.....................    101.12    202.24  1,011.20   2,022.40
8.5 to 9.0.....................    105.66    211.32  1,056.60   2,113.20
9.0 to 9.5.....................    110.42    220.84  1,104.20   2,208.40
9.5 to 10.0....................    115.40    230.80  1,154.00   2,308.00
10.0 to 10.5...................    120.58    241.16  1,205.80   2,411.60
10.5 to 11.0...................    126.02    252.04  1,260.20   2,520.40
11.0 to 11.5...................    131.68    263.36  1,316.80   2,633.60
11.5 to 12.0...................    137.60    275.20  1,376.00   2,752.00
12.0 to 12.5...................    143.80    287.60  1,438.00   2,876.00
12.5 to 13.0...................    150.28    300.56  1,502.80   3,005.60
13.0 to 13.5...................    157.04    314.08  1,570.40   3,140.80
13.5 to 14.0...................    164.10    328.20  1,641.00   3,282.00
14.0 to 14.5...................    171.48    342.96  1,714.80   3,429.60
14.5 to 15.0...................    179.20    358.40  1,792.00   3,584.00
15.0 to 15.5...................    187.26    374.52  1,872.60   3,745.20
15.5 to 16.0...................    195.70    391.40  1,957.00   3,914.00
16.0 to 16.5...................    204.50    409.00  2,045.00   4,090.00
16.5 to 17.0...................    213.70    427.40  2,137.00   4,274.00
17.0 to 17.5...................    223.32    446.64  2,233.20   4,466.40
17.5 to 18.0...................    233.36    466.72  2,333.60   4,667.20
18.0 to 18.5...................    243.86    487.72  2,438.60   4,877.20
18.5 to 19.0...................    254.84    509.68  2,548.40   5,096.80
19.0 to 19.5...................    266.32    532.64  2,663.20   5,326.40
19.5 to 20.0...................    278.30    556.60  2,783.00   5,566.00
20.0 to 20.5...................    290.82    581.64  2,908.20   5,816.40
------------------------------------------------------------------------


[28 FR 405, Jan. 16, 1963, as amended at 31 FR 7625, May 27, 1966; 35 FR 
224, Jan. 7, 1970; 39 FR 4661, Feb. 6, 1974; 45 FR 53393, Aug. 11, 1980; 
46 FR 60573, Dec. 11, 1981]



PART 342_OFFERING OF UNITED STATES SAVINGS NOTES--Table of Contents




Sec.
342.0 Offering of notes.
342.1 Definition of words and terms used in this part.
342.2 Description of notes.
342.3 Extended terms and yields for outstanding notes.
342.4 Purchase--registration.
342.5 Limitations.
342.6 Taxation.
342.7 Payment or redemption.
342.8 Governing regulations.
342.9 Fiscal agents.
342.10 Reservations.

    Authority: 31 U.S.C. 3103, 5 U.S.C. 301.

    Source: 57 FR 14282, Apr. 17, 1992, unless otherwise noted.



Sec. 342.0  Offering of notes.

    The Secretary of the Treasury offered for sale to the people of the 
United States, United States Savings Notes (also known as ``Freedom 
Shares'', and generally referred to herein as ``savings notes'' or 
``notes''). The notes could be purchased only in combination with Series 
E savings bonds of the same or greater denomination. This offering was 
effective from May 1, 1967 until the close of business October 31, 1970 
when the sale of savings notes was terminated by the Secretary of the 
Treasury.



Sec. 342.1  Definition of words and terms used in this part.

    (a) Payroll savings plan refers to a voluntary program maintained by 
an employer whereby its participating officers and employees authorize 
regular withholdings from their salaries or wages for the purchase of 
savings bonds.
    (b) Quarter refers to a 3-month period of a year, as follows: 
January-February-March, April-May-June, July-August-September, or 
October-November-December.



Sec. 342.2  Description of notes.

    (a) General. Savings notes were issued only in registered form and 
are nontransferable.
    (b) Term. A savings note was dated as of the first day of the month 
in which payment of the purchase price was received by an issuing agent. 
A note had an original maturity period of 4 years and 6 months and has 
been granted two 10-year extensions of maturity and an additional 
extension of 5 years and 6 months with interest; it will reach

[[Page 266]]

final maturity 30 years from its issue date. A note cannot be called by 
the Secretary of the Treasury prior to maturity and was not redeemable 
during the first year from issue date. Thereafter, a note may be 
redeemed at the option and request of the owner.
    (c) Denominations and purchase prices. Savings notes were issued on 
a discount basis. The denominations and purchase prices were as follows:

------------------------------------------------------------------------
                                                              Purchase
                       Denomination                             price
------------------------------------------------------------------------
$25.......................................................        $20.25
50........................................................         40.50
75........................................................         60.75
100.......................................................         81.00
------------------------------------------------------------------------


Interest is paid as a part of the redemption value. A note increased in 
value one year after issue date and increases at the beginning of each 
half-year period thereafter until final maturity, at which time interest 
ceases to accrue. Interest on a note which is redeemed before maturity 
ceases to accrue at the end of the interest period next preceding the 
redemption date, except that if the note is redeemed on a date on which 
the redemption value increases, interest ceases to accrue on that date.
    (d) Inscription and issue. At the time of issue, the authorized 
issuing agent:
    (1) Inscribed on the face of each note the name and address of the 
owner and the name of the beneficiary, if any, or the names of the 
coowner;
    (2) Entered the issue date in the right-hand portion of the note in 
the space provided for that purpose; and
    (3) Imprinted thereunder, by use of the agent's validation indicia 
for the issue of Series E savings bonds, the date the note was actually 
inscribed. A note is valid only if an authorized issuing agent received 
payment therefor and duly inscribed, dated, imprinted validation indicia 
on the note and delivered it.



Sec. 342.3  Extended terms and yields for outstanding notes.

    (a) Extended maturity periods. The terms extended maturity period 
and second extended maturity period refer to the 10-year intervals after 
the original maturity dates during which owners may retain their savings 
notes and continue to earn interest thereon. The term third extended 
maturity period refers to the final interval of 5 years and 6 months 
during which owners may retain notes and continue to earn interest until 
final maturity, which occurs 30 years after issue date. No special 
action is required of owners to take advantage of any extension 
heretofore or herein granted. The following table describes the previous 
and final maturities of savings notes:

------------------------------------------------------------------------
                                       Previous
                                      maturities      Previous maturity
      Issue dates--1st day of      ----------------   dates--1st day of
                                     yrs.    mos.
------------------------------------------------------------------------
May 1967-Oct. 1970................      24       6  Nov. 1991-Apr. 1995.
------------------------------------------------------------------------


------------------------------------------------------------------------
                                               Additional
                                                extended
                                                maturity       Life of
          Issue dates--1st day of                period      notes--yrs.
                                            ----------------
                                              yrs.    mos.
------------------------------------------------------------------------
May 1967-Oct. 1970.........................       5       6           30
------------------------------------------------------------------------


------------------------------------------------------------------------
                                              Final maturity dates--1st
          Issue dates--1st day of                      day of
------------------------------------------------------------------------
May 1967-Oct. 1970........................  May 1997-Oct. 2000
------------------------------------------------------------------------

    (b) Guaranteed minimum investment yield--(1) General. Except as 
provided in paragraph (b)(2) of this section, the guaranteed minimum 
investment yields for outstanding savings notes are as follows:
    (i) For savings notes in extended maturity periods prior to November 
1, 1982, the guaranteed minimum investment yield was 8.5 percent per 
annum, compounded semiannually, effective for the period from the first 
semiannual interest accrual date on or after May 1, 1981, through their 
next extended maturity dates on or after November 1, 1982.
    (ii) For savings notes that entered extended maturity periods during 
the period of November 1, 1982, through October 1, 1986, the guaranteed 
minimum investment yield was 7.5 percent per annum, compounded 
semiannually, for such periods, including notes that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
    Issue dates--1st day of--          Extension     Entered--1st day of
------------------------------------------------------------------------
May 1968-Oct. 1970...............  2nd.............  Nov. 1982-Apr.
                                                      1985.
------------------------------------------------------------------------


[[Page 267]]

    (iii) For savings notes that entered into extended maturity periods 
during the period of November 1, 1986, through February 1, 1993, the 
guaranteed minimum investment yield is 6 percent per annum, compounded 
semiannually, for such periods, including notes that entered into an 
extended maturity period, as shown below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
May 1967-Aug. 1968..............  3rd (final).......  Nov. 1991-Feb.
                                                       1993.
------------------------------------------------------------------------

    (iv) For savings notes that entered or enter extended maturity 
periods on or after March 1, 1993, the guaranteed minimum investment 
yield is 4 percent per annum, compounded semiannually, for such periods, 
or the investment yield in effect at the beginning of such periods, 
including notes that enter into an extended maturity period, as shown 
below:

------------------------------------------------------------------------
                                                       Entered--1st day
    Issue dates--1st day of--          Extension              of
------------------------------------------------------------------------
Sep. 1968-Oct. 1970.............  3rd (final).......  Mar. 1993-Apr.
                                                       1995.
------------------------------------------------------------------------

    (2) Eleven-year bonus. If a savings note was held for the 11-year 
period beginning with the first semiannual interest accrual date that 
occurred on or after January 1, 1980, its guaranteed minimum investment 
yield for such period was increased by one-half of one percent per 
annum, compounded semiannually.
    (c) Market-based variable investment yield. In order to be eligible 
for the market-based variable investment yield, notes had to be held at 
least five years beginning with the first semiannual interest accrual 
date occurring on or after November 1, 1982. The market-based variable 
investment yield shall be determined by the Secretary of the Treasury as 
follows:
    (1) For each 6-month period, starting with the period beginning May 
1, 1982, the average market yield on outstanding marketable Treasury 
securities with a remaining term to maturity of approximately 5 years 
during such period as determined. Such determination by the Secretary of 
the Treasury or his or her delegate shall be final and conclusive.
    (2) For notes which entered an extended maturity period prior to May 
1, 1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occuring on or after November 
1, 1987, will be 85 percent, rounded to the nearest one-fourth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (c)(1) of this section, for the 
appropriate number of 6-month periods involved, starting with the period 
beginning May 1, 1982.
    (3) For notes which entered an extended maturity period on or after 
May 1, 1989, the market-based variable investment yield from the first 
semiannual interest accrual date occurring on or after November 1, 1982 
to each semiannual interest accrual date occurring on or after November 
1, 1989, will be 85 percent, rounded to the nearest one-hundredth of one 
percent, of the arithmetic average of the market yield averages, as 
determined in accordance with paragraph (c)(1) of this section for the 
appropriate number of 6-month periods involved, starting with the period 
beginning May 1, 1982.
    (d) Determination of redemption values during any extended maturity 
period. The redemption value of a note on a given interest accrual date 
during any extended maturity period will be the higher of the value 
produced by using the applicable guaranteed minimum investment yield or 
the value produced by using the appropriate market-based variable 
investment yield. The calculation of these values is described below:
    (1) Guaranteed minimum investment yield and resulting values during 
an extended maturity period. A note has a guaranteed minimum investment 
yield for each of its extended maturity periods. The applicable 
guaranteed minimum investment yield for the current extended maturity 
period and any subsequent periods are specified in paragraph (b) of this 
section. In order to determine the value of a note during an extended 
maturity period, the value of the note either at the end of the next 
preceding maturity period or when the guaranteed minimum investment 
yield

[[Page 268]]

last increased,\1\ whichever occurs later, is determined using the 
applicable guaranteed minimum investment yield. This value is then used 
as the base upon which interest accrues during the extended maturity 
period at the guaranteed minimum investment yield in effect for savings 
bonds at the beginning of that period. The resulting semiannual values 
are then compared with the corresponding values determined by using the 
applicable market-based variable investment yields.
---------------------------------------------------------------------------

    \1\ The 11-year bonus was the last increase in the guaranteed 
minimum investment yield (see paragraph (b)(2)). Savings notes which 
were eligible to receive this bonus received it on the first semiannual 
interest accrual date which occurred on or after January 1, 1991.
---------------------------------------------------------------------------

    (2) Market-based variable investment yield and resulting values 
during and extended maturity period. The market-based variable 
investment yield from the first semiannual interest accrual date 
occurring on or after November 1, 1982 to each semiannual interest 
accrual date occurring on or after November 1, 1987, is determined as 
specified in paragraph (c) of this section. The value of a note on its 
first semiannual interest accrual date occurring on or after November 1, 
1982 is used as the base upon which interest accrues during an extended 
maturity period at the applicable market-based variable investment 
yield. If redeemed, the note will receive the higher of the two values 
produced by using the applicable guaranteed minimum investment yield and 
the applicable market-based variable investment yield.
    (e) Market-based variable investment yields and tables of redemption 
values. The market-based variable investment yields for notes redeemed 
during each 6-month period, beginning on May 1 and November 1 of each 
year, are made available prior to each of those dates by the Bureau of 
the Public Debt, Parkersburg, West Virginia 26106-1328, accompanied by 
tables of the redemption values of notes for the following 6 months, 
based on either the applicable market-based variable investment yields 
or guaranteed minimum investment yields.

[57 FR 14282, Apr. 17, 1992, as amended at 58 FR 60937, 60938, Nov. 18, 
1993]



Sec. 342.4  Purchase--registration.

    (a) Purchase. Savings notes, in combination with Series E bonds, 
could be purchased from any authorized issuing agent, a Federal Reserve 
Bank or Branch, or the Bureau of the Public Debt. Payment for the notes 
could be made in the same manner as payment for Series E savings bonds. 
Issuing agents delivered the notes at the time of purchase, or by mail 
at the risk and expense of the United States, but only within the United 
States, its territories and possessions and the Commonwealth of Puerto 
Rico. No mail deliveries elsewhere were made.
    (b) Registration. The following restrictions applied to original 
issues of savings notes:
    (1) They were limited to registration in the name of a natural 
person (whether adult or minor), alone, or with another natural person 
as coowner or beneficiary, and
    (2) They had to be identical in registration to the Series E bond 
purchased in combination therewith.



Sec. 342.5  Limitations.

    (a) Purchases--(1) Payroll savings plans. Under a payroll savings 
plan, withholdings for notes could not exceed the ratio of $1.08 for the 
notes to $1 for the Series E bonds and could not exceed $20.25 per 
weekly pay period, or $40.50 per biweekly or semi-monthly pay period, or 
$81 per monthly pay period.
    (2) Others. In combination purchases of notes and Series E bonds, 
other than under a payroll savings plan, purchases of notes could not 
exceed $350 (face amount) a quarter, and in no event could the annual 
limitation of $1,350 (face amount) be exceeded.
    (b) Holdings. The face amount of savings notes originally issued to 
any one person during any one calendar year, was limited to $1,350.



Sec. 342.6  Taxation.

    (a) General. For the purpose of determining taxes and tax 
exemptions, the increment in value represented by the difference between 
the purchase price and the redemption value received for a savings note 
is considered interest. The interest is subject to all taxes imposed 
under the Internal Revenue Code

[[Page 269]]

of 1986, as amended. The notes are subject to estate, inheritance, gift, 
or other excise taxes, whether Federal or State, but are exempt from all 
other taxation now or hereafter imposed on the principal or interest 
thereof by any State, or any of the possessions of the United States, or 
by any local taxing authority.
    (b) Federal income tax on notes. An owner of savings notes who is a 
cash-basis taxpayer may use either of two methods for reporting the 
increase in the redemption value of the notes for Federal income tax 
purposes, as follows:
    (1) Defer reporting of the increase to the year of final maturity, 
actual redemption, or other disposition, whichever is earlier; or
    (2) Elect to report the increase for the year in which it accrues, 
in which case the election applies to all savings notes then owned and 
those subsequently acquired, as well as to any other similar obligations 
purchased on a discount basis.

If the method in paragraph (b)(1) of this section is used, the taxpayer 
may change to the method in paragraph (b)(2) of this section without 
obtaining permission from the Internal Revenue Service. However, once 
the election to use the method in paragraph (b)(2) of this section is 
made, the taxpayer may not change the method of reporting without 
permission from the Internal Revenue Service. For further information on 
Federal income taxes, the Service Center Director or District Director, 
Internal Revenue Service, of the taxpayer's district should be 
contacted.



Sec. 342.7  Payment or redemption.

    (a) General. A savings note is redeemable any time one year or more 
after the issue date upon its presentation and surrender, with a duly 
executed request for payment, to any Federal Reserve Bank or Branch 
referred to in 342.9, the Bureau of the Public Debt, or to any financial 
institution designated as a paying agent of savings bonds.
    (b) Judgment creditors. Payment of a savings note to the purchaser 
at a sale under a levy, or to the officer authorized to levy upon the 
property of the owner under appropriate process to satisfy a money 
judgment, could not be made until one year after the issue date of the 
note.

[57 FR 14282, Apr. 17, 1992, as amended at 59 FR 10540, Mar. 4, 1994]



Sec. 342.8  Governing regulations.

    Savings notes are subject to the regulations of the Department of 
the Treasury, now or hereafter prescribed, governing United States 
Savings Bonds, contained in 31 CFR part 315, also published as 
Department of the Treasury Circular No. 530, current revision, except as 
otherwise specifically provided herein.



Sec. 342.9  Fiscal agents.

    (a) Federal Reserve Banks and Branches referred to below, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury, or his or her 
delegate, in connection with the issue, redemption and payment of 
savings notes.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.

[[Page 270]]

 
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[59 FR 10540, Mar. 4, 1994]



Sec. 342.10  Reservations.

    (a) Issue of notes. The Secretary of the Treasury reserved the right 
to reject any application for purchase of savings notes, in whole or in 
part, and to refuse to issue or permit to be issued hereunder any such 
notes in any case or any class or classes of cases if such action was 
deemed to be in the public interest. Any action in any such respect was 
final.
    (b) Terms. The Secretary of the Treasury may at any time, or from 
time to time, supplement or amend the terms of this part, or of any 
amendments or supplements thereto.



PART 343_REGULATIONS GOVERNING THE OFFERING OF UNITED STATES MORTGAGE 
GUARANTY INSURANCE COMPANY TAX AND LOSS BONDS--Table of Contents




                      Subpart A_General Information

Sec.
343.0 Offering of bonds.
343.1 General provisions.

                      Subpart B_Tax and Loss Bonds

343.2 Issue date and purchase.
343.3 Redemption.
343.4 Reissue.
343.5 Taxation.

    Authority: 5 U.S.C. 301; 26 U.S.C. 832; 31 U.S.C. 3102.

    Source: 62 FR 49914, Sept. 24, 1997, unless otherwise noted.



                      Subpart A_General Information



Sec. 343.0  Offering of bonds.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, and pursuant to paragraph 832(e) of the 
Internal Revenue Code of 1954, offers for sale only to companies 
organized and engaged in the business of writing mortgage guaranty 
insurance within the United States, bonds of the United States 
designated as Mortgage Guaranty Insurance Company Tax and Loss Bonds, 
hereinafter referred to as tax and loss bonds. The bonds are issued in a 
minimum amount of $1,000 or in any larger amount, in increments of not 
less than $1.00. This offering will continue until terminated by the 
Secretary of the Treasury.



Sec. 343.1  General provisions.

    (a) Regulations. Tax and loss bonds are subject to the general 
regulations with respect to United States securities, which are set 
forth in the Department of the Treasury Circular No. 300 (31 CFR part 
306), to the extent applicable. Copies of the circular may be obtained 
from the Bureau of the Public Debt, Division of Special Investments, 
Room 309, 200 Third St., P.O. Box 396, Parkersburg, WV 26106-0396 or 
downloaded from Public Debt's home page on the Internet at: http://
www.publicdebt.treas.gov/.
    (b) Issuance. Tax and loss bonds are issued in book-entry form on 
the books of the Treasury that are maintained by the Division of Special 
Investments. The bonds are issued with 10 or 20 year maturities as 
designated by the purchaser. These bonds are non-interest bearing. Any 
transfer by sale, exchange, assignment, pledge or otherwise, is 
prohibited. The bonds may be reissued as provided in Sec. 343.4.
    (c) Fiscal agents. Selected Federal Reserve Banks and Branches, as 
fiscal agents of the United States, may be

[[Page 271]]

designated to perform such services requested of them by the Secretary 
of the Treasury in connection with the purchase, redemption and other 
transactions involving these bonds.
    (d) Debt limit contingency. The Department of the Treasury reserves 
the right to change or suspend the terms and conditions of this 
offering, including provisions relating to the purchase of, and 
redemption of, the bonds as well as notices relating hereto, at any time 
the Secretary determines that the issuance of obligations sufficient to 
conduct the orderly financing operations of the United States cannot be 
made without exceeding the statutory debt limit. Announcement of such 
changes shall be provided by such means as the Secretary deems 
appropriate.
    (e) General redemption provisions. A bond may not be called for 
redemption by the Secretary of the Treasury prior to maturity. When the 
bond matures, payment will be made of the principal amount due to the 
owner. A bond scheduled for maturity on a non-business day will be 
redeemed on the next business day.
    (f) Reservations. The Secretary of the Treasury may at any time, or 
from time to time, supplement or amend the terms of this circular or any 
related amendments or supplements. Transaction requests, including 
purchases or redemptions of bonds, are not acceptable if unsigned, 
inappropriately completed, or not timely submitted. Any of these actions 
shall be final. The authority of the Secretary to waive regulations 
under 31 CFR 306.126 applies to part 343.
    (g) Forms and additional information. The application form for 
subscriptions, Fedwire instructions and other information will be 
furnished by the Division of Special Investments upon request by writing 
to the Division of Special Investments or by calling (304) 480-7752. 
Application forms may also be downloaded from the Internet at Public 
Debt's home page at: http://www.publicdebt.treas.gov/.



                      Subpart B_Tax and Loss Bonds



Sec. 343.2  Issue date and purchase.

    (a) Issue date. The issue date must be a business day. The bonds 
will be issued as of the date of receipt of Form PD F 3871 ``Application 
for Issue of United States Mortgage Guaranty Insurance Company Tax and 
Loss Bonds'' and receipt of the remittance of funds for the full amount 
of the bond(s). Applications under this offering must be submitted to 
the Division of Special Investments. An application may be submitted by 
fax at (304) 480-7786 or (304) 480-6818, by mail, or by other carrier. 
Applications submitted by mail should be sent by certified or registered 
mail.
    (b) Purchase. Tax and loss bonds may only be purchased from the 
Division of Special Investments. The purchaser will instruct their 
financial institution to submit the exact amount of funds on the 
requested issue date to the Division of Special Investments via the 
Fedwire funds transfer system, with credit directed to the Treasury's 
General Account, according to wire instructions obtained from the 
Division of Special Investments (see Sec. 343.1(g)). Full payment 
should be submitted by 3:00 P.M. Eastern time to ensure that settlement 
of the transaction occurs.

(Approved by the Office of Management and Budget under control number 
1535-0127)



Sec. 343.3  Redemption.

    (a) General. Tax and loss bonds may not be called for redemption by 
the Secretary of the Treasury prior to maturity, but may be redeemed in 
whole or in part at the owner's option at any time after three months 
from issue date. The Director of the Internal Revenue Service District 
in which the owner's principal place of business is located will be 
given notice of all redemptions. Partial redemptions of bonds may be 
requested in any whole dollar amount; however, an account balance of 
less than $1,000 will be redeemed in total.
    (b) Method of payment. Payment will be made by the Automated 
Clearing House (ACH) method for the owner's

[[Page 272]]

account at a financial institution designated by the owner. To the 
extent applicable, provisions of Sec. 357.26, Payments, and provisions 
of 31 CFR part 370, shall govern ACH payments made under this offering. 
The Department of the Treasury may employ alternate payment procedures 
in lieu of ACH in any case or class of cases where operational 
considerations require such action.
    (c) Book-entry. Bonds will be redeemed automatically upon maturity. 
Payment will be made in accordance with the ACH payment instructions on 
file. Redemptions prior to maturity will be made upon receipt of a 
redemption request. Notice of redemption prior to maturity must be 
submitted in writing on company letterhead to the Division of Special 
Investments, or faxed to (304) 480-7786 or to (304) 480-6818. The notice 
must be received by the Division of Special Investments not less than 
three business days prior to the requested redemption date. It must 
contain the owner's name and Tax Identification Number, the requested 
redemption date, any changed payment routing instructions, the case 
number(s) to be redeemed, including original issue date(s), and the 
amount to be redeemed.
    (d) Registered. To obtain redemption, a bond with the assignment for 
redemption properly completed and executed must be presented to the 
Division of Special Investments. Payment routing instructions must also 
be included with the bond at redemption. Upon partial redemption of a 
registered bond, the remaining balance will be reissued in book-entry 
form with the original issue and maturity date.

(Approved by the Office of Management and Budget under control number 
1535-0127)



Sec. 343.4  Reissue.

    (a) General. Reissue of a tax and loss bond may be made only under 
the conditions specified in this paragraph. A request for reissue must 
be made by an officer of the beneficial owner who is authorized to 
assign the bond for redemption. The request must be submitted to the 
Division of Special Investments. A bond will only be reissued in book-
entry form and will bear the same issue date and maturity as the 
original bond.
    (b) Correction of error. The reissue of a bond may be made to 
correct an error in the original issue upon an appropriate request, 
supported by satisfactory proof of the error.
    (c) Change of name. An owner whose name is changed in any legal 
manner after the issue of the bond should submit the bond with a request 
for reissue, substituting the new name for the name inscribed on the 
bond. The signature on the request for reissue should show the new name, 
the legal reason which caused the change to be made and the former name. 
It must be supported by satisfactory proof of the change of name.
    (d) Legal succession. A bond registered in the name of a company 
which has been succeeded by another company as the result of a merger, 
consolidation, incorporation, reincorporation, conversion, 
reorganization, or which has been lawfully succeeded in any manner 
whereby the business or activities of the original organization are 
continued without substantial change, will be paid to or reissued in the 
name of the successor upon an appropriate request on its behalf, 
supported by satisfactory evidence of successorship.
    (e) Conversion to book-entry. Although not required, any owner of 
tax and loss bonds held in registered form after the effective date of 
this regulation, may submit those bonds to the Division of Special 
Investments, for conversion to book-entry form.

(Approved by the Office of Management and Budget under control number 
1535-0127)



Sec. 343.5  Taxation.

    Tax and loss bonds will be exempt from all taxation now or hereafter 
imposed on the principal by any state or any possession of the United 
States or of any local taxing authority.



PART 344_U.S. TREASURY SECURITIES_STATE AND LOCAL GOVERNMENT SERIES
--Table of Contents




                      Subpart A_General Information

Sec.
344.0 What does this part cover?

[[Page 273]]

344.1 What special terms do I need to know to understand this part?
344.2 What general provisions apply to SLGS securities?

                     LGSafe[reg] Service

344.3 What provisions apply to the SLGSafe Service?

                    Subpart B_Time Deposit Securities

344.4 What are Time Deposit securities?
344.5 What other provisions apply to subscriptions for Time Deposit 
          securities?
344.6 How do I redeem a Time Deposit security before maturity?

                   Subpart C_Demand Deposit Securities

344.7 What are Demand Deposit securities?
344.8 What other provisions apply to subscriptions for Demand Deposit 
          securities?
344.9 How do I redeem a Demand Deposit security?

               Subpart D_Special Zero Interest Securities

344.10 What are Special Zero Interest securities?
344.11 How do I redeem a Special Zero Interest security before maturity?

Appendix A to Part 344--Early Redemption Market Charge Formulas and 
          Examples for Subscriptions From December 28, 1976, Through 
          October 27, 1996
Appendix B to Part 344--Formula for Determining Redemption Value for 
          Securities Subscribed for and Early-Redeemed On or After 
          October 28, 1996

    Authority: 26 U.S.C. 141 note; 31 U.S.C. 3102, 3103, 3104, and 3121.

    Source: 65 FR 55405, Sept. 13, 2000, unless otherwise noted.



                      Subpart A_General Information

    Source: 70 FR 37911, June 30, 2005, unless otherwise noted.



Sec. 344.0  What does this part cover?

    (a) What is the purpose of the SLGS securities offering? The 
Secretary of the Treasury (the Secretary) offers for sale non-marketable 
State and Local Government Series (SLGS) securities to provide issuers 
of tax-exempt securities with investments from any eligible source of 
funds (as defined in Sec. 344.1).
    (b) What types of SLGS securities are governed by this part? This 
part governs the following SLGS securities:
    (1) Time Deposit securities--may be issued as:
    (i) Certificates of indebtedness;
    (ii) Notes; or
    (iii) Bonds.
    (2) Demand Deposit securities--may be issued as certificates of 
indebtedness.
    (3) Special Zero Interest securities. Special Zero Interest 
securities, which were discontinued on October 28, 1996, were issued as:
    (i) Certificates of indebtedness; or
    (ii) Notes.
    (c) In what denominations are SLGS securities issued? SLGS 
securities are issued in the following denominations:
    (1) Time Deposit securities--a minimum amount of $1,000, or in any 
larger whole dollar amount; and
    (2) Demand Deposit securities--a minimum amount of $1,000, or in any 
larger amount, in any increment.
    (d) How long is the offering in effect? The offering continues until 
terminated by the Secretary.



Sec. 344.1  What special terms do I need to know to understand this part?

    As appropriate, the definitions of terms used in this part are those 
found in the relevant portions of the Internal Revenue Code and the 
Income Tax Regulations.
    BPD's Web site refers to http://www.slgs.gov.
    Business day(s) means Federal business day(s).
    Current Treasury borrowing rate means the prevailing market rate, as 
determined by Treasury, for a Treasury security with the specified 
period to maturity. In the case where SLGS rates are needed for 
maturities currently not issued by Treasury, at our discretion, suitable 
proxies for Treasury securities and/or a rate setting methodology, as 
determined by the Secretary, may be used to derive a current Treasury 
borrowing rate. At any time that the Secretary establishes such proxies 
or a rate-setting method or determines that the methodology should be 
revised, we will make an announcement.
    Day(s) means calendar day(s).
    Eligible source of funds means:
    (1) Any amounts that constitute gross proceeds of a tax-exempt bond

[[Page 274]]

issue or are reasonably expected to become gross proceeds of a tax-
exempt bond issue;
    (2) Any amounts that formerly were gross proceeds of a tax-exempt 
bond issue, but no longer are treated as gross proceeds of such issue as 
a result of the operation of the universal cap on the maximum amount 
treated as gross proceeds under 26 CFR 1.148-6(b)(2);
    (3) Amounts held or to be held together with gross proceeds of one 
or more tax-exempt bond issues in a refunding escrow, defeasance escrow, 
parity debt service reserve fund, or commingled fund (as defined in 26 
CFR 1.148-1(b));
    (4) Proceeds of a taxable bond issue that refunds a tax-exempt bond 
issue or is refunded by a tax-exempt bond issue; or
    (5) Any other amounts that are subject to yield limitations under 
the rules applicable to tax-exempt bonds under the Internal Revenue 
Code.
    Issuer refers to the Government body or other entity that issues 
state or local government bonds described in section 103 of the Internal 
Revenue Code.
    SLGS rate means the current Treasury borrowing rate, less one basis 
point, as released daily by Treasury in a SLGS rate table.
    SLGS rate table means a compilation of SLGS rates available for a 
given day.
    ``We,'' ``us,'' or ``the Secretary'' refers to the Secretary and the 
Secretary's delegates at the Department of the Treasury (Treasury), 
Bureau of the Public Debt (BPD). The term also extends to any fiscal or 
financial agent acting on behalf of the United States when designated to 
act by the Secretary or the Secretary's delegates.
    Yield on an investment means ``yield'' as computed under 26 CFR 
1.148-5.
    You or your refers to a SLGS program user or a potential SLGS 
program user.



Sec. 344.2  What general provisions apply to SLGS securities?

    (a) What other regulations apply to SLGS securities? SLGS securities 
are subject to:
    (1) The electronic transactions and funds transfers provisions for 
United States securities, part 370 of this subchapter, ``Electronic 
Transactions and Funds Transfers Related to U.S. Securities'; and
    (2) The appendix to subpart E to part 306 of this subchapter, for 
rules regarding computation of interest.
    (b) Where are SLGS securities held? SLGS securities are issued in 
book-entry form on the books of BPD.
    (c) Besides BPD, do any other entities administer SLGS securities? 
The Secretary may designate selected Federal Reserve Banks and Branches, 
as fiscal agents of the United States, to perform services relating to 
SLGS securities.
    (d) Can SLGS securities be transferred? No. SLGS securities issued 
as any one type, i.e., Time Deposit, Demand Deposit, or Special Zero 
Interest, cannot be transferred for other securities of that type or any 
other type. Transfer of securities by sale, exchange, assignment, 
pledge, or otherwise is not permitted.
    (e) What certifications must the issuer or its agent provide?--(1) 
Agent Certification. When a commercial bank or other agent submits a 
subscription, or performs any other transaction, on behalf of the 
issuer, it must certify that it is acting under the issuer's specific 
authorization. Ordinarily, evidence of such authority is not required.
    (2) Yield Certifications.--(i) Purchase of SLGS Securities. Upon 
submitting a subscription for a SLGS security, a subscriber must certify 
that:
    (A) Marketable Securities to SLGS Securities. If the issuer is 
purchasing a SLGS security with any amount received from the sale or 
redemption (at the option of the holder) before maturity of any 
marketable security, the yield on such SLGS security does not exceed the 
yield at which such marketable security was sold or redeemed; and
    (B) Time Deposit Securities to SLGS Securities. If the issuer is 
purchasing a SLGS security with any amount received from the redemption 
before maturity of a Time Deposit security (other than a zero interest 
Time Deposit security), the yield on the SLGS

[[Page 275]]

security being purchased does not exceed the yield that was used to 
determine the amount of redemption proceeds for such redeemed Time 
Deposit security.
    (ii) Early Redemption of SLGS Securities. Upon submission of a 
request for redemption before maturity of a Time Deposit security (other 
than a zero interest Time Deposit security) subscribed for on or after 
August 15, 2005, the subscriber must certify that no amount received 
from the redemption will be invested at a yield that exceeds the yield 
that is used to determine the amount of redemption proceeds for such 
redeemed Time Deposit security.
    (f) What are some practices involving SLGS securities that are not 
permitted?--(1) In General. For SLGS securities subscribed for on or 
after August 15, 2005, it is impermissible:
    (i) To use the SLGS program to create a cost-free option;
    (ii) To purchase a SLGS security with any amount received from the 
sale or redemption (at the option of the holder) before maturity of any 
marketable security, if the yield on such SLGS security exceeds the 
yield at which such marketable security is sold or redeemed; or
    (iii) To invest any amount received from the redemption before 
maturity of a Time Deposit security (other than a Zero Percent Time 
Deposit security) at a yield that exceeds the yield that is used to 
determine the amount of redemption proceeds for such Time Deposit 
security.
    (2) Examples. (i) Simultaneous Purchase of Marketable and SLGS 
Securities. In order to fund an escrow for an advance refunding, the 
issuer simultaneously enters into a purchase contract for marketable 
securities and subscribes for SLGS securities, such that either purchase 
is sufficient to pay the cash flows on the outstanding bonds to be 
refunded, but together, the purchases are greatly in excess of the 
amount necessary to pay the cash flows. The issuer plans that, if 
interest rates decline during the period between the date of starting a 
SLGS subscription and the requested date of issuance of SLGS securities, 
the issuer will enter into an offsetting agreement to sell the 
marketable securities and use the bond proceeds to purchase SLGS 
securities to fund the escrow. If, however, interest rates do not 
decline in that period, the issuer plans to use the bond proceeds to 
purchase the marketable securities to fund the escrow and cancel the 
SLGS securities subscription. This practice violates the prohibition on 
cancellation under Sec. 344.5(c) or Sec.  344.8(c), and no exception or 
waiver would be granted under this part because the ability to cancel in 
these circumstances would result in the SLGS program being used to 
create a cost-free option. In addition, this practice is prohibited 
under paragraph (f)(1)(i) of this section.
    (ii) Sale of Marketable Securities Conditioned on Interest Rates. 
The existing escrow for an advance refunding contains marketable 
securities which produce a negative arbitrage. In order to reduce or 
eliminate this negative arbitrage, the issuer subscribes for SLGS 
securities at a yield higher than the yield on the existing escrow, but 
less than the permitted yield. At the same time, the issuer agrees to 
sell the marketable securities in the existing escrow to a third party 
and use the proceeds to purchase SLGS securities if interest rates 
decline between the date of subscribing for SLGS securities and the 
requested date of issuance of SLGS securities. The marketable securities 
would be sold at a yield which is less than the yield on the SLGS 
securities purchased. The issuer and the third party further agree that 
if interest rates increase during this period, the issuer will cancel 
the SLGS securities subscription. This practice violates the prohibition 
on cancellation under Sec. 344.5(c) or Sec.  344.8(c), and no exception 
or waiver would be granted under this part because the ability to cancel 
in these circumstances would result in the SLGS program being used to 
create a cost-free option. In addition, this practice is prohibited 
under paragraphs (f)(1)(i) and (ii) of this section.
    (iii) Sale of Marketable Securities Not Conditioned on Interest 
Rates. The facts are the same as in paragraph (f)(2)(ii) of this 
section, except that in this case, the agreement entered into by the 
issuer with a third party to sell the marketable securities in order to 
obtain funds to purchase SLGS securities

[[Page 276]]

is not conditioned upon changes in interest rates on Treasury 
securities. This practice violates the yield gain prohibition in 
paragraph (f)(1)(ii) of this section and is prohibited.
    (iv) Simultaneous Subscription for SLGS Securities and Sale of 
Option to Purchase Marketable Securities. The issuer holds a portfolio 
of marketable securities in an account that produces negative arbitrage. 
In order to reduce or eliminate this negative arbitrage, the issuer 
subscribes for SLGS securities for purchase in sixty days. At the same 
time, the issuer sells an option to purchase the portfolio of marketable 
securities. If interest rates increase, the holder of the option will 
not exercise its option and the issuer will cancel the SLGS securities 
subscription. On the other hand, if interest rates decline, the option 
holder will exercise the option and the issuer will use the proceeds to 
purchase SLGS securities. This practice violates the prohibition on 
cancellation under Sec. 344.5(c) or Sec.  344.8(c), and no exception or 
waiver would be granted under this part because the ability to cancel in 
these circumstances would result in the SLGS program being used to 
create a cost-free option. In addition, this practice is prohibited 
under paragraph (f)(1)(i) of this section.
    (v) Early Redemption of Time Deposit Security and Subsequent 
Purchase of Marketable Security. On February 6, 2006, an issuer 
purchases a Time Deposit security using tax-exempt bond proceeds in a 
debt service reserve fund. The Time Deposit security has a principal 
amount of $7 million, an interest rate of 3.63 percent, and a maturity 
date of February 6, 2009. On March 1, 2007, the issuer submits a request 
to redeem the Time Deposit security on March 15, 2007. The yield used to 
determine the amount of redemption proceeds is 3.21 percent. On March 5, 
2007, the issuer subscribes for the purchase, on March 15, 2007, of a 
second Time Deposit security. The issuer pays for the second Time 
Deposit security on March 15, 2007, with the redemption proceeds of the 
first Time Deposit security. The second Time Deposit security has an 
interest rate of 2.77 percent and a maturity date of April 16, 2007. On 
April 9, 2007, the issuer enters into a contract to purchase, on April 
16, 2007, a ten-year, marketable Treasury security using the principal 
and interest to be received at the maturity of the second Time Deposit 
security. The marketable Treasury security has a yield of 4.02 percent. 
This transaction satisfies the yield limitation in paragraph (f)(1)(iii) 
of this section because:
    (A) The yield on the second Time Deposit security does not exceed 
the yield that is used to determine the amount of redemption proceeds 
for the first Time Deposit security; and
    (B) The second Time Deposit security is not redeemed before maturity 
and therefore the re-investment of the principal and interest received 
on the second Time Deposit security is not subject to the yield 
limitation in paragraph (f)(1)(iii) of this section. This transaction 
constitutes a permissible use of the SLGS program.
    (vi) Early Redemption of Time Deposit Security and Simultaneous 
Purchase of Marketable Security. The facts are the same as in paragraph 
(f)(2)(v) of this section, except that the issuer subscribes for the 
second Time Deposit security on March 1, 2007, and enters into the 
contract to purchase the marketable Treasury security on March 1, 2007. 
This transaction, if permitted, would enable the issuer to redeem the 
first Time Deposit security at a yield that is held constant for 12 
hours based on the ``current Treasury borrowing rate'' for March 1, 
2007, and to re-invest the redemption proceeds based on a market yield 
that may fluctuate during that 12-hour period. The use of the SLGS 
program in this manner would create a cost-free option. Accordingly, 
this transaction is impermissible under paragraph (f)(1)(i) of this 
section.
    (g) When and how do I pay for SLGS securities? You must submit full 
payment for each subscription to BPD no later than 4 p.m., Eastern time, 
on the issue date. Submit payments by the Fedwire funds transfer system 
with credit directed to the Treasury's General Account. For these 
transactions, BPD's ABA Routing Number is 051036476.

[[Page 277]]

    (h) What happens if I need to make an untimely change or do not 
settle on a subscription? An untimely change to a subscription can only 
be made in accordance with Sec. 344.2(n) of this part. The penalty 
imposed for failure to make settlement on a subscription that you submit 
will be to render you ineligible to subscribe for SLGS securities for 
six months beginning on the date the subscription is withdrawn, or the 
proposed issue date, whichever occurs first.
    (1) Upon whom is the penalty imposed? If you are the issuer, the 
penalty is imposed on you unless you provide the Taxpayer Identification 
Number of the conduit borrower that is the actual party failing to make 
settlement of a subscription. If you provide the Taxpayer Identification 
Number for the conduit borrower, the six-month penalty will be imposed 
on the conduit borrower.
    (2) What occurs if Treasury exercises the option to waive the 
penalty? If you settle after the proposed issue date and we determine 
that settlement is acceptable on an exception basis, we will waive, 
under Sec. 344.2(n), the six-month penalty under paragraph (h) of this 
section. You shall be charged a late payment assessment. The late 
payment assessment equals the amount of interest that would have accrued 
on the SLGS securities from the proposed issue date to the date of 
settlement plus an administrative fee of $100 per subscription, or such 
other amount as we may publish in the Federal Register. We will not 
issue SLGS securities until we receive the late payment assessment, 
which is due on demand.
    (i) What happens at maturity? Upon the maturity of a security, we 
will pay the owner the principal amount and interest due. A security 
scheduled for maturity on a non-business day will be redeemed on the 
next business day.
    (j) How will I receive payment? We will make payment by the 
Automated Clearing House (ACH) method for the owner's account at a 
financial institution as designated by the owner. We may use substitute 
payment procedures, instead of ACH, if we consider it to be necessary. 
Any such action is final.
    (k) How do I contact BPD? BPD's contact information is posted on 
BPD's Web site. (1) Will the offering be changed during a debt limit or 
disaster contingency? We reserve the right to change or suspend the 
terms and conditions of the offering (including provisions relating to 
subscriptions for, and issuance of, SLGS securities; interest payments; 
early redemptions; and rollovers) at any time the Secretary determines 
that the issuance of obligations sufficient to conduct the orderly 
financing operations of the United States cannot be made without 
exceeding the statutory debt limit, or that a disaster situation exists. 
We will announce such changes by any means that the Secretary deems 
appropriate.
    (m) What are some of the rights that Treasury reserves in 
administering the SLGS program? We may decide, in our sole discretion, 
to take any of the following actions. Such actions are final. 
Specifically, Treasury reserves the right:
    (1) To reject any SLGSafe Application for Internet Access;
    (2) To reject any electronic message or other message or request, 
including requests for subscription and redemption, that is 
inappropriately completed or untimely submitted;
    (3) To refuse to issue any SLGS securities in any case or class of 
cases;
    (4) To revoke the issuance of any SLGS securities and to declare the 
subscriber or the issuer ineligible thereafter to subscribe for 
securities under the offering if the Secretary deems that such action is 
in the public interest and any security is issued on the basis of an 
improper certification or other misrepresentation (other than as the 
result of an inadvertent error) or there is an impermissible transaction 
under Sec. 344.2(f); or
    (5) To review any transaction for compliance with this part, 
including requiring a subscriber or the issuer to provide additional 
information, and to determine an appropriate remedy under the 
circumstances.
    (n) Are there any situations in which Treasury may waive these 
regulations? We reserve the right, at our discretion, to waive or modify 
any provision of these regulations in any case or class of cases. We may 
do so if such action is not inconsistent with law and will not

[[Page 278]]

subject the United States to substantial expense or liability.
    (o) Are SLGS securities callable by Treasury? No. Treasury cannot 
call a SLGS security for redemption before maturity.

                     SLGSafe[reg] Service



Sec. 344.3  What provisions apply to the SLGSafe Service?

    (a) What is the SLGSafe Service? SLGSafe is a secure Internet site 
on the World Wide Web through which subscribers submit SLGS securities 
transactions. SLGSafe Internet transactions constitute electronic 
messages under 31 CFR part 370.
    (b) Is SLGSafe use mandatory? Yes. Except as provided in 
paragraph(f)(3) or (f)(4) of this section, you must submit all 
transactions through SLGSafe.
    (c) What terms and conditions apply to SLGSafe? The terms and 
conditions contained in the following documents, which may be downloaded 
from BPD's Web site and which may change from time to time, apply to 
SLGSafe transactions:
    (1) SLGSafe Application for Internet Access and SLGSafe User 
Acknowledgment; and
    (2) SLGSafe User's Manual.
    (d) Who can apply for SLGSafe access? If you are an owner or a 
potential owner of SLGS securities, or act as a trustee or other agent 
of the owner, you can apply to BPD for SLGSafe access. Other potential 
users of SLGSafe include, but are not limited to, underwriters, 
financial advisors, and bond counsel.
    (e) How do I apply for SLGSafe access? Submit to BPD a completed 
SLGSafe Application for Internet Access. The form is found on BPD's Web 
site.
    (f) What are the conditions of SLGSafe use? If you are designated as 
an authorized user, on a SLGSafe application that we've approved, you 
must:
    (1) Assume the sole responsibility and the entire risk of use and 
operation of your electronic connection;
    (2) Agree that we may act on any electronic message to the same 
extent as if we had received a written instruction bearing the signature 
of your duly authorized officer;
    (3) Submit electronic messages and other transaction requests 
exclusively through SLGSafe, except to the extent you establish to the 
satisfaction of BPD that good cause exists for you to submit such 
subscriptions and requests by other means; and
    (4) Agree to submit transactions manually if we notify you that due 
to problems with hardware, software, data transmission, or any other 
reason, we are unable to send or receive electronic messages through 
SLGSafe.
    (g) When is the SLGSafe window open? All SLGSafe subscriptions, 
requests for early redemption of Time Deposit securities, and requests 
for redemption of Demand Deposit securities must be received by BPD on 
business days no earlier than 10 a.m. and no later than 10 p.m., Eastern 
time. The official time is the date and time as shown on BPD's 
application server. Except as otherwise provided in Sec. 344.5(d) and 
Sec. 344.8(d), all other functions may be performed during the extended 
SLGSafe hours, from 8 a.m. until 10 p.m., Eastern time.



                    Subpart B_Time Deposit Securities

    Source: 70 FR 37911, June 30, 2005, unless otherwise noted.



Sec. 344.4  What are Time Deposit securities?

    Time Deposit securities are issued as certificates of indebtedness, 
notes, or bonds.
    (a) What are the maturity periods? The issuer must fix the maturity 
periods for Time Deposit securities, which are issued as follows:
    (1) Certificates of indebtedness that do not bear interest. For 
certificates of indebtedness that do not bear interest, the issuer can 
fix a maturity period of not less than fifteen days and not more than 
one year.
    (2) Certificates of indebtedness that bear interest. For 
certificates of indebtedness that bear interest, the issuer can fix a 
maturity period of not less than thirty days and not more than one year.
    (3) Notes. For notes, the issuer can fix a maturity period of not 
less than one year and one day, and not more than ten years.
    (4) Bonds. For bonds, the issuer can fix a maturity period of not 
less than

[[Page 279]]

ten years and one day, and not more than forty years.
    (b) How do I select the SLGS rate? For each security, the issuer 
shall designate an interest rate that does not exceed the maximum 
interest rate shown in the daily SLGS rate table as defined in Sec. 
344.1.
    (1) When is the SLGS rate table released? We release the SLGS rate 
table to the public by 10 a.m., Eastern time, each business day. If the 
SLGS rate table is not available at that time on any given business day, 
the SLGS rate table for the preceding business day applies.
    (2) How do I lock-in a SLGS rate? The applicable daily SLGS rate 
table for a SLGSafe subscription is the one in effect on the business 
day that you start the subscription process. This table is shown on 
BPD's Application server.
    (3) Where can I find the SLGS rate table? The SLGS rate table can be 
obtained at BPD's Web site.
    (c) How are interest computation and payment dates determined? 
Interest on a certificate of indebtedness is computed on an annual basis 
and is paid at maturity with the principal. Interest on a note or bond 
is paid semi-annually. The issuer specifies the first interest payment 
date, which must be at least thirty days and less than or equal to one 
year from the date of issue. The final interest payment date must 
coincide with the maturity date of the security. Interest for other than 
a full interest period is computed on the basis of a 365-day or 366-day 
year (for certificates of indebtedness) and on the basis of the exact 
number of days in the half-year (for notes and bonds). See the appendix 
to subpart E to part 306 of this subchapter for rules regarding 
computation of interest.



Sec. 344.5  What other provisions apply to subscriptions for Time 
Deposit securities?

    (a) When is my subscription due? The subscriber must fix the issue 
date of each security in the subscription. The issue date must be a 
business day. The issue date cannot be more than sixty days after the 
date BPD receives the subscription. If the subscription is for $10 
million or less, BPD must receive a subscription at least five days 
before the issue date. If the subscription is for over $10 million, BPD 
must receive the subscription at least seven days before the issue date.

    Example to paragraph (a): If SLGS securities totaling $10 million or 
less will be issued on November 16th, BPD must receive the subscription 
no later than November 11th. If SLGS securities totaling more than $10 
million will be issued on November 16th, BPD must receive the 
subscription no later than November 9th. In all cases, if SLGS 
securities will be issued on November 16th, BPD will not accept the 
subscription before September 17th.

    (b) How do I start the subscription process? A subscriber starts the 
subscription process by entering into SLGSafe the following information:
    (1) The issue date;
    (2) The total principal amount;
    (3) The issuer's name and Taxpayer Identification Number;
    (4) The title of an official authorized to purchase SLGS securities; 
]
    (5) A description of the tax-exempt bond issue; and ]
    (6) The certification required by Sec. 344.2(e)(1), if the 
subscription is submitted by an agent of the issuer.
    (c) Under what circumstances can I cancel a subscription? You cannot 
cancel a subscription unless you establish, to the satisfaction of 
Treasury, that the cancellation is required for reasons unrelated to the 
use of the SLGS program to create a cost-free option.
    (d) How do I change a subscription? You can change a subscription on 
or before 3 p.m., Eastern time, on the issue date. Changes to a 
subscription are acceptable with the following exceptions:
    (1) You cannot change the issue date to require issuance earlier or 
later than the issue date originally specified; provided, however, you 
may change the issue date up to seven days after the original issue date 
if you establish to the satisfaction of Treasury that such change is 
required as a result of circumstances that were unforeseen at the time 
of the subscription and are beyond the issuer's control (for example, a 
natural disaster);
    (2) You cannot change the aggregate principal amount originally 
specified in the subscription by more than ten percent; and

[[Page 280]]

    (3) You cannot change an interest rate to exceed the maximum 
interest rate in the SLGS rate table that was in effect for a security 
of comparable maturity on the business day that you began the 
subscription process.
    (e) How do I complete the subscription process? The completed 
subscription must:
    (1) Be dated and submitted electronically by an official authorized 
to make the purchase;
    (2) Separately itemize securities by the various maturities, 
interest rates, and first interest payment dates (in the case of notes 
and bonds);
    (3) Not be more than ten percent above or below the aggregate 
principal amount originally specified in the subscription;
    (4) Not be paid with proceeds that are derived, directly or 
indirectly, from the redemption before maturity of SLGS securities 
subscribed for on or before December 27, 1976;
    (5) Include the certifications required by Sec. 344.2(e)(2)(i) 
(relating to yield); and
    (6) Include the information required under paragraph (b), if not 
already provided.
    (f) When must I complete the subscription? BPD must receive a 
completed subscription on or before 3:00 p.m., Eastern time, on the 
issue date.



Sec. 344.6  How do I redeem a Time Deposit security before maturity?

    (a) What is the minimum time a security must be held? (1) Zero 
percent certificates of indebtedness of 16 to 29 days. A zero percent 
certificate of indebtedness of 16 to 29 days can be redeemed, at the 
owner's option, no earlier than 15 days after the issue date.
    (2) Certificates of indebtedness of 30 days or more. A certificate 
of indebtedness of 30 days or more can be redeemed, at the owner's 
option, no earlier than 25 days after the issue date.
    (3) Notes or bonds. A note or bond can be redeemed, at the owner's 
option, no earlier than 30 days after the issue date.
    (b) Can I request partial redemption of a security balance? You may 
request partial redemptions in any whole dollar amount; however, a 
security balance of less than $1,000 must be redeemed in total.
    (c) Do I have to submit a request for early redemption? Yes. An 
official authorized to redeem the securities before maturity must submit 
an electronic request in SLGSafe. The request must show the Taxpayer 
Identification Number of the issuer, the security number, and the dollar 
amount of the securities to be redeemed. Upon submission of a request 
for redemption before maturity of a security subscribed for on or after 
August 15, 2005, the request must include a yield certification under 
Sec. 344.2(e)(2)(ii). BPD must receive the request no less than 14 days 
and no more than 60 days before the requested redemption date. You 
cannot submit a request for early redemption for a security which has 
not yet been issued and you cannot cancel a request once it has been 
submitted.
    (d) How do I calculate the amount of redemption proceeds for 
subscriptions on or after October 28, 1996? For securities subscribed 
for on or after October 28, 1996, the amount of the redemption proceeds 
is calculated as follows:
    (1) Interest. If a security is redeemed before maturity on a date 
other than a scheduled interest payment date, Treasury pays interest for 
the fractional interest period since the last interest payment date.
    (2) Redemption value. The remaining interest and principal payments 
are discounted by the current Treasury borrowing rate for the remaining 
term to maturity of the security redeemed. This may result in a premium 
or discount to the issuer depending on whether the current Treasury 
borrowing rate is unchanged, lower, or higher than the stated interest 
rate of the early-redeemed SLGS securities. There is no market charge 
for the redemption of zero interest Time Deposit securities subscribed 
for on or after October 28, 1996. Redemption proceeds in the case of a 
zero-interest security are a return of the principal invested. The 
formulas for calculating the redemption value under this paragraph, 
including examples of the determination of premiums and discounts, are 
set forth in appendix B of this part.
    (e) How do I calculate the amount of redemption proceeds for 
subscriptions from September 1, 1989, through October 27, 1996? For 
securities subscribed for from

[[Page 281]]

September 1, 1989, through October 27, 1996, the amount of the 
redemption proceeds is calculated as follows:
    (1) Interest. If a security is redeemed before maturity on a date 
other than a scheduled interest payment date, Treasury pays interest for 
the fractional interest period since the last interest payment date.
    (2) Market charge. An amount shall be deducted from the redemption 
proceeds if the current Treasury borrowing rate for the remaining period 
to original maturity exceeds the rate of interest originally fixed for 
such security. The amount shall be the present value of the future 
increased borrowing cost to the Treasury. The annual increased borrowing 
cost for each interest period is determined by multiplying the principal 
by the difference between the two rates. For notes and bonds, the 
increased borrowing cost for each remaining interest period to original 
maturity is determined by dividing the annual cost by two. Present value 
is determined by using the current Treasury borrowing rate as the 
discount factor. When you request a redemption date that is less than 
thirty days before the original maturity date, we will apply the rate of 
a one month security as listed on the SLGS rate table issued on the day 
you make a redemption request. The market charge under this paragraph 
can be computed by using the formulas in appendix A of this part.
    (f) How do I calculate the amount of redemption proceeds for 
subscriptions from December 28, 1976, through August 31, 1989? For 
securities subscribed for from December 28, 1976, through August 31, 
1989, the amount of the redemption proceeds is calculated as follows:
    (1) Interest. Interest for the entire period the security was 
outstanding shall be recalculated if the original interest rate of the 
security is higher than the interest rate that would have been set at 
the time of the initial subscription had the term of the security been 
for the shorter period. If this results in an overpayment of interest, 
we will deduct from the redemption proceeds the aggregate amount of such 
overpayments, plus interest, compounded semi-annually thereon, from the 
date of each overpayment to the date of redemption. The rate used in 
calculating the interest on the overpayment will be one-eighth of one 
percent above the maximum rate that would have applied to the initial 
subscription had the term of the security been for the shorter period. 
If a bond is redeemed before maturity on a date other than a scheduled 
interest payment date, no interest is paid for the fractional interest 
period since the last interest payment date.
    (2) Market charge. An amount shall be deducted from the redemption 
proceeds in all cases where the current Treasury borrowing rate for the 
remaining period to original maturity of the security prematurely 
redeemed exceeds the rate of interest originally fixed for such 
security. You can compute the market charge under this paragraph by 
using the formulas in appendix A of this part.
    (g) How do I calculate the amount of redemption proceeds for 
subscriptions on or before December 27, 1976? For bonds subscribed for 
on or before December 27, 1976, the amount of the redemption proceeds is 
calculated as follows:
    (1) Interest. The interest for the entire period the bond was 
outstanding shall be recalculated if the original interest rate at which 
the bond was issued is higher than an adjusted interest rate reflecting 
both the shorter period during which the bond was actually outstanding 
and a penalty. The adjusted interest rate is the Treasury rate which 
would have been in effect on the date of issue for a marketable Treasury 
bond maturing on the semi-annual maturity period before redemption 
reduced by a penalty which must be the lesser of:
    (i) One-eighth of one percent times the number of months from the 
date of issuance to original maturity, divided by the number of full 
months elapsed from the date of issue to redemption; or
    (ii) One-fourth of one percent.
    (2) Deduction. We will deduct from the redemption proceeds, if 
necessary, any overpayment of interest resulting from previous payments 
made at a higher rate based on the original longer period to maturity.

[[Page 282]]



                   Subpart C_Demand Deposit Securities

    Source: 70 FR 37911, June 30, 2005, unless otherwise noted.



Sec. 344.7  What are Demand Deposit securities?

    Demand Deposit securities are one-day certificates of indebtedness 
that are automatically rolled over each day until you request 
redemption.
    (a) How are the SLGS rates for Demand Deposit securities determined? 
Each security shall bear a variable rate of interest based on an 
adjustment of the average yield for three-month Treasury bills at the 
most recent auction. A new rate is effective on the first business day 
following the regular auction of three-month Treasury bills and is shown 
in the SLGS rate table. Interest is accrued and added to the principal 
daily. Interest is computed on the balance of the principal, plus 
interest accrued through the preceding day.
    (1) How is the interest rate calculated? (i) First, you calculate 
the annualized effective Demand Deposit rate in decimals, designated 
``I'' in Equation 1, as follows:
[GRAPHIC] [TIFF OMITTED] TR30JN05.001



(Equation 1)

Where:

I = Annualized effective Demand Deposit rate in decimals.
P = Average auction price for the most recently auctioned 13-week 
Treasury bill, per hundred, to six decimals.
Y = 365 (if the year following issue date does not contain a leap year 
day) or 366 (if the year following issue date does contain a leap year 
day).
DTM = The number of days from date of issue to maturity for the most 
recently auctioned 13-week Treasury bill.
MTR = Estimated marginal tax rate, in decimals, of purchasers of tax-
exempt bonds.
TAC = Treasury administrative costs, in decimals.

    (ii) Then, you calculate the daily factor for the Demand Deposit 
rate as follows:

DDR = (1 + I)1/Y -1


(Equation 2)

    (2) Where can I find additional information? Information on the 
estimated average marginal tax rate and Treasury administrative costs 
for administering Demand Deposit securities, both to be determined by 
Treasury from time to time, will be published in the Federal Register.
    (b) What happens to Demand Deposit securities during a Debt Limit 
Contingency? At any time the Secretary determines that issuance of 
obligations sufficient to conduct the orderly financing operations of 
the United States cannot be made without exceeding the statutory debt 
limit, we will invest any unredeemed Demand Deposit securities in 
special ninety-day certificates of indebtedness. Funds invested in the 
ninety-day certificates of indebtedness earn simple interest equal to 
the daily factor in effect at the time Demand Deposit security issuance 
is suspended, multiplied by the number of days outstanding. When regular 
Treasury borrowing operations resume, the ninety-day certificates of 
indebtedness, at the owner's option, are:
    (1) Payable at maturity;
    (2) Redeemable before maturity, provided funds are available for 
redemption; or
    (3) Reinvested in Demand Deposit securities.



Sec. 344.8  What other provisions apply to subscriptions for Demand 
Deposit securities?

    (a) When is my subscription due? The subscriber must fix the issue 
date of each security in the subscription. You cannot change the issue 
date to require issuance earlier or later than the issue date originally 
specified; provided, however, you may change the issue date up to seven 
days after the original issue date if you establish to the satisfaction 
of Treasury that such change is required as a result of circumstances 
that were unforeseen at the time of the subscription and are beyond the 
issuer's control (for example, a natural disaster). The issue date must 
be a business day. The issue date cannot be more than sixty days after 
the date BPD receives the subscription. If the subscription is for $10 
million or less, BPD must receive the subscription at least five days 
before the issue date. If

[[Page 283]]

the subscription is for more than $10 million, BPD must receive the 
subscription at least seven days before the issue date.
    (b) How do I start the subscription process? A subscriber starts the 
subscription process by entering into SLGSafe the following information:
    (1) The issue date;
    (2) The total principal amount;
    (3) The issuer's name and Taxpayer Identification Number;
    (4) The title of an official authorized to purchase SLGS securities;
    (5) A description of the tax-exempt bond issue; and
    (6) The certification required by Sec. 344.2(e)(1), if the 
subscription is submitted by an agent of the issuer.
    (c) Under what circumstances can I cancel a subscription? You cannot 
cancel a subscription unless you establish, to the satisfaction of 
Treasury, that the cancellation is required for reasons unrelated to the 
use of the SLGS program to create a cost-free option.
    (d) How do I change a subscription? You can change a subscription on 
or before 3 p.m., Eastern time, on the issue date. You may change the 
aggregate principal amount specified in the subscription by no more than 
ten percent, above or below the amount originally specified in the 
subscription.
    (e) How do I complete the subscription process? The subscription 
must:
    (1) Be dated and submitted electronically by an official authorized 
to make the purchase;
    (2) Include the certifications required by Sec. 344.2(e)(2)(i) 
(relating to yield); and
    (3) Include the information required under paragraph (b) of this 
section, if not already provided.



Sec. 344.9  How do I redeem a Demand Deposit security?

    (a) When must I notify BPD to redeem a security? A Demand Deposit 
security can be redeemed at the owner's option, if BPD receives a 
request for redemption not less than:
    (1) One business day before the requested redemption date for 
redemptions of $10 million or less; and
    (2) Three business days before the requested redemption date for 
redemptions of more than $10 million.
    (b) Can I request partial redemption of a security balance? You may 
request partial redemptions in any amount. If your account balance is 
less than $1,000, it must be redeemed in total.
    (c) Do I have to submit a request for redemption? Yes. An official 
authorized to redeem the securities must submit an electronic request 
through SLGSafe. The request must show the Taxpayer Identification 
Number of the issuer, the security number, and the dollar amount of the 
securities to be redeemed. BPD must receive the request by 3 p.m., 
Eastern time on the required day. You cannot cancel the request.



               Subpart D_Special Zero Interest Securities

    Source: 70 FR 37911, June 30, 2005, unless otherwise noted.



Sec. 344.10  What are Special Zero Interest securities?

    Special zero interest securities were issued as certificates of 
indebtedness and notes. The provisions of subpart B of this part (Time 
Deposit securities) apply except as specified in Subpart D of this part. 
Special Zero Interest securities were discontinued on October 28, 1996. 
The only zero interest securities available after October 28, 1996, are 
zero interest Time Deposit securities that are subject to subpart B of 
this part.



Sec. 344.11  How do I redeem a Special Zero Interest Security before 
maturity?

    Follow the provisions of Sec. 344.6(a) through (g), except that no 
market charge or penalty will apply when you redeem a special zero 
interest security before maturity.

  Appendix A to Part 344--Early Redemption Market Charge Formulas and 
 Examples for Subscriptions From December 28, 1976, Through October 27, 
                                  1996

    (a) The amount of the market charge for bonds and notes subscribed 
for before October 28, 1996 can be determined by the following formula:

[[Page 284]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.002

    (b) The application of this formula can be illustrated by the 
following example:
    (1) Assume that a $600,000 note is issued on July 1, 1985, to mature 
on July 1, 1995. Interest is payable at a rate of 8% on January 1 and 
July 1.
    (2) Assume that the note is redeemed on February 1, 1989, and that 
the current borrowing rate for Treasury at that time for the remaining 
period of 6 years and 150 days is 11%.
    (3) The increased annual borrowing cost is $18,000. ($600,000)x(11%-
8%)
    (4) The market charge is computed as follows:

[[Page 285]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.003

[GRAPHIC] [TIFF OMITTED] TR13SE00.004

    (c) The amount of the market charge for certificates of indebtedness 
subscribed for before October 28, 1996 can be determined by the 
following formula:

[[Page 286]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.005

    (d) The application of this formula can be illustrated by the 
following example:
    (1) Assume that a $50,000 certificate of indebtedness is issued on 
March 1, 1987, to mature on November 1, 1987. Interest is payable at a 
rate of 10%.
    (2) Assume that the certificate of indebtedness is redeemed on July 
1, 1987, and that the current borrowing cost to Treasury for the 123-day 
period from July 1, 1987, to November 1, 1987, is 11.8%.
    (3) The increased annual borrowing cost is $900. ($50,000)x(11.8%-
10%)
    (4) The market charge is computed as follows:
    [GRAPHIC] [TIFF OMITTED] TR13SE00.006
    
  Appendix B to Part 344--Formula for Determining Redemption Value for 
  Securities Subscribed for and Early-Redeemed On or After October 28, 
                                  1996

    (a) This formula results in a premium or discount to the issuer 
depending on whether the current Treasury borrowing rate at the time of 
early redemption is lower or higher

[[Page 287]]

than the stated interest rate of the early-redeemed SLGS security. The 
total redemption value for bonds and notes can be determined by the 
following two steps. First, calculate accrued interest payable in 
accordance with Sec. 344.6(d)(1) using the following formula:
[GRAPHIC] [TIFF OMITTED] TR13SE00.007

Second, calculate the redemption value per Sec. 344.6(d)(2) using the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR13SE00.008

    (b) The application of this formula can be illustrated by the 
following examples:
    (1) The first example is for a redemption at a premium.
    (i) Assume that an $800,000 2-year note is issued on December 10, 
1996, to mature on December 10, 1998. Interest is payable at a rate of 
7% on June 10 and December 10.
    (ii) Assume that the note is redeemed on October 21, 1997, and that 
the current borrowing rate for Treasury at that time for the remaining 
period of 1 year and 50 days is 6.25%.
    (iii) The redemption value is computed as follows. First, the 
accrued interest payable is calculated as:

[[Page 288]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.009

[GRAPHIC] [TIFF OMITTED] TR13SE00.010

    Then, the redemption value is calculated as:

[[Page 289]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.011

    (2) The second example is for a redemption at a discount and it uses 
the same assumptions as the first example, except the current Treasury 
borrowing cost is assumed to be 8.00%:
    (i) Assume that an $800,000 2-year note is issued on December 10, 
1996, to mature on December 10, 1998. Interest is payable at a rate of 
7% on June 10 and December 10.
    (ii) Assume that the note is redeemed on October 21, 1997, and that 
the current borrowing rate for Treasury at that time for the remaining 
period of 1 year and 50 days is 8.00%.

[[Page 290]]

    (iii) The redemption value is computed as follows.
    First, the accrued interest payable is calculated as:
    [GRAPHIC] [TIFF OMITTED] TR13SE00.012
    
    Then, the redemption value is calculated as:
    [GRAPHIC] [TIFF OMITTED] TR13SE00.013
    

[[Page 291]]


[GRAPHIC] [TIFF OMITTED] TR13SE00.014

    (c) The total redemption value for certificates of indebtedness can 
be determined by the following two steps. First, calculate accrued 
interest payable in accordance with Sec. 344.6(d)(1) using the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR13SE00.015

    Second, calculate the redemption value per Sec. 344.6(d)(2) using 
the following equation:

[[Page 292]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.016


[[Page 293]]


    (d) The application of this formula can be illustrated by the 
following examples.
    (1) First, for a redemption at a premium:
    (i) Assume that a $300,000 security is issued on December 5, 1996, 
to mature in 151 days on May 5, 1997. Interest at a rate of 5% is 
payable at maturity.
    (ii) Assume that the security is redeemed on April 9, 1997, and that 
the current borrowing rate for Treasury at that time for the remaining 
period of 26 days is 4.00%.
    (iii) The redemption value is computed as follows.
    First, the accrued interest payable is calculated as:
    [GRAPHIC] [TIFF OMITTED] TR13SE00.017
    
    Then, the redemption value is calculated as:

[[Page 294]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.018

[GRAPHIC] [TIFF OMITTED] TR13SE00.019

    (2) Secondly, for a redemption at a discount:
    (i) Assume that a $300,000 security is issued on December 5, 1996, 
to mature in 151 days on May 5, 1997. Interest at a rate of 5% is 
payable at maturity.
    (ii) Assume that the security is redeemed on April 9, 1997, and that 
the current borrowing rate for Treasury at that time for the remaining 
period of 26 days is 6.25%.
    (iii) The redemption value is computed as follows.
    First, the accrued interest payable is calculated as:

[[Page 295]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.020

    Then, the redemption value is calculated as:

[[Page 296]]

[GRAPHIC] [TIFF OMITTED] TR13SE00.021


[[Page 297]]





PART 345_REGULATIONS GOVERNING 5 PERCENT TREASURY CERTIFICATES OF 
INDEBTEDNESS_R.E.A. SERIES--Table of Contents




Sec.
345.0 Offering of certificates.
345.1 Description of certificates.
345.2 Subscription for purchase.
345.3 Issue date and payment.
345.4 Redemption/reinvestment.
345.5 Taxation.
345.6 General provisions.

    Authority: 31 U.S.C. 754 and 754b; 5 U.S.C. 301.

    Source: 38 FR 35306, Dec. 27, 1973, unless otherwise noted.



Sec. 345.0  Offering of certificates.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, offers to borrowers from the Rural 
Electrification Administration and Rural Telephone Bank, U.S. Department 
of Agriculture, 5 Percent Treasury Certificates of Indebtedness--R.E.A. 
Series. This offering will continue until terminated by the Secretary of 
the Treasury.



Sec. 345.1  Description of certificates.

    (a) General. The certificates of indebtedness will be issued in 
book-entry form on the books of the Department of the Treasury, Bureau 
of the Public Debt, Washington, DC 20226. They may not be transferred by 
sale, exchange, assignment or pledge, or otherwise.
    (b) Terms and rates of interest. The certificates, bearing interest 
at the rate of 5 percent per annum, will be issued in multiples of 
$1,000 and will mature one year from issue date. Interest on the 
certificates will be computed on an annual basis and, unless redeemed 
prior to maturity, will be payable six months from issue date and at 
maturity. Interest may be paid to an owner by having the amount thereof 
credited by a Federal Reserve Bank or Branch, acting as fiscal agent of 
the United States, to the reserve account of a member bank servicing 
such owner and for the latter's account. Such action will be taken at 
the owner's option. If not exercised, payment of interest will be made 
by Treasury check.

[38 FR 35306, Dec. 27, 1973, as amended at 40 FR 29846, July 16, 1975]



Sec. 345.2  Subscription for purchase.

    The recipient of a 5 percent loan from the Rural Electrification 
Administration or Rural Telephone Bank may subscribe for certificates 
under this offering, up to the amount of the unexpended portion of the 
loan, by submitting a subscription, together with the remittance, to the 
Federal Reserve Bank or Branch of the district in which the subscriber 
is located. The subscription form must show the amount of certificates 
desired, and give the title of the designated official of the subscriber 
authorized to redeem them.

[40 FR 29846, July 16, 1975]



Sec. 345.3  Issue date and payment.

    The issue date of a certificate shall be the date on which the 
subscription form, and funds in full payment therefor, are received by 
the office described in Sec. 345.2. A confirmation of the issuance, in 
the form of a written advice, which shall specify the amount and 
describe the certificates by title and maturity date, shall be issued to 
the subscriber.



Sec. 345.4  Redemption/reinvestment.

    (a) At maturity. A certificate may not be called for redemption by 
the Secretary of the Treasury prior to maturity except when the amount 
of the unexpended portion of the loan from the Rural Electrification 
Administration or Rural Telephone Bank is less than the face amount of 
the certificate. Unless the Treasury has received from the owner, at 
least one week prior to the maturity date of a certificate, a written 
request for payment at maturity, it shall automatically redeem the same 
at maturity, and reinvest in the owner's name the principal amount in a 
new certificate having the same description in all material respects as 
the one redeemed. No such automatic reinvestment shall be made, however, 
in excess of the amount of the unexpended portion of the loan from the 
Rural Electrification Administration or the Rural Telephone Bank.
    (b) Prior to maturity. A certificate may be redeemed prior to 
maturity at par and accrued interest at the owner's option on one week's 
notice in writing after one month from the issue date. A

[[Page 298]]

certificate issued upon reinvestment, as provided in paragraph (a) of 
this section, shall not be subject to the one-month holding period. A 
notice to redeem a certificate prior to its maturity date must be given 
by the official authorized to redeem it, as shown in the subscription 
for purchase, to the Bureau of the Public Debt, Division of Securities 
Operations, Washington, DC 20226, by letter or wire.



Sec. 345.5  Taxation.

    The income derived from the certificates is subject to all taxes 
imposed under the Internal Revenue Code of 1954. The certificates are 
subject to estate, inheritance, gift or other excise taxes, whether 
Federal or State, but are exempt from all taxation now or hereafter 
imposed on the principal or interest thereof by any State or any of the 
possessions of the United States, or by any local taxing authority.

[40 FR 29846, July 16, 1975]



Sec. 345.6  General provisions.

    (a) Regulations. Five Percent Treasury Certificates of 
Indebtedness--R.E.A. Series shall be subject to the general regulations 
with respect to United States securities, which are set forth in the 
Department of the Treasury Circular No. 300, current revision (31 CFR 
part 306), to the extent applicable. Copies of the circular may be 
obtained from the Bureau of the Public Debt, Department of the Treasury, 
Washington, DC 20226, or a Federal Reserve Bank or Branch.
    (b) Reservations. The Secretary of the Treasury reserves the right 
to reject any application for the purchase of certificates hereunder, in 
whole or in part, and to refuse to issue or permit to be issued any such 
certificates in any case or any class or classes of cases if he deems 
such action to be in the public interest, and his action in any such 
respect shall be final. The Secretary of the Treasury may also at any 
time, or from time to time, supplement or amend the terms of these 
regulations, or of any amendments or supplements thereto.

[38 FR 35306, Dec. 27, 1973. Redesignated at 40 FR 29846, July 16, 1975]



PART 346_REGULATIONS GOVERNING UNITED STATES INDIVIDUAL RETIREMENT BONDS
--Table of Contents




Sec.
346.0 Offering of bonds.
346.1 Description of bonds.
346.2 Registration.
346.3 Purchase of bonds.
346.4 Proof of purchase.
346.5 Limitation on holdings.
346.6 Nontransferability.
346.7 Judicial proceedings.
346.8 Payment or redemption during lifetime of owner.
346.9 Payment or redemption after death of owner.
346.10 Reissue.
346.11 Use of power of attorney.
346.12 Lost, stolen, or destroyed bonds.
346.13 Taxation.
346.14 Certifying officers.
346.15 General provisions.

Appendix to Part 346--Tables

    Authority: Sec. 2002, Pub. L. 93-406, 88 Stat. 958 (31 U.S.C. 738a, 
752, 754b); 5 U.S.C. 301.

    Source: 40 FR 4240, Jan. 28, 1975, unless otherwise noted.



Sec. 346.0  Offering of bonds.

    The Secretary of the Treasury, under the authority of the Second 
Liberty Bond Act, as amended, and pursuant to the Employee Retirement 
Income Security Act of 1974, offers for sale, beginning January 1, 1975, 
bonds of the United States, designated as United States Individual 
Retirement Bonds. The bonds will be available for investment only to 
individuals eligible to make deductions on their Federal income tax 
returns for retirement savings, as provided in section 2002 of the 
latter Act. This offering of bonds will terminate on April 30, 1982.

[40 FR 4240, Jan. 28, 1975, as amended at 47 FR 18596, Apr. 30, 1982]



Sec. 346.1  Description of bonds.

    (a) Investment yield (interest). United States Individual Retirement 
Bonds, hereinafter sometimes referred to as Individual Retirement Bonds, 
will be issued at par. The investment yields (interest) are as follows:
    (1) Bonds with issue dates of January 1, 1975, through July 1, 
1979--6 percent per annum, compounded semiannually

[[Page 299]]

(see Table of Redemption Values in the appendix).
    (2) Bonds with issue dates of August 1, 1979, through October 1, 
1980--6.5. percent per annum, compounded semiannually (see Table A in 
the appendix).
    (3) Bonds with issue dates of November 1, 1980, through September 1, 
1981--8 percent per annum, compounded semiannually (see Table B).
    (4) Bonds with issue dates of October 1, 1981, or thereafter--9 
percent per annum, compounded semiannually (see Table C).

Interest will be paid only upon redemption of the bonds. The accrual of 
interest will continue until the bonds are redeemed or have reached 
maturity, whichever is earlier, in accordance with these regulations.
    (b) Term. The maturity date of any bond issued under this circular 
shall be the first day of the month in which the registered owner 
thereof has attained the age of 70\1/2\ years, or five years after the 
date of his death, but no later than the first day of the month in which 
he would have attained the age of 70\1/2\ years, if he had lived. Unless 
sooner redeemed in accordance with these regulations, the investment 
yield on a bond will cease on the interest accrual date coinciding with, 
or, where no such coincidence occurs, the interest accrual date next 
preceding:
    (1) The first day of the seventh (7th) month following the 70th 
anniversary of the birth of the person in whose name it is registered, 
or
    (2) The first day of the sixtieth (60th) month following the date of 
death of the person in whose name it is registered, except that such 
date shall be no later than the date on which he would have attained the 
age of 70\1/2\ years, had he lived.
    (c) Denominations--issue date. Individual Retirement Bonds will be 
available only in registered form and in denominations of $50, $75, $100 
and $500. At the time of issue, the issuing agent will enter in the 
upper right-hand portion of the bond the issue date (which shall be the 
first day of the month and year in which payment of the purchase price 
is received by an authorized issuing agent), and will imprint the 
agent's validating stamp in the lower right-hand portion. The issue 
date, as distinguished from the date in the agent's validating stamp, 
will determine the date from which interest will begin to accrue on the 
bond. An Individual Retirement Bond shall be valid only if an authorized 
issuing agent receives payment therefor, duly inscribes, dates, stamps, 
and delivers it.

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37520, July 21, 1977; 46 
FR 60577, Dec. 11, 1981]



Sec. 346.2  Registration.

    (a) General. The registration of Individual Retirement Bonds is 
limited to the names of natural persons in their own right, whether 
adults or minors, in either single ownership or beneficiary form. A bond 
registered in the beneficiary form will be inscribed substantially as 
follows (for example): ``John A. Doe payable on death to (or P.O.D.) 
Richard B. Roe.'' No more than one beneficiary may be designated on a 
bond.
    (b) Inscription. The inscription on the face of each bond will show 
the name, address, date of birth, and the social security account number 
of the registered owner. The name of the beneficiary, if one is to be 
designated, together with his social security account number, where 
available, will also be shown in the inscription.



Sec. 346.3  Purchase of bonds.

    (a) Agencies. Individual Retirement Bonds may be purchased over-the-
counter or by mail from Federal Reserve Banks and Branches and the 
Bureau of the Public Debt, Securities Transactions Branch, Washington, 
DC 20226. Customers of commercial banks and trust companies may be able 
to arrange for the purchase of the bonds through such institutions, but 
only the Federal Reserve Banks and Branches, and the Department of the 
Treasury itself, are authorized to issue the securities. The date of 
receipt of the application and payment by such issuing agencies will 
govern the dating of the bonds issued.
    (b) Applications. Applications for the purchase of Individual 
Retirement Bonds should be made on Form PD 4345, accompanied by a 
remittance to cover the purchase price. Personal

[[Page 300]]

checks will be accepted, subject to collection. Checks, or other forms 
of exchange, should be drawn to the order of the Federal Reserve Bank or 
the U.S. Treasury, as the case may be. Checks payable by endorsement are 
not acceptable.
    (c) Delivery. Delivery of bonds will be made in person, or by mail 
at the risk and expense of the United States at the address given by the 
purchaser, but only within the United States, its territories and 
possessions, the Commonwealth of Puerto Rico, and the Canal Zone. No 
mail deliveries elsewhere will be made. If the registered owner 
temporarily resides abroad, the bonds will be delivered to such address 
in the United States as the purchaser directs.



Sec. 346.4  Proof of purchase.

    At the time an Individual Retirement Bond is issued, the issuing 
agent will furnish therewith to the purchaser a copy of Form PD 4345 for 
the purchaser's personal records. The form will show the name and 
address of the registered owner, his date of birth, social security 
account number, the number of bonds issued, a description thereof by 
issue date, serial numbers, denominations, and registration.



Sec. 346.5  Limitation on holdings.

    (a) Except as provided in paragraph (b) of this section, the amount 
of Individual Retirement Bonds which may be registered in any one 
individual's name is limited to the amount for which an annual deduction 
may be taken under either section 219 or 220 of the Internal Revenue 
Code.\1\ These limitations are as follows:
---------------------------------------------------------------------------

    \1\ Note: Under the Internal Revenue Code, bonds issued during any 
given year or within 45 days thereafter may be deducted in that year.
---------------------------------------------------------------------------

    (1) In the case of an individual electing to deduct his or her bond 
purchase under section 219, the face amount of bonds purchased for tax 
deduction in any given year may not exceed 15 percent of the 
individual's earned income for that year or $1,500, whichever is less.
    (2) In the case of an individual electing to deduct his or her bond 
purchases under section 220, the total face amount of bonds purchased 
for tax deduction in any given year in the name of the individual and in 
the name of his or her nonworking spouse, may not exceed 15 percent of 
the working spouse's earned income for that year or $1,750, whichever is 
less.\2\
---------------------------------------------------------------------------

    \2\ Note: Code section 220 requires, in effect, that the total IRA 
contributions in each spouse's name to be deducted in any one year be in 
equal amounts. While it is permissible for an eligible married couple to 
utilize several different forms of IRA investments within the same year, 
this means that couples investing solely in bonds must purchase equal 
amounts of bonds in each spouse's name.
---------------------------------------------------------------------------

    (b) The above limitations do not apply to rollover bond purchases, 
as described in sections 402(a)(5), 403(a)(4), or 408(d)(3) of the 
Internal Revenue Code.

(26 U.S.C. 220 and 31 U.S.C. 757)

[42 FR 37520, July 21, 1977]



Sec. 346.6  Nontransferability.

    United States Individual Retirement Bonds are not transferable, and 
may not be sold, discounted or pledged as collateral for a loan or as 
security for the performance of an obligation, or for any other purpose.



Sec. 346.7  Judicial proceedings.

    No judicial determination will be recognized which would give effect 
to an attempted voluntary transfer inter vivos of an Individual 
Retirement Bond. Otherwise, a claim against a registered owner will be 
recognized when established by valid judicial proceedings, but in no 
case will payment be made to the purchaser at a sale under a levy or to 
the officer authorized to levy upon the property of the owner under 
appropriate process to satisfy a money judgment unless or until the bond 
has become eligible for authorized redemption pursuant to these 
regulations. Neither the Department of the Treasury nor any of its 
agencies will accept notices of adverse claims or of pending judicial 
proceedings or undertake to protect the interests of litigants who do 
not have possession of the bond.

[[Page 301]]



Sec. 346.8  Payment or redemption during lifetime of owner.

    (a) During first 12 months of issue date. An Individual Retirement 
Bond is redeemable at any time during the first twelve (12) months of 
its issue date. No interest will be paid on any bond so redeemed.
    (b) Prior to age 59\1/2\--(1) With penalty. Unless redeemed within 
twelve months of its issue, or except as provided under paragraphs 
(b)(2) and (c)(2) of this section, if an Individual Retirement Bond is 
cashed by its owner before he attains age 59\1/2\, he must include on 
his Federal income tax return for the year of redemption the value of 
the bond. In addition, there is an additional income tax equal to 10 
percent of the value of the bond imposed by section 409(c) of the 
Internal Revenue Code of 1954.
    (2) In case of disability. An Individual Retirement Bond will be 
paid at its then current redemption value upon a registered owner's 
request (or by a person recognized as entitled to act on his behalf) 
prior to his attainment of age 59\1/2\ years upon submission of a 
physician's statement or any similar evidence showing that the owner has 
become disabled to such an extent that he is unable to engage in any 
substantial, gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or to be of long-continued and indefinite duration. The following are 
examples of impairments which would ordinarily be considered as 
preventing substantial, gainful activity:
    (i) Loss of use of two limbs.
    (ii) Certain progressive diseases which have resulted in the 
physical loss or atrophy of a limb, such as diabetes, multiple 
sclerosis, or Buerger's disease.
    (iii) Disease of the heart, lungs, or blood vessels which have 
resulted in major loss of heart or lung reserve as evidenced by X-ray, 
electrocardiogram, or other objective findings, so that despite medical 
treatment breathlessness, pain, or fatigue is produced on slight 
exertion, such as walking several blocks, using public transportation, 
or doing small chores.
    (iv) Cancer which is inoperable and progressive.
    (v) Damage to the brain or brain abnormality which has resulted in 
severe loss of judgment, intellect, orientation, or memory.
    (vi) Mental diseases (e.g., psychosis or severe psychoneurosis) 
requiring continued institutionalization or constant supervision of the 
individual.
    (vii) Loss or diminution of vision to the extent that the effected 
individual has a central visual acuity of not better than 20/200 in the 
better eye after best correction, or has a limitation in the fields of 
vision such that the widest diameter of the visual fields subtends an 
angle no greater than 20 degrees.
    (viii) Permanent and total loss of speech.
    (ix) Total deafness uncorrectible by a hearing aid.

In any case coming under the provisions hereof, the evidence referred to 
above must be submitted to the Bureau of the Public Debt, Division of 
Transactions and Rulings, Parkersburg, WV 26101, for approval before any 
bonds may be paid. If, after review of the evidence, the Secretary of 
the Treasury is satisfied that the owner's disability has been 
established a letter will be furnished authorizing payment of his 
Individual Retirement Bonds. This letter must be presented each time any 
of the owner's bonds are submitted for payment to a Federal Reserve Bank 
or Branch or to the Department of the Treasury.
    (c) Prior to age 70\1/2\--(1) General. An Individual Retirement Bond 
will be redeemable at its current redemption value upon the request of 
the registered owner (or a person recognized as entitled to act on his 
behalf), provided he is 59\1/2\ years of age or older. The owner's age 
will be determined from the date of birth shown on the face of the bond, 
provided, however, that the Secretary of the Treasury reserves the right 
in any case or class of cases to require proof, in the form of a duly 
certified copy of his birth certificate, that the owner has attained the 
age of 59\1/2\ years. If such evidence is unavailable, one of the 
following documents may be furnished in lieu thereof:
    (i) Church records of birth or baptism
    (ii) Hospital birth record or certificate

[[Page 302]]

    (iii) Physician's or midwife's birth record
    (iv) Certification of Bible or other family records
    (v) Military, naturalization or immigration records
    (vi) Other evidence of probative value.

Similar documentary evidence will also be required to support any claim 
made by an owner that the date of birth shown on his bond is incorrect.
    (2) For change of investment. Under section 409(b)(3)(c) of the 
Internal Revenue Code, if an Individual Retirement Plan Bond is cashed 
at any time before the end of the taxable year in which the owner 
attains age 70\1/2\, and the entire redemption proceeds are transferred 
to an individual retirement account, an individual annuity, an 
employees' trust, or annuity plan, as described in sections 408(a), 
408(b), 401(a) and 403(a), respectively, of the Internal Revenue Code, 
on or before the 60th day after receipt of such proceeds, they shall be 
excluded from gross income and the transfer shall be treated as a 
rollover contribution described in section 408(d)(3) of the Internal 
Revenue Code.
    (d) Requests for payment--(1) By owner. When redemption of any 
Individual Retirement Bond is desired by the registered owner, it should 
be presented, with the request for payment on the back of the bond 
signed and duly certified, to a Federal Reserve Bank or Branch or to the 
Bureau of the Public Debt, Securities Transactions Branch, Washington, 
DC 20226. If payment is requested on account of disability, the letter 
described in paragraph (b)(2) of this section should accompany the 
bond.\3\
---------------------------------------------------------------------------

    \3\ In any case in which a legal representative has not been 
appointed for the estate of a registered owner who has attained the age 
of 59\1/2\ years, or who has become disabled, a person seeking payment 
of a bond on the owner's behalf should furnish a complete statement of 
the circumstances to the Bureau of the Public Debt, Division of 
Securities Operations, Washington, DC 20226. Appropriate instructions 
will then be furnished.
---------------------------------------------------------------------------

    (2) By person other than owner. When redemption of any Individual 
Retirement Bond is desired by the legal guardian, committee, 
conservator, or similar representative of the owner's estate, it should 
be presented, with the request signed as described below, to a Federal 
Reserve Bank or Branch or to the Department of the Treasury. If payment 
is requested on account of disability, the letter described in paragraph 
(b) (2) of this section should accompany the bond.\3\ The request for 
payment, in either case, should be signed by the representative in his 
fiduciary capacity before an authorized certifying officer, and must be 
supported by a certificate or a certified copy of the letters of 
appointment from the court making the appointment, under seal, or other 
proof of qualification if the appointment was not made by a court. 
Except in the case of corporate fiduciaries, such evidence should state 
that the appointment is in full force and should be dated not more than 
one year prior to the presentation of the bond for payment.
    (e) Partial redemption. An Individual Retirement Bond in a 
denomination greater than $50 (face value), which is otherwise eligible 
for redemption, may be redeemed in part, at current redemption value, 
upon the request of the registered owner (or a person recognized as 
entitled to act on his behalf), but only in amounts corresponding to 
authorized denominations. In any case in which partial redemption is 
desired, before the request for payment is signed, the phrase ``to the 
extent of $---- (face value) and reissue of the remainder'' should be 
appended to the request. Upon partial redemption of the bond, the 
remainder will be reissued as of the original issue date. No partial 
redemption of a bond will be made after the death of the owner in whose 
name it is registered.

(26 U.S.C. 220 and 31 U.S.C. 757)

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37520, July 21, 1977]



Sec. 346.9  Payment or redemption after death of owner.

    (a) Order of precedence where owner not survived by beneficiary. If 
the registered owner of an Individual Retirement Bond dies before it has 
been presented and surrendered for payment, and there is no beneficiary 
shown thereon, or if the designated beneficiary predeceased the owner, 
the bond

[[Page 303]]

shall be paid in the following order of precedence:
    (1) To the duly appointed executor or administrator of the estate of 
the owner, who should sign the request for payment on the back of the 
bond in his representative capacity before an authorized certifying 
officer, such request to be supported by a court certificate or a 
certified copy of his letters of appointment, under seal of the court, 
which should show that the appointment is in full force and effect, and 
be dated within six months of its presentation;
    (2) If no legal representative of the deceased registered owner's 
estate has been or will be appointed, to the widow or widower of the 
owner;
    (3) If none of the above, to the child or children of the owner and 
the descendants of deceased children by representation;
    (4) If none of the above, to the parents of the owner, or the 
survivor of them;
    (5) If none of the above, to other next-of-kin of the owner, as 
determined by the laws of the domicile of such owner at the time of his 
death.

In any case coming under the provisions of this paragraph, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary, if any, will 
be required where he predeceased the owner. Payment of bonds under 
paragraph (a)(1) of this section will be made by a Federal Reserve Bank 
or by the Bureau of the Public Debt, Securities Transactions Branch, 
Washington, DC 20226. Payment of bonds under paragraphs (a) (2) through 
(5) of this section will be made upon receipt of applications on Form PD 
3565-1, together with the bonds and supporting evidence, by the Bureau 
of the Public Debt, Division Transactions and Rulings, Parkersburg, WV 
26101.
    (b) Order of precedence where beneficiary survived owner. If the 
registered owner of an Individual Retirement Bond dies before it has 
been presented and surrendered for payment, and the beneficiary shown 
thereon survived the owner, the bond shall be paid in the following 
order of precedence:
    (1) To the designated beneficiary upon his presentation and 
surrender of the bond with the request for payment signed and duly 
certified;
    (2) If the designated beneficiary survived the registered owner but 
failed to present the bond for payment during his own lifetime, payment 
will be made in the order of precedence specified in paragraphs (a) (1) 
through (5) of this section to the legal representative, surviving 
spouse, children, parents, or next-of-kin of such beneficiary, and in 
the manner provided therein.

In any case coming under the provisions of this subsection, a duly 
certified copy of the registered owner's death certificate will 
ordinarily be required. Proof of death of the beneficiary will also be 
required where he survived the owner but failed to present the bond for 
payment during his own lifetime. Payment of a bond to a designated 
beneficiary will be made by a Federal Reserve Bank or by the Bureau of 
the Public Debt, Securities Transactions Branch, Washington, DC 20226.
    (c) Ownership of redemption proceeds. The orders of precedence set 
forth in paragraphs (a) and (b) of this section, except in cases where 
redemption is made for the account of a registered owner, are for the 
Department's convenience in discharging its obligation on an Individual 
Retirement Bond. The discharge of the obligation in accordance therewith 
shall be final so far as the Department is concerned, but those 
provisions do not otherwise purport to determine ownership of the 
redemption proceeds of a bond.

(26 U.S.C. 220 and 31 U.S.C. 757)

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37520, July 21, 1977]



Sec. 346.10  Reissue.

    (a) Addition or change of beneficiary. An Individual Retirement Bond 
will be reissued to add a beneficiary in the case of a single ownership 
bond, or to eliminate or substitute a beneficiary in the case of a bond 
registered in beneficiary form upon the owner's request on Form PD 3564. 
No consent will be required to support any reissue transaction from a 
beneficiary whose name is to be removed from the registration of an 
Individual Retirement Bond. If the registered owner dies after the

[[Page 304]]

bond has been presented and surrendered for reissue, upon receipt of 
notice thereof by the agency to which the request for reissue was 
submitted, such request shall be treated as ineffective, provided the 
notice of death is received by the Federal Reserve Bank or the Bureau of 
the Public Debt, Division of Transactions and Rulings, Parkersburg, WV 
26101, to which the request was sent, in sufficient time to withhold 
delivery, by mail or otherwise, of the reissued bond.
    (b) Error in issue--change of name. Reissue of an Individual 
Retirement Bond will be made where an error in issue has occurred, as 
well as in cases where the owner's name has been changed by marriage, 
divorce, annulment, order of court, or in any other legal manner upon an 
appropriate request. Information as to the procedure to be followed in 
securing such reissue may be obtained from a Federal Reserve Bank or the 
Bureau of the Public Debt, Division of Transactions and Rulings, 
Parkersburg, WV 26101.

(26 U.S.C. 220 and 31 U.S.C. 757)

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37520, July 21, 1977]



Sec. 346.11  Use of power of attorney.

    No designation of an attorney, agent, or other representative to 
request payment or reissue on behalf of the owner, beneficiary, or other 
person entitled under Sec. 346.9, other than as provided in these 
regulations, will be recognized.



Sec. 346.12  Lost, stolen, or destroyed bonds.

    If an Individual Retirement Bond is lost, stolen, or destroyed, 
relief will be granted upon identification of the bond and proof of its 
loss, theft, or destruction. A description of the bond by denomination, 
serial number, issue date and registration should be furnished at the 
time the report of loss, theft, or destruction is made. Such reports 
should be sent to the Bureau of the Public Debt, Division of 
Transactions and Rulings, Parkersburg, WV 26101. Full instructions for 
obtaining substitute bonds, or payment, in appropriate cases, will then 
be given.

(26 U.S.C. 220 and 31 U.S.C. 757)

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37520, July 21, 1977]



Sec. 346.13  Taxation.

    The tax treatment provided under section 409 of the Internal Revenue 
Code of 1954, as amended, shall apply to all Individual Retirement 
Bonds. The bonds are subject to estate, inheritance, or other excise 
taxes, whether Federal or State, but are exempt from all taxation now or 
hereafter imposed on the principal or interest thereof by any State, 
municipality, or any local taxing authority. Inquiry concerning the 
application of any Federal tax to these bonds should be directed to the 
District Director of Internal Revenue for the district in which the 
taxpayer resides.



Sec. 346.14  Certifying officers.

    Officers authorized to certify requests for payment or for any other 
transaction involving Individual Retirement Bonds include:
    (a) Post offices. Any postmaster, acting postmaster, or inspector-
in-charge, or other post office official or clerk designated for that 
purpose. A post office official or clerk, other than a postmaster, 
acting postmaster, or inspector-in-charge, should certify in the name of 
the postmaster or acting postmaster, followed by his own signature and 
official title. Signatures of these officers should be authenticated by 
a legible imprint of the post office dating stamp.
    (b) Banks and trust companies. Any officer of a Federal Reserve Bank 
or Branch, or of a bank or trust company chartered under the laws of the 
United States or those of any State, Commonwealth, or Territory of the 
United States, as well as any employees of such bank or trust company 
expressly authorized to act for that purpose, who should sign over the 
title ``Designated Employee.'' Certifications by any of these officers 
or designated employees should be authenticated by either a legible 
imprint of the corporate seal, or, where the institution is an 
authorized issuing agent for United States

[[Page 305]]

Savings Bonds, Series E, by a legible imprint of its dating stamp.
    (c) Issuing agents of Series E savings bonds. Any officer of a 
corporation or any other organization which is an authorized issuing 
agent for United States Savings Bonds, Series E. All certifications by 
such officers must be authenticated by a legible imprint of the issuing 
agent's dating stamp.
    (d) Foreign countries. In a foreign country requests may be signed 
in the presence of and be certified by any United States diplomatic or 
consular representative, or the manager or other officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate seal or is 
certified to the Department of the Treasury. If such an officer is not 
available, requests may be signed in the presence of and be certified by 
a notary or other officer authorized to administer oaths, but his 
official character and jurisdiction should be certified by a United 
States diplomatic or consular officer under seal of his office.
    (e) Special provisions. The Commissioner of the Public Debt, or his 
delegate, or any Federal Reserve Bank or Branch is authorized to make 
special provision for certification in any particular case or class of 
cases where none of the officers authorized above is readily accessible.



Sec. 346.15  General provisions.

    (a) Regulations. All Individual Retirement Bonds shall be subject to 
the general regulations prescribed by the Secretary with respect to 
United States securities, which are set forth in Department of the 
Treasury Circular No. 300, current revision, to the extent applicable. 
Copies of the general regulations may be obtained upon request from any 
Federal Reserve Bank or the Department of the Treasury.
    (b) Reservation as to issue of bonds. The Secretary of the Treasury 
reserves the right to reject any application for the purchase of 
Individual Retirement Bonds, in whole or in part, and to refuse to issue 
or permit to be issued any such bonds in any case or any class or 
classes of cases if he deems such action to be in the public interest, 
and his action in any such respect shall be final.
    (c) Additional requirements. In any case or any class of cases 
arising under this circular, the Secretary of the Treasury may require 
such additional evidence as may in his judgment be necessary, and may 
require a bond of indemnity, with or without surety, where he may 
consider such bond necessary for the protection of the United States.
    (d) Waiver of requirements. The Secretary of the Treasury reserves 
the right, in his discretion, to waive or modify any provision or 
provisions of this circular in any particular case or class of cases for 
the convenience of the United States, or in order to relieve any person 
or persons of unnecessary hardship, if such action is not inconsistent 
with law, does not impair any existing rights, and he is satisfied that 
such action would not subject the United States to any substantial 
expense or liability.
    (e) Fiscal agents. Federal Reserve Banks and Branches, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury in connection 
with the issue, delivery, redemption, reissue, and payment of Individual 
Retirement Bonds.
    (f) Reservation as to terms of circular. The Secretary of the 
Treasury may at any time, or from time to time, supplement or amend the 
terms of this circular, or any amendments or supplements thereto.

[[Page 306]]

                      Appendix to Part 346--Tables

  Table of Redemption Values Providing an Investment Yield of 6 Percent
    per Annum for Bonds Bearing Issue Dates Beginning January 1, 1975
  Note: This table shows how Individual Retirement Bonds bearing issue
     dates on or after January 1, 1975, by denomination, increase in
   redemption value during the successive half-year periods following
       issue. The redemption values provide an investment yield of
   approximately 6 pct/annum, compounded semiannually, on the purchase
   price from issue date to the beginning of each half-year period. No
increase in redemption value is shown, however, until 1 year after issue
 date since no interest may be paid on bonds redeemed before that time.
  The period to maturity is fixed in accordance with the provisions of
                    Sec.  346.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $75.00    $100.00   $500.00
------------------------------------------------------------------------
1st............................    $50.00    $75.00   $100.00    $500.00
1 to 1\1/2\....................     53.05     79.57    106.10     530.50
1\1/2\ to 2....................     54.64     81.95    109.28     546.40
2 to 2\1/2\....................     56.28     84.41    112.56     562.80
2\1/2\ to 3....................     57.96     86.95    115.92     579.60
3 to 3\1/2\....................     59.70     89.55    119.40     597.00
3\1/2\ to 4....................     61.49     92.24    122.98     614.90
4 to 4\1/2\....................     63.34     95.01    126.68     633.40
4\1/2\ to 5....................     65.24     97.86    130.48     652.40
5 to 5\1/2\....................     67.20    100.79    134.40     672.00
5\1/2\ to 6....................     69.21    103.82    138.42     692.10
6 to 6\1/2\....................     71.29    106.93    142.58     712.90
6\1/2\ to 7....................     73.43    110.14    146.86     734.30
7 to 7\1/2\....................     75.63    113.44    151.26     756.30
7\1/2\ to 8....................     77.90    116.85    155.80     779.00
8 to 8\1/2\....................     80.24    120.35    160.48     802.40
8\1/2\ to 9....................     82.64    123.96    165.28     826.40
9 to 9\1/2\....................     85.12    127.68    170.24     851.20
9\1/2\ to 10...................     87.68    131.51    175.36     876.80
10 to 10\1/2\..................     90.31    135.46    180.62     903.10
10\1/2\ to 11..................     93.01    139.52    186.02     930.10
11 to 11\1/2\..................     95.81    143.71    191.62     958.10
11\1/2\ to 12..................     98.68    148.02    197.36     986.80
12 to 12\1/2\..................    101.64    152.46    203.28   1,016.40
12\1/2\ to 13..................    104.69    157.03    209.38   1,046.90
13 to 13\1/2\..................    107.83    161.74    215.66   1,078.30
13\1/2\ to 14..................    111.06    166.60    222.12   1,110.60
14 to 14\1/2\..................    114.40    171.59    228.80   1,144.00
14\1/2\ to 15..................    117.83    176.74    235.66   1,178.30
15 to 15\1/2\..................    121.36    182.04    242.72   1,213.60
15\1/2\ to 16..................    125.00    187.51    250.00   1,250.00
16 to 16\1/2\..................    128.75    193.13    257.50   1,287.50
16\1/2\ to 17..................    132.62    198.93    265.24   1,326.20
17 to 17\1/2\..................    136.60    204.89    273.20   1,366.00
17\1/2\ to 18..................    140.69    211.04    281.38   1,406.90
18 to 18\1/2\..................    144.91    217.37    289.82   1,449.10
18\1/2\ to 19..................    149.26    223.89    298.52   1,492.60
19 to 19\1/2\..................    153.74    230.61    307.48   1,537.40
19\1/2\ to 20..................    158.35    237.53    316.70   1,583.50
20 to 20\1/2\..................    163.10    244.65    326.20   1,631.00
------------------------------------------------------------------------


  Table A--Table of Redemption Values Providing an Investment Yield of
 6.50 Percent per Annum for Bonds Bearing Issue Dates Beginning Aug. 1,
                                  1979
  Note: This table shows how Individual Retirement Bonds bearing issue
     dates on or after August 1, 1979, by denomination, increase in
   redemption value during the successive half-year periods following
       issue. The redemption values provide an investment yield of
  approximately 6.50 percent per annum, compounded semiannually, on the
    purchase price from issue date to the beginning of each half-year
 period. No increase in redemption value is shown, however, until 1 year
 after issue date since no interest may be paid on bonds redeemed before
    that time. The period to maturity is fixed in accordance with the
             provisions of Sec.  346.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                    $50       $75      $100       $500
------------------------------------------------------------------------
1st............................    $50.00    $75.00   $100.00    $500.00
1 to 1\1/2\....................     53.30     79.95    106.60     533.00
1\1/2\ to 2....................     55.04     82.56    110.08     550.40
2 to 2\1/2\....................     56.82     85.23    113.64     568.20
2\1/2\ to 3....................     58.68     88.02    117.36     586.80
3 to 3\1/2\....................     60.58     90.87    121.16     605.80
3\1/2\ to 4....................     62.54     93.81    125.08     625.40
4 to 4\1/2\....................     64.58     96.87    129.16     645.80
4\1/2\ to 5....................     66.68    100.02    133.36     666.80
5 to 5\1/2\....................     68.84    103.26    137.68     688.40
5\1/2\ to 6....................     71.08    106.62    142.16     710.80
6 to 6\1/2\....................     73.40    110.10    146.80     734.00
6\1/2\ to 7....................     75.78    113.67    151.56     757.80
7 to 7\1/2\....................     78.24    117.36    156.48     782.40
7\1/2\ to 8....................     80.78    121.17    161.56     807.80
8 to 8\1/2\....................     83.40    125.10    166.80     834.00
8\1/2\ to 9....................     86.12    129.18    172.24     861.20
9 to 9\1/2\....................     88.92    133.38    177.84     889.20
9\1/2\ to 10...................     91.80    137.70    183.60     918.00
10 to 10\1/2\..................     94.80    142.20    189.60     948.00
10\1/2\ to 11..................     97.88    146.82    195.76     978.80
11 to 11\1/2\..................    101.06    151.59    202.12   1,010.60
11\1/2\ to 12..................    104.34    156.51    208.68   1,043.40
12 to 12\1/2\..................    107.72    161.58    215.44   1,077.20
12\1/2\ to 13..................    111.22    166.83    222.44   1,112.20
13 to 13\1/2\..................    114.84    172.26    229.68   1,148.40
13\1/2\ to 14..................    118.58    177.87    237.16   1,185.80
14 to 14\1/2\..................    122.44    183.66    244.88   1,224.40
14\1/2\ to 15..................    126.42    189.63    252.84   1,264.20
15 to 15\1/2\..................    130.52    195.78    261.04   1,305.20
15\1/2\ to 16..................    134.76    202.14    269.52   1,347.60
16 to 16\1/2\..................    139.14    208.71    278.28   1,391.40
16\1/2\ to 17..................    143.66    215.49    287.32   1,436.60
17 to 17\1/2\..................    148.34    222.51    296.68   1,483.40
17\1/2\ to 18..................    153.16    229.74    306.32   1,531.60
18 to 18\1/2\..................    158.12    237.18    316.24   1,581.20
18\1/2\ to 19..................    163.26    244.89    326.52   1,632.60
19 to 19\1/2\..................    168.58    252.87    337.16   1,685.80
19\1/2\ to 20..................    174.06    261.09    348.12   1,740.60
20 to 20\1/2\..................    179.72    269.58    359.44   1,797.20
------------------------------------------------------------------------


[[Page 307]]


  Table B--Table of Redemption Values Providing an Investment Yield of
 8.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning November
                                 1, 1980
  Note: This table shows how Individual Retirement Bonds bearing issue
    dates on or after November 1, 1980, by denomination, increase in
   redemption value during the successive half-year periods following
       issue. The redemption values provide an investment yield of
  approximately 8.00 percent per annum, compounded semiannually, on the
    purchase price from issue date to the beginning of each half-year
 period. No increase in redemption value is shown, however, until 1 year
 after issue date since no interest may be paid on bonds redeemed before
    that time. The period to maturity is fixed in accordance with the
             provisions of Sec.  346.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $75.00    $100.00   $500.00
------------------------------------------------------------------------
First half year................    $50.00    $75.00   $100.00    $500.00
1.0 to 1.5.....................     54.08     81.12    108.16     540.80
1.5 to 2.0.....................     56.24     84.36    112.48     562.40
2.0 to 2.5.....................     58.50     87.75    117.00     585.00
2.5 to 3.0.....................     60.84     91.26    121.68     608.40
3.0 to 3.5.....................     63.26     94.89    126.52     632.60
3.5 to 4.0.....................     65.80     98.70    131.60     658.00
4.0 to 4.5.....................     68.42    102.63    136.84     684.20
4.5 to 5.0.....................     71.16    106.74    142.32     711.60
5.0 to 5.5.....................     74.02    111.03    148.04     740.20
5.5 to 6.0.....................     76.98    115.47    153.96     769.80
6.0 to 6.5.....................     80.06    120.09    160.12     800.60
6.5 to 7.0.....................     83.26    124.89    166.52     832.60
7.0 to 7.5.....................     86.58    129.87    173.16     865.80
7.5 to 8.0.....................     90.04    135.06    180.08     900.40
8.0 to 8.5.....................     93.64    140.46    187.28     936.40
8.5 to 9.0.....................     97.40    146.10    194.80     974.00
9.0 to 9.5.....................    101.30    151.95    202.60   1,013.00
9.5 to 10.0....................    105.34    158.01    210.68   1,053.40
10.0 to 10.5...................    109.56    164.34    219.12   1,095.60
10.5 to 11.0...................    113.94    170.91    227.88   1,139.40
11.0 to 11.5...................    118.50    177.75    237.00   1,185.00
11.5 to 12.0...................    123.24    184.86    246.48   1,232.40
12.0 to 12.5...................    128.16    192.24    256.32   1,281.60
12.5 to 13.0...................    133.30    199.95    266.60   1,333.00
13.0 to 13.5...................    138.62    207.93    277.24   1,386.20
13.5 to 14.0...................    144.16    216.24    288.32   1,441.60
14.0 to 14.5...................    149.94    224.91    299.88   1,499.40
14.5 to 15.0...................    155.94    233.91    311.88   1,559.40
15.0 to 15.5...................    162.16    243.24    324.32   1,621.60
15.5 to 16.0...................    168.66    252.99    337.32   1,686.60
16.0 to 16.5...................    175.40    263.10    350.80   1,754.00
16.5 to 17.0...................    182.42    273.63    364.84   1,824.20
17.0 to 17.5...................    189.72    284.58    379.44   1,897.20
17.5 to 18.0...................    197.30    295.95    394.60   1,973.00
18.0 to 18.5...................    205.20    307.80    410.40   2,052.00
18.5 to 19.0...................    213.40    320.10    426.80   2,134.00
19.0 to 19.5...................    221.94    332.91    443.88   2,219.40
19.5 to 20.0...................    230.82    346.23    461.64   2,308.20
20.0 to 20.5...................    240.06    360.09    480.12   2,400.60
------------------------------------------------------------------------


  Table C--Table of Redemption Values Providing an Investment Yield of
 9.00 Percent Per Annum for Bonds Bearing Issue Dates Beginning October
                                 1, 1981
  Note: This table shows how Individual Retirement Bonds bearing issue
     dates on or after October 1, 1981, by denomination, increase in
   redemption value during the successive half-year periods following
       issue. The redemption values provide an investment yield of
  approximately 9.00 percent per annum, compounded semiannually, on the
    purchase price from issue date to the beginning of each half-year
 period. No increase in redemption value is shown, however, until 1 year
 after issue date since no interest may be paid on bonds redeemed before
    that time. The period to maturity is fixed in acordance with the
             provisions of Sec.  346.1(b) of this circular.
------------------------------------------------------------------------
                                               Issue price
                                ----------------------------------------
                                 Redemption values during each half-year
Period after issue date (years)  period (values increase on first day of
                                              period shown)
                                ----------------------------------------
                                  $50.00    $75.00    $100.00   $500.00
------------------------------------------------------------------------
First half.....................    $50.00    $75.00   $100.00    $500.00
1.0 to 1.5.....................     54.60     81.90    109.20     546.00
1.5 to 2.0.....................     57.06     85.59    114.12     570.60
2.0 to 2.5.....................     59.62     89.43    119.24     596.20
2.5 to 3.0.....................     62.30     93.45    124.60     623.00
3.0 to 3.5.....................     65.12     97.68    130.24     651.20
3.5 to 4.0.....................     68.04    102.06    136.08     680.40
4.0 to 4.5.....................     71.10    106.65    142.20     711.00
4.5 to 5.0.....................     74.30    111.45    148.60     743.00
5.0 to 5.5.....................     77.64    116.46    155.28     776.40
5.5 to 6.0.....................     81.14    121.71    162.28     811.40
6.0 to 6.5.....................     84.80    127.20    169.60     848.00
6.5 to 7.0.....................     88.60    132.90    177.20     886.00
7.0 to 7.5.....................     92.60    138.90    185.20     926.00
7.5 to 8.0.....................     96.76    145.14    193.52     967.60
8.0 to 8.5.....................    101.12    151.68    202.24   1,011.20
8.5 to 9.0.....................    105.66    158.49    211.32   1,056.60
9.0 to 9.5.....................    110.42    165.63    220.84   1,104.20
9.5 to 10.0....................    115.40    173.10    230.80   1,154.00
10.0 to 10.5...................    120.58    180.87    241.16   1,205.80
10.5 to 11.0...................    126.02    189.03    252.04   1,260.20
11.0 to 11.5...................    131.68    197.52    263.36   1,316.80
11.5 to 12.0...................    137.60    206.40    275.20   1,376.00
12.0 to 12.5...................    143.80    215.70    287.60   1,438.00
12.5 to 13.0...................    150.28    225.42    300.56   1,502.80
13.0 to 13.5...................    157.04    235.56    314.08   1,570.40
13.5 to 14.0...................    164.10    246.15    328.20   1,641.00
14.0 to 14.5...................    171.48    257.22    342.96   1,714.80
14.5 to 15.0...................    179.20    268.80    358.40   1,792.00
15.0 to 15.5...................    187.26    280.89    374.52   1,872.60
15.5 to 16.0...................    195.70    293.55    391.40   1,957.00
16.0 to 16.5...................    204.50    306.75    409.00   2,045.00
16.5 to 17.0...................    213.70    320.55    427.40   2,137.00
17.0 to 17.5...................    223.32    334.98    446.64   2,233.20
17.5 to 18.0...................    233.36    350.04    466.72   2,333.60
18.0 to 18.5...................    243.86    365.79    487.72   2,438.60
18.5 to 19.0...................    254.84    382.26    509.68   2,548.40
19.0 to 19.5...................    266.32    399.48    532.64   2,663.20
19.5 to 20.0...................    278.30    417.45    556.60   2,783.00
20.0 to 20.5...................    290.82    436.23    581.64   2,908.20
------------------------------------------------------------------------


(26 U.S.C. 220, and 31 U.S.C. 757; 40 Stat. 288, 48 Stat. 343, as 
amended; 31 U.S.C. 752, 7546; 5 U.S.C. 301)

[40 FR 4240, Jan. 28, 1975, as amended at 42 FR 37521, July 21, 1977; 45 
FR 53397, Aug. 11, 1980; 45 FR 55178, Aug. 19, 1980; 46 FR 60577, Dec. 
11, 1981]

[[Page 308]]



PART 348_REGULATIONS GOVERNING DEPOSITARY COMPENSATION SECURITIES--Table 
of Contents




Sec.
348.0 Offering of securities.
348.1 Description of securities.
348.2 Redemption/call/reinvestment.
348.3 Reservations.

    Authority: 31 U.S.C. 3121; 5 U.S.C. 301.

    Source: 68 FR 41267, July 11, 2003 unless otherwise noted.



Sec. 348.0  Offering of securities.

    The Secretary of the Treasury (the Secretary) under authority of 
Title 31, Chapter 31, offers, at par, Depositary Compensation Securities 
(securities) to financial agents of the Department of the Treasury. The 
securities are offered to financial agents of the Department of the 
Treasury designated under federal law (including, but not limited to: 12 
U.S.C. 90, 265-266, 1464(k), and 1789a; 31 U.S.C. 3303) which have 
executed a Depositary, Financial Agency, and Collateral Agreement 
satisfactory to the Secretary, and are authorized to provide essential 
banking services to the Department of the Treasury. The securities will 
be issued in an amount not to exceed, in any case, the amount for which 
the financial agents are authorized. The securities are non-marketable 
Treasury securities that will be utilized to compensate financial 
agents, in whole or in part, for services performed on behalf of the 
Department of the Treasury. The financial agents will be compensated 
from the interest earned on the securities. This offering will continue 
until terminated by the Secretary. The Fiscal Assistant Secretary is 
authorized to act on behalf of the Secretary upon all matters contained 
in these regulations.



Sec. 348.1  Description of securities.

    (a) General. The securities will be issued in book-entry form on the 
books of the Department of the Treasury, Bureau of the Public Debt, 
Parkersburg, WV.
    (b) Terms and rate of interest. The securities will be issued as 
notes or bonds, depending on their maturity, under such terms and at 
such rates as determined and announced by the Secretary. The Secretary 
will set a given rate of interest that will apply to all securities 
issued while the rate is in effect. The interest will be payable on a 
monthly basis. The securities will be issued in a minimum of $1,000 
each.
    (c) Nontransferability. The securities are not transferable, but 
they will be acceptable to secure compensating balances with financial 
agents (as described in Sec. 348.0) and may not be used for any other 
purpose.



Sec. 348.2  Redemption/call/reinvestment.

    (a) Redemption by financial agents. The securities may be redeemed 
prior to maturity by financial agents only under such terms and 
conditions as set forth in agreements between the financial agents and 
the Department of the Treasury, Financial Management Service, 
Washington, DC.
    (b) Call by the Treasury. The securities are subject to call before 
maturity. The Secretary will announce such call by any means the 
Secretary deems appropriate.
    (c) Reinvestment at maturity. The securities shall be automatically 
redeemed at maturity and the principal amount reinvested in new 
securities having the same description in all material respects as the 
ones redeemed, except that the Secretary shall have the authority to 
modify the rate of interest for the re-issued securities. The securities 
shall be automatically redeemed and re-invested unless the agent 
certifies in writing, to the Treasury, Financial Management Service, 
Washington, DC, that it declines automatic reinvestment within seven 
calendar days prior to maturity date.



Sec. 348.3  Reservations.

    The Secretary reserves the right to reject any application for the 
purchase of securities hereunder, in whole or in part, and to refuse to 
issue or permit to be issued any such securities in any case if the 
Secretary deems such action to be in the public interest, and the 
Secretary's action in any such respect shall be final. The Secretary may 
also at any time, supplement or amend the terms of these regulations, or 
of any amendments or supplements thereto.

[[Page 309]]



PART 351_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES EE--Table of 
Contents




Sec.

                      Subpart A_General Information

351.0 What does this part cover?
351.1 What regulations govern Series EE savings bonds?
351.2 How do I contact Public Debt?
351.3 What special terms do I need to know to understand this part?
351.4 In what form are Series EE savings bonds issued?

Subpart B_Maturities, Redemption Values, and Investment Yields of Series 
                            EE Savings Bonds

                           General Provisions

351.5 What is the maturity period of a Series EE savings bond?
351.6 When may I redeem my Series EE savings bond?
351.7 May Series EE savings bonds be called for redemption prior to 
          final maturity?
351.8 When is interest payable on Series EE savings bonds?
351.9 When will I receive the redemption value of my Series EE savings 
          bonds?
351.10 What do I need to know about market yields, or market bid yields, 
          to understand redemption value calculations in this subpart?
351.11 What do I need to know about the short-term savings bond rate, to 
          understand redemption value calculations in this subpart?
351.12 What do I need to know about the long-term savings bond rate, to 
          understand redemption value calculations in this subpart?
351.13 What do I need to know about the savings bond rate to understand 
          redemption value calculations in this subpart?
351.14 When are rate announcements applicable to Series EE savings bonds 
          announced?
351.15 Is the determination of the Secretary on rates and values final?
351.16 What do I need to know about the base denomination for redemption 
          value calculations?
351.17-351.18 [Reserved]

      Series EE Savings Bonds With Issue Dates Prior to May 1, 1995

351.19 What are maturity periods of Series EE savings bonds with issue 
          dates prior to May 1, 1995?
351.20 What is the investment yield (interest) during the original 
          maturity period of Series EE savings bonds with issue dates 
          January 1, 1980, through April 1, 1995?
351.21 How are redemption values determined during any extended maturity 
          period of Series EE savings bonds with issue dates prior to 
          May 1, 1995?
351.22 When does the redemption value increase for bonds issued prior to 
          May 1, 1995?
351.23 Are tables of redemption values available for bonds issued prior 
          to May 1, 1995?

Series EE Savings Bonds With Issue Dates From May 1, 1995, Through April 
                                 1, 1997

351.24 What are the maturity periods of bonds with issue dates from May 
          1, 1995, through April 1, 1997?
351.25 What were the interest rates and redemption values for bonds with 
          issue dates from May 1, 1995, through April 1, 1997, during 
          semiannual rate periods in the first 5 years after issue date?
351.26 What are the interest rates and redemption values for bonds with 
          issue dates from May 1, 1995 through April 1, 1997, during 
          semiannual rate periods that begin 5 years or more after issue 
          date?
351.27 What are the interest rates and redemption values for bonds with 
          issue dates from May 1, 1995 through April 1, 1997, during an 
          extended maturity period?
351.28 How are redemption values calculated for bonds with issue dates 
          from May 1, 1995, through April 1, 1997?

 Series EE Savings Bonds With Issue Dates of May 1, 1997, Through April 
                                 1, 2005

351.29 What are the maturity periods of bonds with issue dates of May 1, 
          1997, through April 1, 2005?
351.30 What are interest rates and monthly accruals for Series EE bonds 
          with issue dates of May 1, 1997, through April 1, 2005, during 
          the original maturity period?
351.31 What is the interest penalty for Series EE bonds with issue dates 
          of May 1, 1997, through April 1, 2005, that are redeemed less 
          than 5 years after the issue date?
351.32 How are redemption values calculated for Series EE bonds with 
          issue dates of May 1, 1997, through April 1, 2005?
351.33 What are interest rates and redemption values for Series EE bonds 
          issued May 1, 1997, through April 1, 2005, during an extended 
          maturity period?

 Series EE Savings Bonds With Issue Dates of May 1, 2005, or Thereafter

351.34 What are the maturity periods of Series EE bonds with issue dates 
          of May 1, 2005, or thereafter?
351.35 What do I need to know about interest rates, penalties, and 
          redemption values for Series EE bonds with issue dates of May 
          1, 2005, or thereafter?

[[Page 310]]

351.36-351.39 [Reserved]

              Subpart C_Definitive Series EE Savings Bonds

351.40 What are the denominations and prices of definitive Series EE 
          savings bonds?
351.41 When are definitive Series EE savings bonds validly issued?
351.42 What is the issue date of a definitive Series EE savings bond?
351.43 Are taxpayer identification numbers (TINs) required for the 
          registration of definitive Series EE savings bonds?
351.44 What amount of definitive Series EE savings bonds may I purchase 
          per year?
351.45 What happens if I purchase definitive Series EE savings bonds in 
          excess of the maximum annual amount?
351.46 May I purchase definitive Series EE savings bonds over-the-
          counter?
351.47 May I purchase definitive Series EE savings bonds through a 
          payroll savings plan?
351.48 May I purchase definitive Series EE savings bonds through 
          employee thrift, savings, vacation, and similar plans?
351.49 How are definitive Series EE savings bonds delivered?
351.50 How is payment made when definitive Series EE savings bonds are 
          redeemed?
351.51 How can I find out what my definitive Series EE savings bonds are 
          worth?
351.52-351.59 [Reserved]

              Subpart D Book_Entry Series EE Savings Bonds

351.60 How are book-entry Series EE savings bonds purchased and held?
351.61 What are the denominations and prices of book-entry Series EE 
          savings bonds?
351.62 How is payment made for purchases of book-entry Series EE savings 
          bonds?
351.63 How are redemption payments made for my redeemed book-entry 
          Series EE savings bonds?
351.64 What is the issue date of a book-entry Series EE savings bond?
351.65 What amount of book-entry Series EE savings bonds may I acquire 
          per year?
351.66 What book-entry Series EE savings bonds are included in the 
          computation?
351.67 What happens if any person purchases book-entry Series EE savings 
          bonds in excess of the maximum annual amount?
351.68 Are taxpayer identification numbers (TINs) required for 
          registration of book-entry Series EE savings bonds?
351.69 When is a book-entry Series EE savings bond validly issued?
351.70 How are redemption values calculated for book-entry Series EE 
          savings bonds?
351.71 How can I find out what my book-entry Series EE savings bonds are 
          worth?
351.72-351.80 [Reserved]

                   Subpart E_Miscellaneous Provisions

351.81 Is the Education Savings Bond Program available for Series EE 
          savings bonds?
351.82 Does Public Debt prohibit the issuance of Series EE savings bonds 
          in a chain letter scheme?
351.83 May Public Debt issue Series EE savings bonds only in book-entry 
          form?
351.84 Does Public Debt make any reservations as to issue of Series EE 
          savings bonds?
351.85 May Public Debt waive any provision in this part?
351.86 What is the role of Federal Reserve Banks and Branches?
351.87 May Public Debt revise, supplement or amend the terms of this 
          offering?

Appendix to Part 351--Tax Considerations

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.

    Source: 68 FR 24796, May 8, 2003, unless otherwise noted.



                      Subpart A_General Information



Sec. 351.0  What does this part cover?

    This part is the offering of United States Savings Bonds of Series 
EE (referred to as Series EE bonds or bonds) for sale to the people of 
the United States by the Secretary of the Treasury (Secretary). Series 
EE bonds have been offered since 1980. The current offer was effective 
May 1, 2005, and will continue until terminated by the Secretary.

[68 FR 24796, May 8, 2003, as amended at 70 FR 17288, Apr. 5, 2005]



Sec. 351.1  What regulations govern Series EE savings bonds?

    (a) The regulations in 31 CFR part 353 apply to definitive (paper) 
Series EE savings bonds that have not been converted to book-entry bonds 
through New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series EE savings bonds that were originally issued 
as book-entry bonds in New Treasury Direct; and
    (2) definitive Series EE savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.
    (c) The regulations in 31 CFR part 370 apply to transactions for the 
purchase

[[Page 311]]

of savings bonds issued through the Bureau of the Public Debt, but do 
not apply to transactions purchased through issuing agents generally.
    (d) We expressly disclaim any representations or warranties 
regarding Series EE savings bonds that in any way conflict with these 
regulations and other applicable law.

[68 FR 24796, May 8, 2003, as amended at 70 FR 14941, Mar. 23, 2005]



Sec. 351.2  How do I contact Public Debt?

    You may contact Public Debt by e-mail at [email protected], or 
by writing to the following address: Bureau of the Public Debt, 
Parkersburg, West Virginia 26106-1328. Our website address is 
www.savingsbonds.gov.



Sec. 351.3  What special terms do I need to know to understand this part?

    Accrual date is the first day of any month on which earnings on a 
Series EE bond accrue. The redemption value of a bond does not change 
between these accrual dates.
    Automated Clearing House (ACH) means a funds transfer system 
governed by the Rules of the National Automated Clearing House 
Association (NACHA). NACHA provides for the interbank clearing of 
electronic entries for participating financial institutions.
    Bank account means your account at a United States depository 
financial institution (whether a bank or other financial institution) to 
which you have directed that ACH debits and payments be made.
    Beneficiary refers to the second individual named in the 
registration of a security held in definitive form registered ``John Doe 
SSN 123-45-6789 POD (payable on death to) Joseph Doe.'' In the New 
Treasury Direct system, beneficiary refers to the second individual 
named in the registration of a security registered ``John Doe SSN 123-
45-6789 POD (payable on death to) Joseph Doe SSN 987-65-4321.'' In these 
examples, Joseph Doe is the beneficiary.
    Book-entry bond means a Series EE savings bond maintained by 
Treasury solely as a computer record.
    Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a book-
entry savings bond to be maintained by Treasury solely as a computer 
record.
    Coowner means either the first or the second individual named in the 
registration of a definitive Series EE savings bond registered ``John 
Doe SSN 123-45-6789 or Joseph Doe.'' In this example, John Doe and 
Joseph Doe are coowners.
    Definitive bond means a Series EE savings bond issued in paper form.
    Extended maturity period, second extended maturity period, and 
extended maturity refer to periods after the original maturity dates of 
the bonds during which owners may retain them and continue to earn 
interest.
    Face amount refers to the nominal amount of a Series EE savings 
bond. The face amount of a definitive Series EE bond is imprinted on the 
front of the bond. The face amount of a book-entry Series EE bond is the 
amount of the original investment. (See principal amount.)
    Fiduciary means the court-appointed or otherwise qualified person, 
regardless of title, who is legally authorized to act for another. 
Fiduciary does not include an attorney-in-fact.
    Final maturity refers to the date that a bond ceases to earn 
interest.
    Individual means a natural person. Individual does not mean an 
organization, representative, or fiduciary.
    Interest, as used in this part, is the difference between the 
principal amount and the redemption value of the bond.
    Issue date is the first day of the month in which an authorized 
issuing agent receives payment of the issue price of the bond.
    Issuing agent means an organization that has been qualified under 31 
CFR part 317, and any other entity that is otherwise authorized to issue 
bonds.
    New Treasury Direct system (New Treasury Direct) is an online 
account system in which you may hold and conduct transactions in 
eligible book-entry Treasury securities.
    Original maturity period or original maturity refers to the initial 
maturity period of a bond prior to any extensions of maturity; this 
period varies from 8 to 20 years, depending on the issue date of the 
bond.

[[Page 312]]

    Owner is either a single owner, the first individual named in the 
registration of a bond held in the owner with beneficiary form of 
registration, or the primary owner of a book-entry bond held in the 
primary owner with secondary owner form of registration.
    Par means the face amount of a Series EE savings bond.
    Paying agent means a financial institution that has been qualified 
under 31 CFR part 321.
    Person means an entity including an individual, trust, estate, 
corporation, government entity, association, partnership, and any other 
similar organization. Person does not mean a Federal Reserve Bank.
    Primary owner means the first individual named in the registration 
of a book-entry bond held in New Treasury Direct registered ``John Doe 
SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this example, John 
Doe is the primary owner.
    Principal amount means the amount of the original investment. 
Principal amount does not include any interest earned.
    Redemption of a book-entry Series EE savings bond refers to payment 
of principal and accrued interest on the bond at final maturity, or, at 
the option of the owner, prior to final maturity. The owner of a book-
entry savings bond held in New Treasury Direct may redeem all principal 
and interest or a portion of the principal and the proportionate amount 
of interest.
    Redemption of a definitive Series EE savings bond refers to the 
payment of principal and accrued interest when the owner presents the 
bond for payment.
    Redemption value means principal plus accrued interest of a Series 
EE savings bond, as of the date of potential or actual redemption. In 
the case of a book-entry Series EE savings bond, it also refers to a 
portion of the principal amount plus a proportionate amount of accrued 
interest of a bond, as of the date of potential or actual redemption.
    Registration of a book-entry Series EE savings bond means that the 
name and taxpayer identification number (TIN) of all registrants are 
maintained on our records for a book-entry bond.
    Registration of a definitive Series EE savings bond means that the 
name and TIN of the owner, first-named coowner, or purchaser of a gift 
bond are imprinted on the face of the bond.
    Secondary owner means the second individual named in the 
registration of a book-entry bond held in New Treasury Direct registered 
``John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this 
example, Joseph Doe is the secondary owner.
    Semiannual rate periods or semiannual earnings periods are the six-
month periods beginning on the issue date and on each semiannual 
anniversary of the issue date to final maturity.
    Series EE savings bond is an accrual-type savings bond, offered at a 
discount, either in definitive (paper) form or in book-entry form, that 
pays interest on the principal based on rates determined by Treasury.
    Single owner means the person named in the registration of a savings 
bond without a coowner, beneficiary or secondary owner.
    Taxpayer identification number (TIN) means the identifying number 
required on tax returns and other documents submitted to the Internal 
Revenue Service; for example, an individual's social security account 
number (SSN) or an employer identification number (EIN). A SSN is 
composed of nine digits separated by two hyphens, for example, 123-45-
6789. An EIN is composed of nine digits separated by one hyphen, for 
example, 12-3456789. The hyphens are an essential part of the numbers.
    We, us, or our refers to the agency, the Bureau of the Public Debt. 
The term extends to the Secretary of the Treasury and the Secretary's 
delegates at the Treasury Department and Bureau of the Public Debt. The 
term also extends to any fiscal or financial agent we designate to act 
on behalf of the United States.
    You or your refers to an owner of a Series EE savings bond.

[68 FR 24796, May 8, 2003, as amended at 70 FR 14941, Mar. 23, 2005]



Sec. 351.4  In what form are Series EE savings bonds issued?

    Series EE savings bonds are issued in either book-entry or 
definitive form.

[[Page 313]]



Subpart B_Maturities, Redemption Values, and Investment Yields of Series 
                            EE Savings Bonds

                           General Provisions



Sec. 351.5  What is the maturity period of a Series EE savings bond?

    Series EE savings bonds have a total maturity period of 30 years 
from the issue date, consisting of an original maturity period and one 
or two periods of extended maturity, which vary depending on the issue 
date of the bond. The interest on an outstanding bond ceases to accrue 
30 years after its issue date.



Sec. 351.6  When may I redeem my Series EE savings bond?

    (a) Bonds with issue dates on or before January 1, 2003. You may 
redeem your Series EE savings bond at any time beginning six months 
after its issue date.
    (b) Bonds with issue dates on or after February 1, 2003. You may 
redeem your Series EE savings bond at any time beginning twelve months 
after its issue date.



Sec. 351.7  May Series EE savings bonds be called for redemption prior 
to final maturity?

    The Secretary of the Treasury may not call Series EE bonds for 
redemption prior to final maturity.



Sec. 351.8  When is interest payable on Series EE savings bonds?

    Interest on a bond accrues and becomes part of the redemption value. 
Interest earnings are payable upon redemption.



Sec. 351.9  When will I receive the redemption value of my Series EE 
savings bonds?

    (a) You will be paid the redemption value of your definitive bond 
when you surrender the bond for payment as provided in these regulations 
and in 31 CFR part 353.
    (b) You will be paid the redemption value of your book-entry bond 
when it reaches final maturity, if you have not redeemed the bond 
previously.



Sec. 351.10  What do I need to know about market yields, or market bid 
yields, to understand redemption value calculations in this subpart?

    We use market yields, or market bid yields, derived from Treasury 
bills, notes, and bonds, to create a yield curve based on the most 
actively traded Treasury securities. This curve relates the yield on a 
security to its time to maturity. Yields at particular points on the 
curve are referred to as ``constant maturity yields'' and are determined 
by the Treasury from this daily yield curve. Six-month and 5-year 
Treasury securities rates are derived from these yield curves.



Sec. 351.11  What do I need to know about the short-term savings bond 
rate, to understand redemption value calculations in this subpart?

    We determine this rate by compiling 6-month Treasury securities 
rates as of the close of business for each day of the previous three 
months and calculating the monthly average for each month, rounding each 
monthly average to the nearest one-hundredth of one percent. We then 
determine the short-term savings bond rate by taking 85 percent of the 
three-month average and rounding the result to the nearest one-hundredth 
of one percent. For bonds entitled to interest accruals at the short-
term savings bond rate, that rate applies to the bond's first full 
semiannual interest accrual period following each announcement of the 
rate.



Sec. 351.12  What do I need to know about the long-term savings bond 
rate, to understand redemption value calculations in this subpart?

    We determine this rate by compiling 5-year Treasury securities rates 
as of the close of business for each day of the previous six months and 
calculating the monthly average for each month, rounding each monthly 
average to the nearest one-hundredth of one percent. We then determine 
the long-term savings bond rate by taking 85 percent of the 6-month 
average and rounding the result to the nearest one-hundredth of one 
percent. For bonds entitled to interest accruals at the long-term 
savings bond rate, that rate applies to the

[[Page 314]]

bond's first full semiannual interest accrual period following each 
announcement of the rate.



Sec. 351.13  What do I need to know about the savings bond rate to 
understand redemption value calculations in this subpart?

    We determine the savings bond rate by compiling 5-year Treasury 
securities yields as of the close of business for each day of the 
previous six months and calculating the monthly average to the nearest 
one-hundredth of one percent. We then determine the savings bonds rate 
by taking 90 percent of the 6-month average and rounding the result to 
the nearest one-hundredth of one percent.



Sec. 351.14  When are rate announcements that apply to Series EE savings 
bonds announced?

    (a) The Secretary will furnish rates that apply to Series EE savings 
bonds in announcements published each May 1 and November 1.
    (b) If the regularly scheduled date for the announcement is a day 
when we are not open for business, then the Secretary will make the 
announcement on the next business day. However, the effective date of 
the rate remains the first day of the month of the announcement.
    (c) The Secretary may announce rates at any other time.



Sec. 351.15  Is the determination of the Secretary on rates and values 
final?

    The Secretary's determination of rates of return and savings bond 
redemption values is final and conclusive.



Sec. 351.16  What do I need to know about the base denomination for 
redemption value calculations?

    We base all calculations of interest on a unit with a principal 
amount of $12.50. We use this unit value to determine the value of bonds 
in higher denominations. The effect of rounding off the value of the 
$12.50 unit increases at higher denominations. This can work to your 
slight advantage or disadvantage, depending on whether the value is 
rounded up or down.

    Example. The following hypothetical example illustrates the 
calculation: A rate of 3.25% will result in a newly purchased $12.50 
unit increasing in value after six months to $12.70, when rounded to the 
nearest cent. Therefore, a $5,000 definitive Series EE bond (with a 
principal amount of $2,500) will be worth $2,540 after six months 
([$2,500 divided by $12.50] x $12.70 = $2,540.) In contrast, if applied 
directly to a $2,500 principal amount, the rate would render a value of 
$2,540.63 after six months, a difference of 63 cents. (This example does 
not account for any interest penalty that might apply if you redeem a 
bond less than five years after its issue date.)



Sec. Sec. 351.17-351.18  [Reserved]

      Series EE Savings Bonds with Issue Dates Prior to May 1, 1995



Sec. 351.19  What are maturity periods of Series EE savings bonds with 
issue dates prior to May 1, 1995?

    Bonds with issue dates from January 1, 1980, through May 1, 1995 
have an original maturity period and two extended maturity periods, as 
shown by the following table:

----------------------------------------------------------------------------------------------------------------
                                                First extended      Second
    Issue dates--1st day of      Original term     term  (in     extended term        Final maturity dates
                                  (in years)        years)        (in years)
----------------------------------------------------------------------------------------------------------------
Jan. 1980-Oct. 1980...........              11              10               9  Jan. 2010-Oct. 2010.
Nov. 1980-Apr. 1981...........               9              10              11  Nov. 2010-Apr. 2011.
May 1981-Oct. 1982............               8              10              12  May 2011-Oct. 2012.
Nov. 1982-Oct. 1986...........              10              10              10  Nov. 2012-Oct. 2016.
Nov. 1986-Feb. 1993...........              12              10               8  Nov. 2016-Feb. 2023.
Mar. 1993-Apr. 1995...........              18              10               2  Mar. 2023-Apr. 2025.
----------------------------------------------------------------------------------------------------------------


[[Page 315]]



Sec. 351.20  What is the investment yield (interest) during the original 
maturity period of Series EE savings bonds with issue dates from January 
1, 1980, through April 1, 1995?

    The redemption value of a bond on a given interest accrual date 
during original maturity will be the higher of the value produced using 
the applicable guaranteed minimum investment yield or the value produced 
using the appropriate market-based variable investment yield.
    (a) Guaranteed minimum investment yield--(1) Bonds bearing issue 
dates prior to November 1, 1982. You may obtain the guaranteed minimum 
investment yields on bonds bearing issue dates prior to November 1, 
1982, by downloading from our website at www.savingsbonds.gov, 
contacting us by email at [email protected], or by writing us at 
the following address: Bureau of the Public Debt, Parkersburg, West 
Virginia 26106-1328.
    (2) Bonds bearing issue dates of November 1, 1982, through April 1, 
1995. (i) Prior to 5 years from issue date. You may download the 
guaranteed minimum investment yields prior to 5 years from issue date at 
our website at www.savingsbonds.gov, by contacting us by email at 
[email protected], or writing to the following address: Bureau of 
the Public Debt, Parkersburg, West Virginia 26106-1328.
    (ii) On or after 5 years from issue date. The guaranteed minimum 
investment yield of a bond from its issue date to each semiannual 
interest accrual date occurring on or after 5 years from issue up to 
original maturity will be as follows, compounded semiannually:

------------------------------------------------------------------------
                    Issue dates of bonds                        Percent
------------------------------------------------------------------------
Nov. 1, 1982-October 1, 1986................................         7.5
Nov. 1, 1986-Feb. 1, 1993...................................         6
Mar. 1, 1993-Apr. 1, 1995...................................         4
------------------------------------------------------------------------

    (b) Market-based variable investment yield. If a bond is held for a 
period of 5 years after its first semiannual interest accrual period, 
occurring on or after November 1, 1982, or its issue date, whichever is 
later, its market-based variable investment yield for such period, and 
to each successive semiannual interest accrual date up to its original 
maturity, will be determined as follows:
    (1) For each 6-month period, starting with the period beginning on 
May 1, 1982, we will determine the average market yield on outstanding 
marketable Treasury securities with a remaining term to maturity of 
approximately 5 years during such period.
    (2) For bonds bearing an issue date prior to May 1, 1989, the 
market-based variable investment yield from its first semiannual 
interest accrual date occurring on or after November 1, 1982, or its 
issue date, whichever is later, to its first semiannual interest accrual 
date 5 years thereafter will be 85 percent, rounded to the nearest one-
fourth of 1 percent, of the arithmetic average of the market yield 
averages for the ten 6-month periods starting with the 6-month period 
that most recently ended before such issue date, whichever is later.
    (3) For bonds bearing issue dates of May 1, 1989, through April 1, 
1995, the market-based variable investment yield from the issue date to 
the semiannual interest accrual date 5 years thereafter will be 85 
percent, rounded to the nearest one-hundredth of 1 percent, of the 
arithmetic average of the market yield averages for the ten 6-month 
periods starting with the 6-month period that most recently ended before 
such issue date.
    (4) In determining the market-based variable investment yield for a 
bond from its first semiannual interest accrual date occurring on or 
after November 1, 1982, or its issue date, whichever is later, to each 
successive semiannual interest accrual date occurring after 5 years from 
issue up to original maturity, the average market yield for each 
additional 6-month period will be included in the computation.



Sec. 351.21  How are redemption values determined during any extended 
maturity period of Series EE savings bonds with issue dates prior to 
May 1, 1995?

    The redemption value of a bond on a given interest accrual date 
during an extended maturity period or periods will be the higher of the 
values produced using either the applicable guaranteed minimum 
investment yield or the appropriate market-based variable investment 
yield. The calculation of

[[Page 316]]

these yields and the resulting redemption values are described below:
    (a) Guaranteed minimum investment yield and resulting values during 
an extended maturity period. A bond may be subject to one guaranteed 
minimum investment yield during its original maturity period and to 
another such yield during each of its extended maturity periods.
    (1) Bonds entering an extended maturity period from May 1, 1989, 
through February 1, 1993. Bonds that entered an extended maturity period 
from May 1, 1989, through February 1, 1993, had a guaranteed minimum 
investment yield of 6 percent per annum, compounded semiannually, during 
that extended maturity period.
    (2) Bonds entering an extended maturity period on or after March 1, 
1993. Bonds that entered or enter an extended maturity period on or 
after March 1, 1993, have a guaranteed minimum investment yield of 4 
percent per annum, compounded semiannually, during that extended 
maturity period, or the guaranteed minimum investment yield in effect at 
the beginning of that period.
    (3) Determination of values for a bond during extended maturity 
periods. In order to determine values for a bond during its first 
extended maturity period, we determine the value of the bond at the end 
of its original maturity period using the guaranteed minimum investment 
yield applicable to that period. This value is then used as the base 
upon which interest accrues during the first extended maturity period at 
the applicable guaranteed minimum investment yield for that period. We 
use the value thus attained at first extended maturity as the base upon 
which interest accrues during the second extended maturity period at the 
applicable guaranteed minimum investment yield for that period. We then 
compare the resulting semiannual values with the corresponding values 
determined using only the applicable market-based variable investment 
yields.
    (b) Market-based variable investment yield and resulting values 
during an extended maturity period. For a bond beginning an extended 
maturity period, the market-based variable investment yield from its 
first semiannual interest accrual date occurring on or after November 1, 
1982, or its issue date, whichever is later, to each semiannual interest 
accrual date occurring on or after November 1, 1989, will be 85 percent, 
rounded to the nearest one-hundredth of one percent, of the arithmetic 
average of the market yield averages for the appropriate number of 6-
month periods involved, beginning with the period from May 1, 1982, or 
the 6-month period that most recently ended before the issue date, 
whichever period occurs later. We use the value of a bond on its first 
semiannual interest accrual date occurring on or after November 1, 1982, 
or its issue date, whichever is later, as the base upon which interest 
accrues during the extended maturity period at the applicable market-
based variable investment yield. As described above, the bond will 
receive the higher of the two values: One value produced using the 
applicable market-based variable investment yield; and, the other value 
produced using the guaranteed minimum investment yield.



Sec. 351.22  When does the redemption value increase for bonds issued 
prior to May 1, 1995?

    (a) Bonds with issue dates from January 1, 1980, through October 1, 
1980. For bonds with issue dates from January 1, 1980, through October 
1, 1980, the redemption value increases on the first day of each month 
from the third through the thirtieth month after issue, and thereafter 
on the first day of each successive 6-month period.
    (b) Bonds with issue dates from November 1, 1980, through October 1, 
1986. For bonds with issue dates from November 1, 1980, through October 
1, 1986, the redemption value increases on the first day of each month 
from the third through the eighteenth month after issue, and thereafter 
on the first day of each successive 6-month period.
    (c) Bonds with issue dates from November 1, 1986, through February 
1, 1993. For bonds with issue dates from November 1, 1986, through 
February 1, 1993, the redemption values increase on the first day of 
each month from the third through the thirtieth month after issue, and 
thereafter on the first day of each successive 6-month period.

[[Page 317]]

    (d) Bonds with issue dates of March 1, 1993, through April 1, 1995. 
For bonds with issue dates of March 1, 1993, through April 1, 1995, the 
redemption values increase on the first day of each month from the third 
through the sixtieth month after issue, and thereafter either on the 
first day of each month or on the first day of each successive 6-month 
period, whichever accrual schedule ensures that the actual yield from 
issue date to redemption date is in no case less than 4 percent per 
annum, compounded semiannually.



Sec. 351.23  Are tables of redemption values available for bonds issued 
prior to May 1, 1995?

    You may obtain the appropriate yields and tables by downloading from 
our website at www.savingsbonds.gov, contacting us by email at 
[email protected], or by writing us at the following address: 
Bureau of the Public Debt, Parkersburg, West Virginia 26106-1328.

Series EE Savings Bonds With Issue Dates From May 1, 1995, Through April 
                                 1, 1997



Sec. 351.24  What are the maturity periods of bonds with issue dates 
from May 1, 1995, through April 1, 1997?

    (a) Original maturity. Bonds reach original maturity at 17 years 
after issue date.
    (b) Final maturity. Series EE savings bonds have an extended 
maturity period of 13 years, and reach final maturity at 30 years after 
the issue date. Bonds cease to earn interest at final maturity.



Sec. 351.25  What were the interest rates and redemption values for 
bonds with issue dates from May 1, 1995, through April 1, 1997, during 
semiannual rate periods in the first 5 years after issue date?

    (a) Interest rates. The interest rate for a Series EE bond bearing 
an issue date of May 1, 1995, through April 1, 1997, for semiannual 
earning periods during the first 5 years from issue date, was the short-
term savings bond rate (see Sec. 351.11 for a description of the short-
term savings bond rate.)
    (b) Redemption values. Redemption values for semiannual accrual 
dates occurring on or before 5 years from issue date are calculated in 
accordance with Sec. 351.28.



Sec. 351.26  What are the interest rates and redemption values for bonds 
with issue dates from May 1, 1995 through April 1, 1997, during semiannual 
rate periods that begin 5 years or more after issue date?

    (a) Interest rates. The interest rate for a Series EE bond bearing 
an issue date of May 1, 1995, through April 1, 1997, for semiannual 
earning periods beginning 5 years from issue date through original 
maturity, is the long-term savings bond rate as defined in Sec. 351.12.
    (b) Redemption values. We calculate redemption values for semiannual 
accrual dates occurring after 5 years from issue date, through original 
maturity, in accordance with Sec. 351.28, except that the redemption 
value at the date of original maturity shall not be less than the 
denomination (face amount or face value).



Sec. 351.27  What are the interest rates and redemption values for bonds 
with issue dates from May 1, 1995, through April 1, 1997, during an 
extended maturity period?

    During an extended maturity period the bond will be subject to the 
terms and conditions in effect when it is issued, and will continue to 
earn interest as described in paragraph Sec. 351.26, unless the terms 
and conditions applicable to an extended maturity period are expressly 
amended prior to the beginning of such period.



Sec. 351.28  How are redemption values calculated for bonds with issue 
dates from May 1, 1995, through April 1, 1997?

    We determine the redemption value of a bond on the accrual date 
immediately following each semiannual earning period as follows:
    (a) We convert the applicable long-term or short-term savings bond 
rate for the semiannual earning period to decimal form by dividing by 
100, and adjust it to a semiannual rate by dividing by 2.
    (b) Using redemption values for the base denomination, as defined in 
Sec. 351.16, we then multiply this rate by the redemption value of the 
bond at

[[Page 318]]

the beginning of the semiannual earning period.
    (c) We add the resulting interest amount, rounded to the nearest 
cent, to the redemption value of the bond at the beginning of the 
earning period to produce the redemption value at the next semiannual 
accrual date. The redemption value of a bond remains constant between 
accrual dates.

 Series EE Savings Bonds With Issue Dates of May 1, 1997, Through April 
                                 1, 2005



Sec. 351.29  What are the maturity periods of bonds with issue dates of 
May 1, 1997, through April 1, 2005?

    (a) Original maturity--(1) Bonds with issue dates from May 1, 1997, 
to May 1, 2003. Bonds reach original maturity at 17 years after issue 
date.
    (2) Bonds with issue dates of June 1, 2003, through April 1, 2005. 
Bonds reach original maturity at 20 years after issue date.
    (b) Final maturity. Bonds reach final maturity at 30 years after the 
issue date. Bonds cease to earn interest at final maturity.

[68 FR 24796, May 8, 2003, as amended at 70 FR 17288, Apr. 5, 2005]



Sec. 351.30  What are interest rates and monthly accruals for Series EE 
bonds with issue dates of May 1, 1997, through April 1, 2005, during the 
original maturity period?

    Savings bond rates (defined in Sec. 351.13) apply to earnings 
during the first semiannual rate period beginning on or after the 
effective date of the rate. Interest is credited on the first day of 
each month and compounded semiannually. Interest accrues beginning with 
the fourth month from the issue date. For example, a bond issued in 
January has interest first credited on May 1, which represents one month 
of interest because of the 3-month interest penalty. The following table 
shows, for any given month of issue with rates announced each May and 
November, the months making up the semiannual rate period during which 
interest is earned at the announced rate (disregarding the penalty for 
bonds redeemed prior to 5 years after the issue date) and the months in 
which the bonds increase in value. This rate is an annual rate 
compounded semiannually.

----------------------------------------------------------------------------------------------------------------
                                                             Then, semiannual
                                    And rate announcement/    rate periods in
        If issue month is--          effective date is--     which interest is    And bonds increase in value on
                                                              earned include          1st day of months of--
                                                                months of--
----------------------------------------------------------------------------------------------------------------
Jan. or Jul.......................  May 1................  Jul. through Dec....  Aug. through Jan.
Feb. or Aug.......................  May 1................  Aug. through Jan....  Sep. through Feb.
Mar. or Sep.......................  May 1................  Sep. through Feb....  Oct. through Mar.
Apr. or Oct.......................  May 1................  Oct. through Mar....  Nov. through Apr.
May or Nov........................  May 1................  May through Oct.....  Jun. through Nov.
Jun. or Dec.......................  May 1................  Jun. through Nov....  Jul. through Dec.
Jan. or Jul.......................  Nov. 1...............  Jan. through Jun....  Feb. through Jul.
Feb. or Aug.......................  Nov. 1...............  Feb. through Jul....  Mar. through Aug.
Mar. or Sep.......................  Nov. 1...............  Mar. through Aug....  Apr. through Sep.
Apr. or Oct.......................  Nov. 1...............  Apr. through Sep....  May through Oct.
May or Nov........................  Nov. 1...............  Nov. through Apr....  Dec. through May.
Jun. or Dec.......................  Nov. 1...............  Dec. through May....  Jan. through Jun.
----------------------------------------------------------------------------------------------------------------



Sec. 351.31  What is the interest penalty for Series EE bonds with issue 
dates of May 1, 1997, through April 1, 2005, that are redeemed less than 
5 years after the issue date?

    If you redeem a Series EE savings bond with an issue date of May 1, 
1997, through April 1, 2005, less than five years following the issue 
date, we reduce the overall earning period from the issue date by three 
months. For example, if you redeem a bond issued January 1, 1998, 9 
months later on October 1, 1998, we will determine the redemption value 
by applying the redemption value calculation formula described in Sec. 
351.32 and the savings bonds rate for that bond at 6 months after the 
issue date on July 1, 1998. The redemption value of a bond subject to 
the 3-

[[Page 319]]

month interest penalty shall not be reduced below the issue price. This 
penalty does not apply to bonds redeemed 5 years or more after the issue 
date.

[68 FR 24796, May 8, 2003, as amended at 70 FR 17288, Apr. 5, 2005]



Sec. 351.32  How are redemption values calculated for Series EE bonds 
with issue dates of May 1, 1997, through April 1, 2005?

    (a) Formula for redemption value. We determine the redemption value 
of a bond for the accrual date (the first day of each month beginning 
with the fourth month from the issue date) in accordance with this 
section and the following formula:

FV = PV x {[1+(i / 2)] (m/6){time} 

where

FV (future value) = redemption value on redemption date rounded to the 
nearest cent.
PV (present value) = redemption value at the beginning of the semiannual 
rate period
i = savings bonds rate converted to decimal form by dividing by 100.
m = number of full calendar months outstanding during the semiannual 
rate period. \1\
---------------------------------------------------------------------------

    \1\ The following hypothetical example illustrates how this formula 
is applied:
    Example, assume a hypothetical savings bonds rate of 5.00% effective 
May 1, 2002, for a bond denominated at $25, with an issue date of 
September 1, 1997 and a redemption value of $16.00 as of September 1, 
2002. The February 1, 2003, redemption value is calculated as follows: 
Bonds issue dated in September have semiannual rate periods beginning 
each March 1 and September 1. The first semiannual rate period to begin 
on or after the effective date of the May 1, 2002, rate would be the 
period beginning September 1, 2002. PV, the present value, would be the 
value of the bond at the beginning of the semiannual rate period, on 
September 1, 2002. The savings bonds rate of 5.00% converted to a 
decimal would be 0.05. The number of months, m, is 5 since 5 full 
calendar months (September through January) have lapsed since the 
beginning of the rate period. FV is then the result of the formula:

    FV = $16.00 x {[1 + (0.05 / 2)] (5/6){time}  = $16.33 
after rounding to the nearest cent.

    Using the example, the FV of a savings bond with a $50 or larger 
denomination can be determined by applying the appropriate multiple, for 
example: $16.33 x ($50.00/$25.00) for a bond with a $50.00 face amount; 
or $16.33 x ($100.00/$25.00) for a bond with a $100.00 face amount.
---------------------------------------------------------------------------

    (b) Value of bonds at original maturity--(1) Definitive bond. At 
original maturity, the redemption value of a definitive bond shall not 
be less than the face amount/denomination of the bond.
    (2) Book-entry bond. At original maturity, the redemption value of a 
book-entry bond shall not be less than double the purchase price of the 
bond.



Sec. 351.33  What are interest rates and redemption values for Series 
EE bonds issued May 1, 1997, through April 1, 2005, during an extended 
maturity period?

    During an extended maturity period the bond will be subject to the 
terms and conditions in effect when it is issued and will continue to 
earn interest as described in Sec. 351.30, unless the terms and 
conditions applicable to an extended maturity period are expressly 
amended prior to the beginning of such period.

 Series EE Savings Bonds With Issue Dates of May 1, 2005, or Thereafter



Sec. 351.34  What are the maturity periods of Series EE bonds with issue 
dates of May 1, 2005, or thereafter?

    (a) Original maturity. Bonds reach original maturity at 20 years 
after the issue date.
    (b) Final maturity. Bonds reach final maturity at 30 years after the 
issue date. Bonds cease to earn interest at final maturity.

[70 FR 17288, Apr. 9, 2005]



Sec. 351.35  What do I need to know about interest rates, penalties, and 
redemption values for Series EE bonds with issue dates of May 1, 2005, or 
thereafter?

    (a) Fixed rate or fixed rate of interest. Fixed rate or fixed rate 
of interest means the rate of interest for a Series EE savings bond with 
an issue date of May 1, 2005, or thereafter, established by the 
Secretary or the Secretary's designee.
    (b) Determination of fixed rate of interest. (1) The Secretary or 
the Secretary's designee determines the fixed rate of interest, which is 
established for the life of the bond, including the extended maturity 
period, unless, prior to the beginning of such maturity period, the 
Secretary either announces a

[[Page 320]]

different fixed rate applicable to the extended maturity period, or we 
expressly amend the terms and conditions applicable to the extended 
maturity period.
    (2) The Secretary's determination of rates of interest and savings 
bond redemption values is final and conclusive.
    (c) Announcement of fixed rate. (1) The Secretary or the Secretary's 
designee will furnish a fixed rate of interest in announcements 
published each May 1 and November 1. The effective date of the rates 
will be the first day of the month of the announcement.
    (2) If the regularly scheduled date for the announcement is a day 
when the Treasury is not open for business, then the Secretary will make 
the announcement on the next business day; however, the effective date 
of the rates remains the first day of the month of the announcement.
    (3) The Secretary may announce rates at any other time.
    (4) The most recently announced fixed rate applies only to bonds 
purchased during the six months following the announcement, or for any 
other period of time announced by the Secretary.
    (d) Monthly accruals. Interest accrues on the first day of each 
month; that is, we add the interest earned on a bond during any given 
month to its value at the beginning of the following month. The accrued 
interest compounds semiannually.
    (e) Interest penalty for Series EE bonds redeemed less than 5 years 
after issue date. If you redeem a bond with an issue date of May 1, 
2005, or thereafter, less than five years following the issue date, we 
reduce the overall earning period from the issue date by three months. 
However, the redemption value of a bond subject to the 3-month interest 
penalty shall not be reduced below the issue price. This penalty does 
not apply to bonds redeemed 5 years or more after the issue date.
    (f) Redemption value of Series EE bonds at original maturity--(1) 
Definitive bond. At original maturity, the redemption value of a 
definitive bond shall not be less than the face amount/denomination of 
the bond.
    (2) Book-entry bond. At original maturity, the redemption value of a 
book-entry bond shall not be less than double the purchase price of the 
bond.

[70 FR 17289, Apr. 9, 2005]



Sec. Sec. 351.36-351.39  [Reserved]



              Subpart C_Definitive Series EE Savings Bonds



Sec. 351.40  What are the denominations and prices of definitive Series 
EE savings bonds?

    We issue definitive bonds in denominations of $50, $75, $100, $200, 
$500, $1,000, $5,000, and $10,000. The purchase price is one-half the 
amount of the denomination.



Sec. 351.41  When are definitive Series EE savings bonds validly issued?

    A definitive bond is validly issued when it is registered as 
provided in 31 CFR part 353, and when it bears an issue date and the 
validation indicia of an authorized issuing agent.



Sec. 351.42  What is the issue date of a definitive Series EE savings 
bond?

    The issue date of a definitive bond is the first day of the month in 
which an authorized issuing agent receives payment of the issue price.



Sec. 351.43  Are taxpayer identification numbers (TINs) required for 
the registration of definitive Series EE savings bonds?

    The inscription of a definitive bond must include the TIN of the 
owner or first-named coowner. The TIN of the second-named coowner or 
beneficiary is not required but its inclusion is desirable. If the bond 
is being purchased as a gift or award and the owner's TIN is not known, 
the TIN of the purchaser must be included in the inscription on the 
bond.



Sec. 351.44  What amount of definitive Series EE savings bonds may I 
purchase per year?

    The principal amount of definitive bonds that you may purchase in 
any calendar year is limited to $30,000. See 31 CFR 353.10 and 353.11 of 
this Chapter for rules governing the computation of

[[Page 321]]

amounts and the special limitation for employee plans.



Sec. 351.45  What happens if I purchase definitive Series EE savings 
bonds in excess of the maximum annual amount?

    If you have bonds issued during any one calendar year in excess of 
the prescribed maximum annual amount, we reserve the right to take any 
action we deem necessary to adjust the excess. You should obtain 
instructions for adjustment of the excess from us at the following 
address: email at [email protected], or writing to Bureau of the 
Public Debt, Parkersburg, WV 26106-1328.



Sec. 351.46  May I purchase definitive Series EE savings bonds 
over-the-counter?

    You may purchase definitive bonds over-the-counter through any 
issuing agent qualified under 31 CFR part 317.\2\ To purchase over-the-
counter, you must submit a purchase application, along with payment in 
the amount of the issue price to an issuing agent. You may use any means 
of payment acceptable to the issuing agent. You may authorize purchases 
on a recurring basis in your application. The issuing agent bears the 
burden of collection and the risk of loss for non-collection or return 
of the payment.
---------------------------------------------------------------------------

    \2\ However, an organization serving as an issuing agent because of 
its status as an employer or an organization operating an employer's 
payroll savings plan under Sec. 317.2(c) may sell bonds only through 
payroll savings plans.
---------------------------------------------------------------------------



Sec. 351.47  May I purchase definitive Series EE savings bonds through 
a payroll savings plan?

    You may purchase definitive bonds in denominations of $100 or higher 
through deductions from your pay if your employer maintains a payroll 
savings plan. An authorized issuing agent must issue the bonds.



Sec. 351.48  May I purchase definitive Series EE savings bonds through 
employee thrift, savings, vacation, and similar plans?

    You may purchase bonds registered in the names of trustees of 
employee plans in book-entry form in multiples of $100 through a 
designated Federal Reserve Bank, after we have approved the plan as 
eligible for the special limitation under Sec. 353.13 of this chapter.



Sec. 351.49  How are definitive Series EE savings bonds delivered?

    We deliver definitive bonds by mail to your address. If your address 
is within the United States, its territories or possessions, or the 
Commonwealth of Puerto Rico, we will deliver bonds at our risk. Bonds 
delivered elsewhere will be delivered at your risk; however, at our 
discretion, we may require delivery to an address within the United 
States, or refuse delivery to addresses in countries referred to in part 
211 of this chapter.



Sec. 351.50  How is payment made when definitive Series EE savings bonds 
are redeemed?

    (a) Payment in general. A financial institution qualified as a 
paying agent under the provisions of 31 CFR part 321 will pay the 
current redemption value of a definitive Series EE bond presented for 
payment. The bond must meet the requirements for payment specified in 31 
CFR part 353. You must establish your identity and entitlement to 
redemption to the satisfaction of the agent, in accordance with our 
instructions and identification guidelines, and must sign and complete 
the request for payment.
    (b) Payment to beneficiary or legal representative. A paying agent 
may, but is not required to, pay the current redemption value of a 
definitive Series EE savings bond upon the request of a beneficiary if 
he or she survives the owner, or a legal representative designated in 
the bond registration by name and capacity, or a court-appointed legal 
representative of the last-deceased registrant's estate provided:
    (1) The bond is in order for payment; and
    (2) The presenter establishes his or her identity to the 
satisfaction of the agent in accordance with our instructions and 
identification guidelines, and signs and completes the request for 
payment.

[[Page 322]]



Sec. 351.51  How can I find out what my definitive Series EE savings 
bonds are worth?

    (a) Redemption values. We make redemption values available for 
definitive bonds in various formats and media.
    (1) You may determine the redemption value for definitive bonds on 
the Internet at .
    (2) You may download savings bond calculators from the Internet at 
.
    (3) You may obtain paper tables from the Bureau of the Public Debt, 
Parkersburg, West Virginia 26106-1328. We reserve the right to cease 
making paper tables of redemption values available.
    (b) Redemption penalty. For bonds issued after May 1, 1997, 
redemption values published in the tables reflect the three-month 
interest penalty applied to bonds redeemed prior to five years from the 
issue date.



Sec. Sec. 351.52-351.59  [Reserved]



              Subpart D_Book-Entry Series EE Savings Bonds



Sec. 351.60  How are book-entry Series EE savings bonds purchased and 
held?

    Book-entry bonds must be purchased and held online through your New 
Treasury Direct account. We provide instructions for opening an account 
online at .



Sec. 351.61  What are the denominations and prices of book-entry Series 
EE savings bonds?

    Book-entry bonds are issued in a minimum amount of $25, with 
additional increments of one cent.



Sec. 351.62  How is payment made for purchases of book-entry Series EE 
savings bonds?

    You may only purchase book-entry Series EE savings bonds online 
through your New Treasury Direct account. You may pay for your 
securities through a debit to your designated account at a United States 
depository financial institution, or by applying the redemption proceeds 
of a certificate of indebtedness held in your New Treasury Direct 
account.

[69 FR 50308, Aug. 16, 2004]



Sec. 351.63  How are redemption payments made for my redeemed book-entry 
Series EE savings bonds?

    We will make payments electronically by direct deposit, using the 
ACH method, to your designated account at a United States depository 
financial institution. You may also direct that a payment be used to 
purchase a certificate of indebtedness to be held in your New Treasury 
Direct account.

[69 FR 50308, Aug. 16, 2004]



Sec. 351.64  What is the issue date of a book-entry Series EE savings 
bond?

    The issue date of a book-entry Series EE savings bond is the first 
day of the month in which the security posts to the current holdings of 
the account owner.

[69 FR 50308, Aug. 16, 2004]



Sec. 351.65  What amount of book-entry Series EE savings bonds may I 
acquire per year?

    The principal amount of book-entry bonds that you may acquire in any 
calendar year is limited to $30,000.



Sec. 351.66  What book-entry Series EE savings bonds are included in 
the computation?

    (a) We include all bonds that you purchased in that calendar year.
    (b) Bonds purchased as gifts or in a fiduciary capacity are not 
included in the computation for the purchaser.
    (c) Bonds transferred or delivered from one New Treasury Direct 
account to another New Treasury Direct account are included in the 
computation for the recipient, unless the recipient has become entitled 
to the transferred bonds due to the death of the registered owner.



Sec. 351.67  What happens if any person purchases book-entry Series EE 
savings bonds in excess of the maximum annual amount?

    We reserve the right to take any action we deem necessary to adjust 
the excess, including the right to remove

[[Page 323]]

the excess bonds from your New Treasury Direct account and refund the 
payment price to your bank account of record using the ACH method of 
payment.



Sec. 351.68  Are taxpayer identification numbers (TINs) required for 
registration of book-entry Series EE savings bonds?

    The TIN of each person named in the registration is required to 
purchase a book-entry bond.



Sec. 351.69  When is a book-entry Series EE savings bond validly issued?

    A book-entry bond is validly issued when it is posted to your New 
Treasury Direct account.



Sec. 351.70  How are redemption values calculated for book-entry Series 
EE savings bonds?

    We base current redemption values (CRV) for book-entry Series EE 
savings bonds on the definitive savings bond CRV. We use the CRV for a 
$100 principal amount as calculated in Sec. 351.16 to calculate a CRV 
prorated to the book-entry principal investment amount for the 
corresponding issue and redemption dates. Calculated book-entry CRV will 
be rounded to the nearest one cent.\3\ The formula is as follows:
---------------------------------------------------------------------------

    \3\ Example: Calculated value of $25.044 rounds to $25.04; 
calculated value of $25.045 rounds to $25.05.

[Book-entry principal investment / $100] x [CRV value for $100 principal 
    amount].



Sec. 351.71  How can I find out what my book-entry Series EE savings 
bonds are worth?

    (a) Redemption values. You may access redemption values for your 
book-entry bonds through your New Treasury Direct account.
    (b) Redemption penalty. Redemption values shown in your New Treasury 
Direct account for bonds that are within 5 years from issue date reflect 
the three-month interest penalty applied to bonds redeemed prior to five 
years from the issue date.



Sec. Sec. 351.72-351.80  [Reserved]



                   Subpart E_Miscellaneous Provisions



Sec. 351.81  Is the Education Savings Bond Program available for Series 
EE savings bonds?

    You may be able to exclude from income for Federal income tax 
purposes all or part of the interest received on the redemption of 
qualified bonds during the year. To qualify for the program, you or the 
coowner (in the case of definitive savings bonds) must have paid 
qualified higher education expenses during the same year. You also must 
have satisfied certain other conditions. This exclusion is known as the 
Education Savings Bond Program. Information about the program can be 
found in Internal Revenue Service Publications. (For example, see 
Publication 17, ``Your Federal Income Tax,'' Publication 550, 
``Investment Income and Expenses,'' and Publication 970, ``Tax Benefits 
for Higher Education.'') These publications are available on the IRS Web 
site at http://www.irs.gov.



Sec. 351.82  Does Public Debt prohibit the issuance of Series EE savings 
bonds in a chain letter scheme?

    We do not permit bonds to be issued in a chain letter or pyramid 
scheme. We authorize an issuing agent to refuse to issue a bond or 
accept a purchase order if there is reason to believe that a purchase is 
connected with a chain letter. The agent's decision is final.



Sec. 351.83  May Public Debt issue Series EE savings bonds only in 
book-entry form?

    We reserve the right to issue bonds only in book-entry form.



Sec. 351.84  Does Public Debt make any reservations as to issue of 
Series EE savings bonds?

    We may reject any application for Series EE bonds, in whole or in 
part. We may refuse to issue, or permit to be issued, any bonds in any 
case or class of cases, if we deem the action to be in the public 
interest. Our action in any such respect is final.

[[Page 324]]



Sec. 351.85  May Public Debt waive any provision in this part?

    We may waive or modify any provision of this part in any particular 
case or class of cases for the convenience of the United States or in 
order to relieve any person or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity;
    (b) If it does not impair any material existing rights; and
    (c) If we are satisfied that such action would not subject the 
United States to any substantial expense or liability.



Sec. 351.86  What is the role of Federal Reserve Banks and Branches?

    (a) Federal Reserve Banks and Branches are fiscal agents of the 
United States. They are authorized to perform such services as we may 
request of them, in connection with the issue, servicing and redemption 
of Series EE bonds.
    (b) We have currently designated the following Federal Reserve 
Offices to provide savings bond services:

------------------------------------------------------------------------
                                 Reserve district     Geographic area
        Servicing site                served               served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo   New York, Boston.  Connecticut, Maine,
 Branch, 160 Delaware Avenue,                       Massachusetts, New
 Buffalo, NY 14202.                                 Hampshire, New
                                                    Jersey (northern
                                                    half), New York,
                                                    Rhode Island,
                                                    Vermont, Puerto
                                                    Rico, Virgin
                                                    Islands.
Federal Reserve Bank,           Cleveland,         Delaware, Kentucky
 Pittsburgh Branch, 717 Grant    Philadelphia.      (eastern half), New
 Street, Pittsburgh, PA 15219.                      Jersey, (southern
                                                    half), Ohio,
                                                    Pennsylvania, West
                                                    Virginia (northern
                                                    panhandle only).
Federal Reserve Bank of         Richmond, Atlanta  Alabama, District of
 Richmond, 701 East Byrd                            Columbia, Florida,
 Street, Richmond, VA 23219.                        Georgia, Louisiana
                                                    (southern half),
                                                    Maryland,
                                                    Mississippi
                                                    (southern half),
                                                    North Carolina,
                                                    South Carolina,
                                                    Tennessee (eastern
                                                    half), Virginia,
                                                    West Virginia
                                                    (except northern
                                                    panhandle).
Federal Reserve Bank of         Minneapolis,       Illinois (northern
 Minneapolis, 90 Hennepin        Chicago..          half), Indiana
 Avenue, Minneapolis, MN 55401.                     (northern half),
                                                    Iowa, Michigan,
                                                    Minnesota, Montana,
                                                    North Dakota, South
                                                    Dakota, Wisconsin.
Federal Reserve Bank of Kansas  Dallas, San        Alaska, Arizona,
 City, 925 Grand Boulevard,      Francisco,         Arkansas,
 Kansas City, MO 64106.          Kansas City, St.   California,
                                 Louis.             Colorado, Hawaii,
                                                    Idaho, Illinois
                                                    (southern half),
                                                    Indiana (southern
                                                    half), Indiana
                                                    (southern half),
                                                    Kansas, Kentucky
                                                    (western half),
                                                    Louisiana (northern
                                                    half), Mississippi
                                                    (northern half),
                                                    Missouri, Nebraska,
                                                    Nevada, New Mexico,
                                                    Oklahoma, Oregon,
                                                    Tennessee (western
                                                    half), Texas, Utah,
                                                    Washington, Wyoming,
                                                    Guam.
------------------------------------------------------------------------



Sec. 351.87  May Public Debt revise, supplement or amend the terms of 
this offering?

    We may revise, supplement or amend the terms of this offering at any 
time.

                Appendix to Part 351--Tax Considerations

    1. What are some general tax considerations?
    General. Interest on savings bonds is subject to taxes imposed under 
the Internal Revenue Code of 1986, as amended. The bonds are exempt from 
taxation by any State or political subdivision of a State, except for 
estate or inheritance taxes. (See 31 U.S.C. 3124.)
    2. What reporting methods are available for savings bonds?
    (a) Reporting methods. You may use either of the following two 
methods for reporting the increase in the redemption value of the bond 
for Federal income tax purposes:
    (1) Cash basis method. You may defer reporting the increase to the 
year of final maturity, redemption, or other disposition, whichever is 
earliest; or
    (2) Accrual basis method. You may elect to report the increase each 
year, in which case the election applies to all Series EE bonds that you 
then own, those subsequently acquired, and to any other obligations 
purchased on a discount basis.
    (b) Changing methods. If you use the cash basis method, you may 
change to the accrual basis method without obtaining permission from the 
Internal Revenue Service. However, once you elect to use the accrual 
basis method in paragraph (a)(2), you may change the method of reporting 
the increase only by following the specific procedures prescribed by the 
Internal Revenue Service for making a method change. For further 
information, you may contact the Internal Revenue Service director for 
your area, or the Internal Revenue Service, Washington, DC 20224.

[[Page 325]]

    3. What transactions have potential tax consequences?
    The following types of transactions, among others, may have 
potential tax consequences:
    (a) A reissue that affects the rights of any of the persons named on 
a definitive Series EE savings bond may have tax consequences for the 
owner.
    (b) The transfer of a book-entry Series EE savings bond from one 
owner to another may have tax consequences for the transferor.
    (c) The redemption of a book-entry Series EE savings bond by the 
secondary owner may have tax consequences for the primary owner.
    (d) The purchase of a Series EE savings bond as a gift may have gift 
tax consequences.



PART 352_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES HH--Table of 
Contents




Sec.
352.0 Offering of bonds.
352.1 Governing regulations.
352.2 Description of bonds.
352.3 Registration and issue.
352.4 Limitation on purchases.
352.5 Authorized issuing and paying agents.
352.6 [Reserved]
352.7 Issues on exchange.
352.8 Reinvestment of matured Series H bonds.
352.9 Delivery of bonds.
352.10 Taxation.
352.11 Reservation as to issue of bonds.
352.12 Waiver.
352.13 Fiscal agents.
352.14 Reservation as to terms of offer.

    Authority: 31 U.S.C. 3105, 5 U.S.C. 301.

    Source: 54 FR 40249, Sept. 29, 1989, unless otherwise noted.



Sec. 352.0  Offering of bonds.

    The Secretary of the Treasury offered to the people of the United 
States, United States Savings Bonds of Series HH in exchange for 
eligible United States Savings Bonds of Series E and EE and United 
States Savings Notes (Freedom Shares). This offering is being withdrawn 
and will terminate at the close of business on August 31, 2004.

[69 FR 40318



Sec. 352.1  Governing regulations.

    Series HH bonds are subject to the regulations of the Department of 
the Treasury, now or hereafter prescribed, governing United States 
Savings Bonds of Series EE and HH contained in Department of the 
Treasury Circular, Public Debt Series No. 3-80, as amended (31 CFR part 
353), hereinafter referred to as Circular No. 3-80.



Sec. 352.2  Description of bonds.

    (a) General. Series HH bonds were issued only in registered form and 
are nontransferable. The bonds are distinguishable by the portraits, 
color, border design, tax-deferral legend, and text material.
    (b) Denominations and prices. Series HH bonds were issued at face 
amount and are in denominations of $500, $1,000, $5,000 and $10,000.
    (c) Term. Each bond bears an issue date which is the date from which 
interest is earned. The date was established as provided in Sec. 
352.7(f). Series HH bonds have an original maturity period of 10 years 
and have been granted an extended maturity period of 10 years; they will 
reach final maturity 20 years from their issue dates.
    (d) Redemption. A Series HH bond may be redeemed after six months 
from its issue date. The Secretary of the Treasury may not call Series 
HH bonds for redemption prior to maturity. In any case where Series HH 
bonds are surrendered to an authorized paying agent for redemption in 
the month prior to an interest payment date, redemption will not be 
deferred but will be made in regular course, unless the presenter 
specifically requests that the transaction be delayed until that date. A 
request to defer redemption made more than one month preceding the 
interest payment date will not be accepted.
    (e) Investment yield (interest). (1) During original maturity. 
Interest payments on Series HH bonds will produce the investment yields 
specified below during their original maturity period:
    (i) Bonds with issue dates of January 1, 2003, and thereafter. The 
investment yield applicable to Series HH bonds issued on or after 
January 1, 2003, will be furnished in rate announcements by the 
Secretary or the Secretary's designee. The rate announced will apply to 
bonds issued during the period covered by the announcement.
    (ii) Bonds with issue dates of March 1, 1993, through December 1, 
2002. Series

[[Page 326]]

HH bonds with issue dates of March 1, 1993, through December 1, 2002, 
yield 4 percent per annum, paid semiannually, to original maturity.
    (iii) Bonds with issue dates of November 1, 1986, through February 
1, 1993. Series HH bonds with issue dates of November 1, 1986, through 
February 1, 1993, yield 6 percent per annum, paid semiannually, to 
original maturity.
    (iv) Bonds with issue dates of November 1, 1986, through September 
1, 1989. Series HH bonds with issue dates of November 1, 1986, through 
September 1, 1989, will yield 6 percent per annum, paid semiannually, to 
original maturity.
    (v) Bonds with issue dates of November 1, 1982, through October 1, 
1986. Series HH bonds with issue dates of November 1, 1982, through 
October 1, 1986, will yield 7.5 percent per annum, paid semiannually, to 
original maturity.
    (vi) Bonds with issue dates of May 1, 1981, through October 1, 1982. 
Series HH bonds with issue dates of May 1, 1981, through October 1, 
1982, will yield 8.5 percent per annum, paid semiannually, to original 
maturity.
    (vii) Bonds with issue dates of November 1, 1980, through April 1, 
1981. Series HH bonds with issue dates of November 1, 1980, through 
April 1, 1981, were originally offered to yield 7.5 percent per annum, 
paid semiannually. The yield to original maturity was increased by 1 
percent, effective with the first full semiannual interest accrual 
period beginning on or after May 1, 1981.
    (viii) Bonds with issue dates of January 1, 1980, through October 1, 
1980. Series HH bonds with issue dates of January 1, 1980, through 
October 1, 1980, were originally offered to yield 6.5 percent per annum, 
paid semiannually. The yield to original maturity was increased by 1 
percent, effective with the first full semiannual interest accrual 
period beginning on or after November 1, 1980, and an additional 1 
percent, effective with the first full semiannual interest accrual 
period beginning on or after May 1, 1981.
    (2) During extended maturity. The investment yields for Series HH 
bonds during their extended maturity periods are as specified in 
paragraphs (e)(2)(i), (ii), and (iii) of this section.
    (i) Bonds that enter an extended maturity period on or after January 
1, 2003. The investment yield applicable to Series HH bonds that enter 
an extended maturity period on or after January 1, 2003, will be 
furnished in rate announcements by the Secretary or the Secretary's 
designee. The rate announced will apply to bonds that enter an extended 
maturity period during the period covered by the announcement.
    (ii) Bonds that entered an extended maturity period from March 1, 
1993, through December 1, 2002. The investment yield applicable to 
Series HH bonds that entered an extended maturity period from March 1, 
1993, through December 1, 2002, is 4 percent per annum, paid 
semiannually.
    (iii) Bonds that entered an extended maturity period from January 1, 
1990, through February 1, 1993. The investment yield applicable to 
Series HH bonds that entered into an extended maturity period from 
January 1, 1990, through February 1, 1993, is 6 percent per annum, paid 
semiannually.
    (f) Payment of interest. The interest on a Series HH bond is paid 
semiannually beginning six months from the issue date. Interest ceases 
at final maturity or, if the bond is redeemed before final maturity, as 
of the end of the interest period preceding the date of redemption. If 
the redemption date falls on an interest payment date, interest ceases 
on that date.
    (1) Bonds issued on or after October 1, 1989. Interest on Series HH 
bonds issued on or after October 1, 1989, will be paid by the automated 
clearing house (ACH) method to the registered owner or coowner's account 
at a financial institution, unless the Bureau of the Public Debt 
determines that extraordinary circumstances warrant payment by check or 
other means.
    (2) Bonds issued prior to October 1, 1989. Interest on Series HH 
bonds issued prior to October 1, 1989, will be paid as follows:
    (i) By check drawn to the order of the registered owner or both 
coowners; or
    (ii) Upon request, by the ACH method to the owner or coowner's 
account at a financial institution.
    (g) Rules governing payment of interest by the ACH method. 
Provisions contained in Sec. 353.31 of Department of the Treasury 
Circular, Public Debt Series No. 3-80, as amended (31 CFR part 353),

[[Page 327]]

apply to the submission of deposit account information for Series HH 
interest payments made on and after October 1, 1989, for which ACH 
payment:
    (1) Is required under paragraph (f)(1) of this section;
    (2) Is requested by an owner or coowner on or after October 1, 1989, 
pursuant to paragraph (f)(2) of this section; or
    (3) Was requested by an owner or coowner prior to October 1, 1989.
    Interest payments made by the ACH method on and after October 1, 
1989, will be processed in accordance with 31 CFR part 370.

(Approved by the Office of Management and Budget under control number 
1535-0094)

    (h) Tables of interest payments and redemption values. Tables 
showing the interest payments and redemption values of bonds issued 
under previous revisions of this Circular will be available from the 
Bureau of the Public Debt and designated Federal Reserve Banks.

[54 FR 40249, Sept. 29, 1989, as amended at 58 FR 60947, Nov. 18, 1993; 
59 FR 10540, Mar. 4, 1994; 67 FR 79384, Dec. 24, 2002; 69 FR 40318, July 
2, 2004]



Sec. 352.3  Registration and issue.

    (a) Registration. Series HH bonds may be registered as set forth in 
subpart B of 31 CFR part 353, also published as Department of the 
Treasury Circular, Public Debt Series No. 3-80.
    (b) Validity of issue. A bond is validly issued when it is 
registered as provided 31 CFR part 353, also published as Department of 
the Treasury Circular, Public Debt Series No. 3-80, and bears an issue 
date and appropriate validation indicia.
    (c) Taxpayer identifying number. The inscription of a bond must 
include the taxpayer identifying number of the owner or first-named 
coowner. The taxpayer identifying number of the second-named coowner or 
beneficiary is not required but its inclusion is desirable.

[54 FR 40249, Sept. 29, 1989, as amended at 57 FR 14286, Apr. 17, 1992]



Sec. 352.4  Limitation on purchases.

    Series HH bonds issued under the terms of this Circular were not 
subject to a purchase limitation.

[54 FR 40249, Sept. 29, 1989, as amended at 69 FR 40318, July 2, 2004]



Sec. 352.5  Authorized issuing and paying agents.

    Series HH bonds were issued and may be redeemed only by Federal 
Reserve Banks (see Sec. 352.13) and the Bureau of the Public Debt.

[69 FR 40318, July 2, 2004]



Sec. 352.6  [Reserved]



Sec. 352.7  Issues on exchange.

    (a) Securities eligible for exchange. Prior to the close of business 
on August 31, 2004, owners were permitted to exchange United States 
Savings Bonds of Series E and EE and United States Savings Notes 
(Freedom Shares) at their current redemption values for Series HH bonds. 
Series E bonds and savings notes remained eligible for exchange for a 
period of one year from the month in which they reached final maturity. 
Series EE bonds issued on January 1, 2003, or earlier, became eligible 
for exchange six months after their issue dates. Series EE bonds issued 
on February 1, 2003, or thereafter, became eligible for exchange 12 
months after their issue dates.
    (b) Basis for issue. Series HH bonds were issued on exchange by an 
authorized issuing agent upon receipt of a properly executed exchange 
application with eligible securities, and additional cash, if any, and 
any supporting evidence that was required under the regulations. If 
eligible securities were submitted directly to a Federal Reserve Bank 
referred to in Sec. 351.13, each was required to bear a properly signed 
and certified request for payment. Checks in payment of additional cash 
needed to complete a transaction (see paragraph (d) of this section) 
were required to be drawn to the order of the Federal Reserve Bank.
    (c) Role of financial institutions. Department of the Treasury 
Circular No. 750, current revision (31 CFR part 321), authorizes 
financial institutions qualified as paying agents for savings bonds

[[Page 328]]

and notes to redeem eligible securities presented for exchange and to 
forward an exchange application and full payment to a Federal Reserve 
Bank referred to in Sec. 351.13 for the issue of Series HH bonds. The 
securities redeemed on exchange by such an institution were required to 
be securities that it is authorized to redeem for cash.
    (d) Computation of issue price. The total current redemption value 
of the eligible securities submitted for exchange in any one transaction 
was required to be $500 or more. If the current redemption value was an 
even multiple of $500, Series HH bonds were required to be issued in 
that exact amount. If the current redemption value exceeded, but was not 
an even multiple of $500, the owner had the option either:
    (1) To add the cash necessary to bring the amount of the application 
to the next higher multiple of $500, or
    (2) To receive a payment to reduce the amount of the application to 
the next lower multiple of $500.
    (e) Registration. A Series HH bond issued on exchange was permitted 
to be registered in any form authorized in subpart B of Circular No. 3-
80, subject to the following restrictions:
    (1) If the securities submitted for exchange were in single 
ownership form, the owner was required to be named as owner or first-
named coowner on the Series HH bonds. A coowner or beneficiary was 
permitted to be named.
    (2) If the securities submitted for exchange were in coownership 
form, and one coowner was the ``principal coowner'', that person was 
required to be named as owner or first-named coowner on the Series HH 
bonds. A coowner or beneficiary was also permitted to be named. The 
``principal coowner'' was the coowner who purchased the securities 
presented for exchange with his or her own funds, or received them as a 
gift, inheritance or legacy, or as a result of judicial proceedings, and 
had them reissued in coownership form, provided he or she had received 
no contribution in money or money's worth for designating the other 
coowner on the securities.
    (3) If the securities presented for exchange were in coownership 
form, and both coowners shared in their purchase or received them 
jointly as a gift, inheritance, or legacy or as a result of judicial 
proceedings, both persons were required to be named as coowners on the 
Series HH bonds.
    (4) If the securities presented for exchange were in beneficiary 
form, the owner was required to be named on the Series HH bonds as owner 
or first-named coowner. If the owner was deceased, a surviving 
beneficiary was required to be named as owner or first-named coowner. In 
either case, a coowner or beneficiary was permitted to be named.
    (f) Issue date. Series HH bonds issued on exchange were dated as of 
the first day of the month in which the eligible securities presented 
for exchange were redeemed by an authorized paying agent, as evidenced 
in the payment stamp on the securities and the exchange application.
    (g) Tax-deferred exchanges. (1) Continuation of tax deferral. 
Pursuant to the provisions of the Internal Revenue Code of 1954, as 
amended, an owner who had not been reporting the interest on his or her 
Series E or EE bonds and savings notes on an accrual basis for Federal 
income tax purposes, and who exchanged those securities for Series HH 
bonds, was permitted to continue to defer reporting the interest on the 
securities exchanged until the taxable year in which the Series HH bonds 
received in the exchange reach final maturity, are redeemed, or are 
otherwise disposed of, whichever is earlier. A reissue transaction that 
affects any of the persons required to be named on the Series HH bonds, 
as set forth in paragraph (e) of this section, may result in termination 
of the tax deferral privilege.
    (2) Tax deferral legend. Each bond issued in a tax-deferred exchange 
bore a legend showing how much of its issue price represented interest 
on the securities exchanged. This interest must be treated as income for 
Federal income tax purposes and reported in accordance with paragraph 
(g)(1) of this section.
    (3) Reporting of interest paid to owner. To the extent that it 
represented interest earned on the securities presented for exchange, an 
amount paid to an owner in accordance with paragraph (d)

[[Page 329]]

of this section was reportable as income for Federal income tax purposes 
for the year in which it was paid. Pursuant to 26 CFR 1.6049.4, a paying 
agent was required to report interest income of $10 or more included in 
any amount paid in an exchange transaction to the payee and to the 
Internal Revenue Service on Form 1099-INT or an approved substitute. A 
separate report was permitted to be made for each exchange transaction 
in which interest in the amount of $10 or more was paid, or all interest 
paid in both cash redemption and exchange transactions was permitted to 
be aggregated and reported annually should the total amount be $10 or 
more.
    (h) Exchanges without tax deferral. The rules prescribed for 
exchanges under paragraphs (a) through (f) of this section also applied 
to exchanges by owners who report the interest earned on their bonds of 
Series E and EE and savings notes annually for Federal income tax 
purposes, or elect to report all such interest that was not previously 
reported for the taxable year of the exchange. Series HH bonds issued in 
a nontax-deferred exchange were required to show a ``0'' in the tax-
deferral legend.

[69 FR 40318, July 2, 2004]



Sec. 352.8  Reinvestment of matured Series H bonds.

    (a) General. Prior to the close of business on August 31, 2004, the 
proceeds of matured Series H and HH bonds, whether purchased for cash or 
issued in exchange for other securities, were permitted to be reinvested 
in Series HH bonds. Tax deferral granted to interest earned on 
securities exchanged for Series H bonds was not permitted to be 
continued when the Series H bonds reached final maturity and their 
proceeds were reinvested in Series HH bonds. The amount appearing in the 
legend on a matured Series H bond on which tax deferral was granted must 
be reported for Federal income tax purposes for the year of such final 
maturity.
    (b) Rules. The reinvestment transaction were subject to the rules 
governing exchanges, as set forth in Sec. 352.7 of this Circular, and 
the Series HH bonds issued on reinvestment were identical in all 
respects with those issued in a non-tax-deferred exchange.

[54 FR 40249, Sept. 29, 1989, as amended at 69 FR 40319, July 2, 2004]



Sec. 352.9  Delivery of bonds.

    Authorized issuing agents delivered Series HH bonds by mail at the 
risk and expense of the United States to the address given by the 
applicant, if it is within the United States, one of its territories or 
possessions, or the Commonwealth of Puerto Rico. No mail deliveries 
elsewhere were made. Bonds acquired by a citizen of the United States 
residing abroad were delivered only to such address in the United States 
as the applicant directs.

[54 FR 40249, Sept. 29, 1989, as amended at 69 FR 40319, July 2, 2004]



Sec. 352.10  Taxation.

    The interest paid on Series HH bonds is subject to all taxes imposed 
under the Internal Revenue Code of 1954, as amended. The bonds are 
subject to estate, inheritance, gift, or other excise taxes, whether 
Federal or State, but are exempt from all taxation now or hereafter 
imposed on the principal or interest by any State or any local taxing 
authority.



Sec. 352.11  Reservation as to issue of bonds.

    The Commissioner of the Public Debt, as delegate of the Secretary of 
the Treasury, reserved the right to reject any application for Series HH 
bonds, in whole or in part, and to refuse to issue or permit to be 
issued any bonds in any case or class of cases, if the action was deemed 
to be in the public interest. The Commissioner's action in such respect 
was final.

[54 FR 40249, Sept. 29, 1989, as amended at 69 FR 40319, July 2, 2004]



Sec. 352.12  Waiver.

    The Commissioner of the Public Debt, as delegate of the Secretary of 
the Treasury, may waive or modify any provision of this Circular in any 
particular case or class of cases for the convenience of the United 
States or in order to relieve any person or persons of unnecessary 
hardship if:

[[Page 330]]

    (a) Such action would not be inconsistent with law or equity;
    (b) It does not impair any existing rights; and
    (c) The Commissioner is satisfied that such action would not subject 
the United States to any substantial expense or liability.



Sec. 352.13  Fiscal agents.

    (a) Federal Reserve Banks and Branches, referred to below, as fiscal 
agents of the United States, are authorized to perform such services as 
may be requested of them by the Secretary of the Treasury, or his or her 
delegate, in connection with the issue, servicing, and redemption of 
Series HH bonds.
    (b)(1) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, MS
                                                         (northern
                                                         half), NE, NM,
                                                         NV, OK, OR, TN
                                                         (western half),
                                                         TX, WA, WY, UT
                                                         and GU.
------------------------------------------------------------------------

    (2) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.

[59 FR 10541, Mar. 4, 1994]



Sec. 352.14  Reservation as to terms of offer.

    The Secretary of the Treasury may at any time or from time to time 
supplement or amend the terms of this offering of bonds.



PART 353_REGULATIONS GOVERNING UNITED STATES SAVINGS BONDS, SERIES EE 
AND HH--Table of Contents




                      Subpart A_General Information

Sec.
353.0 Applicability.
353.1 Official agencies.
353.2 Definitions.
353.3 Converting definitive savings bonds to book-entry bonds in New 
          Treasury Direct.

                         Subpart B_Registration

353.5 General rules.
353.6 Restrictions on registration.
353.7 Authorized forms of registration.
353.8 Chain letters prohibited.

                Subpart C_Limitations on Annual Purchases

353.10 Amounts which may be purchased.
353.11 Computation of amount.
353.12 Disposition of excess.
353.13 Employee plans--Conditions of eligibility.

               Subpart D_Limitations on Transfer or Pledge

353.15 Transfer.
353.16 Pledge.

                     Subpart E_Judicial Proceedings

353.20 General.
353.21 Payment to judgment creditors.
353.22 Payment or reissue pursuant to judgment.
353.23 Evidence.

[[Page 331]]

353.24 Payment pursuant to judicial or administrative forfeiture.

 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds

353.25 General.
353.26 Application for relief--After receipt of bond.
353.27 Application for relief--Nonreceipt of bond.
353.28 Recovery or receipt of bond before or after relief is granted.
353.29 Adjudication of claims.

                           Subpart G_Interest

353.30 Series EE bonds.
353.31 Series HH bonds.

                Subpart H_General Provisions for Payment

353.35 Payment (redemption).
353.36 Payment during life of sole owner.
353.37 Payment during lives of both coowners.
353.38 Payment during lifetime of owner of beneficiary bond.
353.39 Surrender for payment.
353.40 Special provisions for payment.
353.41 Partial redemption.
353.42 Nonreceipt or loss of check issued in payment.
353.43 Effective date of request for payment.
353.44 Withdrawal of request for payment.

              Subpart I_Reissue and Denominational Exchange

353.45 General.
353.46 Effective date of request for reissue.
353.47 Authorized reissue--during lifetime.
353.48 Restrictions on reissue.
353.49 Correction of errors.
353.50 Change of name.
353.51 Requests for reissue.

                      Subpart J_Certifying Officers

353.55 Individuals authorized to certify.
353.56 General instructions and liability.
353.57 When a certifying officer may not certify.
353.58 Forms to be certified.

     Subpart K_Minors, Incompetents, Aged Persons, Absentees, et al.

353.60 Payment to representative of an estate.
353.61 Payment after death.
353.62 Payment to minors.
353.63 Payment to a parent or other person on behalf of a minor.
353.64 Payment, reinvestment, or exchange--voluntary guardian of an 
          incapacitated person.
353.65 Reissue.

            Subpart L_Deceased Owner, Coowner or Beneficiary

353.70 General rules governing entitlement.
353.71 Decedent's estate
353.72 [Reserved]

                          Subpart M_Fiduciaries

353.75 Payment or reissue during the existence of the fiduciary estate.
353.76 Payment or reissue after termination of the fiduciary estate.
353.77 Exchanges by fiduciaries.

      Subpart N_Private Organizations (Corporations, Associations, 
 Partnerships, et cetera) and Governmental Agencies, Units and Officers

353.80 Payment to corporations or unincorporated associations.
353.81 Payment to partnerships.
353.82 Reissue or payment to successors of corporations, unincorporated 
          associations, or partnerships.
353.83 Reissue or payment on dissolution of corporation or partnership.
353.84 Payment to certain institutions.
353.85 Reissue in name of trustee or agent for reinvestment purposes.
353.86 Reissue upon termination of investment agency.
353.87 Payment to governmental agencies, units, or their officers.

                   Subpart O_Miscellaneous Provisions

353.90 Waiver of regulations.
353.91 Additional requirements; bond of indemnity.
353.92 Supplements, amendments, or revisions.

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105, 3125.

    Source: 44 FR 76441, Dec. 26, 1979, unless otherwise noted.



                      Subpart A_General Information



Sec. 353.0  Applicability.

    (a) The regulations in this part govern definitive (paper) Series EE 
savings bonds that have not been converted to book-entry bonds through 
New Treasury Direct and definitive Series HH savings bonds. These bonds 
bear issue dates of January 1, 1980, or thereafter.
    (b) The regulations in 31 CFR part 315 govern all other definitive 
United States Savings Bonds and Savings Notes.

[[Page 332]]

    (c) The regulations in 31 CFR part 363 govern Series EE savings 
bonds that were originally issued as book-entry bonds in New Treasury 
Direct and Series EE savings bonds that were converted to book-entry 
bonds through New Treasury Direct.

[68 FR 24805, May 8, 2003, as amended at 70 FR 14941, Mar. 23, 2005]



Sec. 353.1  Official agencies.

    (a) The Bureau of the Public Debt of the Department of the Treasury 
is responsible for administering the Savings Bonds Program. Authority to 
process transactions has been delegated to Federal Reserve Banks and 
Branches in the list in paragraph (b) of this section, as fiscal agents 
of the United States.
    (b) Communications concerning transactions and requests for forms 
should be addressed to:
    (1) A Federal Reserve Bank or Branch in the list below; the Bureau 
of the Public Debt, 200 Third Street, Parkersburg, WV 26101; or the 
Bureau of the Public Debt, Washington, DC 20226.
    (2)(i) The following Federal Reserve Offices have been designated to 
provide savings bond services:

------------------------------------------------------------------------
                                     Reserve districts   Geographic area
          Servicing office                 served            served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo        New York, Boston.  CT, MA, ME, NH,
 Branch, P.O. Box 961, Buffalo, NY                       NJ (northern
 14240.                                                  half), NY (City
                                                         & State), RI,
                                                         VT, Puerto Rico
                                                         and Virgin
                                                         Islands.
Federal Reserve Bank, Pittsburgh     Cleveland,         DE, KY (eastern
 Branch, P.O. Box 867, Pittsburgh,    Philadelphia.      half), NJ
 PA 15230.                                               (southern
                                                         half), OH, PA,
                                                         WV (northern
                                                         panhandle).
Federal Reserve Bank of Richmond,    Richmond, Atlanta  AL, DC, FL, LA
 P.O. Box 27622, Richmond, VA 23261.                     (southern
                                                         half), MD, MS
                                                         (southern
                                                         half), NC, SC,
                                                         TN (eastern
                                                         half), VA, WV
                                                         (except
                                                         northern
                                                         panhandle).
Federal Reserve Bank of              Minneapolis,       IA, IL (northern
 Minneapolis, 250 Marquette Avenue,   Chicago.           half), IN
 Minneapolis, MN 55480.                                  (northern
                                                         half), MN, MT,
                                                         ND, SD, WI.
Federal Reserve Bank of Kansas       Dallas, San        AK, AR, AZ, CA,
 City, 925 Grand Avenue, Kansas       Francisco,         CO, HI, ID, IL
 City, MO 64198.                      Kansas City, St.   (southern
                                      Louis.             half), IN
                                                         (southern
                                                         half), KS, KY
                                                         (western half),
                                                         LA (northern
                                                         half), MO, NE,
                                                         NM, NV, OK, OR,
                                                         TN (western
                                                         half), TX, WA,
                                                         WY, UT and GU.
------------------------------------------------------------------------

    (ii) Until March 1, 1996, other Federal Reserve Offices may continue 
to provide some savings bond services, but such services will be phased 
out over the period prior to that date.
    (c) Notices and documents must be filed with the agencies referred 
to above and as indicated in these regulations.

[44 FR 76441, Dec. 26, 1979, as amended at 59 FR 10541, Mar. 4, 1994]



Sec. 353.2  Definitions.

    (a) Bond, or Series EE or HH savings bond, as used in this part, 
means a definitive United States Savings Bond of Series EE or HH.
    (b) Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a book-
entry savings bond to be maintained by Treasury solely as a computer 
record.
    (c) Incompetent means an individual who is incapable of handling his 
or her business affairs because of a legal, mental or medical 
disability, except that a minor is not an incompetent solely because of 
age.
    (d) Issuing agent means an organization that has been qualified 
under the provisions of Department of the Treasury Circular, Public Debt 
Series No. 4-67, current revision (31 CFR part 317), to issue savings 
bonds.
    (e) Paying agent means a financial institution that has been 
qualified under the provisions of Department of the Treasury Circular 
No. 750, current revision (31 CFR part 321), to make payment of savings 
bonds.
    (f) Payment means redemption, unless otherwise indicated by context.
    (g) Person means any legal entity including, but without limitation, 
an individual, corporation (public or private), partnership, 
unincorporated association, or fiduciary estate.
    (h) Personal trust estates means trust estates established by 
natural persons in their own right for the benefit of themselves or 
other natural persons in whole or in part, and common trust

[[Page 333]]

funds comprised in whole or in part of such trust estates.
    (i) Reissue means the cancellation and retirement of a bond and the 
issuance of a new bond or bonds of the same series, same issue date, and 
same total face amount.
    (j) Representative of the estate of a minor, incompetent, aged 
person, absentee, et al. means the court-appointed or otherwise 
qualified person, regardless of title, who is legally authorized to act 
for the individual. The term does not include parents in their own 
right, voluntary or natural guardians, or the executors or 
administrators of decedents' estates.
    (k) Surrender means the actual receipt of a bond with an appropriate 
request for payment or reissue by either a Federal Reserve Bank or 
Branch, the Bureau of the Public Debt, or, if a paying agent is 
authorized to handle the transaction, the actual receipt of the bond and 
the request for payment by the paying agent.
    (l) Taxpayer identifying number means a social security account 
number or an employer identification number.
    (m) Voluntary guardian means an individual who is recognized as 
authorized to act for an incompetent, as provided by Sec. 353.64.
    (n) Voluntary representative means the person qualified by the 
Department of the Treasury to request payment or distribution of a 
decedent's savings bonds pursuant to Sec. 353.71.

[44 FR 76441, Dec. 26, 1979, as amended at 68 FR 24805, May 8, 2003; 70 
FR 14941, Mar. 23, 2005; 70 FR 57430, Sept. 30, 2005]



Sec. 353.3  Converting definitive savings bonds to book-entry bonds in 
New Treasury Direct.

    Series EE savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is http://www.treasurydirect.gov. Bond owners who 
wish to convert their definitive savings bonds should follow online 
instructions for conversion. Regulations governing converted bonds are 
found at 31 CFR part 363.

[70 FR 14941, Mar. 23, 2005]



                         Subpart B_Registration



Sec. 353.5  General rules.

    (a) Registration is conclusive of ownership. Savings bonds are 
issued only in registered form. The registration must express the actual 
ownership of, and interest in, the bond. The registration is conclusive 
of ownership, except as provided in Sec. 353.49.
    (b) Requests for registration. Registrations requested must be 
clear, accurate and complete, conform substantially with one of the 
forms set forth in this subpart, and include the taxpayer identifying 
number of the owner or first-named coowner. The taxpayer identifying 
number of the second-named coowner or beneficiary is not required but 
its inclusion is desirable. The registration of all bonds owned by the 
same person, organization, or fiduciary should be uniform with respect 
to the name of the owner and any description of the fiduciary capacity. 
An individual should be designated by the name he or she is ordinarily 
known by or uses in business, including at least one full given name. 
The name may be preceded or followed by any applicable title, such as 
Miss, Mr., Mrs., Ms., Dr., Rev., M.D., or D.D.. A suffix, such as Sr. or 
Jr., must be included when ordinarily used or when necessary to 
distinguish the owner from another member of his family. A married 
woman's own given name, not that of her husband, must be used; for 
example, Mary A. Jones or Mrs. Mary A. Jones, NOT Mrs. Frank B. Jones. 
The address must include, where appropriate, the number and street, 
route, or any other local feature, city, State, and ZIP Code.
    (c) Inscription of bonds purchased as gifts. If the bonds are 
purchased as gifts, awards, prizes, etc., and the taxpayer identifying 
number of the intended owners is not known, the purchaser's number must 
be furnished. Bonds so inscribed will not be associated with the 
purchaser's own holdings. A bond registered in the name of a purchaser 
with another person as coowner or beneficiary is not considered a gift 
or an award. If the purchaser so requests, a bond may be inscribed to 
provide a ``Mail to'' instruction, followed by a delivery name and 
address.

[[Page 334]]

No rights of ownership are conferred on such designee.

[44 FR 76441, Dec. 26, 1979, as amended at 55 FR 575, Jan. 5, 1990]



Sec. 353.6  Restrictions on registration.

    (a) Natural persons. Only an individual in his or her own right may 
be designated as coowner or beneficiary along with any other individual, 
whether on original issue or reissue, except as provided in Sec. 
353.7(f).
    (b) Residence. The designation of an owner or first-named coowner is 
restricted, on original issue only, to persons (whether individuals or 
others) who are:
    (1) Residents of the United States, its territories or possessions, 
or the Commonwealth of Puerto Rico;
    (2) Citizens of the United States residing abroad;
    (3) Civilian employees of the United States or members of its armed 
forces, regardless of their residence or citizenship; and
    (4) Residents of Canada or Mexico who work in the United States but 
only if the bonds are purchased on a payroll savings plan and the owner 
provides a taxpayer identifying number.

A nonresident alien may be designated coowner or beneficiary or, on 
authorized reissue, owner, unless the nonresident alien is a resident of 
an area with respect to which the Department of the Treasury restricts 
or regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities. See Department of the 
Treasury Circular No. 655, current revision (31 CFR part 211). 
Registration is not permitted in any form which includes the name of any 
alien who is a resident of any restricted area.
    (c) Minors. (1) Minors may purchase with their wages, earnings, or 
other funds belonging to them and under their control bonds registered 
in their names alone or with a coowner or beneficiary.
    (2) Bonds purchased by another person with funds belonging to a 
minor not under legal guardianship or similar fiduciary estate must be 
registered, without a coowner or beneficiary, in the name of the minor 
or a natural guardian on behalf of a minor.
    (3) Bonds purchased with funds of another may be registered to name 
the minor as owner, coowner, or beneficiary. If the minor is under legal 
guardianship or similar fiduciary estate, the registration must include 
an appropriate reference to it.
    (4) Bonds purchased as a gift to a minor under a gift-to-minors 
statute must be registered as prescribed by the statute and no coowner 
or beneficiary may be named.
    (5) Bonds purchased by a representative of a minor's estate must be 
registered in the name of the minor and must include in the registration 
an appropriate reference to the guardianship or similar fiduciary 
estate. Bonds purchased by a representative of the estates of two or 
more minors, even though appointed in a single proceeding, must be 
registered in the name of each minor separately with appropriate 
reference to the guardianship or similar fiduciary estate.
    (d) Incompetents. Bonds may be registered to name as owner, coowner, 
or beneficiary an incompetent for whose estate a guardian or similar 
representative has been appointed, except that a coowner or beneficiary 
may not be named on bonds purchased with funds belonging to the 
incompetent. The registration must include appropriate reference to the 
guardianship or similar fiduciary estate. Bonds should not be registered 
in the name of an incompetent unless there is a representative for his 
or her estate, except as provided in Sec. 353.64.

[44 FR 76441, Dec. 26, 1979, as amended at 63 FR 64551, Nov. 20, 1998]



Sec. 353.7  Authorized forms of registration.

    Subject to any limitations or restrictions contained in these 
regulations on the right of any person to be named as owner, coowner, or 
beneficiary, bonds should be registered as indicated below. A savings 
bond inscribed in the form not substantially in agreement with one of 
the forms authorized by this subpart is not considered validly issued.
    (a) Natural persons. A bond may be registered in the names of 
individuals in their own right, but only in one of

[[Page 335]]

the forms authorized by this paragraph.
    (1) Single ownership form. A bond may be registered in the name of 
one individual. Example:

John A. Jones 123-45-6789.

    (2) Coownership form. A bond may be registered in the names of two 
individuals in the alternative as coowners. The form of registration ``A 
and B'' is not authorized. Examples:

John A. Jones 123-45-6789 or Ella S. Jones 987-65-4321.
John A. Jones 123-45-6789 or (Miss, Ms. or Mrs.) Ella S. Jones.
Ella S. Jones 987-65-4321 or John A. Jones.

    (3) Beneficiary form. A bond may be registered in the name of one 
individual payable on death to another. ``Payable on death to'' may be 
abbreviated to ``P.O.D.'' Examples:

John A. Jones 123-45-6789 payable on death to Mrs. Ella S. Jones.
John A. Jones 123-45-6789 P.O.D. Ella S. Jones 987-65-4321.

    (b) Fiduciaries (including legal guardians and similar 
representatives, certain custodians, natural guardians, executors, 
administrators, and trustees)--(1) General. A bond may be registered in 
the name of any person or persons or any organization acting as 
fiduciary of a single fiduciary estate, but not where the fiduciary will 
hold the bond merely or principally as security for the performance of a 
duty, obligation, or service. Registration should conform to a form 
authorized by this paragraph. A coowner or beneficiary may be named only 
in accordance with the applicable provisions of Sec. 353.6 (c) and (d). 
A common trust fund established and maintained by a financial 
institution authorized to act as a fiduciary will be considered a single 
fiduciary estate within the meaning of these regulations.
    (2) Legal guardians, conservators, similar representatives, certain 
custodians. A bond may be registered in the name and title or capacity 
of the legally appointed or authorized representative of the estate of a 
minor, incompetent, aged or infirm person, absentee, et al., or in the 
name of that individual followed by an appropriate reference to the 
estate. Examples:

Tenth National Bank, guardian (or conservator, trustee, etc.) of the 
estate of George N. Brown 123-45-6789, a minor (or an incompetent, aged 
person, infirm person, or absentee).
Henry C. Smith, conservator of the estate of John R. White 123-45-6789, 
an adult, pursuant to Sec. 633.572 of the Iowa Code.
John F. Green 123-45-6789, a minor (or an incompetent) under 
custodianship by designation of the Veterans Administration.
Frank M. Redd 123-45-6789, an incompetent for whom Eric A. Redd has been 
designated trustee by the Department of the Army pursuant to 37 U.S.C. 
602.
Arnold A. Ames, as custodian for Barry B. Bryan 123-45-6789, under the 
California Uniform Gifts to Minors Act.
Thomas J. Reed, as custodian for Lawrence W. Reed 123-45-6789, a minor, 
under laws of Georgia.
Richard A. Rowe 123-45-6789, for whom Reba L. Rowe is representative 
payee for social security benefits (or black lung benefits, as the case 
may be). (If the beneficiary is a minor, the words ``a minor'' should 
appear immediately after the social security number.)
Henry L. Green 123-45-6789 or George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Henry L. Green 123-45-6789 P.O.D. George M. Brown, a minor under legal 
guardianship of the Tenth National Bank.
Redd State Hospital and School, selected payee for John A. Jones 123-45-
6789, a Civil Service annuitant, pursuant to 5 U.S.C. 8345(e).

    (3) Natural guardians. A bond may be registered in the name of 
either parent (natural and adoptive) of a minor, as natural guardian. 
The registration of a bond in this form is considered as establishing a 
fiduciary relationship. A coowner or beneficiary may be named but only 
if the funds used to purchase the bonds do not belong to the minor. 
Examples:

John A. Jones, as natural guardian for Henry M. Jones 123-45-6789.
Melba Smith, as natural guardian for Thelma Smith 123-45-6789 P.O.D. 
Bartholomew Smith.

    (4) Executors and administrators. A bond may be registered in the 
name of the representative appointed by a court to act for an estate of 
a decedent, or in the name of an executor authorized to administer a 
trust under the terms of a will although not named trustee. The

[[Page 336]]

name and capacity of all the representatives as shown in the letters of 
appointment must be included in the registration and be followed by an 
adequate indentifying reference to the estate. Examples:

John H. Smith and Calvin N. Jones, executors of the will (or 
administrators of the estate) of Robert J. Smith, deceased, 12-3456789.
John H. Smith, executor of the will of Robert J. Smith, deceased, in 
trust for Mrs. Jane L. Smith, with remainder over, 12-3456789.

    (5) Trustees or life tenants under wills, deeds of trust, 
agreements, or similar instruments. A bond may be registered in the name 
and title of the trustee of a trust estate, or in the name of a life 
tenant, followed by an adequate identifying reference to the authority 
governing the trust or life tenancy. Examples:

Thomas J. White and Tenth National Bank, trustees under the will of 
Robert J. Smith, deceased, 12-3456789.
Jane N. Black 123-45-6789, life tenant under the will of Robert J. 
Black, deceased.
Tenth National Bank, trustee under agreement with Paul E. White, dated 
2/1/80, 12-3456789.
Carl A. Black and Henry B. Green, trustees under agreement with Paul E. 
White, dated 2/1/80, 12-3456789.
Paul E. White, trustee under declaration of trust dated 2/1/80, 12-
3456789.

    (i) If the trust instrument designates by title only an officer of a 
board or an organization as trustee, only the title of the officer 
should be used. Example:

Chairman, Board of Trustees, First Church of Christ, Scientist, of 
Chicago, Illinois, in trust under the will of Robert J. Smith, deceased, 
12-3456789.

    (ii) The names of all trustees, in the form used in the trust 
instrument, must be included in the registration, except as follows:
    (A) If there are several trustees designated as a board or they are 
required to act as a unit, their names may be omitted and the words 
``Board of Trustees'' substituted for the word ``trustee''. Example:

Board of Trustees of Immediate Relief Trust of Federal Aid Association, 
under trust indenture dated 2/1/80, 12-3456789.

    (B) If the trustees do not constitute a board or are not required to 
act as a unit, and are too numerous to be designated in the registration 
by names and title, some or all the names may be omitted. Examples:

John A. Smith, Henry B. Jones, et al., trustees under the will of Edwin 
O. Mann, deceased, 12-3456789.
Trustees under the will of Edwin O. Mann, deceased, 12-3456789.

    (6) Employee thrift, savings, vacation and similar plans. A bond may 
be registered in the name and title, or title alone, of the trustee of 
an eligible employee thrift, savings, vacation or similar plan, as 
defined in Sec. 353.13(a). If the instrument creating the trust 
provides that the trustees shall serve for a limited term, their names 
may be omitted. Examples:

Tenth National Bank, trustee of Pension Fund of Safety Manufacturing 
Company, U/A with the company, dated March 31, 1980, 12-3456789.
Trustees of Retirement Fund of Safety Manufacturing Company, under 
directors' resolution adopted March 31, 1980, 12-3456789.
County Trust company, trustee of the Employee Savings Plan of Jones 
Company, Inc., U/A dated January 17, 1980, 12-3456789.
Trustee of the Employee Savings Plan of Brown Brothers, Inc., U/A dated 
January 20, 1980, 12-3456789.

    (7) Funds of lodges, churches, societies, or similar organizations. 
A bond may be registered in the title of the trustees, or a board of 
trustees, holding funds in trust for a lodge, church, or society, or 
similar organization, whether or not incorporated. Examples:

Trustees of the First Baptist Church, Akron, OH, acting as a Board under 
section 15 of its bylaws, 12-3456789.
Trustees of Jamestown Lodge No. 1000, Benevolent and Protective Order of 
Elks, under section 10 of its bylaws, 12-3456789.
Board of Trustees of Lotus Club, Washington, IN, under Article 10 of its 
constitution, 12-3456789.

    (8) Investment agents for religious, educational, charitable and 
non-profit organizations. A bond may be registered in the name of a 
bank, trust company, or other financial institution, or an individual, 
as agent under an agreement with a religious, educational, charitable or 
non-profit organization, whether or not incorporated, if the

[[Page 337]]

agent holds funds for the sole purpose of investing them and paying the 
income to the organization. The name and designation of the agent must 
be followed by an adequate reference to the agreement. Examples:

Tenth National Bank, fiscal agent U/A with the Evangelical Lutheran 
Church of the Holy Trinity, dated 12/28/80, 12-3456789.
Sixth Trust Company, Investment Agent
U/A dated September 16, 1980, with Central City Post, Department of 
Illinois, American Legion, 12-3456789.
John Jones, Investment Agent U/A dated September 16, 1980, with Central 
City Post, Department of Illinois, American Legion, 12-3456789.

    (9) Funds of school groups or activities. A bond may be registered 
in the title of the principal or other officer of a public, private, or 
parochial school holding funds in trust for a student body fund or for a 
class, group, or activity. If the amount purchased for any one fund does 
not exceed $2,500 (face amount), no reference need be made to a trust 
instrument. Examples:

Principal, Western High School, in trust for the Class of 1980 Library 
Fund, 12-3456789.
Director of Athletics, Western High School, in trust for Student 
Activities Association, under resolution adopted 5/12/80, 12-3456789.

    (10) Public corporations, bodies, or officers as trustees. A bond 
may be registered in the name of a public corporation or a public body, 
or in the title of a public officer, acting as trustee under express 
authority of law, followed by an appropriate reference to the statute 
creating the trust. Examples:

Rhode Island Investment Commission, trustee of the General Sinking Fund 
under Title 35, Ch. 8, Gen. Laws of Rhode Island.
    Superintendent of the Austin State Hospital Annex, in trust for the 
Benefit Fund under Article 3183C, Vernon's Civ. Stat. of Texas Ann.

    (c) Private organizations (corporations, associations, 
partnerships)--(1) General. A bond may be registered in the name of any 
private organization in its own right. The full legal name of the 
organization as set forth in its charter, articles of incorporation, 
constitution, partnership agreement, or other authority from which its 
powers are derived, must be included in the registration and may be 
followed by a parenthetical reference to a particular account other than 
a trust account.
    (2) Corporations. A bond may be registered in the name of a 
business, fraternal, religious, non-profit, or other private 
corporation. The words ``a corporation'' must be included in he 
registration unless the fact of incorporation is shown in the name. 
Examples:

Smith Manufacturing Company, a corporation, 12-3456789.
    Green and Redd, Inc., 12-3456789 (Depreciation Acct.)

    (3) Unincorporated associations. A bond may be registered in the 
name of a club, lodge, society, or a similar self-governing association 
which is unincorporated. The words ``an unincorporated association'' 
must be included in the registration. This form of registration must not 
be used for a trust fund, board of trustees, a partnership, or a sole 
proprietorship. If the association is chartered by or affiliated with a 
parent organization, the name or designation of the subordinate or local 
organization must be given first, followed by the name of the parent 
organization. The name of the parent organization may be placed in 
parentheses and, if well known, may be abbreviated. Examples:

The Lotus Club, an unincorporated association, 12-3456789.
Local 447, Brotherhood of Railroad Trainmen, an unincorporated 
association, 12-3456789.
Eureka Lodge 317 (A.F. and A.M.), an unincorporated association, 12-
3456789.

    (4) Partnerships. A bond may be registered in the name of a 
partnership. The words ``a partnership'' must be included in the 
registration. Examples:

Smith & Jones, a partnership, 12-3456789.
Acme Novelty Company, a partnership, 12-3456789.

    (5) Sole Proprietorships. A bond may be registered in the name of an 
individual who is doing business as a sole proprietor. A reference may 
be made to the trade name under which the business is conducted. 
Example:

John Jones DBA Jones Roofing Company 123-45-6789.


[[Page 338]]


    (d) Institutions (churches, hospitals, homes, schools, etc.). A bond 
may be registered in the name of a church, hospital, home, school, or 
similar institution conducted by a private organization or by private 
trustees, regardless of the manner in which it is organized or governed 
or title to its property is held. Descriptive words, such as ``a 
corporation'' or ``an unincorporated association'', must not be included 
in the registration. Examples:

Shriners' Hospital for Crippled Children, St. Louis, MO, 12-3456789.
St. Mary's Roman Catholic Church, Albany, NY, 12-3456789.
Rodeph Shalom Sunday School, Philadelphia, PA, 12-3456789.

    (e) States, public bodies and corporations, and public officers. A 
bond may be registered in the name of a State, county, city, town, 
village, school district, or other political entity, public body, or 
corporation established by law (including a board, commission, 
administration, authority, or agency) which is the owner or official 
custodian of public funds, other than trust funds, or in the full legal 
title of the public officer having custody of the funds. Examples:

State of Maine.
Town of Rye, NY (Street Improvement Fund).
Maryland State Highway Administration.
Treasurer, City of Chicago.

    (f) The United States Treasury. A person who desires to have a bond 
become the property of the United States upon his or her death may 
designate the United States Treasury as coowner or beneficiary. 
Examples:

George T. Jones 123-45-6789 or the United States Treasury.
George T. Jones 123-45-6789 P.O.D. the United States Treasury.



Sec. 353.8  Chain letters prohibited.

    The issuance of bonds in the furtherance of a chain letter or 
pyramid scheme is considered to be against the public interest and is 
prohibited.



                Subpart C_Limitations on Annual Purchases



Sec. 353.10  Amounts which may be purchased.

    The amount of savings bonds of Series EE and HH which may be 
purchased and held, in the name of any one person in any one calendar 
year, is computed according to the provisions of Sec. 353.11 and is 
limited as follows:
    (a) Series EE--(1) General annual limitation. $30,000 (principal 
amount).
    (2) Special limitation. $4,000 (face amount) multiplied by the 
highest number of employees participating in an eligible employee plan, 
as defined in Sec. 353.13, at any time during the calendar year in 
which the bonds are issued.
    (b) Series HH--(1) General annual limitation. $20,000 (face amount).
    (2) Special limitation. $200,000 (face amount) for bonds received in 
a calendar year as gifts by an organization which at the time of 
purchase was an exempt organization under the terms of 26 CFR 
1.501(c)(3)-1.

[44 FR 76441, Dec. 26, 1979, as amended at 68 FR 24805, May 8, 2003]



Sec. 353.11  Computation of amount.

    (a) General. The purchases of bonds in the name of any person in an 
individual capacity are computed separately from purchases in a 
fiduciary capacity. A pension or retirement fund, or an investment, 
insurance, annuity, or similar fund or trust is regarded as an entity, 
regardless of the number of beneficiaries or the manner in which their 
shares or interests are established, determined, or segregated.
    (b) Bonds included in computation. In computing the purchases for 
each person, the following outstanding bonds are included:
    (1) All bonds registered in the name of that person alone;
    (2) All bonds registered in the name of the representative of the 
estate of that person; and
    (3) All bonds registered in the name of that person as first-named 
coowner.
    (c) Bonds excluded from computation. In computing the purchases for 
each person, the following are excluded:
    (1) Bonds on which that person is named beneficiary;

[[Page 339]]

    (2) Bonds to which that person has become entitled--
    (i) Under Sec. 353.70 as surviving beneficiary upon the death of 
the registered owner;
    (ii) As an heir or a legatee of the deceased owner;
    (iii) By virtue of the termination of a trust or the happening of a 
similar event;
    (3) Bonds issued in an authorized exchange or reinvestment; and
    (4) Bonds that are purchased and redeemed within the same calendar 
year.

[44 FR 76441, Dec. 26, 1979, as amended at 68 FR 24805, May 8, 2003]



Sec. 353.12  Disposition of excess.

    If any person at any time has savings bonds issued during any one 
calendar year in excess of the prescribed amount, the Bureau of the 
Public Debt reserves the right to take any action that it deems 
necessary to adjust the excess. Instructions for adjustment of the 
excess can be obtained by email at [email protected] or by writing 
to Bureau of the Public Debt, Parkersburg, WV 26106-1328.

[68 FR 24805, May 8, 2003]



Sec. 353.13  Employee plans--Conditions of eligibility.

    (a) Definition of plan. Employee thrift, savings, vacation and 
similar plans are contributory plans established by the employer for the 
exclusive and irrevocable benefit of its employees or their 
beneficiaries. Each plan must afford employees the means of making 
regular savings from their wages through payroll deductions and provide 
for employer contributions to be added to these savings.
    (b) Definition of terms used in this section. (1) The term assets 
means all the employees' contributions and assets purchased with them 
and the employer's contributions and assets purchased with them, as well 
as accretions, such as dividends on stock, the increment in value on 
bonds and all other income; but, notwithstanding any other provision of 
this section, the right to demand and receive all assets credited to the 
account of an employee shall not be construed to require the 
distribution of assets in kind when it would not be possible or 
practicable to make such a distribution; for example, Series EE bonds 
may not be reissued in unauthorized denominations.
    (2) The word beneficiary means: (i) The person or persons, if any, 
designated by the employee in accordance with the terms of the plan to 
receive the benefits of the plan upon the employee's death or (ii) the 
estate of the employee.
    (c) Conditions of eligibility. An employee plan must conform to the 
following rules in order to be eligible for the special limitation 
provided in Sec. 353.10.
    (1) Crediting of assets. All assets of a plan must be credited to 
the individual accounts of participating employees and may be 
distributed only to them or their beneficiaries, except as provided in 
paragraph (c)(3) of this section.
    (2) Purchase of bonds. Bonds may be purchased only with assets 
credited to the accounts of participating employees and only if the 
amount taken from any account at any time for that purpose is equal to 
the purchase price of a bond or bonds in an authorized denomination or 
denominations, and shares in the bonds are credited to the accounts of 
the individuals from which the purchase price was derived, in amounts 
corresponding with their shares. For example, if $50 credited to the 
account of John Jones is commingled with funds credited to the accounts 
of other employees to make a total of $5,000 with which a Series EE bond 
in the denomination of $10,000 (face amount) is purchased in December 
1980 and registered in the name and title of the trustee, the plan must 
provide, in effect, that John Jones' account be credited to show that he 
is the owner of a Series EE bond in the denomination of $100 (face 
amount) bearing an issue date of December 1, 1980.
    (3) Irrevocable right of withdrawal. Each participating employee has 
an irrevocable right to request and receive from the trustee all assets 
credited to the employee's account (or their value, if the employee 
prefers) without regard to any conditions other than the loss or 
suspension of the privilege of participating further in the plan. A plan 
may limit or modify such right in any manner required for qualification 
of

[[Page 340]]

the plan under section 401 of the Internal Revenue Code of 1954, as 
amended (26 U.S.C. section 401).
    (4) Rights of beneficiary. Upon the death of an employee, his or her 
beneficiary shall have the absolute and unconditional right to demand 
and receive from the trustee all assets credited to the account of the 
employee or their value, if he or she so prefers.
    (5) Reissue or payment upon distribution. When settlement is made 
with an employee or his or her beneficiary with respect to any bond 
registered in the name and title of the plan trustee in which the 
employee has a share, the bond must be paid or reissued to the extent of 
the share. If an employee or the beneficiary is to receive distribution 
in kind, bonds bearing the same issue dates as those credited to the 
employee's account will be reissued in the name of the employee or the 
employee's beneficiary to the extent entitled, in authorized 
denominations, in any authorized form of registration, upon the request 
and certification of the trustee.
    (d) Application for special limitation. A trustee of an employee 
plan who desires to purchase bonds under the special limitation should 
submit to the designated Federal Reserve Bank or Branch a copy of:
    (1) The plan, (2) any instructions issued under the plan that 
concern Series EE bonds, and (3) the trust agreement, in order to 
establish the plan's eligibility.
    (e) Vacation plans. Savings bonds may be purchased under certain 
vacation plans. Questions concerning the eligibility of these plans to 
purchase bonds in excess of the general limitation should be addressed 
to the Bureau of the Public Debt, Parkersburg, WV 26101.

(31 U.S.C. 3105 and 3121)

[44 FR 76441, Dec. 26, 1979, as amended at 48 FR 55458, Dec. 13, 1983; 
59 FR 10541, Mar. 4, 1994; 63 FR 64551, Nov. 20, 1998]



               Subpart D_Limitations on Transfer or Pledge



Sec. 353.15  Transfer.

    Savings bonds are not transferable and are payable only to the 
owners named on the bonds, except as specifically provided in these 
regulations and then only in the manner and to the extent so provided.



Sec. 353.16  Pledge.

    A savings bond may not be hypothecated, pledged, or used as security 
for the performance of an obligation.



                     Subpart E_Judicial Proceedings



Sec. 353.20  General.

    (a) The Department of the Treasury will not recognize a judicial 
determination that gives effect to an attempted voluntary transfer inter 
vivos of a bond, or a judicial determination that impairs the rights of 
survivorship conferred by these regulations upon a coowner or 
beneficiary. All provisions of this subpart are subject to these 
restrictions.
    (b) The Department of the Treasury will recognize a claim against an 
owner of a savings bond and conflicting claims of ownership of, or 
interest in, a bond between coowners or between the registered owner and 
the beneficiary, if established by valid judicial proceedings, but only 
as specifically provided in this subpart. Section 353.23 specifies the 
evidence required to establish the validity of the judicial proceedings.
    (c) The Department of the Treasury and the agencies that issue, 
reissue, or redeem savings bonds will not accept a notice of an adverse 
claim or notice of pending judicial proceedings, nor undertake to 
protect the interests of a litigant not in possession of a savings bond.



Sec. 353.21  Payment to judgment creditors.

    (a) Purchaser or officer under levy. The Department of the Treasury 
will pay (but not reissue) a savings bond to the purchaser at a sale 
under a levy or to the officer authorized under appropriate process to 
levy upon property of the registered owner or coowner to satisfy a money 
judgment. Payment will be made only to the extent necessary to satisfy 
the money judgment. The

[[Page 341]]

amount paid is limited to the redemption value 60 days after the 
termination of the judicial proceedings. Except in a case of a levy by 
the Internal Revenue Service, payment of a bond registered in 
coownership form pursuant to a judgment or a levy against only one 
coowner is limited to the extent of that coowner's interest in the bond. 
That interest must be established by an agreement between the coowners 
by judgment, decree, or order of a court in a proceeding to which both 
coowners are parties. Payment of a bond registered in coownership form 
pursuant to levy by the Internal Revenue Service will be made if the 
levy is against either coowner on the bond.
    (b) Trustee in bankruptcy, receiver, or similar court officer. The 
Department of the Treasury will pay, at current redemption value, a 
savings bond to a trustee in bankruptcy, a receiver of an insolvent's 
estate, a receiver in equity, or a similar court officer under the 
provisions of paragraph (a) of this section.

[44 FR 76441, Dec. 26, 1979, as amended at 63 FR 64551, Nov. 20, 1998]



Sec. 353.22  Payment or reissue pursuant to judgment.

    (a) Divorce. The Department of the Treasury will recognize a divorce 
decree that ratifies or confirms a property settlement agreement 
disposing of bonds or that otherwise settles the interests of the 
parties in a bond. Reissue of a savings bond may be made to eliminate 
the name of one spouse as owner, coowner, or beneficiary or to 
substitute the name of one spouse for that of the other spouse as owner, 
coowner, or beneficiary pursuant to the decree. However, if the bond is 
registered in the name of one spouse with another person as coowner, 
there must be submitted either:
    (1) A request for reissue by the other person or (2) a certified 
copy of a judgment, decree, or court order entered in proceedings to 
which the other person and the spouse named on the bond are parties, 
determining the extent of the interest of that spouse in the bond. 
Reissue will be permitted only to the extent of that spouse's interest. 
The evidence required under Sec. 353.23 must be submitted in every 
case. When the divorce decree does not set out the terms of the property 
settlement agreement, a certified copy of the agreement must be 
submitted. Payment, rather than reissue, will be made if requested.
    (b) Gift causa mortis. A savings bond belonging solely to one 
individual will be paid or reissued at the request of the person found 
by a court to be entitled by reason of a gift causa mortis from the sole 
owner.
    (c) Date for determining rights. When payment or reissue under this 
section is to be made, the rights of the parties will be those existing 
under the regulations current at the time of the entry of the final 
judgment, decree, or court order.



Sec. 353.23  Evidence.

    (a) General. To establish the validity of judicial proceedings, 
certified copies of the final judgment, decree, or court order, and of 
any necessary supplementary proceedings, must be submitted. If the 
judgment, decree, or court order was rendered more than six months prior 
to the presentation of the bond, there must also be submitted a 
certification from the clerk of the court, under court seal, dated 
within six months of the presentation of the bond, showing that the 
judgment, decree, or court order is in full force.
    (b) Trustee in bankruptcy or receiver of an insolvent's estate. A 
request for payment by a trustee in bankruptcy or a receiver of an 
insolvent's estate must be supported by appropriate evidence of 
appointment and qualification. The evidence must be certified by the 
clerk of the court, under court seal, as being in full force on a date 
that is not more than six months prior to the presentation of the bond.
    (c) Receiver in equity or similar court officer. A request for 
payment by a receiver in equity or a similar court officer, other than a 
receiver of an insolvent's estate, must be supported by a copy of an 
order that authorizes the presentation of the bond for redemption, 
certified by the clerk of the court, under court seal, as being in full 
force on a date that is not more than six months prior to the 
presentation of the bond.

[[Page 342]]



Sec. 353.24  Payment pursuant to judicial or administrative forfeiture.

    (a) Definitions. As used in this part:
    (1) Contact point means the individual designated to receive 
referrals from the Bureau of the Public Debt, as provided for in this 
section, by the Federal investigative agency, United States Attorney's 
Office, or forfeiting agency specified in Public Debt Form 1522.
    (2) Forfeiting agency means the federal law enforcement agency 
responsible for the forfeiture.
    (3) Forfeiture--(i) Administrative forfeiture means the process by 
which property may be forfeited by a Federal agency rather than through 
judicial proceedings.
    (ii) Judicial forfeiture means either a civil or a criminal 
proceeding in a United States District Court that may result in a final 
judgment and order of forfeiture.
    (4) Public Debt Form 1522 means the written notification of the 
forfeiture provided by the forfeiting agency to the Bureau of the Public 
Debt on a Public Debt Form 1522 Special Form of Request for Payment of 
United States Savings and Retirement Securities Where Use of a Detached 
Request Is Authorized. Public Debt Form 1522 must specify: the contact 
point; the issue date of each bond; the serial number for each bond; the 
date of forfeiture; the forfeiture fund to which payment is to be made; 
and be signed by an individual authorized by the forfeiting agency. The 
forfeited bonds and the completed Public Debt Form 1522 are to be mailed 
to the Department of the Treasury, Bureau of the Public Debt, 
Parkersburg, WV 26106-1328.
    (b) Forfeiture of bond. (1) Upon receipt and review of the Public 
Debt Form 1522, as described in (a)(4) above, the Bureau of the Public 
Debt will make payment to the forfeiture fund specified on the form.
    (2) The Bureau of the Public Debt will record the forfeiture, the 
forfeiture fund into which the proceeds were paid, the contact point, 
and any related information.
    (3) The Bureau of the Public Debt will rely exclusively upon the 
information provided by the Federal agency in the Public Debt Form 1522 
and will not make any independent evaluation of the validity of the 
forfeiture order, the request for payment, or the authority of the 
individual signing the request for payment.
    (4) The amount paid is limited to the redemption value of the 
savings bonds as of the date of forfeiture specified in the Public Debt 
Form 1522.
    (c) Inquiry from previous owner. (1) Upon payment made pursuant to 
(b), all inquiries from the previous owner, including requests for 
payment, reissue, or applications for relief, related to forfeited 
savings bonds will be referred by the Bureau of the Public Debt to the 
contact point named in the Public Debt Form 1522.
    (2) The Bureau of the Public Debt will notify the submitter of the 
inquiry of the referral to the contact point.
    (3) The Bureau of the Public Debt will not investigate the inquiry 
and will defer to the forfeiting agency's determination of the 
appropriate course of action, including settlement where appropriate. 
Any settlement will be paid from the forfeiture fund into which the 
proceeds were deposited.

[61 FR 53822, Oct. 15, 1996]



 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds



Sec. 353.25  General.

    Relief, by the issue of a substitute bond or by payment, is 
authorized for the loss, theft, destruction, mutilation, or defacement 
of a bond after receipt by the owner or his or her representative. As a 
condition for granting relief, the Commissioner of the Public Debt, as 
designee of the Secretary of the Treasury, may require a bond of 
indemnity, in the form, and with the surety, or security, he considers 
necessary to protect the interests of the United States. In all cases 
the savings bond must be identified by serial number and the applicant 
must submit satisfactory evidence of the loss, theft, or destruction, or 
a satisfactory explanation of the mutilation or defacement.

[[Page 343]]



Sec. 353.26  Application for relief--After receipt of bond.

    (a) If the serial numbers of the lost, stolen, or destroyed bonds 
are known, the claimant should execute an application for relief on the 
appropriate form and submit it to the Bureau of the Public Debt, 
Parkersburg, WV 26101.
    (b) If the bond serial number is not known, the claimant must 
provide sufficient information to enable the Bureau of the Public Debt 
to identify the bond by serial number. See Sec. 353.29(c). The Bureau 
will furnish the proper application form and instructions.
    (c) If applicable, a defaced bond and all available fragments of a 
mutilated bond should be submitted to the Bureau.
    (d) The application must be made by the person or persons (including 
both coowners, if living) authorized under these regulations to request 
payment of the bond. In addition:
    (1) If the bond is in beneficiary form and the owner and beneficiary 
are both living, both will ordinarily be required to join in the 
application.
    (2) If a minor named on a bond as owner, coowner, or beneficiary is 
not of sufficient competency and understanding to request payment, both 
parents will ordinarily be required to join in the application.
    (e) If the application is approved, relief will be granted either by 
the issuance of a bond bearing the same issue date as the bond for which 
the claim was filed or by the issuance of a check in payment.



Sec. 353.27  Application for relief--Non-receipt of bond.

    If a bond issued on any transaction is not received, the issuing 
agent must be notified as promptly as possible and given all information 
about the non-receipt. An appropriate form and instructions will be 
provided. If the application is approved, relief will be granted by the 
issuance of a bond bearing the same issue date as the bond that was not 
received. Also, relief is authorized for the issuance of bonds for which 
the Secretary has not received payment, in order to preserve public 
confidence in dealing with issuing agents.

[63 FR 64551, Nov. 20, 1998]



Sec. 353.28  Recovery or receipt of bond before or after relief is 
granted.

    (a) If a bond reported lost, stolen, destroyed, or not received, is 
recovered or received before relief is granted, the Bureau of the Public 
Debt, Parkersburg, WV 26101, must be notified promptly.
    (b) A bond for which relief has been granted is the property of the 
United States and, if recovered, must be promptly submitted to the 
Bureau of the Public Debt, Parkersburg, WV 26101, for cancellation.



Sec. 353.29  Adjudication of claims.

    (a) General. The Bureau of the Public Debt will adjudicate claims 
for lost, stolen or destroyed bonds on the basis of records created and 
regularly maintained in the ordinary course of business.
    (b) Claims filed 10 years after payment. A bond for which no claim 
has been filed within 10 years of the recorded date of redemption will 
be presumed to have been properly paid. If a claim is subsequently 
filed, a photographic copy of the bond will not be available to support 
the disallowance.
    (c) Claims filed six years after final maturity. No claim filed six 
years or more after the final maturity of a savings bond will be 
entertained unless the claimant supplies the serial number of the bond.



                           Subpart G_Interest



Sec. 353.30  Series EE bonds.

    Series EE bonds are issued at a discount. The accrued interest is 
added to the issue price at stated intervals and is payable only at 
redemption as part of the redemption value. Information regarding 
interest rates and redemption values is found in Department of the 
Treasury Circular, Public Debt Series No. 1-80 (31 CFR part 351).



Sec. 353.31  Series HH bonds.

    (a) General. Series HH bonds are current income bonds issued at par 
(face amount). Interest on a Series HH bond

[[Page 344]]

is paid semiannually beginning six months from the issue date. Interest 
ceases at final maturity, or, if the bond is redeemed prior to final 
maturity, as of the end of the interest period last preceding the date 
of redemption. For example, if a bond on which interest is payable on 
January 1 and July 1 is redeemed on September 1, interest ceases as of 
the preceding July 1, and no interest will be paid for the period from 
July 1 to September 1. However, if the redemption date falls on an 
interest payment date, interest ceases on that date. Information 
regarding interest rates is found in Department of the Treasury 
Circular, Public Debt Series No. 2-80, current revision (31 CFR part 
352).
    (b) Payment of interest. Series HH bond interest accounts are 
maintained by the Bureau of the Public Debt, Parkersburg, WV. Interest 
on bonds issued on or after October 1, 1989 will be paid on each 
interest due date by the Automated Clearing House (ACH) method to the 
owner or coowner's account at a financial institution, unless the Bureau 
determines that extraordinary circumstances warrant payment by check or 
other means. Interest on bonds issued prior to October 1, 1989, is 
payable by check drawn to the order of the owner or both coowners or, 
upon request, by the ACH method to the owner or coowner's account at a 
financial institution. Checks will be mailed to the delivery address 
provided to the Bureau. Deposit account information for ACH payments 
shall be provided on the form designated by the Bureau. Series H 
interest payments made by the ACH method are governed by the regulations 
at 31 CFR part 370.

(Approved by the Office of Management and Budget under control number 
1535-0094)

    (c) Delivery of interest. Notices affecting the delivery of interest 
payments. To ensure appropriate action, notices affecting the delivery 
of interest payments on Series HH bonds must be received by the Bureau 
of the Public Debt, Parkersburg, WV 26102-1328, at least one month prior 
to the interest payment date. Each notice must include the owner or 
coowner's name and the taxpayer identifying number appearing on the 
account under which records of the bonds are maintained.
    (d) Reissue during interest period. Physical reissue of a Series HH 
bond may be made without regard to interest payment dates. The Series HH 
interest accounts maintained by the Bureau of the Public Debt will be 
closed in the first week of the month preceding each interest payment 
date, and payments will be made pursuant to the information contained in 
the accounts as of the date they are closed.
    (e) Endorsement of checks. Interest checks must be endorsed in 
accordance with the regulations governing the payment of fiscal agency 
checks, as contained in 31 CFR part 355.
    (f) Payment of interest by the ACH method--(1) Submission of deposit 
account information. Payments on all Series HH bonds assigned to the 
same account maintained by the Bureau must be made to the same deposit 
account at a financial institution.
    (2) Deposit account held by individuals in their own right. Where 
the Series HH bonds are registered in the name of individual(s) as sole 
owner, or as owner and beneficiary, and the deposit account at the 
financial institution is held in the name of individual(s) in their own 
right, the owner's name must appear on the deposit account. Where the 
bonds are registered in the names of two individuals as coowners and the 
deposit account is held in the name of individual(s) in their own right, 
the registration of the bonds and the title of the account must contain 
at least one name that is common to both. The deposit account to which 
the interest payments are directed should preferably be established in a 
form identical to the registration of the bonds to ensure that rights of 
ownership and survivorship can be more easily identified and preserved. 
Neither the United States nor any Federal Reserve Bank shall be liable 
for any loss sustained because the interest of the holder(s) of a 
deposit account to which payments are made are not the same as the 
owner(s) of the bonds.
    (3) Deposit account held by organization. Where the deposit account 
to which interest payments are to be directed is held in the name of the 
financial institution itself acting as sole

[[Page 345]]

trustee, or as co-trustee, or is the name of a commercially-managed 
investment fund, the owner or coowner should inquire whether the 
financial institution is able to receive ACH payments; if not, the owner 
or coowner should make alternative arrangements.
    (4) Financial institution cannot accept ACH payments. If after 
submission of deposit account information, it is determined that ACH 
payments cannot be accepted by the designated financial institution, 
pending receipt of new deposit account information, payment will be made 
by check drawn to the registered owner or both coowners and mailed to 
the address of record.
    (5) Cancellation of ACH arrangement. (i) Bonds issued on or after 
October 1, 1989. As set forth in paragraph (b) of this section and in 
the Series HH offering contained in Circular No. 2-80, interest on 
Series HH bonds issued on or after October 1, 1989, will be paid by the 
ACH method. In the absence of extraordinary circumstances, a request to 
discontinue payment by the ACH method in favor of payment by check will 
not be accepted.
    (ii) Bonds issued prior to October 1, 1989. An ACH arrangement 
established for Series HH bonds issued prior to October 1, 1989, shall 
remain in effect until it is terminated by a request from the owner or 
coowner submitted to the Bureau of the Public Debt, Parkersburg, WV 
26102-1328.
    (6) Rules. Series HH interest payments made by the ACH method are 
governed by the regulations at 31 CFR part 370.
    (7) Nonreceipt or loss of interest payment. The Bureau of the Public 
Debt, Parkersburg, WV 26102 should be notified if:
    (i) An interest check is not received or is lost after receipt or
    (ii) An ACH payment is not credited to the designated account and 
the financial institution has no record of receiving it. The notice 
should include the owner or coowner's name and taxpayer identifying 
number and the interest payment date.

[54 FR 40254, Sept. 29, 1989, as amended at 59 FR 10541, Mar. 4, 1994; 
64 FR 40487, July 26, 1999]



                Subpart H_General Provisions for Payment



Sec. 353.35  Payment (redemption).

    (a) General. Payment of a savings bond will be made to the person or 
persons entitled under the provisions of these regulations, except that 
checks in payment will not be delivered to addresses in areas with 
respect to which the Department of the Treasury restricts or regulates 
the delivery of checks drawn against funds of the United States. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211). Payment will be made without regard to any notice of adverse 
claims to a bond and no stoppage or caveat against payment of a bond 
will be entered.
    (b) A Series EE bond issued on January 1, 2003, or earlier, will be 
paid at any time after 6 months from its issue date. A Series EE bond 
issued on February 1, 2003, or thereafter, will be paid at any time 
after 12 months from its issue date. Bonds will be paid at the current 
redemption value shown in Department of the Treasury Circular, Public 
Debt Series No. 1-80 (31 CFR part 351).
    (c) Series HH. A Series HH bond will be paid at any time after six 
months from issue date. A Series HH bond issued in an authorized 
exchange or reinvestment transaction will be paid at face value. A 
Series HH bond issued for cash will be paid at the current redemption 
value shown in Department of the Treasury Circular, Public Debt Series 
No. 2-80, Second Revision (31 CFR part 352). If the bond is redeemed at 
less than face value, the difference represents an adjustment of 
interest. In any case where Series HH bonds are surrendered to a 
designated Federal Reserve Bank or Branch or the Bureau of the Public 
Debt, Parkersburg, WV 26106-1328, for redemption in the month prior to 
an interest payment date, redemption will not be deferred but will be 
made in regular course, unless the presenter specifically requests that 
the transaction be delayed until that date. A request to defer 
redemption made

[[Page 346]]

more than one month preceding the interest payment date will not be 
accepted.

[44 FR 76441, Dec. 26, 1979, as amended at 51 FR 23754, July 1, 1986; 59 
FR 10541, Mar. 4, 1994; 68 FR 2667, Jan. 17, 2003; 68 FR 7427, Feb. 14, 
2003]



Sec. 353.36  Payment during life of sole owner.

    A savings bond registered in single ownership form (i.e., without a 
coowner or beneficiary) will be paid to the owner during his or her 
lifetime upon surrender with an appropriate request.



Sec. 353.37  Payment during lives of both coowners.

    A savings bond registered in coownership form will be paid to either 
coowner upon surrender with an appropriate request, and upon payment (as 
determined in Sec. 353.43), the other coowner will cease to have any 
interest in the bond. If both coowners request payment, payment will be 
made by check drawn in the form, ``John A. Jones AND Mary C. Jones''.



Sec. 353.38  Payment during lifetime of owner of beneficiary bond.

    A savings bond registered in beneficiary form will be paid to the 
registered owner during his or her lifetime upon surrender with an 
appropriate request. Upon payment (as determined in Sec. 353.43) the 
beneficiary will cease to have any interest in the bond.



Sec. 353.39  Surrender for payment.

    (a) Procedure for bonds of Series EE, in the names of individual 
owners or coowners only. An individual who is the owner or coowner of a 
Series EE bond may present the bond to an authorized paying agent for 
redemption. The presenter must be prepared to establish his or her 
identity in accordance with Treasury instructions and identification 
guidelines. The owner or coowner must sign the request for payment on 
the bond or, if authorized, on a separate detached request, and add his 
or her address. If the request for payment has been signed, or signed 
and certified, before presentation of the bond, the paying agent must be 
satisfied that the person presenting the bond for payment is the owner 
or coowner and may require the person to sign the request for payment 
again. If the bond is in order for payment, the paying agent will make 
immediate payment at the current redemption value without charge to the 
presenter. Paying agents are not authorized to process any case 
involving partial redemption or any case in which supporting evidence is 
required.
    (b) Procedure for all other cases. In the case of bonds to which the 
procedure in paragraph (a) of this section, does not apply, or if 
otherwise preferred, the owner or coowner, or other person entitled to 
payment, should appear before an officer authorized to certify requests 
for payment, establish his or her identity, sign the request for 
payment, and provide information as to the address to which the check in 
payment is to be mailed. The bond must be forwarded to a designated 
Federal Reserve Bank or Branch or the Bureau of the Public Debt. 
Usually, payment will be expedited by submission to a designated Federal 
Reserve Bank or Branch. In all cases, the cost and risk of presentation 
of a bond will be borne by the owner. Payment will be made by check 
drawn to the order of the registered owner or other person entitled and 
will be mailed to the address requested.
    (c) Date of request. Requests executed more than six months before 
the date of receipt of a bond for payment will not be accepted. Neither 
will a bond be accepted if payment is requested as of a date more than 
three months in the future.

[44 FR 76441, Dec. 26, 1979, as amended at 59 FR 10541, Mar. 4, 1994]



Sec. 353.40  Special provisions for payment.

    (a) Owner's signature not required. A bond may be paid by a paying 
agent or a designated Federal Reserve Bank without the owner's signature 
to the request for payment, if the bond bears the special endorsement of 
a paying agent specifically qualified to place such an endorsement on 
savings bonds.
    (b) Signature by mark. A signature by mark (X) must be witnessed by 
at least

[[Page 347]]

one disinterested person and a certifying officer. See subpart J. The 
witness must attest to the signature by mark substantially as follows: 
``Witness to signature by mark'', followed by his or her signature and 
address.
    (c) Name change. If the name of the owner, coowner, or other person 
entitled to payment, as it appears in the registration or in evidence on 
file in the Bureau of the Public Debt, has been changed in any legal 
manner, the signature to the request for payment must show both names 
and the manner in which the change was made; for example, ``Mary T. 
Jones Smith (Mary T. J. Smith or Mary T. Smith) changed by marriage from 
Mary T. Jones'', or ``John R. Young, changed by order of court from Hans 
R. Jung''. See Sec. 353.50.
    (d) Attorneys-in-fact. A request for payment, reinvestment, or 
exchange executed by an attorney-in-fact will be recognized if it is 
accompanied by a copy of the power of attorney which meets the following 
requirements:
    (1) The power of attorney must bear the grantor's signature, 
properly certified or notarized, in accordance with applicable State 
law;
    (2) The power of attorney must grant, by its terms, authority for 
the attorney-in-fact to sell or redeem the grantor's securities, sell 
his or her personal property, or, otherwise contain similar authority; 
and
    (3) In the case of a grantor who has become incapacitated, the power 
of attorney must conform with pertinent provisions of State law 
concerning its durability. Generally, in such circumstances, the power 
of attorney should provide that the authority granted will not be 
affected by the subsequent incompetence or incapacity of the grantor. 
Medical evidence or other proof of the grantor's condition may be 
required in any case.

[45 FR 64091, Sept. 26, 1980, as amended at 57 FR 39602, Sept. 1, 1992; 
59 FR 10541, Mar. 4, 1994]



Sec. 353.41  Partial redemption.

    A bond of Series EE or HH may be redeemed in part at current 
redemption value, but only in amounts corresponding to authorized 
denominations, upon surrender of the bond to a designated Federal 
Reserve Bank or Branch or to the Bureau of the Public Debt in accordance 
with Sec. 353.39(b). In any case in which partial redemption is 
requested, the phrase ``to the extent of $---- (face amount) and reissue 
of the remainder'' should be added to the request. Upon partial 
redemption of the bond, the remainder will be reissued as of the 
original issue date, as provided in subpart I.

[44 FR 76441, Dec. 26, 1979, as amended at 59 FR 10541, Mar. 4, 1994]



Sec. 353.42  Nonreceipt or loss of check issued in payment.

    If a check in payment of a bond surrendered for redemption is not 
received within a reasonable time or is lost after receipt, notice 
should be given to the same agency to which the bond was surrendered for 
payment. The notice should give the date the bond was surrendered for 
payment and describe the bond by series, denomination, serial number, 
and registration, including the taxpayer identifying number of the 
owner.



Sec. 353.43  Effective date of request for payment.

    The Department of the Treasury will treat the receipt of a bond with 
an appropriate request for payment by:
    (a) A Federal Reserve Bank or Branch, (b) the Bureau of the Public 
Debt, or (c) a paying agent authorized to pay that bond, as the date 
upon which the rights of the parties are fixed for the purpose of 
payment.



Sec. 353.44  Withdrawal of request for payment.

    (a) Withdrawal by owner or coowner. An owner or coowner, who has 
surrendered a bond to a Federal Reserve Bank or Branch or to the Bureau 
of the Public Debt or to an authorized paying agent with an appropriate 
request for payment, may withdraw the request if notice of intent to 
withdraw is received by the same agency prior to payment either in cash 
or through the issuance of the redemption check.
    (b) Withdrawal on behalf of deceased owner or incompetent. A request 
for payment may be withdrawn under the same conditions as in paragraph 
(a) of this section by the executor or administrator of the estate of a 
deceased

[[Page 348]]

owner or by the person or persons who could have been entitled to the 
bond under Subpart L, or by the legal representative of the estate of a 
person under legal disability, unless surrender of the bond for payment 
has eliminated the interest of a surviving coowner or beneficiary. See 
Sec. 353.70 (b) and (c).



              Subpart I_Reissue and Denominational Exchange



Sec. 353.45  General.

    Reissue of a bond may be made only under the conditions specified in 
these regulations, and only at:
    (a) A Federal Reserve Bank or Branch, or
    (b) The Bureau of the Public Debt.

Reissue will not be made if the request is received less than one full 
calendar month before the final maturity date of a bond. The request, 
however, will be effective to establish ownership as though the 
requested reissue had been made.



Sec. 353.46  Effective date of request for reissue.

    The Department of the Treasury will treat the receipt by: (a) A 
Federal Reserve Bank or Branch or (b) the Bureau of the Public Debt of a 
bond and an acceptable request for reissue as determining the date upon 
which the rights of the parties are fixed for the purpose of reissue. 
For example, if the owner or either coowner of a bond dies after the 
bond has been surrendered for reissue, the bond will be regarded as 
having been reissued in the decedent's lifetime.



Sec. 353.47  Authorized reissue--during lifetime.

    A bond belonging to an individual may be reissued in any authorized 
form of registration upon an appropriate request for the purposes 
outlined below.
    (a) Single ownership. A bond registered in single ownership form may 
be reissued--
    (1) To add a coowner or beneficiary; or
    (2) To name a new owner, with or without a coowner or beneficiary, 
but only if:
    (i) The new owner is related to the previous owner by blood 
(including legal adoption) or marriage; (ii) the previous owner and the 
new owner are parties to a divorce or annulment; or (iii) the new sole 
owner is the trustee of a personal trust estate which was created by the 
previous owner or which designates as beneficiary either the previous 
owner or a person related to him or her by blood (including legal 
adoption) or marriage.
    (b) Coownership--(1) Reissue--to name a related individual as owner 
or coowner. During the lifetime of both coowners, a coownership bond may 
be reissued in the name of another individual related by blood 
(including legal adoption) or marriage to either coowner:
    (i) As single owner,
    (ii) As owner with one of the original coowners as beneficiary, or
    (iii) As a new coowner with one of the original coowners.
    (2) Reissue--to name either coowner alone or with another individual 
as coowner or beneficiary. During the lifetime of both coowners, a 
coownership bond may be reissued in the name of either coowner alone or 
with another individual as coowner or beneficiary if:
    (i) After issue of the submitted bond, either coowner named thereon 
marries, or the coowners are divorced or legally separated from each 
other, or their marriage is annulled; or
    (ii) Both coowners on the submitted bond are related by blood 
(including legal adoption) or marriage to each other.
    (3) Reissue--to name the trustee of a personal trust estate. A bond 
registered in coownership form may be reissued to name a trustee of a 
personal trust estate created by either coowner or by some other person 
if:
    (i) Either coowner is a beneficiary of the trust, or (ii) a 
beneficiary of the trust is related by blood or marriage to either 
coowner.
    (c) Beneficiary. A bond registered in beneficiary form may be 
reissued:
    (1) To name the beneficiary as coowner;
    (2) To substitute another individual as beneficiary; or
    (3) To eliminate the beneficiary, and, if the beneficiary is 
eliminated, to effect any of the reissues authorized by paragraph (a) of 
this section.

[[Page 349]]



Sec. 353.48  Restrictions on reissue.

    (a) Denominational exchange. Reissue is not permitted solely to 
change denominations.
    (b) United States Treasury. Reissue may not be made to eliminate the 
United States Treasury as coowner.



Sec. 353.49  Correction of errors.

    A bond may be reissued to correct an error in registration upon 
appropriate request supported by satisfactory proof of the error.



Sec. 353.50  Change of name.

    An owner, coowner, or beneficiary whose name is changed by marriage, 
divorce, annulment, order of court, or in any other legal manner after 
the issue of the bond should submit the bond with a request for reissue 
to substitute the new name for the name inscribed on the bond. 
Documentary evidence may be required in any appropriate case.



Sec. 353.51  Requests for reissue.

    A request for reissue of bonds in coownership form must be signed by 
both coowners, except that a request solely to eliminate the name of one 
coowner may be signed by that coowner only. A bond registered in 
beneficiary form may be reissued upon the request of the owner, without 
the consent of the beneficiary. Public Debt forms are available for 
requesting reissue.



                      Subpart J_Certifying Officers



Sec. 353.55  Individuals authorized to certify.

    The following individuals are authorized to act as certifying 
officers for the purpose of certifying a request for payment, reissue, 
or a signature to a Public Debt form:
    (a) Officers generally authorized--(1) At banks, trust companies, 
and member organizations of the Federal Home Loan Bank System. (i) Any 
officer of a bank incorporated in the United States, the territories or 
possessions of the United States, or the Commonwealth of Puerto Rico.
    (ii) Any officer of a trust company incorporated in the United 
States, the territories or possessions of the United States, or the 
Commonwealth of Puerto Rico.
    (iii) Any officer of an organization that is a member of the Federal 
Home Loan Bank System. This includes Federal savings and loan 
associations.
    (iv) Any officer of a foreign branch or a domestic branch of an 
institution indicated in paragraphs (a)(1)(i) through (iii) of this 
section.
    (v) Any officer of a Federal Reserve Bank, a Federal Land Bank, or a 
Federal Home Loan Bank.
    (vi) Any employee of an institution in paragraphs (a)(1)(i) through 
(v) of this section, who is expressly authorized to certify by the 
institution.


Certification by these officers or designated employees must be 
authenticated by a legible imprint of either the corporate seal of the 
institution or of the issuing or paying agent's stamp. The employee 
expressly authorized to certify by an institution must sign his or her 
name over the title ``Designated Employee''.
    (2) At issuing agents that are not banks or trust companies. Any 
officer of an organization, not a bank or a trust company, that is 
qualified as an issuing agent for bonds of Series EE. The agent's stamp 
must be imprinted in the certification.
    (3) By United States officials. Any judge, clerk, or deputy clerk of 
a United States court, including United States courts for the 
territories and possessions of the United States and the Commonwealth of 
Puerto Rico; any United States Commissioner, United States Attorney, or 
United States Collector of Customs, including their deputies; in the 
Internal Revenue Service, any Regional Commissioner, District Director, 
Service Center Director, or Internal Revenue agent.
    (b) Officers with limited authority--(1) In the Armed Forces. Any 
commissioned officer or warrant officer of the Armed Forces of the 
United States, but only for members of the respective services, their 
families, and civilian employees at posts, bases, or stations. The 
certifying officer must indicate his or her rank and state that the 
individual signing the request is one of the class whose request the 
certifying officer is authorized to certify.

[[Page 350]]

    (2) At the Veterans Administration, Federal penal institutions, and 
United States Public Health Service hospitals. Any officer in charge of 
a home, hospital, or other facility of the Veterans Administration, but 
only for the patients, or employees of the facility; any officer of a 
Federal penal institution or a United States Public Health Service 
hospital expressly authorized to certify by the Secretary of the 
Treasury or his designee, but only for the inmates, patients or 
employees of the institution involved. Officers of Veterans 
Administration facilities, Federal penal institutions, and Public Health 
Service hospitals must use the stamp or seal of the particular 
institution or service.
    (c) Authorized officers in foreign countries. Any United States 
diplomatic or consular representative, or the officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate seal or is 
certified to the Department of the Treasury. If none of these 
individuals is available, a notary public or other officer authorized to 
administer oaths may certify, but his or her official character and 
jurisdiction must be certified by a United States diplomatic or consular 
officer under seal of his or her office.
    (d) Authorized officers in particular localities. The Governor and 
the Treasurer of Puerto Rico; the Governor and the Commissioner of 
Finance of the Virgin Islands; the Governor and the Director of Finance 
of Guam; the Governor and the Director of Administrative Services of 
American Samoa; or designated officers of the Panama Canal Commission.
    (e) Special provisions. If no certifying officer is readily 
accessible, the Commissioner of the Public Debt, Deputy Commissioner, 
any Assistant Commissioner, or other designated official of the Bureau 
or of a Federal Reserve Bank or Branch is authorized to make special 
provision for any particular case.



Sec. 353.56  General instructions and liability.

    (a) The certifying officer must: (1) Require the person presenting a 
bond, or an appropriate Public Debt transaction form, to establish his 
or her identity in accordance with Department of the Treasury 
instructions and identification guidelines;
    (2) Place a notation on the back of the bond or on the appropriate 
Public Debt transaction form, or in a separate record, showing exactly 
how identification was established; and
    (3) Affix, as part of the certification, his or her official 
signature, title, seal or issuing or paying agent's stamp, address, and 
the date of execution.
    (b) The certifying officer and, if such person is an officer or an 
employee of an organization, the organization will be held fully 
responsible for the adequacy of the identification.



Sec. 353.57  When a certifying officer may not certify.

    Certifying officers may not certify the requests for payment of 
bonds, or appropriate Public Debt transaction forms if, in their own 
right or in a representative capacity, they--
    (a) Have an interest in the bonds, or
    (b) Will, by virtue of the requests being certified, acquire an 
interest in the bonds.



Sec. 353.58  Forms to be certified.

    When required in the instructions on a Public Debt transaction form, 
the form must be signed before an authorized certifying officer.



     Subpart K_Minors, Incompetents, Aged Persons, Absentees, et al.



Sec. 353.60  Payment to representative of an estate.

    (a) The representative of an estate of an owner who is a minor, an 
aged person, incompetent, absentee, et al., may receive payment upon 
request:
    (1) If the registration shows the name and capacity of the 
representative;
    (2) If the registration shows the capacity but not the name of the 
representative and the request is accompanied by appropriate evidence; 
or
    (3) If the registration includes neither the name of the 
representative nor his or her capacity but the request is accompained by 
appropriate evidence.
    (b) Appropriate evidence for paragraphs (a) (2) and (3) of this 
section includes a certified copy of the letters of

[[Page 351]]

appointment or, if the representative is not appointed by a court, other 
proof of qualification. Except in the case of corporate fiduciaries, the 
evidence must show that the appointment is in full force and be dated 
not more than one year prior to the presentation of the bond for 
payment. The request for payment appearing on the back of a bond must be 
signed by the representative as such, for example, ``John S. Jones, 
guardian (committee) of the estate of Henry W. Smith, a minor (an 
incompetent)''.



Sec. 353.61  Payment after death.

    After the death of the ward, and at any time prior to the 
representative's discharge, the representative of the estate will be 
entitled to obtain payment of a bond to which the ward was solely 
entitled.



Sec. 353.62  Payment to minors.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of the 
minor's estate, payment will be made to the minor upon his or her 
request, provided the minor is of sufficient competency to sign the 
request for payment and to understand the nature of the transaction. In 
general, the fact that the request for payment has been signed by a 
minor and certified will be accepted as sufficient proof of competency 
and understanding.



Sec. 353.63  Payment to a parent or other person on behalf of a minor.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of his or 
her estate, and if the minor is not of sufficient competency to sign the 
request for payment and to understand the nature of the transaction, 
payment will be made to either parent with whom the minor resides or to 
whom legal custody has been granted. If the minor does not reside with 
either parent, payment will be made to the person who furnishes the 
chief support for the minor. The request must appear on the back of the 
bond in one of the following forms:
    (a) Request by parent.

I certify that I am the mother of John C. Jones (with whom he resides) 
(to whom legal custody has been granted). He is ------ years of age and 
is not of sufficient understanding to make this request.

Mary Jones on behalf of John C. Jones

    (b) Request by other person.

    I certify that John C. Jones does not reside with either parent and 
that I furnish his chief support. He is ------ years of age and is not 
of sufficient understanding to make this request.

    Alice Brown, grandmother,

On behalf of John C. Jones



Sec. 353.64  Payment, reinvestment, or exchange--voluntary guardian of 
an incapacitated person.

    (a) Payment of bonds. When an adult owner of bonds is incapable of 
requesting payment as a result of incapacity and there is no other 
person legally qualified to do so, the relative, or other person, 
responsible for the owner's care and support may submit an application 
for recognition as voluntary guardian for the purpose of redeeming the 
owner's bonds, if the total redemption value of all of the owner's bonds 
does not exceed $20,000. The redemption value of the bonds shall be 
determined as of the date the bonds are received, accompanied by an 
appropriate request for payment. If the total redemption value exceeds 
$20,000, a legal representative must be appointed, as set forth in Sec. 
315.60.
    (b) Reinvestment of bonds. If the bonds have finally matured and it 
is desired to redeem them and reinvest the proceeds in other savings 
bonds, the new bonds must be registered in the name of the incapacitated 
person, followed by words showing that he or she is under voluntary 
guardianship; for example, ``John Jones 123-45-6789, under voluntary 
guardianship''. A living coowner or beneficiary named on the matured 
bonds must be designated on the new bonds, unless such person furnishes 
a certified statement consenting to omission of his or her name. If an 
amount insufficient to purchase an additional bond of any authorized 
denomination of either series remains after the reinvestment, the 
voluntary guardian may furnish additional funds sufficient to purchase 
another bond of

[[Page 352]]

either series of the lowest available denomination. If additional funds 
are not furnished, the remaining amount will be paid to the voluntary 
guardian for the use and benefit of the incapacitated person.
    (c) Exchange of bonds. The provisions for reinvestment of the 
proceeds of matured bonds are equally applicable to any authorized 
exchange of bonds of one series for those of another.

[57 FR 39602, Sept. 1, 1992]



Sec. 353.65  Reissue.

    A bond on which a minor or other person under legal disability is 
named as the owner or coowner, or in which he or she has an interest, 
may be reissued under the following conditions:
    (a) A minor for whose estate no representative has been appointed 
may request reissue if the minor is of sufficient competency to sign his 
or her name to the request and to understand the nature of the 
transaction.
    (b) A bond on which a minor is named as beneficiary or coowner may 
be reissued in the name of a custodian for the minor under a statute 
authorizing gifts to minor upon the request of the adult whose name 
appears on the bond as owner or coowner.
    (c) A minor coowner for whose estate no representative has been 
appointed, may be named sole owner upon the request of the competent 
coowner.
    (d) Reissue to eliminate the name of a minor or incompetent for 
whose estate a legal representative has been appointed is permitted only 
if supported by evidence that a court has authorized the representative 
of the minor's or incompetent's estate to request the reissue. See Sec. 
353.23.

Except to the extent provided in paragraphs (a) through (d) of this 
section, reissue will be restricted to a form of registration which does 
not adversely affect the existing ownership or interest of a minor who 
is not of sufficient understanding to make a request, or other person 
under legal disability. Requests for reissue should be executed by the 
person authorized to request payment under Sec. Sec. 353.60 and 353.63, 
or the person who may request recognization as voluntary guardian under 
Sec. 353.64.

[44 FR 76441, Dec. 26, 1979. Redesignated at 57 FR 39602, Sept. 1, 1992]



            Subpart L_Deceased Owner, Coowner or Beneficiary



Sec. 353.70  General rules governing entitlement.

    The following rules govern ownership or entitlement where one or 
both of the persons named on a bond have died without the bond having 
been surrendered for payment or reissue:
    (a) Single owner bond. If the owner of a bond registered in single 
ownership form has died, the bond becomes the property of that 
decedent's estate, and payment or reissue will be made as provided in 
this subpart.
    (b) Coowner bond--(1) One coowner deceased. If one of the coowners 
named on a bond has died, the surviving coowner will be recognized as 
the sole and absolute owner, and payment or reissue will be made as 
though the bond were registered in the name of the survivor alone. Any 
request for reissue by the surviving coowner must be supported by proof 
of death of the other coowner.
    (2) Both coowners deceased. If both coowners named on a bond have 
died, the bond becomes the property of the estate of the coowner who 
died last, and payment or reissue will be made as if the bond were 
registered in the name of the last deceased coowner alone. Proof of 
death of both coowners will be required to establish the order of death.
    (3) Simultaneously death of both coowners. If both coowners die 
under conditions where it cannot be established, either by presumption 
of law or otherwise, which coowner died first, the bond becomes the 
property of both equally, and payment or reissue will be made 
accordingly.
    (c) Beneficiary bond--(1) Owner deceased. If the owner of a bond 
registered in beneficiary form has died and is survived by the 
beneficiary, upon proof of death of the owner, the beneficiary will be 
recognized as the sole and absolute owner of the bond. Payment or 
reissue will be made as though the bond were registered in the 
survivor's name alone. A request for payment or reissue by the 
beneficiary

[[Page 353]]

must be supported by proof of death of the owner.
    (2) Beneficiary deceased. If the beneficiary's death occurs before, 
or simultaneously with, that of the registered owner, payment or reissue 
will be made as though the bond were registered in the owner's name 
alone. Proof of death of the owner and beneficiary is required to 
establish the order of death.
    (d) Nonresident aliens. If the person who becomes entitled to a bond 
because of the death of an owner is an alien who is a resident of an 
area with respect to which the Department of the Treasury restricts or 
regulates the delivery of checks drawn against funds of the United 
States or its agencies or instrumentalities, delivery of the redemption 
check will not be made so long as the restriction applies. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211).



Sec. 353.71  Decedent's estate.

    (a) Estate is being administered. (1) A legal representative of a 
deceased owner's estate may request payment of savings bonds to the 
estate, or may distribute the savings bonds to the persons entitled.
    (2) Appropriate proof of appointment for the legal representative of 
the estate is required. Letters of appointment must be dated not more 
than one year prior to the date of submission of the letters of 
appointment.
    (b) Estate has been settled previously. If the estate has been 
settled previously through judicial proceedings, the persons entitled 
may request payment or reissue of savings bonds. A certified copy of the 
court-approved final accounting for the estate, the court's decree of 
distribution, or other appropriate evidence is required.
    (c) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the estate is to be appointed, the person appointed 
to receive or distribute the assets of a decedent's estate without 
regular administration under applicable local law summary or small 
estates procedures may request payment or reissue of savings bonds. 
Appropriate evidence is required.
    (d) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000, administration of the decedent's estate will 
be required. The redemption value of savings bonds and the principal 
amount of marketable securities will be used to determine the value of 
securities, and will be determined as of the date of death. 
Administration may also be required at the discretion of the Department 
for any case.
    (e) Voluntary representative for small estates that are not being 
otherwise administered--(1) General. A voluntary representative is a 
person qualified according to paragraph (e)(3) of this section, to 
redeem or distribute a decedent's savings bonds. The voluntary 
representative procedures are for the convenience of the Department; 
entitlement to the decedent's savings bonds and held payments, if any, 
is determined by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. Voluntary representative procedures may 
be used only if:
    (i) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (ii) The total redemption value of the Treasury securities and held 
payments, if any, held directly on our records that are the property of 
the decedent's estate is $100,000 or less as of the date of death; and
    (iii) There is a person eligible to serve as the voluntary 
representative according to paragraph (e)(3) of this section.
    (2) Authority of voluntary representative. A voluntary 
representative may:
    (i) Redeem the decedent's savings bonds that are eligible for 
redemption on behalf of the persons entitled by the law of the 
jurisdiction in which the decedent was domiciled at the date of death;
    (ii) Distribute the decedent's savings bonds to the persons entitled 
by the law of the jurisdiction in which the decedent was domiciled at 
the date of death.

[[Page 354]]

    (3) Order of precedence for voluntary representative. An individual 
eighteen years of age or older may act as a voluntary representative 
according to the following order of precedence: A surviving spouse; if 
there is no surviving spouse, then a child of the decedent; if there are 
none of the above, then a descendant of a deceased child of the 
decedent; if there are none of the above, then a parent of the decedent; 
if there are none of the above, then a brother or sister of the 
decedent; if there are none of the above, then a descendant of a 
deceased brother or sister of the decedent; if there are none of the 
above, then a next of kin of the decedent, as determined by the law of 
the jurisdiction in which the decedent was domiciled at the date of 
death. As used in this order of precedence, child means a natural or 
adopted child of the decedent.
    (4) Liability. By serving, the voluntary representative warrants 
that the distribution of payments or savings bonds is to the persons 
entitled by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. The United States is not liable to any 
person for the improper distribution of payments or securities. Upon 
payment or transfer of the securities at the request of the voluntary 
representative, the United States is released to the same extent as if 
it had paid or delivered to a representative of the estate appointed 
pursuant to the law of the jurisdiction in which the decedent was 
domiciled at the date of death. The voluntary representative shall 
indemnify and hold harmless the United States and all creditors and 
persons entitled to the estate of the decedent. The amount of the 
indemnification is limited to an amount no greater than the value 
received by the voluntary representative.
    (f) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for the amount of the debt, providing the 
debt has not been barred by applicable local law.

[70 FR 57430, Sept. 30, 2005]



Sec. 353.72  [Reserved]



                          Subpart M_Fiduciaries



Sec. 353.75  Payment or reissue during the existence of the fiduciary 
estate.

    (a) Payment or reissue before maturity--(1) Request from the 
fiduciary named in the registration. A request for reissue or payment 
prior to maturity must be signed by all of the fiduciaries unless by 
statute, decree of court, or the terms of the governing instrument, any 
lesser number may properly execute the request. If the fiduciaries named 
in the registration are still acting, no further evidence will be 
required. In other cases, evidence to support the request will be 
required, as specified:
    (i) Fiduciaries by title only. If the bond is registered only in the 
titles, without the names, of fiduciaries not acting as a board, 
satisfactory evidence of their incumbency must be furnished, except in 
the case of bonds registered in the title of public officers as 
trustees.
    (ii) Boards, committees, commission, etc. If a bond is registered in 
the name of a governing body which is empowered to act as a unit, and 
which holds title to the property of a religious, educational, 
charitable or nonprofit organization or a public corporation, the 
request should be signed in the name of the body by an authorized 
person. Ordinarily, a signed and certified request will be accepted 
without further evidence.
    (iii) Corporate fiduciaries. If a bond is registered in the name of 
a public or private corporation or a governmental body as fiduciary, the 
request must be signed by an authorized officer in the name of the 
organization as fiduciary. Ordinarily, a signed and certified request 
will be accepted without further evidence.
    (2) Trustee of a common trust fund. A bond held by a financial 
institution in a fiduciary capacity may be reissued in the name of the 
institution as trustee of its common trust fund to the extent that 
participation in the common trust fund is authorized by law or 
regulation.

[[Page 355]]

The request for reissue should be executed by the institution and any 
cofiduciary.
    (3) Successor fiduciary. If the fiduciary in whose name the bond is 
registered has been replaced by another fiduciary, satisfactory evidence 
of successorship must be furnished.
    (b) Payment at or after final maturity. At or after final maturity, 
a request for payment signed by any one or more of the fiduciaries will 
be accepted. Payment will be made by check drawn as the bond is 
registered.



Sec. 353.76  Payment or reissue after termination of the fiduciary 
estate.

    A bond registered in the name or title of a fiduciary may be paid or 
reissued to the person who has become entitled by reason of the 
termination of a fiduciary estate. Requests for reissue made by a 
fiduciary pursuant to the termination of a fiduciary estate should be 
made on the appropriate form. Requests for payment or reissue by other 
than the fiduciary must be accompanied by evidence to show that the 
person has become entitled in accordance with applicable State law or 
otherwise. When two or more persons have become entitled, the request 
for payment or reissue must be signed by each of them.



Sec. 353.77  Exchanges by fiduciaries.

    Fiduciaries are authorized to request an exchange of bonds of one 
series for those of another, pursuant to any applicable Department of 
the Treasury offering. A living coowner of beneficiary named on the 
bonds submitted in exchange may be retained in the same capacity on the 
new bonds.



      Subpart N_Private Organizations (Corporations, Associations, 
 Partnerships, et cetera) and Governmental Agencies, Units and Officers



Sec. 353.80  Payment to corporations or unincorporated associations.

    A bond registered in the name of a private corporation or an 
unincorporated association will be paid to the corporation or 
unincorporated association upon a request for payment on its behalf by 
an authorized officer. The signature to the request should be in the 
form, for example, ``The Jones Coal Company, a corporation, by John 
Jones, President'', or ``The Lotus Club, an unincorporated association, 
by William A. Smith, Treasurer''. A request for payment so signed and 
certified will ordinarily be accepted without further evidence of the 
officer's authority.



Sec. 353.81  Payment to partnerships.

    A bond registered in the name of an existing partnership will be 
paid upon a request for payment signed by a general partner. The 
signature to the request should be in the form, for example, ``Smith and 
Jones, a partnership, by John Jones, a general partner''. A request for 
payment so signed and certified will ordinarily be accepted as 
sufficient evidence that the partnership is still in existence and that 
the person signing the request is authorized.



Sec. 353.82  Reissue or payment to successors of corporations, 
unincorporated associations, or partnerships.

    A bond registered in the name of a private corporation, an 
unincorporated association, or a partnership which has been succeeded by 
another corporation, unincorporated association, or partnership by 
operation of law or otherwise, in any manner whereby the business or 
activities of the original organization are continued without 
substantial change, will be paid to or reissued in the name of the 
succeeding organization upon appropriate request on its behalf, 
supported by satisfactory evidence of successorship. The appropriate 
form should be used.



Sec. 353.83  Reissue or payment on dissolution of corporation or 
partnership.

    (a) Corporations. A bond registered in the name of a private 
corporation which is in the process of dissolution will be paid to the 
authorized representative of the corporation upon a request for payment, 
supported by satisfactory evidence of the representative's authority. At 
the termination of dissolution proceedings, the bond may

[[Page 356]]

be reissued upon the request of the authorized representative in the 
names of those persons, other than creditors, entitled to the assets of 
the corporation, to the extent of their respective interests. Proof will 
be required that all statutory provisions governing the dissolution of 
the corporation have been complied with and that the persons in whose 
names reissue is requested are entitled and have agreed to the reissue. 
If the dissolution proceedings are under the direction of a court, a 
certified copy of an order of the court, showing the authority of the 
representative to make the distribution requested must be furnished.
    (b) Partnerships. A bond registered in the name of a partnership 
which has been dissolved by death or withdrawal of a partner, or in any 
other manner:
    (1) Will be paid upon a request for payment by any partner or 
partners authorized by law to act on behalf of the dissolved 
partnership, or
    (2) Will be paid to or reissued in the names of the persons entitled 
as the result of such dissolution to the extent of their respective 
interests, except that reissue will not be made in the names of 
creditors. The request must be supported by satisfactory evidence of 
entitlement, including proof that the debts of the partnership have been 
paid or properly provided for. The appropriate form should be used.



Sec. 353.84  Payment to certain institutions.

    A bond registered in the name of a church, hospital, home, school, 
or similar institution, without reference in the registration to the 
manner in which it is organized or governed or to the manner in which 
title to its property is held, will be paid upon a request for payment 
signed on behalf of such institution by an authorized representative. A 
request for payment signed by a pastor of a church, superintendent of a 
hospital, president of a college, or by any official generally 
recognized as having authority to conduct the financial affairs of the 
particular institution will ordinarily be accepted without further proof 
of authority. The signature to the request should be in the form, for 
example, ``Shriners' Hospital for Crippled Children, St. Louis, MO, by 
William A. Smith, Superintendent'', or ``St. Mary's Roman Catholic 
Church, Albany, NY, by the Rev. John Smyth, Pastor''.



Sec. 353.85  Reissue in name of trustee or agent for reinvestment 
purposes.

    A bond registered in the name of a religious, educational, 
charitable or nonprofit organization, whether or not incorporated, may 
be reissued in the name of a financial institution, or an individual, as 
trustee or agent. There must be an agreement between the organization 
and the trustee or agent holding funds of the organization, in whole or 
in part, for the purpose of investing and reinvesting the principal and 
paying the income to the organization. Reissue should be requested on 
behalf of the organization by an authorized officer using the 
appropriate form.



Sec. 353.86  Reissue upon termination of investment agency.

    A bond registered in the name of a financial institution, or 
individual, as agent for investment purposes only, under an agreement 
with a religious, an educational, a charitable, or a nonprofit 
organization, may be reissued in the name of the organization upon 
termination of the agency. The former agent should request such reissue 
and should certify that the organization is entitled by reason of the 
termination of the agency. If such request and certification are not 
obtainable, the bond will be reissued in the name of the organization 
upon its own request, supported by satisfactory evidence of the 
termination of the agency. The appropriate form should be used.



Sec. 353.87  Payment to governmental agencies, units, or their officers.

    (a) Agencies and units. A bond registered in the name of a State, 
county, city, town, village, or in the name of a Federal, State, or 
local governmental agency, such as a board, commission, or corporation, 
will be paid upon a request signed in the name of the governmental 
agency or unit or by an authorized officer. A request for payment so 
signed and certified will ordinarily be accepted without further proof 
of the officer's authority.

[[Page 357]]

    (b) Officers. A bond registered in the official title of an officer 
of a governmental agency or unit will be paid upon a request for payment 
signed by the officer. The request for payment so signed and certified 
will ordinarily be accepted as proof that the person signing is the 
incumbent of the office.



                   Subpart O_Miscellaneous Provisions



Sec. 353.90  Waiver of regulations.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may waive or modify any provision or provisions of these 
regulations. He may do so in any particular case or class of cases for 
the convenience of the United States or in order to relieve any person 
or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity, (b) 
if it does not impair any existing rights, and (c) if he is satisfied 
that such action would not subject the United States to any substantial 
expense or liability.



Sec. 353.91  Additional requirements; bond of indemnity.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may require:
    (a) Such additional evidence as he may consider necessary or 
advisable, or (b) a bond of indemnity, with or without surety, in any 
case in which he may consider such a bond necessary for the protection 
of the interests of the United States.



Sec. 353.92  Supplements, amendments, or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional, supplemental, amendatory, or revised rules and 
regulations governing United States Savings Bonds of Series EE and HH.



PART 354_REGULATIONS GOVERNING BOOK-ENTRY SECURITIES OF THE STUDENT LOAN 
MARKETING ASSOCIATION (SALLIE MAE)--Table of Contents




Sec.
354.0 Applicability; maintenance of Sallie Mae Securities.
354.1 Definitions of terms.
354.2 Law governing rights and obligations of Federal Reserve Banks, and 
          Sallie Mae; rights of any Person against Federal Reserve Bank, 
          and Sallie Mae.
354.3 Law governing other interests.
354.4 Creation of Participant's Security Entitlement; security 
          interests.
354.5 Obligations of Sallie Mae; no adverse claims.
354.6 Authority of Federal Reserve Banks.
354.7 Withdrawal of eligible Book-entry Sallie Mae Securities for 
          conversion to definitive form.
354.8 Waiver of regulations.
354.9 Liability of Sallie Mae and Federal Reserve Banks.
354.10 Additional provisions.

    Authority: 12 U.S.C. 391; 20 U.S.C. 1087-2(m).

    Source: 62 FR 622, Jan. 6, 1997, unless otherwise noted.



Sec. 354.0  Applicability; maintenance of Sallie Mae Securities.

    (a) A Sallie Mae Security may be maintained in the form of a 
Definitive Sallie Mae Security or a Book-entry Sallie Mae Security. A 
Book-entry Sallie Mae Security shall be maintained in the Book-entry 
System.
    (b) The Sallie Mae Securities to which the regulations in this part 
apply are obligations which, by the terms of their issue, are available 
exclusively as Book-entry Sallie Mae Securities or which, pursuant to 
the securities documentation, are convertible from Book-entry Sallie Mae 
Securities to Definitive Sallie Mae Securities or vice versa.



Sec. 354.1  Definitions of terms.

    (a) Adverse Claim means a claim that a claimant has a property 
interest in a Security and that it is a violation of the rights of the 
claimant for another Person to hold, transfer, or deal with the 
Security.

[[Page 358]]

    (b) Book-entry Sallie Mae Security means a Sallie Mae Security 
issued or maintained in the Book-entry System.
    (c) Book-entry System means the automated book-entry system operated 
by the Federal Reserve Banks acting as the fiscal agent for Sallie Mae, 
on which Book-entry Sallie Mae Securities are issued, recorded, 
transferred and maintained in book-entry form.
    (d) Definitive Sallie Mae Security means a Sallie Mae Security in 
engraved or printed form, or that is otherwise represented by a 
certificate.
    (e) Eligible Book-entry Sallie Mae Security means a Book-entry 
Sallie Mae Security issued or maintained in the Book-entry System which 
by the terms of its Security Documentation is available in either 
definitive or book-entry form.
    (f) Entitlement Holder means a Person to whose account an interest 
in a Book-entry Sallie Mae Security is credited on the records of a 
Securities Intermediary.
    (g) Federal Reserve Bank means a Federal Reserve Bank or Branch.
    (h) Federal Reserve Bank Operating Circular means the publication 
issued by each Federal Reserve Bank that sets forth the terms and 
conditions under which the Federal Reserve Bank maintains book-entry 
Securities accounts (including Book-entry Sallie Mae Securities) and 
transfers book-entry Securities (including Book-entry Sallie Mae 
Securities).
    (i) Funds Account means a reserve and/or clearing account at a 
Federal Reserve Bank to which debits or credits are posted for transfers 
against payment, book-entry securities transaction fees, or principal 
and interest payments.
    (j) Participant means a Person that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    (k) Participant's Securities Account means an account in the name of 
a Participant at a Federal Reserve Bank to which Book-entry Sallie Mae 
Securities held for a Participant are or may be credited.
    (l) Person means and includes an individual, corporation, company, 
governmental entity, association, firm, partnership, trust, estate, 
representative, and any other similar organization, but does not mean or 
include the United States, Sallie Mae, or a Federal Reserve Bank.
    (m) Revised Article 8 means Uniform Commercial Code, Revised Article 
8, Investment Securities (with Conforming and Miscellaneous Amendments 
to Articles 1, 3, 4, 5, 9, and 10) 1994 Official Text. Revised Article 8 
of the Uniform Commercial Code is incorporated by reference in this part 
pursuant to 5 U.S.C. 552(a) and 1 CFR part 51. Article 8 was adopted by 
the American Law Institute and the National Conference of Commissioners 
on Uniform State laws and approved by the American Bar Association on 
February 14, 1995. Copies of this publication are available from the 
Executive Office of the American Law Institute, 4025 Chestnut Street, 
Philadelphia, PA 19104, and the National Conference of Commissioners on 
Uniform State Laws, 676 North St. Clair Street, Suite 1700, Chicago, IL 
60611. Copies are also available for public inspection at the Department 
of the Treasury Library, Room 5030, main Treasury Building, 1500 
Pennsylvania Avenue, N.W., Washington D.C. 20220, and at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    (n) Sallie Mae means the Student Loan Marketing Association, a stock 
holder-owned corporation and government-sponsored enterprise established 
in 1972 by, and operating pursuant to, section 439 of the Higher 
Education Act of 1965, as amended, 20 U.S.C. 1087-2.
    (o) Sallie Mae Security means any security or obligation of Sallie 
Mae issued in the form of a Definitive Sallie Mae Security or a Book-
entry Sallie Mae Security.
    (p) Securities Documentation means the applicable statement of terms 
and conditions or other documents establishing the terms of a Book-entry 
Sallie Mae Security.
    (q) Securities Intermediary means:
    (1) A Person that is registered as a ``clearing agency'' under the 
federal securities laws; a Federal Reserve Bank;

[[Page 359]]

any other Person that provides clearance or settlement services with 
respect to a Book-entry Security that would require it to register as a 
clearing agency under the federal securities laws but for an exclusion 
or exemption from the registration requirement, if its activities as a 
clearing corporation, including promulgation of rules, are subject to 
regulation by a federal or state governmental authority; or
    (2) A Person (other than an individual, unless such individual is 
registered as a broker or dealer under the federal securities laws) 
including a bank or broker, that in the ordinary course of its business 
maintains securities accounts for others and is acting in that capacity.
    (r) Security means any note, bond, debenture, evidence of 
indebtedness, or, in general, any interest or instrument commonly known 
as a ``security.''
    (s) Security Entitlement means the rights and property interest of 
an Entitlement Holder with respect to a Book-entry Sallie Mae Security.
    (t) State means any state of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or any other territory or 
possession of the United States.
    (u) Transfer Message means an instruction of a Participant to a 
Federal Reserve Bank to effect a transfer of a Book-entry Security 
(including a Book-entry Sallie Mae Security) maintained in the Book-
entry System, as set forth in Federal Reserve Bank Operating Circulars.

[62 FR 622, Jan. 6, 1997, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 354.2  Law governing rights and obligations of Federal Reserve 
Banks, and Sallie Mae; rights of any Person against Federal Reserve 
Banks and Sallie Mae.

    (a) Except as provided in paragraph (b) of this section, the 
following are governed solely by the book-entry regulations contained in 
this part 354, the Securities Documentation (to the extent not 
inconsistent with these regulations) and Federal Reserve Bank Operating 
Circulars:
    (1) The rights and obligations of Sallie Mae and the Federal Reserve 
Banks with respect to:
    (i) A Book-entry Sallie Mae Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to Sallie 
Mae Securities; and
    (2) The rights of any Person, including a Participant, against 
Sallie Mae and the Federal Reserve Banks with respect to:
    (i) A Book-entry Sallie Mae Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to Sallie 
Mae Securities.
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 354.4(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 354.14(c)(1), 
is governed by the law determined in the manner specified in Sec. 
354.3.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8 
(incorporated by reference, see Sec. 354.1), then the law specified in 
paragraph (b) shall be the law of that State as though Revised Article 8 
had been adopted by that State.



Sec. 354.3  Law governing other interests.

    (a) To the extent not inconsistent with the regulations in this 
part, the law (not including the conflict-of-law rules) of a Securities 
Intermediary's jurisdiction governs:
    (1) The acquisition of a Security Entitlement from the Securities 
Intermediary;
    (2) The rights and duties of the Securities Intermediary and 
Entitlement Holder arising out of a Security Entitlement;
    (3) Whether the Securities Intermediary owes any duties to an 
adverse claimant to a Security Entitlement;

[[Page 360]]

    (4) Whether an Adverse Claim can be asserted against a Person who 
acquires a Security Entitlement from the Securities Intermediary or a 
Person who purchases a Security Entitlement or interest therein from an 
Entitlement Holder; and
    (5) Except as otherwise provided in paragraph (c) of this section, 
the perfection, effect of perfection or non-perfection and priority of a 
security interest in a Security Entitlement.
    (b) The following rules determine a ``Securities Intermediary's 
jurisdiction'' for purposes of this section:
    (1) If an agreement between the Securities Intermediary and its 
Entitlement Holder specifies that it is governed by the law of a 
particular jurisdiction, that jurisdiction is the Securities 
Intermediary's jurisdiction.
    (2) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify the governing law as provided in 
paragraph (b)(1) of this section, but expressly specifies that the 
securities account is maintained at an office in a particular 
jurisdiction, that jurisdiction is the Securities Intermediary's 
jurisdiction.
    (3) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
office identified in an account statement as the office serving the 
Entitlement Holder's account.
    (4) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section and an account statement does 
not identify an office serving the Entitlement Holder's account as 
provided in paragraph (b)(3) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
chief executive office of the Securities Intermediary.
    (c) Notwithstanding the general rule in paragraph (a)(5) of this 
section, the law (but not the conflict-of-law rules) of the jurisdiction 
in which the Person creating a security interest is located governs 
whether and how the security interest may be perfected automatically or 
by filing a financing statement.
    (d) If the jurisdiction specified in paragraph (b) of this section 
is a State that has not adopted Revised Article 8 (incorporated by 
reference, see Sec. 354.1), then the law for the matters specified in 
paragraph (a) of this section shall be the law of that State as though 
Revised Article 8 had been adopted by that State. For purposes of the 
application of the matters specified in paragraph (a) of this section, 
the Federal Reserve Bank maintaining the Participant's Securities 
Account is a clearing corporation, and the Participant's interest in a 
Book-entry Security is a Security Entitlement.



Sec. 354.4  Creation of Participant's Security Entitlement; security 
interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book-entry that a Book-entry Sallie Mae 
Security has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including without limitation deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Federal Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the security. For purposes of this 
paragraph, an ``authorized representative of the United States'' is the 
official designated in the applicable regulations or agreement to which 
a Federal Reserve Bank is a party, governing the security interest.
    (c)(1) Sallie Mae and the Federal Reserve Banks have no obligation 
to agree to act on behalf of any Person or

[[Page 361]]

to recognize the interest of any transferee of a security interest or 
other limited interest in favor of any Person except to the extent of 
any specific requirement of Federal law or regulation or to the extent 
set forth in any specific agreement with the Federal Reserve Bank on 
whose books the interest of the Participant is recorded. To the extent 
required by such law or regulation or set forth in an agreement with a 
Federal Reserve Bank, or the Federal Reserve Bank Operating Circular, a 
security interest in a Security Entitlement that is in favor of a 
Federal Reserve Bank, Sallie Mae, or a Person may be created and 
perfected by a Federal Reserve Bank marking its books to record the 
security interest. Except as provided in paragraph (b) of this section, 
a security interest in a Security Entitlement marked on the books of a 
Federal Reserve Bank shall have priority over any other interest in the 
securities.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest, including a security interest in favor of 
a Federal Reserve Bank, may be perfected by any method by which a 
security interest may be perfected under applicable law as described in 
Sec. 354.2(b) or Sec.  354.3. The perfection, effect of perfection or 
non-perfection and priority of a security interest are governed by such 
applicable law. A security interest in favor of a Federal Reserve Bank 
shall be treated as a security interest in favor of a clearing 
corporation in all respects under such law, including with respect to 
the effect of perfection and priority of such security interest. A 
Federal Reserve Bank Operating Circular shall be treated as a rule 
adopted by a clearing corporation for such purposes.



Sec. 354.5  Obligations of Sallie Mae; no adverse claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in Sec. 
354.4(c)(1), for the purposes of this part 354, Sallie Mae and the 
Federal Reserve Banks shall treat the Participant to whose Securities 
Account an interest in a Book-entry Sallie Mae Security has been 
credited as the person exclusively entitled to issue a Transfer Message, 
to receive interest and other payments with respect thereof and 
otherwise to exercise all the rights and powers with respect to such 
Security, notwithstanding any information or notice to the contrary. 
Neither the Federal Reserve Banks nor Sallie Mae is liable to a Person 
asserting or having an Adverse Claim to a Security Entitlement or to a 
Book-entry Sallie Mae Security in a Participant's Securities Account, 
including any such claim arising as a result of the transfer or 
disposition of a Book-entry Sallie Mae Security by a Federal Reserve 
Bank pursuant to a Transfer Message that the Federal Reserve Bank 
reasonably believes to be genuine.
    (b) The obligation of Sallie Mae to make payments of interest and 
principal with respect to Book-entry Sallie Mae Securities is discharged 
at the time payment in the appropriate amount is made as follows:
    (1) Interest on Book-entry Sallie Mae Securities is either credited 
by a Federal Reserve Bank to a Funds Account maintained at such Bank or 
otherwise paid as directed by the Participant.
    (2) Book-entry Sallie Mae Securities are redeemed at maturity or 
pursuant to a call for redemption in accordance with their terms by a 
Federal Reserve Bank withdrawing the securities from the Participant's 
Securities Account in which they are maintained and by either crediting 
the amount of the redemption proceeds, including both principal and 
interest where applicable, to a Funds Account at such Bank or otherwise 
paying such principal and interest, as directed by the Participant.



Sec. 354.6  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of Sallie Mae to perform functions with respect to the issuance of Book-
entry Sallie Mae Securities offered and sold by Sallie Mae, in 
accordance with the Securities Documentation, and Federal Reserve Bank 
Operating Circulars; to service and maintain Book-entry Sallie Mae 
Securities in accounts established for such purposes; to make payments 
of principal and interest with respect to such Book-entry Sallie Mae 
Securities

[[Page 362]]

as directed by Sallie Mae; to effect transfer of Book-entry Sallie Mae 
Securities between Participants' Securities Account as directed by the 
Participants; to effect conversions between Book-entry Sallie Mae 
securities and Definitive Sallie Mae Securities with respect to those 
securities as to which conversion rights are available pursuant to the 
applicable Securities Documentation; and to perform such other duties as 
fiscal agent as may be requested by Sallie Mae.
    (b) Each Federal Reserve Bank may issue Operating Circulars not 
inconsistent with this part, governing the details of its handling of 
Book-entry Sallie Mae Securities, Security Entitlements, and the 
operation of the Book-entry System under this part.



Sec. 354.7  Withdrawal of eligible Book-entry Sallie Mae Securities for 
conversion to definitive form.

    (a) Eligible Book-entry Sallie Mae Securities may be withdrawn from 
the Book-entry System by requesting delivery of like Definitive Sallie 
Mae Securities.
    (b) A Federal Reserve Bank shall, upon receipt of appropriate 
instructions to withdraw Eligible Book-entry Sallie Mae Securities from 
book-entry in the Book-entry System, convert such securities into 
Definitive Sallie Mae Securities and deliver them in accordance with 
such instructions. No such conversion shall affect existing interests in 
such Sallie Mae Securities.
    (c) All requests for withdrawal of Eligible Book-entry Sallie Mae 
Securities must be made prior to the maturity or date of call of such 
securities.
    (d) Sallie Mae Securities which are to be delivered upon withdrawal 
may be issued in either registered or bearer form, to the extent 
permitted by the applicable Securities Documentation.



Sec. 354.8  Waiver of regulations.

    The Secretary reserves the right, in the Secretary's discretion, to 
waive any provision(s) of the regulations in this part in any case or 
class of cases for the convenience of Sallie Mae, or in order to relieve 
any person or entity of unnecessary hardship, if such action is not 
inconsistent with law, does not adversely affect substantial existing 
rights, and the Secretary is satisfied that such action will not subject 
Sallie Mae to any substantial expense or liability.



Sec. 354.9  Liability of Sallie Mae and Federal Reserve Banks.

    Sallie Mae and the Federal Reserve Banks may rely on the information 
provided in a Transfer Message, and are not required to verify the 
information. Sallie Mae and the Federal Reserve Banks shall not be 
liable for any action taken in accordance with the information set out 
in a Transfer Message or evidence submitted in support thereof.



Sec. 354.10  Additional provisions.

    (a) Additional requirements. In any case or any class of cases 
arising under these regulations, Sallie Mae may require such additional 
evidence and a bond of indemnity, with or without surety, as may in the 
judgment of Sallie Mae be necessary for the protection of the interests 
of Sallie Mae.
    (b) Notice of attachment for Sallie Mae Securities in Book-entry 
System. The interest of a debtor in a Security Entitlement may be 
reached by a creditor only by legal process upon the Securities 
Intermediary with whom the debtor's securities account is maintained, 
except where a Security Entitlement is maintained in the name of a 
secured party, in which case the debtor's interest may be reached by 
legal process upon the secured party. The regulations in this part do 
not purport to establish whether a Federal Reserve Bank is required to 
honor an order or other notice of attachment in any particular case or 
class of cases.



PART 355_REGULATIONS GOVERNING FISCAL AGENCY CHECKS--Table of Contents




Sec.
355.0 What does this part cover?
355.1 Do any other regulations cover fiscal agency checks?
355.2 What special terms do I need to know to understand this part?
355.3 Where can I cash my fiscal agency check?
355.4 Is there a time limit on cashing a fiscal agency check?
355.5 What warranties does a presenting bank make?

[[Page 363]]

355.6 What happens if the presenting bank breaches its warranty?
355.7 What notice should I give if I do not receive my check or if a 
          check is lost, stolen, or destroyed?
355.8 How can I get a replacement fiscal agency check?
355.9 What should I do if I recover a check reported as lost, stolen, 
          destroyed, or not received?
355.10 What happens if I present my check to the payor Reserve Bank more 
          than six months after the issue date of the check?
355.11 What should I do if the endorsement on my check is forged or 
          unauthorized?
355.12 What requirements apply if the check is payable to two or more 
          persons?
355.13 Are there any additional requirements related to fiscal agency 
          checks?
355.14 Can these regulations be waived?
355.15 Can these regulations be amended?

    Authority: 12 U.S.C. 391; 31 U.S.C. Ch. 31.

    Source: 65 FR 65700, Nov. 1, 2000, unless otherwise noted.



Sec. 355.0  What does this part cover?

    This part governs checks issued for payments in connection with 
United States securities. These checks, referred to as ``fiscal agency 
checks,'' are issued by a designated Federal Reserve Bank in its 
capacity as fiscal agent of the United States. The checks are drawn on 
the payor Federal Reserve Bank in its banking capacity. The drawer of a 
fiscal agency check is the United States, and the drawee is a Federal 
Reserve Bank. The rights and liabilities of the United States, the 
Federal Reserve Banks, and others are set out in this part.



Sec. 355.1  Do any other regulations cover fiscal agency checks?

    The regulations governing checks drawn on the United States and on 
designated depositories of the United States do not apply to fiscal 
agency checks, unless a statute specifically provides differently, or 
unless we state differently in this part. If a definition or matter 
pertaining to fiscal agency checks is not specifically covered in this 
part, we will apply the provisions of Regulations J of the Board of 
Governors of the Federal Reserve System, at 12 CFR part 210. To the 
extent not otherwise covered by this part or by Regulation J, we will 
apply the provisions of the Uniform Commercial Code (U.C.C.)



Sec. 355.2  What special terms do I need to know to understand this part?

    Depository institution means:
    (1) Any insured bank, mutual savings bank or savings bank as defined 
in 12 U.S.C. 1813, or any institution eligible to become an insured bank 
under 12 U.S.C. 1815;
    (2) Any insured credit union as defined in 12 U.S.C. 1752, or any 
credit union eligible to become an insured credit union under 12 U.S.C. 
1781;
    (3) Any member as defined in 12 U.S.C. 1422; and
    (4) Any savings association as defined in 12 U.S.C. that is an 
insured depository institution as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811 et seq., or is eligible to become an 
insured depository institution under that Act.
    Fiscal agency check means a check for a payment in connection with a 
United States security drawn upon a Reserve Bank and issued on our 
behalf by the Reserve Bank in its capacity as fiscal agent of the United 
States.
    Payee (or ``you'') means the person or persons to whom a fiscal 
agency check is made payable.
    Payor Reserve Bank means the Reserve Bank on which a fiscal agency 
check is drawn.
    Presenting bank means a depository institution that sends a fiscal 
agency check directly to a Reserve Bank for payment or collection.
    Reserve Bank or Federal Reserve Bank means any Federal Reserve Bank 
or any branch of a Federal Reserve Bank.
    Security, for the purpose of this part, means a direct obligation of 
the United States, including a Treasury bill, note, bond or savings 
bond/note.
    We (or ``us'') refers to the Secretary of the Treasury and the 
Secretary's delegates at the Treasury Department and the Bureau of the 
Public Debt. The term also extends to any fiscal or financial agency 
acting on behalf of the United States when designated to act by the 
Secretary or the Secretary's delegates. The term does not refer to a 
United States Savings Bond issuing or paying agent.

[[Page 364]]



Sec. 355.3  Where can I cash my fiscal agency check?

    Presentment of a fiscal agency check must be made to the payor 
Reserve Bank. The payor Reserve Bank will only cash a fiscal agency 
check presented by the payee who can be identified to the satisfaction 
of the Reserve Bank. Otherwise, a fiscal agency check must be presented 
through banking channels. A refusal to accept or to pay fiscal agency 
check presented by a person other than the payee, or by a payee who is 
not reasonably identified, does not constitute dishonor.



Sec. 355.4  Is there a time limit on cashing a fiscal agency check?

    A payor Reserve Bank may refuse to pay a fiscal agency check 
presented more than six (6) months after the issue date of the check. If 
the check is not presented within this time, you must follow the 
procedures in Sec. 355.10.



Sec. 355.5  What warranties does a presenting bank make?

    (a) A presenting bank makes the warranties required of a sender 
under Subpart A of Regulation J (12 CFR part 210). This paragraph does 
not limit any warranty by a presenter or other party arising under State 
law.
    (b) We are not barred from recovering on a breach of warranty solely 
because:
    (1) Our negligence contributed to a fraudulent endorsement or 
material alteration;
    (2) We did not promptly discover an unauthorized signature or 
alteration;
    (3) An impostor fraudulently caused the issuance of a fiscal agency 
check in the name of any existing payee; or
    (4) Our employee fraudulently caused the issuance of a fiscal agency 
check in the name of any existing payee.



Sec. 355.6  What happens if the presenting bank breaches its warranty?

    If the presenting bank breaches its warranty, the payor Reserve Bank 
may either return the check to the presenting bank or send notice of the 
breach to the presenting bank. If the presenting bank does not make 
prompt restitution when it receives the returned check or notice of 
breach, we may begin appropriate collection procedures.



Sec. 355.7  What notice should I give if I do not receive my check or if 
a check is lost, stolen, or destroyed?

    If a fiscal agency check is not received within a reasonable time 
after a payment is due, or if a check is lost, stolen, or destroyed, you 
must provide prompt written notification. Your written notice may be 
sent to us or to the payor Reserve Bank. You may give notice by 
telephone, but we will not issue a replacement check until you confirm 
the notice in writing. The written notice must provide enough 
information for us to identify the account and the security to which the 
payment relates. We will stop payment on the fiscal agency check if we 
have a reasonable time to act before final payment.



Sec. 355.8  How can I get a replacement fiscal agency check?

    The payor Federal Reserve Bank will issue a replacement fiscal 
agency check if:
    (a) You submit written notice:
    (b) The check is unpaid;
    (c) We determine that recovery of the original check is unlikely; 
and
    (d) The payee and endorsee, if any, of the check execute the 
required indemnification agreement.



Sec. 355.9  What should I do if I recover a check reported as lost, 
stolen, destroyed, or not received?

    If you recover the original check you must notify us in writing. If 
we have not yet issued a replacement check, we will remove the stop 
payment order against the original check. If we have already issued a 
replacement check, you must return the original check to us.



Sec. 355.10  What happens if I present my check to the payor Reserve 
Bank more than six months after the issue date of the check?

    If the payor Reserve Bank refuses payment on a fiscal agency check 
solely because it is presented more than six (6) months after the issue 
date of the check, a replacement check will be issued if you:
    (a) Surrender the original check; and
    (b) Executive the required indemnification agreement.

[[Page 365]]



Sec. 355.11  What should I do if the endorsement on my check is forged 
or unauthorized?

    If we verify the existence or a forged or unauthorized endorsement 
on a paid fiscal agency check, the payor Reserve Bank will issue a 
replacement check to the person entitled. The payee or endorsee must 
execute an affidavit that there has been a forged or unauthorized 
endorsement. We may also require an indemnification agreement.



Sec. 355.12  What requirements apply if the check is payable to two 
or more persons?

    If the fiscal agency check is payable to two or more persons, the 
requirements of this part apply to all designated payees.



Sec. 355.13  Are there any additional requirements related to fiscal 
agency checks?

    We may require an indemnification agreement, with or without surety. 
You must provide any additional evidence we consider necessary. We will 
require any information necessary for the protection of the interests of 
the United States.



Sec. 355.14  Can these regulations be waived?

    We reserve the right, in our discretion, to waive any provision of 
the regulations in this part in any case or class of cases for the 
convenience of the United States, or to relieve any person of 
unnecessary hardship, if the waiver is not inconsistent with law and 
will not subject the United States to substantial expense or liability.



Sec. 355.15  Can these regulations be amended?

    We may, at any time, supplement, amend, or revise the regulations in 
this part.



PART 356_SALE AND ISSUE OF MARKETABLE BOOK-ENTRY TREASURY BILLS, NOTES, 
AND BONDS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT SERIES NO. 
1-93)--Table of Contents




                      Subpart A_General Information

Sec.
356.0 What authority does the Treasury have to sell and issue 
          securities?
356.1 To which securities does this circular apply?
356.2 What definitions do I need to know to understand this part?
356.3 What is the role of the Federal Reserve Banks in this process?
356.4 What are the book-entry systems in which auctioned Treasury 
          securities may be issued?
356.5 What types of securities does the Treasury auction?

             Subpart B_Bidding, Certifications, and Payment

356.10 What is the purpose of an auction announcement?
356.11 How are bids submitted in an auction?
356.12 What are the different types of bids and do they have specific 
          requirements or restrictions?
356.13 When must I report my net long position and how do I calculate 
          it?
356.14 What are the requirements for submitting bids for customers?
356.15 What rules apply to bids submitted by investment advisers?
356.16 Do I have to make any certifications?
356.17 How and when do I pay for securities awarded in an auction?

          Subpart C_Determination of Auction Awards; Settlement

356.20 How does the Treasury determine auction awards?
356.21 How are awards at the high yield or discount rate calculated?
356.22 Does the Treasury have any limitations on auction awards?
356.23 How are the auction results announced?
356.24 Will I be notified directly of my awards and, if I am submitting 
          bids for others, do I have to provide confirmations?
356.25 How does the settlement process work?

                   Subpart D_Miscellaneous Provisions

356.30 When does the Treasury pay principal and interest on securities?

[[Page 366]]

356.31 How does the STRIPS program work?
356.32 What tax rules apply?
356.33 Does the Treasury have any discretion in the auction process?
356.34 What could happen if someone does not fully comply with the 
          auction rules or fails to pay for securities?
356.35 Who approved the information collections?

Appendix A to Part 356--Bidder Categories
Appendix B to Part 356--Formulas and Tables
Appendix C to Part 356--Investment Considerations
Appendix D to Part 356--Description of the Consumer Price Index

    Authority: 5 U.S.C. 301; 31 U.S.C. 3102, et seq.; 12 U.S.C. 391.

    Source: 69 FR 45202, July 28, 2004, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 356 appear at 70 FR 
57439, Sept. 30, 2005.



                      Subpart A_General Information



Sec. 356.0  What authority does the Treasury have to sell and issue 
securities?

    Chapter 31 of Title 31 of the United States Code authorizes the 
Secretary of the Treasury to issue United States obligations, and to 
offer them for sale with the terms and conditions that the Secretary 
prescribes.



Sec. 356.1  To which securities does this circular apply?

    The provisions in this part, including the appendices, and each 
individual auction announcement govern the sale and issuance of 
marketable Treasury securities issued on or after March 1, 1993. This 
part also governs all securities eligible for the STRIPS (Separate 
Trading of Registered Interest and Principal of Securities) Program (See 
Sec. 356.31.). In addition, these provisions and the auction 
announcements govern any other types of securities we may issue under 
this part.



Sec. 356.2  What definitions do I need to know to understand this part?

    Accrued interest means an amount that bidders must pay to us for 
interest income as part of the settlement amount. Accrued interest 
compensates us up front for interest that bidders will be paid but did 
not earn because it is attributable to a period of time prior to the 
issue date. (See Appendix B, section I, paragraph C of this part for 
additional explanation and examples.)
    Adjusted value means, for an interest component stripped from an 
inflation-protected security, an amount derived by:
    (1) Multiplying the semiannual interest rate by the par amount, and 
then
    (2) Multiplying this value by: 100 divided by the Reference CPI of 
the original issue date (or dated date, when the dated date is different 
from the original issue date). (See Appendix B, section IV of this part 
for an example of how to calculate the adjusted value.)
    Auction means a bidding process by which we sell marketable Treasury 
securities to the public.
    Autocharge agreement means an agreement in a format acceptable to 
Treasury between a submitter or clearing corporation and a depository 
institution that authorizes us to:
    (1) Deliver awarded securities to:
    (i) The book-entry securities account of a designated depository 
institution in the commercial book-entry system, or
    (ii) An account in Legacy Treasury Direct[supreg], and
    (2) Charge a funds account of a designated depository institution 
for the settlement amount of the securities.
    Bid means an offer to purchase a stated par amount of securities, 
either competitively or noncompetitively, in an auction.
    Bid-to-cover ratio means the total par amount of securities bid for 
in an auction divided by the total par amount of securities awarded. It 
excludes bids by, and awards to, the Federal Reserve for its own 
account.
    Bidder, as further defined in Appendix A, means a person or an 
entity that offers to purchase Treasury securities in an auction either 
directly or through a depository institution or dealer. We may consider 
two or more persons or entities to be one bidder based on their 
relationship or their actions in participating in an auction. We 
consider a controlled account to be a bidder when an investment adviser 
bids in the name of the controlled account (See Sec. 356.15.).
    Bidder Identification Number means a number we assign to each 
institutional submitter and to certain other bidders.

[[Page 367]]

We assign such numbers either to identify certain bidders or to grant 
separate bidder status to different parts of the same corporate or 
partnership structure.
    Book-entry security means a security that is issued and maintained 
as an accounting entry or electronic record in either the commercial 
book-entry system or in one of Treasury's two direct-hold systems--
TreasuryDirect[supreg] or Legacy Treasury Direct. (See Sec. 356.4.)
    Business day means any day on which the Federal Reserve Banks are 
open for business.
    Call means the redemption of a security prior to maturity under the 
terms specified in its auction announcement.
    Certificate of indebtedness means a one-day non-interest-bearing 
security that may be held in TreasuryDirect and that automatically 
matures and is rolled over each day until its owner requests that it be 
redeemed.
    Clearing corporation means a clearing agency as defined in section 3 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(23)). A 
clearing corporation must be registered with the Securities and Exchange 
Commission under section 17A of the Securities Exchange Act of 1934 and 
its rules.
    Competitive bid means a bid to purchase a stated par amount of 
securities at a specified yield or discount rate.
    Consumer Price Index (CPI) means the monthly non-seasonally adjusted 
U.S. City Average All Items Consumer Price Index for All Urban 
Consumers, published by the Bureau of Labor Statistics of the Department 
of Labor. We use the CPI as the basis for adjusting the principal 
amounts of inflation-protected securities. (See Appendix D.)
    Corpus means the principal component of a security that has been 
stripped of its interest components.
    CUSIP number means the unique identifying number assigned to each 
separate security issue and each separate STRIPS component. CUSIP 
numbers are provided by the CUSIP Service Bureau of Standard & Poor's 
Corporation. CUSIP is an acronym for Committee on Uniform Securities 
Identification Procedures.
    Customer means a bidder that directs a depository institution or 
dealer to submit or forward a bid for a specific amount of securities in 
a specific auction on the bidder's behalf. Only depository institutions 
and dealers may submit bids for customers directly to us, or forward 
them to another depository institution or dealer.
    Dated date means the date from which interest accrues for notes and 
bonds. The dated date and issue date are usually the same. In those 
cases where interest begins accruing prior to the issue date, however, 
the dated date will be prior to the issue date. An example is when the 
dated date is a Saturday and the issue date is the following Monday.
    Dealer means an entity that is registered or has given notice of its 
status as a government securities broker or government securities dealer 
under Section 15C(a)(1) of the Securities Exchange Act of 1934.
    Delivery and payment agreement means a written agreement between a 
clearing corporation and a submitter, acknowledged by a Federal Reserve 
Bank, regarding securities awarded to the submitter for its own account. 
It authorizes us to deliver such securities to, and accept payment from, 
a depository institution acting on behalf of the clearing corporation 
under an acknowledged autocharge agreement.
    Depository institution means:
    (1) An entity described in Section 19(b)(1)(A), excluding 
subparagraph (vii), of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)).
    (2) Any agency or branch of a foreign bank as defined by the 
International Banking Act of 1978, as amended (12 U.S.C. 3101).
    Discount means the difference between par and the price of the 
security, when the price is less than par. (See Appendix B for formulas 
and examples.)
    Discount amount means the discount divided by 100 and multiplied by 
the par amount. (See Appendix B for formulas and examples.)
    Discount rate means a rate of return, on an annual basis, on bills 
held until they mature. The discount rate is expressed in percentage 
terms and based on a 360-day year. It is also referred to as the ``bank 
discount rate.'' (See Appendix B for formulas and examples.)

[[Page 368]]

    Funds account means a cash account maintained by a depository 
institution at a Federal Reserve Bank.
    Index means the Consumer Price Index.
    Index ratio means, for an inflation-protected security, the 
Reference CPI of a particular date divided by the Reference CPI of the 
original issue date. (When the dated date is different from the original 
issue date, the denominator of the index ratio is the Reference CPI of 
the dated date rather than that of the original issue date.)
    Inflation-adjusted principal means, for an inflation-protected 
security, the value of the security derived by multiplying the par 
amount by the applicable index ratio as described in Appendix B, section 
I, paragraph B.
    Interest rate means the annual percentage rate of interest paid on 
the par amount (or the inflation-adjusted principal) of a specific issue 
of notes or bonds. (See Appendix B for methods and examples of interest 
calculations on notes and bonds.)
    Intermediary means a depository institution or dealer that forwards 
bids for customers to another depository institution or dealer. An 
intermediary does not submit bids directly to us.
    Issue date means the date specified in the auction announcement on 
which we issue a security as an obligation of the United States. 
Interest normally begins to accrue on a security's issue date.
    Legacy Treasury Direct means a non-Internet-based book-entry system 
maintained by Treasury for purchasing and holding marketable Treasury 
securities directly with Treasury. (See 31 CFR part 357.)
    Marketable security means a security that may be bought, sold and 
transferred in the secondary market.
    Maturity date means the date on which a security becomes due and 
payable, and ceases to earn interest. The maturity date is specified in 
the auction announcement.
    Minimum to bid means the smallest amount of a security that may be 
bid for in an auction as stated in the auction announcement.
    Multiple to bid means the smallest additional amount of a security 
that may be bid for in an auction as stated in the auction announcement.
    Multiple-price auction means an auction in which each successful 
competitive bidder pays the price equivalent to the yield or rate that 
it bid.
    Noncompetitive bid means, for a single-price auction, a bid to 
purchase a stated par amount of securities at the highest yield or 
discount rate awarded to competitive bidders. For a multiple-price 
auction, a noncompetitive bid means a bid to purchase securities at the 
weighted average yield or discount rate of awards to competitive 
bidders.
    Offering amount means the par amount of securities we are offering 
to the public for purchase in an auction, as specified in the auction 
announcement.
    Par means a price of 100. (See Appendix B.)
    Par amount means the stated value of a security at original 
issuance.
    Person means a natural person.
    Premium means the difference between par and the price of the 
security, when the price is greater than par.
    Premium amount means the premium divided by 100 and multiplied by 
the par amount.
    Price means the price of a security per 100 dollars of its stated 
value as calculated using the formulas in Appendix B.
    Real yield means, for an inflation-protected security, the yield 
based on the payment stream in constant dollars. In other words, the 
real yield is the yield in the absence of inflation.
    Reference CPI (Ref CPI) means, for an inflation-protected security, 
the index number applicable to a given date. (See Appendix B, section I, 
paragraph B.)
    Reopening means the auction of an additional amount of an 
outstanding security.
    Security means a Treasury bill, note, or bond, each as described in 
this part. Security also means any other obligation we issue that is 
subject to this part according to its auction announcement. Security 
includes an interest or principal component under the STRIPS program, as 
well as a certificate of indebtedness in an investor's TreasuryDirect 
account.
    Settlement means final and complete payment for securities awarded 
in an

[[Page 369]]

auction and delivery of those securities.
    Settlement amount means the total of the par amount of securities 
awarded, less any discount amount or plus any premium amount, and plus 
any accrued interest. For inflation-protected securities, the settlement 
amount also includes any inflation adjustment when such securities are 
reopened or when the dated date is different from the issue date.
    Single-price auction means an auction in which all successful 
bidders pay the same price regardless of the yields or rates they each 
bid.
    STRIPS (Separate Trading of Registered Interest and Principal of 
Securities) means our program under which eligible securities are 
authorized to be separated into principal and interest components, and 
transferred separately. These components are maintained and transferred 
in the commercial book-entry system.
    Submitter means a person or entity submitting bids directly to us 
for its own account, for customer accounts, or both. Only depository 
institutions and dealers are permitted to submit bids for customer 
accounts. We permit investment advisers to submit bids on behalf of 
controlled accounts.
    TINT means an interest component from a stripped security.
    TreasuryDirect means the book-entry, online system maintained by 
Treasury for purchasing and holding marketable Treasury securities, 
nonmarketable savings bonds, and certificates of indebtedness directly 
with Treasury. (See 31 CFR part 363.)
    We (or ``us'') means the Secretary of the Treasury and his or her 
delegates, including the Department of the Treasury, Bureau of the 
Public Debt, and their representatives. The term also includes Federal 
Reserve Banks acting as fiscal agents of the United States.
    Weighted-average means the average of the yields or discount rates 
at which we award securities to competitive bidders weighted by the par 
amount of securities allotted at each yield or discount rate.
    Yield means the annualized rate of return to maturity on a fixed-
principal security. Yield is expressed as a percentage. For an 
inflation-protected security, yield means the real yield. Yield is also 
referred to as ``yield to maturity.'' (See Appendix B.)
    You means a prospective bidder in an auction.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57439, Sept. 30, 2005]



Sec. 356.3  What is the role of the Federal Reserve Banks in this 
process?

    The Treasury Department authorizes Federal Reserve Banks, as fiscal 
agents of the United States, to perform all activities necessary to 
carry out the provisions of this part, any auction announcements, and 
applicable regulations.



Sec. 356.4  What are the book-entry systems in which auctioned Treasury 
securities may be issued?

    There are three book-entry securities systems--the commercial book-
entry system, TreasuryDirect[supreg], and Legacy Treasury 
Direct[supreg]--into which we issue marketable Treasury securities. We 
maintain and transfer securities in these three book-entry systems at 
their par amount. Par amounts of Treasury inflation-protected securities 
do not include adjustments for inflation. Securities may be transferred 
from one system to the other. See Department of the Treasury Circular, 
Public Debt Series No. 2-86, as amended (31 CFR part 357) and 31 CFR 
part 363.
    (a) The commercial book-entry system. When depository institutions 
or dealers submit bids for Treasury securities in an auction, securities 
awarded as a result of those bids are generally held in the commercial 
book-entry system. Specifically, we maintain book-entry accounts in the 
National Book-Entry System [reg] (``NBES'') for Federal 
Reserve Banks, depository institutions, and other authorized entities, 
such as government and international agencies and foreign central banks. 
In their accounts, depository institutions maintain securities held for 
their own account and for the accounts of others. The accounts held for 
others include those of other depository institutions and dealers, which 
may, in turn, maintain accounts for others.
    (b) TreasuryDirect. In this system, account holders maintain 
accounts in a

[[Page 370]]

book-entry, online system directly on the records of the Bureau of the 
Public Debt, Department of the Treasury. Bids for securities to be held 
in TreasuryDirect are submitted through the Internet.
    (c) Legacy Treasury Direct. In this system, we maintain the book-
entry securities of account holders directly on the records of the 
Bureau of the Public Debt, Department of the Treasury. Bids for 
securities to be held in Legacy Treasury Direct are generally submitted 
directly to us, although such bids may also be forwarded to us by a 
depository institution or dealer.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57439, Sept. 30, 2005]



Sec. 356.5  What types of securities does the Treasury auction?

    We offer securities under this part exclusively in book-entry form 
and as direct obligations of the United States issued under Chapter 31 
of Title 31 of the United States Code. The securities are subject to the 
terms and conditions in this part, the regulations in 31 CFR part 363 
(for securities held in TreasuryDirect), the regulations in 31 CFR part 
357 (for securities held in the commercial book-entry system and Legacy 
Treasury Direct), and the auction announcements. When we issue 
additional securities with the same CUSIP number as outstanding 
securities, we consider them to be the same securities as the 
outstanding securities.
    (a) Treasury bills. (1) Are issued at a discount;
    (2) Are redeemed at their par amount at maturity; and
    (3) Have maturities of not more than one year.
    (b) Treasury notes--(1) Treasury fixed-principal\1\ notes.
---------------------------------------------------------------------------

    \1\ We use the term ``fixed-principal'' in this part to distinguish 
such securities from ``inflation-protected'' securities. We refer to 
fixed-principal notes and fixed-principal bonds as ``notes'' and 
``bonds'' in official Treasury publications, such as auction 
announcements and auction results press releases, as well as in auction 
systems.
---------------------------------------------------------------------------

    (i) Are issued with a stated rate of interest to be applied to the 
par amount;
    (ii) Have interest payable semiannually;
    (iii) Are redeemed at their par amount at maturity;
    (iv) Are sold at discount, par, or premium, depending upon the 
auction results; and
    (v) Have maturities of at least one year, but of not more than ten 
years.
    (2) Treasury inflation-protected notes. (i) Are issued with a stated 
rate of interest to be applied to the inflation-adjusted principal on 
each interest payment date;
    (ii) Have interest payable semiannually;
    (iii) Are redeemed at maturity at their inflation-adjusted 
principal, or at their par amount, whichever is greater;
    (iv) Are sold at discount, par, or premium, depending on the auction 
results (See Appendix B for price and interest payment calculations and 
Appendix C for Investment Considerations.); and
    (v) Have maturities of at least one year, but not more than ten 
years.
    (c) Treasury bonds--(1) Treasury fixed-principal bonds. (i) Are 
issued with a stated rate of interest to be applied to the par amount;
    (ii) Have interest payable semiannually;
    (iii) Are redeemed at their par amount at maturity;
    (iv) Are sold at discount, par, or premium, depending on the auction 
results; and
    (v) Have maturities of more than ten years.
    (2) Treasury inflation-protected bonds. (i) Are issued with a stated 
rate of interest to be applied to the inflation-adjusted principal on 
each interest payment date;
    (ii) Have interest payable semiannually;
    (iii) Are redeemed at maturity at their inflation-adjusted 
principal, or at their par amount, whichever is greater;
    (iv) Are sold at discount, par, or premium, depending on the auction 
results; and
    (v) Have maturities of more than ten years. (See Appendix B for 
price and interest payment calculations and Appendix C for Investment 
Considerations.)

[69 FR 45202, July 28, 2004, as amended at 70 FR 57439, Sept. 30, 2005]

[[Page 371]]



             Subpart B_Bidding, Certifications, and Payment



Sec. 356.10  What is the purpose of an auction announcement?

    By issuing an auction announcement, we provide public notice of the 
sale of bills, notes, and bonds. The auction announcement lists the 
specifics of each auction, e.g., offering amount, term and type of 
security, CUSIP number, and issue and maturity dates. The auction 
announcement and this part, including the Appendices, specify the terms 
and conditions of sale. If anything in the auction announcement differs 
from this part, the auction announcement will control. If you intend to 
bid, you should read the applicable auction announcement along with this 
part.



Sec. 356.11  How are bids submitted in an auction?

    (a) General. (1) All bids must be submitted using an approved 
method, which depends on whether you are requesting us to issue the 
awarded securities in the commercial book-entry system, in 
TreasuryDirect[supreg], or in Legacy Treasury Direct[supreg] (See Sec. 
356.4). The approved submission methods for these respective systems are 
explained in this section. A bidder must provide its assigned bidder 
identification numbers if it has been assigned one. We have the option 
of accepting or rejecting incomplete bids.
    (2) We must receive competitive and noncompetitive bids prior to 
their respective closing times, which are stated in the auction 
announcement. We will not include late bids in the auction. For bids 
other than those submitted on paper forms, our computer time stamp will 
establish the receipt time. You are bound by your bids after the closing 
time.
    (3) We are not responsible for any delays, errors, or omissions. We 
are not responsible for any failures or disruptions of equipment or 
communications facilities used for participating in Treasury auctions.
    (4) Submitters are responsible for bids submitted using computer 
equipment on their premises, whether or not such bids are authorized.
    (b) Commercial book-entry system. (1) If you are a submitter and the 
awarded securities are to be issued in the commercial book-entry system, 
you must submit bids using one of our approved electronic methods except 
for contingency situations.
    (2) You must have an agreement on file with us under which you agree 
to our terms and conditions for access to our system for participating 
in our auctions.
    (3) In contingency situations, such as a power outage, we may accept 
bids by a telephone call to designated Treasury employees if you submit 
them prior to the relevant bidding deadline.
    (c) TreasuryDirect. You must submit your bids through your 
established book-entry, online TreasuryDirect account. You may reinvest 
the proceeds of maturing securities held in TreasuryDirect by directing 
that the proceeds be used to purchase a certificate of indebtedness in 
your TreasuryDirect account and by using the proceeds of your 
certificate of indebtedness to pay for the securities.
    (d) Legacy Treasury Direct. (1) If you are a submitter and the 
awarded securities are to be issued in Legacy Treasury Direct, you may 
submit bids by using one of our approved methods, e.g., computer, 
automated telephone service, or paper forms. You may also reinvest the 
proceeds of maturing securities into new securities through the same 
methods.
    (2) If you are submitting bids by paper form, you must use forms 
authorized by the Bureau of the Public Debt and provide the requested 
information. We have the option of accepting or rejecting bids on any 
other form. You are responsible for ensuring that we receive bids in 
paper form on time. A noncompetitive bid is on time if:
    (i) We receive it on or before the issue date, and
    (ii) The envelope it arrived in bears evidence, such as a U.S. 
Postal Service cancellation, that it was mailed prior to the auction 
date.
    (3) If you are submitting a bid by computer or automated telephone 
service you must be an established Legacy Treasury Direct account holder 
with a Taxpayer Identification Number.

[[Page 372]]

    (4) In contingency situations, such as a power outage, we may accept 
bids by other means, provided, that in all cases the bids are submitted 
prior to the relevant bidding deadline by an established Legacy Treasury 
Direct account holder.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57440, Sept. 30, 2005]



Sec. 356.12  What are the different types of bids and do they have 
specific requirements or restrictions?

    (a) General. All bids must state the par amount of securities bid 
for and must equal or exceed the minimum to bid amount stated in the 
auction announcement. Bids in larger amounts must be in the multiple 
stated in the auction announcement.
    (b) Noncompetitive bids--(1) Maximum bid. You may not bid 
noncompetitively for more than $5 million. The maximum bid limitation 
does not apply if you are bidding solely through either a 
TreasuryDirect[supreg] or a Legacy Treasury Direct[supreg] reinvestment 
request. A request for reinvestment of securities maturing in either 
TreasuryDirect or Legacy Treasury Direct is a noncompetitive bid.
    (2) Additional restrictions. You may not bid noncompetitively in an 
auction in which you are bidding competitively. You may not bid 
noncompetitively if, in the security being auctioned, you hold a 
position in when-issued trading or in futures or forward contracts at 
any time between the date of the auction announcement and the time we 
announce the auction results. During this same timeframe, a 
noncompetitive bidder may not enter into any agreement to purchase or 
sell or otherwise dispose of the securities it is acquiring in the 
auction. For this paragraph, futures contracts include those:
    (i) That require delivery of the specific security being auctioned;
    (ii) For which the security being auctioned is one of several 
securities that may be delivered; or
    (iii) That are cash-settled.
    (c) Competitive bids.--(1) Bid format (i) Treasury bills. A 
competitive bid must show the discount rate bid, expressed with three 
decimals in .005 increments. The third decimal must be either a zero or 
a five, for example, 5.320 or 5.325. We will treat any missing decimals 
as zero, for example, a bid of 5.32 will be treated as 5.320.
    (ii) Treasury fixed-principal securities. A competitive bid must 
show the yield bid, expressed with three decimals, for example, 4.170. 
We will treat any missing decimals as zero, for example, a bid of 4.1 
will be treated as 4.100.
    (iii) Treasury inflation-protected securities. A competitive bid 
must show the real yield bid, expressed with three decimals, for 
example, 3.070. We will treat any missing decimals as zero, for example, 
a bid of 3 will be treated as 3.000. The real yield may be a positive 
number, a negative number, or zero.
    (2) Maximum recognized bid. There is no limit on the maximum dollar 
amount that you may bid for competitively, either at a single yield or 
discount rate, or at different yields or discount rates. However, a 
competitive bid at a single yield or discount rate that exceeds 35 
percent of the offering amount will be reduced to that amount. For 
example, if the offering amount is $10 billion, the maximum bid amount 
we will recognize at any one yield or discount rate from any bidder is 
$3.5 billion. (See Sec. 356.22 for award limitations.)
    (3) Additional restrictions. You may not bid competitively in an 
auction in which you are bidding noncompetitively. You may not bid 
competitively for securities to be bought through either TreasuryDirect 
or Legacy Treasury Direct.

[69 FR 45202, July 28, 2004, as amended at 69 FR 53621, Sept. 2, 2004; 
70 FR 57440, Sept. 30, 2005]



Sec. 356.13  When must I report my net long position and how do I 
calculate it?

    (a) Net long position reporting threshold. (1) If you are bidding 
competitively in an auction, you must report your net long position when 
the total of your bids plus your net long position in the security being 
auctioned equals or exceeds the net long position reporting threshold 
(See table.). We will specify this threshold in the auction announcement 
for each security (See Sec. 356.10.). The threshold is typically 35 
percent of the offering amount, but we may state

[[Page 373]]

a different threshold in the auction announcement. To see whether you 
must report your net long position, follow this table:

------------------------------------------------------------------------
          If . . .                And if . . .           Then . . .
------------------------------------------------------------------------
(i) the total of your bids                          you must report your
 and your net long position                          net long position
 in the security being                               (which does not
 auctioned equals or exceeds                         include your bids).
 the reporting threshold.
(ii) the total of your bids   you have no position  you must report a
 in the auction equals or      or a net short        zero.
 exceeds the reporting         position in the
 threshold.                    security being
                               auctioned.
(iii) the total of your bids                        you may either
 and your net long position                          report nothing
 in the security being                               (leave the field
 auctioned is less than the                          blank) or report
 reporting threshold.                                your net long
                                                     position.
------------------------------------------------------------------------

    (2) Also, if you have more than one bid in an auction and you must 
report either your net long position or a zero, you must report that 
figure only once. Finally, if you are a customer and must report either 
your net long position or a zero, you must report that figure through 
only one depository institution or dealer. (See Sec. 356.14(d).)
    (b) ``As of'' time for calculating net long position. You must 
calculate your net long position as of one half-hour prior to the 
closing time for receipt of competitive bids.
    (c) Components of the net long position. Except as modified in 
paragragh (d) of this section, your net long position is the sum total 
of the par amounts of:
    (1) Your holdings of outstanding securities with the same CUSIP 
number as the security being auctioned;
    (2) Your holdings of STRIPS principal components of the security 
being auctioned, and;
    (3) Your positions, in the security being auctioned, in:
    (i) When-issued trading, including when-issued trading positions of 
the STRIPS principal components;
    (ii) Futures contracts that require delivery of the specific 
security being auctioned (but not futures contracts for which the 
security being auctioned is one of several securities that may be 
delivered, and not futures contracts that are cash-settled); and
    (iii) Forward contracts that require delivery of the specific 
security being auctioned or of the STRIPS principal component of that 
security.
    (d) Calculating the net long position in a reopening. In a reopening 
(additional issue) of an outstanding security, you may subtract the 
exclusion amount stated in the auction announcement from:
    (1) Your holdings of the outstanding securities (paragraph (c)(1) of 
this section) combined with
    (2) Your holdings of STRIPS principal components of the security 
being auctioned (paragraph (c)(2) of this section). We will specify the 
amount of holdings that you may exclude from the net long position 
calculation in the auction announcement. You may not take the exclusion 
if your combined holdings are zero or less. The exclusion is optional, 
but if you take the exclusion, you must include any holdings that exceed 
the exclusion amount in calculating your net long position. If the 
exclusion amount is greater than your combined holdings (paragraphs 
(c)(1) and (2) of this section), you may calculate the combined holdings 
as zero, but they cannot be included in the calculation as a negative 
number.



Sec. 356.14  What are the requirements for submitting bids for customers?

    (a) Institutions that may submit bids for customers. Only depository 
institutions or dealers may submit bids for customers, or for customers 
of intermediaries, under the requirements set out in this section. If a 
bid from a depository institution or a dealer fulfills a guarantee to a 
customer to sell a specified amount of securities at an agreed-upon 
price, or a price fixed in terms of an agreed-upon standard, then the 
bid is a bid of that depository institution or dealer. It is not a 
customer bid.
    (b) Payment. Submitters must remit payment for bids they submit on 
behalf of customers, including customers of

[[Page 374]]

intermediaries, that result in awards of securities in the auction.
    (c) Identifying customers. Submitters must provide the names of 
customers whenever they submit bids for them. Submitters must provide 
the names of their direct customers as well as customers of any 
intermediaries who are forwarding customer bids. For individuals, 
submitters must provide the customer's full name (first and last). For 
institutional customers, submitters must provide the name of the 
institution, and the bidder identification number if the customer 
provides it. For trusts or other fiduciary estates (See Appendix A.), 
submitters must provide on the customer list:
    (1) The full name or title of the trustee or fiduciary;
    (2) A reference to the document creating the trust or fiduciary 
estate with date of execution; and
    (3) The employer identification number (not social security number) 
of the trust or fiduciary estate. We do not consider trusts to be a 
separate bidder that have not been assigned, or that do not provide, an 
employer identification number.
    (d) Competitive customer bids. For each customer competitive bid, 
the submitter must provide the customer's name, the amount bid, and the 
yield or discount rate. The submitter or intermediary must also report 
the net long position amount if the customer provides it. The submitter 
must inform a customer of the net long position reporting requirement 
(See Sec. 356.13.) if the customer is bidding for $100 million or more 
of securities. If the submitter's or intermediary's personnel know that 
the customer's position information is not correct, the submitter or 
intermediary may not submit the customer's bid.
    (e) Noncompetitive customer bids. For each noncompetitive bid, the 
submitter must provide the customer's name and the amount bid. 
Submitters may either provide the customer's name with the bid or, if 
the list of customers is lengthy, the submitter may provide a summary 
bid amount covering all noncompetitive customers. If it provides a 
summary bid amount, the submitter must transmit the list of individual 
customers and their bid amounts by close of business on the auction day. 
However, the submitter must be able to provide the customer list details 
by the noncompetitive bidding deadline if requested.



Sec. 356.15  What rules apply to bids submitted by investment advisers?

    (a) General. The auction rules that apply to investment advisers are 
determined by the relationship between ``investment advisers'' and 
``controlled accounts.'' An investment adviser means any person or 
entity that has investment discretion for the bids or positions of a 
different person or entity (a controlled account). A person or entity 
has investment discretion if it determines what, how many, and when 
securities will be purchased or sold on behalf of another person or 
entity. We consider a person that is employed or supervised by an 
investment adviser to be part of that investment adviser. We also 
consider the bids or positions of controlled accounts to be separate 
from the bids or positions of the person or entity with which they would 
otherwise be associated under the bidder categories in Appendix A of 
this part.
    (b) Bidding options. (1) An investment adviser has two options for 
whose name to use when bidding on behalf of controlled accounts.

                                   --
------------------------------------------------------------------------
  An investment adviser may bid for a     In such cases, we consider the
        controlled account . . .                bidder to be . . .
------------------------------------------------------------------------
(i) in the investment adviser's own      the investment adviser.
 name.
(ii) in the name of the controlled       the controlled account.
 account.
------------------------------------------------------------------------

    (2) Using the first option (paragraph (b)(1)(i)), an investment 
advisor could bid noncompetitively up to the noncompetitive bidding 
limit only for itself, as a single bidder. Using the second option 
(paragraph (b)(1)(ii)), an investment adviser could bid noncompetitively 
for each separately

[[Page 375]]

named controlled account up to the noncompetitive bidding limit. The 
investment adviser could also bid noncompetitively in its own name in 
the same auction up to the noncompetitive bidding limit. An investment 
adviser may not bid for a controlled account both noncompetitively and 
competitively in the same auction. If an investment adviser is bidding 
competitively in the name of a controlled account, the controlled 
account is subject to the award limitations of Sec. 356.22(b).
    (c) Reporting net long positions. If it is bidding competitively, an 
investment adviser must calculate the amount of its bids and positions 
for purposes of the net long position reporting requirement found in 
Sec. 356.13(a). In addition to its own competitive bids and positions, 
the investment adviser must also include in the calculation all other 
competitive bids and positions that it controls. If the net long 
position is reportable, the investment adviser must report it as a total 
in connection with only one bid as stated in Sec. 356.13(a). This 
requirement applies regardless of whether the investment adviser bids in 
its own name or in the name of its controlled accounts. The following 
table shows which positions an investment adviser must include to 
determine whether it meets the net long position reporting threshold in 
Sec. 356.13(a). If an investment adviser does meet the reporting 
threshold, the table also shows which positions must be included in, and 
which may be excluded from, the net long position calculation.

                                   --
------------------------------------------------------------------------
  If an investment adviser is bidding
        competitively, and . . .                    Then . . .
------------------------------------------------------------------------
(1) the investment adviser has a net     that position must be included
 long position for its own account.       in the investment adviser's
                                          net long position calculation.
(2) the investment adviser's             any net long position of that
 competitive bid is for a controlled      account must be included in
 account.                                 the investment adviser's net
                                          long position calculation.
(3) the investment adviser is not
 bidding competitively for a controlled
 account and . . ..
(i) the controlled account has a net     that position must be included
 long position of $100 million or more.   in the investment adviser's
                                          net long position calculation.
(ii) the controlled account has a net    that position may be excluded
 long position that is less than $100     from the investment adviser's
 million.                                 net long position calculation.
(iii) any net long position is excluded  all net short positions of
 under paragraph (b)(3)(ii) of this       controlled accounts under $100
 table.                                   million must also be excluded.
------------------------------------------------------------------------

    (d) Certifications. When an investment adviser bids for a controlled 
account, we deem the investment adviser to have certified that it is 
complying with this part and the auction announcement for the security. 
Further, we deem the investment adviser to have certified that the 
information it provided about bids for controlled accounts is accurate 
and complete.
    (e) Proration of awards. Investment advisers that submit competitive 
bids in the names of controlled accounts are responsible for prorating 
any awards at the highest accepted yield or discount rate using the same 
percentage that we announce. See Sec. 356.21 for examples of how to 
prorate.



Sec. 356.16  Do I have to make any certifications?

    (a) Submitters. If you submit bids or other information in an 
auction, we deem you to have certified that:
    (1) You are in compliance with this part and the auction 
announcement;
    (2) The information provided with regard to any bids for your own 
account is accurate and complete; and
    (3) The information provided with regard to any bids for customers 
accurately and completely reflects information provided by your 
customers or intermediaries.
    (4) If you submit bids by computer, you must have on file a written 
certification that, each time you submit such bids, you are in 
compliance with this part and the applicable auction announcement. An 
authorized person must sign and date the certification on

[[Page 376]]

behalf of the submitter, and it must be filed with us and renewed at 
least annually.
    (b) Intermediaries. If you forward bids in an auction, we deem you 
to have certified that:
    (1) You are in compliance with this part and the applicable auction 
announcement; and
    (2) That the information you provided to a submitter or other 
intermediary with regard to bids for customers accurately and completely 
reflects information provided by those customers or intermediaries.
    (c) Customers. By bidding for a security as a customer we deem you 
to have certified that:
    (1) You are in compliance with this part and the auction 
announcement and;
    (2) The information you provided to the submitter or intermediary in 
connection with the bid is accurate and complete.



Sec. 356.17  How and when do I pay for securities awarded in an auction?

    (a) General. By bidding in an auction, you agree to pay the 
settlement amount for any securities awarded to you. (See Sec. 356.25.) 
For notes and bonds, the settlement amount may include a premium amount, 
accrued interest, and, for inflation-protected securities, an inflation 
adjustment.
    (b) TreasuryDirect[supreg]. You must pay for your awarded securities 
by a debit entry to a deposit account that you are authorized to debit 
or by using the redemption proceeds of your certificate of indebtedness 
held in your TreasuryDirect account. Payment by debit entry occurs on 
the settlement date for the actual settlement amount due. (See Sec. 
356.25.)
    (c) Legacy Treasury Direct[supreg]. Unless you make other 
provisions, you must pay by debit entry to a deposit account that you 
are authorized to debit or submit payment with your bids. Payment by 
debit entry occurs on the settlement date for the actual settlement 
amount due. (See Sec. 356.25.) If you are paying with a check or with 
maturing securities, you must pay separately for any premium, accrued 
interest, or inflation adjustment as soon as you receive your Payment 
Due Notice.
    (1) Bidding and payment by computer or by telephone. If you are 
bidding by computer or by telephone, you must pay for any securities 
awarded to you by debit entry to a deposit account. If a depository 
institution or dealer is submitting your bids for securities to be held 
in Legacy Treasury Direct, payment may be either by debit entry to a 
deposit account or by allowing us to charge the Federal Reserve Bank 
funds account of a depository institution.
    (2) Bidding and payment by paper form. If you are mailing bids to us 
on a paper form, you may either enclose your payment with the form or 
pay for any securities awarded to you by debit entry to a deposit 
account. For bills, you may pay by depository institution (cashier's or 
teller's) check, certified check, or currently dated Treasury or fiscal 
agency check made payable to you. For notes or bonds, in addition to the 
payment options for bills, you may also pay by personal check. If you 
submit a personal check, make it payable to Legacy Treasury Direct and 
mail it with the bid to the Federal Reserve Bank handling your account. 
In your payment amount you must include the par amount and any announced 
accrued interest and/or inflation adjustment.
    (3) Payment by maturing securities. You may use maturing securities 
held in Legacy Treasury Direct as payment for reinvestments into new 
securities that we are offering, as long as we receive the appropriate 
transaction request on time.
    (d) Commercial book-entry system. Unless you make other provisions, 
payment of the settlement amount must be by charge to the funds account 
of a depository institution at a Federal Reserve Bank.
    (1) A submitter that does not have a funds account at a Federal 
Reserve Bank or that chooses not to pay by charge to its own funds 
account must have an approved autocharge agreement on file with us 
before submitting any bids. Any depository institution whose funds 
account will be charged under an autocharge agreement will receive 
advance notice from us of the total par amount of, and price to be

[[Page 377]]

charged for, securities awarded as a result of the submitter's bids.
    (2) A submitter that is a member of a clearing corporation may 
instruct that delivery and payment be made through the clearing 
corporation for securities awarded to the submitter for its own account. 
To do this, the following requirements must be met prior to submitting 
any bids:
    (i) We must have acknowledged and have on file an autocharge 
agreement between the clearing corporation and a depository institution. 
By entering into such an agreement, the clearing corporation authorizes 
us to provide aggregate par and price information to the depository 
institution whose funds account will be charged under the agreement. The 
clearing corporation is responsible for remitting payment for auction 
awards of the clearing corporation member.
    (ii) We must have acknowledged and have on file a delivery and 
payment agreement between the submitter and the clearing corporation. By 
entering into such an agreement, the submitter authorizes us to provide 
award and payment information to the clearing corporation.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57440, Sept. 30, 2005; 
70 FR 71401, Nov. 29, 2005]



          Subpart C_Determination of Auction Awards; Settlement



Sec. 356.20  How does the Treasury determine auction awards?

    (a) Determining the range and amount of accepted competitive bids--
    (1) Accepting bids. First we accept in full all noncompetitive bids 
that were submitted by the noncompetitive bidding deadline. After the 
closing time for receipt of competitive bids we start accepting those at 
the lowest yields or discount rates through successively higher yields 
or discount rates, up to the amount required to meet the offering 
amount. When necessary, we prorate bids at the highest accepted yield or 
discount rate as described below. If the amount of noncompetitive bids 
would absorb most or all of the offering amount, we will accept 
competitive bids in an amount sufficient to provide a fair determination 
of the yield or discount rate for the securities we are auctioning.
    (2) Accepting bids at the high yield or discount rate. Generally, 
the total amount of bids at the highest accepted yield or discount rate 
exceeds the offering amount remaining after we accept the noncompetitive 
bids and the competitive bids at the lower yields or discount rates. In 
order to keep the total amount of awards as close as possible to the 
announced offering amount, we award a percentage of the bids at the 
highest accepted yield or discount rate. We derive the percentage by 
dividing the remaining par amount needed to fill the offering amount by 
the par amount of the bids at the high yield or discount rate and 
rounding up to the next hundredth of a whole percentage point, for 
example, 17.13%.
    (b) Determining the interest rate for new note and bond issues. We 
set the interest rate at a \1/8\ of one percent increment. If a Treasury 
inflation-protected securities auction results in a negative or zero 
yield, the interest rate will be set at zero, and successful bidders' 
award prices will be calculated accordingly (See Appendix B to this part 
for formulas).
    (1) Single-price auctions. The interest rate we establish produces 
the price closest to, but not above, par when evaluated at the yield of 
awards to successful competitive bidders.
    (2) Multiple-price auctions. The interest rate we establish produces 
the price closest to, but not above, par when evaluated at the weighted-
average yield of awards to successful competitive bidders.
    (c) Determining purchase prices for awarded securities. We round 
price calculations to six decimal places on the basis of price per 
hundred, for example, 99.954321 (See Appendix B to this part).
    (1) Single-price auctions. We award securities to both 
noncompetitive and competitive bidders at the price equivalent to the 
highest accepted discount rate or yield at which bids were accepted. For 
inflation-protected securities, the price for awarded securities is the 
price equivalent to the highest accepted real yield.
    (2) Multiple-price auctions--(i) Competitive bids. We award 
securities to competitive bidders at the price equivalent

[[Page 378]]

to each yield or discount rate at which their bids were accepted.
    (ii) Noncompetitive bids. We award securities to noncompetitive 
bidders at the price equivalent to the weighted average yield or 
discount rate of accepted competitive bids.

[69 FR 45202, July 28, 2004, as amended at 69 FR 53621, Sept. 2, 2004]



Sec. 356.21  How are awards at the high yield or discount rate 
calculated?

    (a) Awards to submitters. We generally prorate bids at the highest 
accepted yield or discount rate under Sec. 356.20(a)(2) of this part. 
For example, if 80.15% is the announced percentage at the highest yield 
or discount rate, we award 80.15% of the amount of each bid at that 
yield or rate. A bid for $100 million at the highest accepted yield or 
discount rate would be awarded $80,150,000 in this example. We always 
make awards for at least the minimum to bid, and above that amount we 
make awards in the appropriate multiple to bid. For example, Treasury 
bills may be issued with a minimum to bid of $1,000 and multiples to bid 
of $1,000. Say we accept an $18,000 bid at the high discount rate, and 
the percent awarded at the high discount rate is 88.27%. We would award 
$16,000 to that bidder, which is an upward adjustment from $15,888.60 
($18,000 x .8827) to the nearest multiple of $1,000. If we were to award 
4.65% of bids at the highest accepted rate, for example, the award for a 
$10,000 bid at that rate would be $1,000, rather than $465, in order to 
meet the minimum to bid for a bill issue.
    (b) Awards to customers. The same prorating rules apply to customers 
as apply to submitters. Depository institutions and dealers, whether 
submitters or intermediaries, are responsible for prorating awards for 
their customers at the same percentage that we announce. For example, if 
80.15% is the announced percentage at the highest yield or discount 
rate, then each customer bid at that yield or rate must be awarded 
80.15%.



Sec. 356.22  Does the Treasury have any limitations on auction awards?

    (a) Awards to noncompetitive bidders. The maximum award to any 
noncompetitive bidder is $5 million. This limit does not apply to 
bidders bidding solely through TreasuryDirect[supreg] or Legacy Treasury 
Direct[supreg] reinvestment requests.
    (b) Awards to competitive bidders. The maximum award is 35 percent 
of the offering amount less the bidder's net long position as reportable 
under Sec. 356.13. For example, in a note auction with a $10 billion 
offering amount, and therefore a maximum award of $3.5 billion, a bidder 
with a reported net long position of $1 billion could receive a maximum 
auction award of $2.5 billion. When the bids and net long positions of 
more than one person or entity must be combined, as is the case with 
investment advisers and controlled accounts (See Sec. 356.15(c).), we 
will use this combined amount for the purpose of this 35 percent award 
limit.

[69 FR 45202, July 28, 2004, as amended at 69 FR 53622, Sept. 2, 2004; 
70 FR 574410, Sept. 30, 2005]



Sec. 356.23  How are the auction results announced?

    (a) After the conclusion of the auction, we will announce the 
auction results through a press release that is available on our Web 
site at www.publicdebt.treas.gov.
    (b) The press release will include such information as:
    (1) The amounts of bids we accepted and the amount of securities we 
awarded;
    (2) The range of accepted yields or discount rates;
    (3) The proration percentage;
    (4) The interest rate for a note or bond;
    (5) A breakdown of the amounts of noncompetitive and competitive 
bids we accepted from, and awarded to, the public;
    (6) The amounts of bids tendered and accepted from the Federal 
Reserve Banks for their own accounts;
    (7) The bid-to-cover ratio; and
    (8) Other information that we may decide to include.



Sec. 356.24  Will I be notified directly of my awards and, if I am 
submitting bids for others, do I have to provide confirmations?

    (a) Notice of awards--(1) Notice to submitters. We will provide 
notice to all

[[Page 379]]

submitters letting them know whether their bids were successful or not.
    (2) Notice to clearing corporations. If we are to deliver awarded 
securities under a delivery and payment agreement, we will provide 
notice of the awards to the clearing corporation that is a party to the 
agreement.
    (b) Notification of awards to customers. If you are a submitter for 
customers, you are responsible for notifying them of their awards. You 
are also responsible for notifying any intermediaries that forwarded 
successful bids to you. Similarly, an intermediary is responsible for 
providing notification of any awards to its customers and any 
intermediaries from whom it received bids.
    (c) Notification of awards and settlement amounts to a depository 
institution having an autocharge agreement with a submitter or a 
clearing corporation. We will notify each depository institution that 
has entered into an autocharge agreement with a submitter or a clearing 
corporation of the amount to be charged, on the issue date, to the 
institution's funds account at the Federal Reserve Bank servicing the 
institution. We will provide this notification no later than the day 
after the auction.
    (d) Customer confirmation. Any customer awarded a par amount of $500 
million or more in an auction must send us a confirmation containing the 
information in paragraphs (d)(1) and (2) of this section. The 
confirmation must be sent no later than 10:00 a.m. on the day following 
the auction. The confirmation must be signed by the customer or 
authorized representative. If signed by an authorized representative, 
the confirmation must include the capacity in which the representative 
is acting. A submitter or intermediary submitting or forwarding bids for 
a customer must notify the customer of this requirement if we award the 
customer $500 million or more as a result of those bids. The information 
the customer must provide in writing is:
    (1) A confirmation of the awarded bid(s), including the name of the 
submitter that submitted the bid(s) on the customer's behalf, and
    (2) A statement indicating whether the customer had a reportable net 
long position as defined in Sec. 356.13. If a position had to be 
reported, the statement must provide the amount of the position and the 
name of the submitter that the customer requested to report the 
position.



Sec. 356.25  How does the settlement process work?

    Securities bought in the auction must be paid for by the issue date. 
The payment amount for awarded securities will be the settlement amount 
as defined in Sec. 356.2. (See formulas in Appendix B.) There are 
several ways to pay for securities:
    (a) Payment by debit entry to a deposit account. If you are paying 
by debit entry to a deposit account as provided for in Sec. 356.17 (b) 
and (c), we will charge the settlement amount to the specified account 
on the issue date.
    (b) Payment by authorized charge to a funds account. Where the 
submitter's method of payment is an authorized charge to the funds 
account of a depository institution as provided for in Sec. 356.17 
(c)(1) and (d), we will charge the settlement amount to the specified 
funds account on the issue date.
    (c) Payment through a certificate of indebtedness. If you are paying 
with the redemption proceeds of your certificate of indebtedness as 
provided for in Sec. 356.17(b), we will redeem the certificate of 
indebtedness for the settlement amount of the security and apply the 
proceeds on the issue date.
    (d) Payment with bids. If you paid the par amount with your bids as 
provided for in Sec. 356.17 (c)(2), you may have to pay an additional 
amount, or we may have to pay an amount to you, as follows:
    (1) When we owe an amount to you. If the amount you paid is more 
than the settlement amount, we will refund the balance to you after the 
auction. This will generally occur if you submit payment with your bids. 
A typical example would be an auction where the price is a discount from 
par and there is no accrued interest.
    (2) When you must remit an additional amount. If the settlement 
amount is more than the amount you paid, we will notify you of the 
additional amount due. You may owe us such an

[[Page 380]]

additional amount if the auction calculations result in a premium or if 
accrued interest or an inflation adjustment is due. If your securities 
are to be held in TreasuryDirect[supreg], we will collect this amount 
through the same payment method that you previously authorized for the 
transaction. If your securities are to be held in Legacy Treasury 
Direct[supreg], you will be responsible for remitting this additional 
amount immediately.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57440, Sept. 30, 2005]



                   Subpart D_Miscellaneous Provisions



Sec. 356.30  When does the Treasury pay principal and interest on 
securities?

    (a) General. We will pay principal on bills, notes, and bonds on the 
maturity date as specified in the auction announcement. Interest on 
bills consists of the difference between the discounted amount paid by 
the investor at original issue and the par value we pay to the investor 
at maturity. Interest on notes and bonds accrues from the dated date. 
Interest is payable on a semiannual basis on the interest payment dates 
specified in the auction announcement through the maturity date. If any 
principal or interest payment date is a Saturday, Sunday, or other day 
on which the Federal Reserve System is not open for business, we will 
make the payment (without additional interest) on the next business day. 
If a bond is callable, we will pay the principal prior to maturity if we 
call it under its terms, which include providing appropriate public 
notice.
    (b) Treasury inflation-protected securities. (1) This table explains 
the amount that we will pay to holders of inflation-protected securities 
at maturity.

                                   --
------------------------------------------------------------------------
         At maturity, if . . .                      then . . .
------------------------------------------------------------------------
(i) the inflation-adjusted principal is  we will pay the inflation-
 equal to or more than the par amount     adjusted principal.
 of the security..
(ii) the inflation-adjusted principal    we will pay an additional
 is less than the par amount of the       amount so that the additional
 security, and the security has not       amount plus the inflation-
 been stripped..                          adjusted principal equals the
                                          par amount.
(iii) the inflation-adjusted principal   to holders of principal
 is less than the par amount of the       components only we will pay an
 security, and the security has been      additional amount so that the
 stripped..                               additional amount plus the
                                          inflation-adjusted principal
                                          equals the par amount.
------------------------------------------------------------------------

    (2) Regardless of whether or not we pay an additional amount, we 
will base the final interest payment on the inflation-adjusted principal 
at maturity.
    (c) Discharge of payment obligations--
    (1) The commercial book-entry system. We discharge our payment 
obligations when we credit payment to the account maintained at a 
Federal Reserve Bank for a depository institution or other authorized 
entity, or when we make payment according to the instructions of the 
person or entity maintaining the account. Further, we do not have any 
obligations to any person or entity that does not have an account with a 
Federal Reserve Bank. We also will not recognize the claims of any 
person or entity:
    (i) That does not have an account at a Federal Reserve Bank, or
    (ii) With respect to any accounts not maintained at a Federal 
Reserve Bank.
    (2) TreasuryDirect[supreg]. We discharge our payment obligations 
when we make payment to a depository institution for credit to the 
account specified by the owner of the security, when we make payment for 
a certificate of indebtedness to be issued and held in the owner's 
account, or when we make payment according to the instructions of the 
security's owner or the owner's legal representative.
    (3) Legacy Treasury Direct[supreg]. We discharge our payment 
obligations when we make payment to a depository institution for credit 
to the account specified by the owner of the security, or when we make 
payment according to the instructions of the security's owner or the 
owner's legal representative.

[69 FR 45202, July 28, 2004, as amended at 70 FR 57441, Sept. 30, 2005]

[[Page 381]]



Sec. 356.31  How does the STRIPS program work?

    (a) General. Notes or bonds may be ``stripped''--divided into 
separate principal and interest components. These components must be 
maintained in the commercial book-entry system. Stripping is done at the 
option of the holder, and may occur at any time from issuance until 
maturity. We provide the CUSIP numbers and payment dates for the 
principal and interest components in auction announcements and on our 
website at www.publicdebt.treas.gov.
    (b) Treasury fixed-principal securities (notes and bonds other than 
Treasury inflation-protected securities--(1) Minimum par amounts 
required for STRIPS. The minimum par amount of a fixed-principal 
security that may be stripped is $1,000. Any par amount to be stripped 
above $1,000 must be in a multiple of $1,000.
    (2) Principal components. Principal components stripped from fixed-
principal securities are maintained in accounts, and transferred, at 
their par amount. They have a CUSIP number that is different from the 
CUSIP number of the fully constituted (unstripped) security.
    (3) Interest components. Interest components stripped from fixed-
principal securities have the following features:
    (i) They are maintained in accounts, and transferred, at their 
original payment value, which is derived by multiplying the semiannual 
interest rate and the par amount;
    (ii) Their interest payment date becomes the maturity date for the 
component;
    (iii) All interest components with the same maturity date have the 
same CUSIP number, regardless of the underlying security from which the 
interest payments were stripped, and therefore are fungible 
(interchangeable).
    (iv) the CUSIP numbers of interest components are different from the 
CUSIP numbers of principal components and fully constituted securities, 
even if they have the same maturity date, and therefore are not 
fungible.
    (c) Treasury inflation-protected securities--(1) Minimum par amounts 
required for STRIPS. The minimum par amount of an inflation-protected 
security that may be stripped is $1,000. Any par amount to be stripped 
above $1,000 must be in a multiple of $1,000.
    (2) Principal components. Principal components stripped from 
inflation-protected securities are maintained in accounts, and 
transferred, at their par amount. At maturity, the holder will receive 
the inflation-adjusted principal or the par amount, whichever is 
greater. (See Sec. 356.30.) A principal component has a CUSIP number 
that is different from the CUSIP number of the fully constituted 
(unstripped) security.
    (3) Interest components.--(i) Adjusted value. Interest components 
stripped from inflation-protected securities are maintained in accounts, 
and transferred, at their adjusted value. This value is derived by 
multiplying the semiannual interest rate by the par amount and then 
multiplying this value by: 100 divided by the Reference CPI of the 
original issue date. (The dated date is used instead of the original 
issue date when the dates are different.) See Appendix B, Section IV of 
this part for an example of how to do this calculation.
    (ii) CUSIP numbers. When an interest payment is stripped from an 
inflation-protected security, the interest payment date becomes the 
maturity date for the component. All interest components with the same 
maturity date have the same CUSIP number, regardless of the underlying 
security from which the interest payments were stripped. Such interest 
components are fungible (interchangeable). The CUSIP numbers of interest 
components are different from the CUSIP numbers of principal components 
and fully constituted securities, even if they have the same maturity 
date.
    (iii) Payment at maturity. At maturity, the payment to the holder 
will be derived by multiplying the adjusted value of the interest 
component by the Reference CPI of the maturity date, divided by 100. See 
Appendix B, Section IV of this part for an example of how to do this 
calculation.
    (iv) Rebasing of the CPI. If the CPI is rebased to a different time 
base reference period (See Appendix D.), the adjusted values of all 
outstanding inflation-protected interest components will be converted to 
adjusted values

[[Page 382]]

based on the new base reference period. At that time, we will publish 
information that describes how this conversion will occur. After 
rebasing, any interest components created from a security that was 
issued during a prior base reference period will be issued with adjusted 
values calculated using reference CPIs under the most-recent base 
reference period.
    (d) Reconstituting a security. Stripped interest and principal 
components may be reconstituted, that is, put back together into their 
fully constituted form. A principal component and all related unmatured 
interest components, in the appropriate minimum or multiple amounts or 
adjusted values, must be submitted together for reconstitution. Because 
inflation-protected interest components are different from fixed-
principal interest components, they are not interchangeable for 
reconstitution purposes.
    (e) Applicable regulations. Subparts A, B, and D of part 357 of this 
chapter govern notes and bonds stripped into their STRIPS components, 
unless we state differently in this part.



Sec. 356.32  What tax rules apply?

    (a) General. Securities issued under this part are subject to all 
applicable taxes imposed under the Internal Revenue Code of 1986, or its 
successor. Under section 3124 of title 31, United States Code, the 
securities are exempt from taxation by a State or political subdivision 
of a State, except for State estate or inheritance taxes and other 
exceptions as provided in that section.
    (b) Treasury inflation-protected securities. Special federal income 
tax rules for inflation-protected securities, including stripped 
inflation-protected principal and interest components, are set forth in 
Internal Revenue Service regulations.



Sec. 356.33  Does the Treasury have any discretion in the auction 
process?

    (a) We have the discretion to:
    (1) Accept, reject, or refuse to recognize any bids submitted in an 
auction;
    (2) Award more or less than the amount of securities specified in 
the auction announcement;
    (3) Waive any provision of this part for any bidder or submitter; 
and
    (4) Change the terms and conditions of an auction.
    (b) Our decisions under this part are final. We will provide a 
public notice if we change any auction provision, term, or condition.
    (c) We reserve the right to modify the terms and conditions of new 
securities and to depart from the customary pattern of securities 
offerings at any time.



Sec. 356.34  What could happen if someone does not fully comply with the 
auction rules or fails to pay for securities?

    (a) General. If a person or entity fails to comply with any of the 
auction rules in this part, we will consider the circumstances and take 
what we deem to be appropriate action. This could include barring the 
person or entity from participating in future auctions under this part. 
We also may refer the matter to an appropriate regulatory agency.
    (b) Liquidated damages. If you fail to pay for awarded securities in 
a timely manner, we may require you to pay liquidated damages of up to 
one percent of the par amount of securities we awarded to you. Our use 
of this liquidated damages remedy does not preclude us from using any 
other appropriate remedy.



Sec. 356.35  Who approved the information collections?

    The Office of Management and Budget approved the collections of 
information contained in Sec. Sec. 356.11, 356.12, 356.13, 356.14, and 
356.15 and in Appendix A of this part under control number 1535-0112.

                Appendix A to Part 356--Bidder Categories

                    I. Categories of Eligible Bidders

    We describe below various categories of bidders eligible to bid in 
Treasury auctions. You may use them to determine whether we consider you 
and other persons or entities to be one bidder or more than one bidder 
for auction bidding and compliance purposes. For example, we use these 
definitions to apply the competitive and noncompetitive award 
limitations and for other requirements. Notwithstanding these 
definitions, we consider any persons or entities that intentionally act 
together with respect to bidding in a Treasury auction to collectively 
be one bidder. Even if an auction participant

[[Page 383]]

does not fall under any of the categories listed below, it is our intent 
that no auction participant receives a larger auction award by acquiring 
securities through others than it could have received had it been 
considered one of these types of bidders.
    (a) Corporation--We consider a corporation to be one bidder. A 
corporation includes all of its affiliates, which may be persons, 
partnerships, or other entities. We consider a business trust, such as a 
Massachusetts or Delaware business trust, to be a corporation. We use 
the term ``corporate structure'' to refer to the collection of 
affiliates that we consider collectively to be one bidder. An affiliate 
is any:
     Entity that is more than 50-percent owned, 
directly or indirectly, by the corporation;
     Entity that is more than 50-percent owned, 
directly or indirectly, by any other affiliate of the corporation;
     Person or entity that owns, directly or 
indirectly, more than 50 percent of the corporation;
     Person or entity that owns, directly or 
indirectly, more than 50 percent of any other affiliate of the 
corporation; or
     Entity, a majority of whose board of directors or 
a majority of whose general partners are directors or officers of the 
corporation, or of any affiliate of the corporation.
    An entity that is more than 50-percent owned as described in this 
definition is not an affiliate, however, if:
     The purpose of such ownership is to seek a return 
on investment and not to engage in the business of the entity;
     The owner does not routinely exercise operational 
or management control over the entity;
     The owner does not exercise any control over 
investment decisions of the entity regarding U.S. Treasury securities;
     The corporation has written policies or 
procedures, including ongoing compliance monitoring processes, that are 
designed to prevent it from acting together with the entity regarding 
participation in Treasury auctions or investment strategies regarding 
Treasury securities being auctioned; and
     The corporation submits notice and certification 
to us, as provided in this appendix A.
    A corporation that plans to make use of this exception to the 
definition of ``affiliate'' must inform us of this fact in writing and 
provide the following certification:
    [Name of corporation] hereby certifies that, with regard to any 
entity of which it owns more than 50 percent as defined in appendix A to 
31 CFR part 356, but for which the purpose of such ownership is to seek 
a return on investment and not to engage in the business of the entity:
     We do not routinely exercise operational or 
management control over the entity;
     We do not exercise any control over investment 
decisions of the entity regarding U.S. Treasury securities;
     We have written policies or procedures, including 
ongoing compliance monitoring processes, that are designed to prevent 
the corporation from acting together with the entity regarding 
participation in Treasury auctions or investment strategies regarding 
Treasury securities being auctioned; and
     We will continue to meet the terms of this 
certification until we notify the Treasury of a change.
    (b) Partnership--We consider a partnership to be one bidder if it is 
a partnership for which the Internal Revenue Service has assigned a tax-
identification number. A partnership includes all of its affiliates, 
which may be persons, corporations, general partners acting on behalf of 
the partnership, or other entities. We use the term ``partnership 
structure'' to refer to the collection of affiliates that we consider 
collectively to be one bidder. We may consider a partnership structure 
that contains one or more corporations as a ``partnership'' or a 
``corporation,'' but not both.
    An affiliate is any:
     Entity that is more than 50-percent owned, 
directly or indirectly, by the partnership;
     Entity that is more than 50-percent owned, 
directly or indirectly, by any other affiliate of the partnership;
     Person or entity that owns, directly or 
indirectly, more than 50 percent of the partnership;
     Person or entity that owns, directly or 
indirectly, more than 50 percent of any other affiliate of the 
partnership; or
     Entity, a majority of whose general partners or a 
majority of whose board of directors are general partners or directors 
of the partnership or of any affiliate of the partnership.
    An entity that is more than 50-percent owned as described in this 
definition is not an affiliate, however, if:
     The purpose of such ownership is to seek a return 
on investment and not to engage in the business of the entity;
     The owner does not routinely exercise operational 
or management control over the entity;
     The owner does not exercise any control over 
investment decisions of the entity regarding U.S. Treasury securities;
     The partnership has written policies or 
procedures, including ongoing compliance monitoring processes, that are 
designed to prevent it from acting together with the entity regarding 
participation in Treasury auctions or investment strategies regarding 
Treasury securities being auctioned; and
     The partnership submits notice and certification 
to us, as provided in this appendix A.

[[Page 384]]

    A partnership that plans to make use of this exception to the 
definition of ``affiliate'' must inform us of this fact in writing and 
provide the following certification:
    [Name of partnership] hereby certifies that, with regard to any 
entity of which it owns more than 50 percent as defined in appendix A to 
31 CFR part 356, but for which the purpose of such ownership is to seek 
a return on investment and not to engage in the business of the entity:
     We do not routinely exercise operational or 
management control over the entity;
     We do not exercise any control over investment 
decisions of the entity regarding U.S. Treasury securities;
     We have written policies or procedures, including 
ongoing compliance monitoring processes, that are designed to prevent 
the partnership from acting together with the entity regarding 
participation in Treasury auctions or investment strategies regarding 
Treasury securities being auctioned; and
     We will continue to meet the terms of this 
certification until we notify the Treasury of a change.
    (c) Government-related entity--We consider each of the following 
entities to be one bidder:
    (1) A state government or the government of the District of Columbia
    (2) A unit of local government, including any county, city, 
municipality, or township, or other unit of general government as 
defined by the Bureau of the Census for statistical purposes.
    (3) A commonwealth, territory, or possession of the United States.
    (4) A governmental entity, body, or corporation established under 
Federal, State, or local law.
    (5) A foreign central bank, the government of a foreign state, or an 
international organization in which the United States holds membership. 
This type of entity applies only when such entity is not using an 
account at the Federal Reserve Bank of New York (See paragraph (f).).
    We generally consider an investment, reserve, or other fund of one 
of the above government-related entities as part of that entity and not 
a separate bidder. We will consider a government-related entity's fund 
to be a separate bidder if it meets the definition of the ``trust or 
other fiduciary estate'' category, or if applicable law requires that 
the investments of such fund be made separately.
    (d) Trust or other fiduciary estate--We consider a legal entity 
created under a valid trust instrument, court order, or other legal 
authority that designates a trustee or fiduciary to act for the benefit 
of a named beneficiary to be one bidder. The following conditions must 
also be met for us to consider a trust entity to be one bidder:
     The legal entity must be able to be identified 
by:
    1. The name or title of the trustee or fiduciary;
    2. Specific reference to the trust instrument, court order, or legal 
authority under which the trustee or fiduciary is acting; and
    3. The unique IRS-assigned employer identification number (not 
social security number) for the entity.
     The trustee or fiduciary must make the decisions 
on participating in auctions on behalf of the trust or fiduciary estate.
    (e) Individual--We consider a person to be one bidder, regardless of 
whether he or she is acting as an individual, a sole proprietor, or for 
any entity not otherwise defined as a bidder. If a person meets the 
definition of an affiliate within a corporate or partnership structure, 
we will consider him or her to be a bidder in this ``individual'' 
category if the corporation or partnership is not bidding in the same 
auction. We do not consider a person acting in an official capacity as 
an employee or other representative of a bidder defined in any other 
category to be an ``individual'' bidder. We consider a person, his or 
her spouse, and any children under the age of 21 having a common 
household to be one ``individual'' bidder.
    (f) Foreign and International Monetary Authority (``FIMA'')--We 
consider one or more parties making up a foreign or international 
monetary organization that is not private in nature to be a bidder 
called a FIMA entity if at least one of the parties is a foreign or 
international entity that is (i) financial in nature, or (ii) not 
financial in nature but is authorized to open an account at the Federal 
Reserve Bank of New York. We consider each of the following entities to 
be a single FIMA entity:
    (1) A foreign central bank or regional central bank.
    (2) A foreign governmental monetary or finance entity.
    (3) A non-governmental international financial organization that is 
not private in nature (for example, the International Monetary Fund, the 
World Bank, the Inter-American Development Bank, and the Asian 
Development Bank).
    (4) A non-financial international organization that the United 
States participates in (for example, the United Nations).
    (5) A multi-party arrangement of a governmental ministry and/or a 
foreign central bank or monetary authority with a United States 
Government Department and/or the Federal Reserve Bank of New York.
    (6) A foreign or international monetary entity or an entity 
authorized by statute or by us to open accounts at the Federal Reserve 
Bank of New York.
    (g) Other Bidder--We do not consider a bidder defined by any of the 
above categories to be a bidder in this category. For purposes of

[[Page 385]]

this definition, ``other bidder'' means an institution or organization 
with a unique IRS-assigned employer identification number. This 
definition includes such entities as an association, church, university, 
union, or club. This category does not include any person or entity 
acting in a fiduciary or investment management capacity, a sole 
proprietorship, an investment account, an investment fund, a form of 
registration, or investment ownership designation.

              II. How To Obtain Separate Bidder Recognition

    Under certain circumstances, we may recognize a major organizational 
component (e.g., the parent or a subsidiary) in a corporate or 
partnership structure as a bidder separate from the larger corporate or 
partnership structure. We also may recognize two or more major 
organizational components collectively as one bidder. All of the 
following criteria must be met for such component(s) to qualify for 
recognition as a separate bidder:
    (a) Such component(s) must be prohibited by law or regulation from 
exchanging, or must have established written internal procedures 
designed to prevent the exchange of, information related to bidding in 
Treasury auctions with any other component in the corporate or 
partnership structure;
    (b) Such component(s) must not be created for the purpose of 
circumventing our bidding and award limitations;
    (c) Decisions related to purchasing Treasury securities at auction 
and participation in specific auctions must be made by employees of such 
component(s). Employees of such component(s) that make decisions to 
purchase or dispose of Treasury securities must not perform the same 
function for other components within the corporate or partnership 
structure; and
    (d) The records of such component(s) related to the bidding for, 
acquisition of, and disposition of Treasury securities must be 
maintained by such component(s). Those records must be identifiable--
separate and apart from similar records for other components within the 
corporate or partnership structure. To obtain recognition as a separate 
bidder, each component or group of components must request such 
recognition from us, provide a description of the component or group and 
its position within the corporate or partnership structure, and provide 
the following certification:
    [Name of the bidder] hereby certifies that to the best of its 
knowledge and belief it meets the criteria for a separate bidder as 
described in Appendix A to 31 CFR Part 356. The above-named bidder also 
certifies that it has established written policies or procedures, 
including ongoing compliance monitoring processes, that are designed to 
prevent the component or group of components from:
    (1) Exchanging any of the following information with any other part 
of the corporate [partnership] structure: (a) yields or rates at which 
it plans to bid; (b) amounts of securities for which it plans to bid; 
(c) positions that it holds or plans to acquire in a security being 
auctioned; and (d) investment strategies that it plans to follow 
regarding the security being auctioned, or
    (2) In any way intentionally acting together with any other part of 
the corporate [partnership] structure with respect to formulating or 
entering bids in a Treasury auction.
    The above-named bidder agrees that it will promptly notify the 
Department in writing when any of the information provided to obtain 
separate bidder status changes or when this certification is no longer 
valid.

[69 FR 45202, July 28, 2004, as amended at 70 FR 29456, May 23, 2005]

               Appendix B to Part 356--Formulas and Tables

I. Computation of Interest on Treasury Bonds and Notes.
II. Formulas for Conversion of Fixed-Principal Security Yields to 
Equivalent Prices.
III. Formulas for Conversion of Inflation-Protected Security Yields to 
Equivalent Prices.
IV. Computation of Adjusted Values and Payment Amounts for Stripped 
Inflation-Protected Interest Components.
V. Computation of Purchase Price, Discount Rate, and Investment Rate 
(Coupon-Equivalent Yield) for Treasury Bills.
    The examples in this appendix are given for illustrative purposes 
only and are in no way a prediction of interest rates on any bills, 
notes, or bonds issued under this part. In some of the following 
examples, we use intermediate rounding for ease in following the 
calculations. In actual practice, we generally do not round prior to 
determining the final result.
    If you use a multi-decimal calculator, we recommend setting your 
calculator to at least 13 decimals and then applying normal rounding 
procedures. This should be sufficient to obtain the same final results. 
However, in the case of any discrepancies, our determinations will be 
final.

         I. Computation of Interest on Treasury Bonds and Notes

                 A. Treasury Fixed-Principal Securities

    1. Regular Half-Year Payment Period. We pay interest on marketable 
Treasury fixed-principal securities on a semiannual basis. The regular 
interest payment period is a full half-year of six calendar months. 
Examples

[[Page 386]]

of half-year periods are: (1) February 15 to August 15, (2) May 31 to 
November 30, and (3) February 29 to August 31 (in a leap year). 
Calculation of an interest payment for a fixed-principal note with a par 
amount of $1,000 and an interest rate of 8% is made in this manner: 
($1,000 x .08)/2 = $40. Specifically, a semiannual interest payment 
represents one half of one year's interest, and is computed on this 
basis regardless of the actual number of days in the half-year.
    2. Daily Interest Decimal. We compute a daily interest decimal in 
cases where an interest payment period for a fixed-principal security is 
shorter or longer than six months or where accrued interest is payable 
by an investor. We base the daily interest decimal on the actual number 
of calendar days in the half-year or half-years involved. The number of 
days in any half-year period is shown in Table 1.

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                   Beginning and ending days are   Beginning and ending days are
                                                     1st or 15th of the months      the last days of the months
                                                   listed under interest period    listed under interest period
                 Interest period                         (number of days)                (number of days)
                                                 ---------------------------------------------------------------
                                                   Regular year      Leap year     Regular year      Leap year
----------------------------------------------------------------------------------------------------------------
January to July.................................             181             182             181             182
February to August..............................             181             182             184             184
March to September..............................             184             184             183             183
April to October................................             183             183             184             184
May to November.................................             184             184             183             183
June to December................................             183             183             184             184
July to January.................................             184             184             184             184
August to February..............................             184             184             181             182
September to March..............................             181             182             182             183
October to April................................             182             183             181             182
November to May.................................             181             182             182             183
December to June................................             182             183             181             182
----------------------------------------------------------------------------------------------------------------

    Table 2 below shows the daily interest decimals covering interest 
from \1/8\% to 20% on $1,000 for one day in increments of \1/8\ of one 
percent. These decimals represent \1/181\, \1/182\, \1/183\, or \1/184\ 
of a full semiannual interest payment, depending on which half-year is 
applicable.

                                                     Table 2
 [Decimal for one day's interest on $1,000 at various rates of interest, payable semiannually or on a semiannual
 basis, in regular years of 365 days and in years of 366 days (to determine applicable number of days, see table
                                                      1.)]
----------------------------------------------------------------------------------------------------------------
                                                          Half-year of  Half-year of  Half-year of  Half-year of
                Rate per annum (percent)                    184 days      183 days      182 days      181 days
----------------------------------------------------------------------------------------------------------------
\1/8\...................................................   0.003396739   0.003415301   0.003434066   0.003453039
\1/4\...................................................   0.006793478   0.006830601   0.006868132   0.006906077
\3/8\...................................................   0.010190217   0.010245902   0.010302198   0.010359116
\1/2\...................................................   0.013586957   0.013661202   0.013736264   0.013812155
\5/8\...................................................   0.016983696   0.017076503   0.017170330   0.017265193
\3/4\...................................................   0.020380435   0.020491803   0.020604396   0.020718232
\7/8\...................................................   0.023777174   0.023907104   0.024038462   0.024171271
1.......................................................   0.027173913   0.027322404   0.027472527   0.027624309
1\1/8\..................................................   0.030570652   0.030737705   0.030906593   0.031077348
1\1/4\..................................................   0.033967391   0.034153005   0.034340659   0.034530387
1\3/8\..................................................   0.037364130   0.037568306   0.037774725   0.037983425
1\1/2\..................................................   0.040760870   0.040983607   0.041208791   0.041436464
1\5/8\..................................................   0.044157609   0.044398907   0.044642857   0.044889503
1\3/4\..................................................   0.047554348   0.047814208   0.048076923   0.048342541
1\7/8\..................................................   0.050951087   0.051229508   0.051510989   0.051795580
2.......................................................   0.054347826   0.054644809   0.054945055   0.055248619
2\1/8\..................................................   0.057744565   0.058060109   0.058379121   0.058701657
2\1/4\..................................................   0.061141304   0.061475410   0.061813187   0.062154696
2\3/8\..................................................   0.064538043   0.064890710   0.065247253   0.065607735
2\1/2\..................................................   0.067934783   0.068306011   0.068681319   0.069060773
2\5/8\..................................................   0.071331522   0.071721311   0.072115385   0.072513812
2\3/4\..................................................   0.074728261   0.075136612   0.075549451   0.075966851
2\7/8\..................................................   0.078125000   0.078551913   0.078983516   0.079419890
3.......................................................   0.081521739   0.081967213   0.082417582   0.082872928
3\1/8\..................................................   0.084918478   0.085382514   0.085851648   0.086325967
3\1/4\..................................................   0.088315217   0.088797814   0.089285714   0.089779006
3\3/8\..................................................   0.091711957   0.092213115   0.092719780   0.093232044

[[Page 387]]

 
3\1/2\..................................................   0.095108696   0.095628415   0.096153846   0.096685083
3\5/8\..................................................   0.098505435   0.099043716   0.099587912   0.100138122
3\3/4\..................................................   0.101902174   0.102459016   0.103021978   0.103591160
3\7/8\..................................................   0.105298913   0.105874317   0.106456044   0.107044199
4.......................................................   0.108695652   0.109289617   0.109890110   0.110497238
4\1/8\..................................................   0.112092391   0.112704918   0.113324176   0.113950276
4\1/4\..................................................   0.115489130   0.116120219   0.116758242   0.117403315
4\3/8\..................................................   0.118885870   0.119535519   0.120192308   0.120856354
4\1/2\..................................................   0.122282609   0.122950820   0.123626374   0.124309392
4\5/8\..................................................   0.125679348   0.126366120   0.127060440   0.127762431
4\3/4\..................................................   0.129076087   0.129781421   0.130494505   0.131215470
4\7/8\..................................................   0.132472826   0.133196721   0.133928571   0.134668508
5.......................................................   0.135869565   0.136612022   0.137362637   0.138121547
5\1/8\..................................................   0.139266304   0.140027322   0.140796703   0.141574586
5\1/4\..................................................   0.142663043   0.143442623   0.144230769   0.145027624
5\3/8\..................................................   0.146059783   0.146857923   0.147664835   0.148480663
5\1/2\..................................................   0.149456522   0.150273224   0.151098901   0.151933702
5\5/8\..................................................   0.152853261   0.153688525   0.154532967   0.155386740
5\3/4\..................................................   0.156250000   0.157103825   0.157967033   0.158839779
5\7/8\..................................................   0.159646739   0.160519126   0.161401099   0.162292818
6.......................................................   0.163043478   0.163934426   0.164835165   0.165745856
6\1/8\..................................................   0.166440217   0.167349727   0.168269231   0.169198895
6\1/4\..................................................   0.169836957   0.170765027   0.171703297   0.172651934
6\3/8\..................................................   0.173233696   0.174180328   0.175137363   0.176104972
6\1/2\..................................................   0.176630435   0.177595628   0.178571429   0.179558011
6\5/8\..................................................   0.180027174   0.181010929   0.182005495   0.183011050
6\3/4\..................................................   0.183423913   0.184426230   0.185439560   0.186464088
6\7/8\..................................................   0.186820652   0.187841530   0.188873626   0.189917127
7.......................................................   0.190217391   0.191256831   0.192307692   0.193370166
7\1/8\..................................................   0.193614130   0.194672131   0.195741758   0.196823204
7\1/4\..................................................   0.197010870   0.198087432   0.199175824   0.200276243
7\3/8\..................................................   0.200407609   0.201502732   0.202609890   0.203729282
7\1/2\..................................................   0.203804348   0.204918033   0.206043956   0.207182320
7\5/8\..................................................   0.207201087   0.208333333   0.209478022   0.210635359
7\3/4\..................................................   0.210597826   0.211748634   0.212912088   0.214088398
7\7/8\..................................................   0.213994565   0.215163934   0.216346154   0.217541436
8.......................................................   0.217391304   0.218579235   0.219780220   0.220994475
8\1/8\..................................................   0.220788043   0.221994536   0.223214286   0.224447514
8\1/4\..................................................   0.224184783   0.225409836   0.226648352   0.227900552
8\3/8\..................................................   0.227581522   0.228825137   0.230082418   0.231353591
8\1/2\..................................................   0.230978261   0.232240437   0.233516484   0.234806630
8\5/8\..................................................   0.234375000   0.235655738   0.236950549   0.238259669
8\3/4\..................................................   0.237771739   0.239071038   0.240384615   0.241712707
8\7/8\..................................................   0.241168478   0.242486339   0.243818681   0.245165746
9.......................................................   0.244565217   0.245901639   0.247252747   0.248618785
9\1/8\..................................................   0.247961957   0.249316940   0.250686813   0.252071823
9\1/4\..................................................   0.251358696   0.252732240   0.254120879   0.255524862
9\3/8\..................................................   0.254755435   0.256147541   0.257554945   0.258977901
9\1/2\..................................................   0.258152174   0.259562842   0.260989011   0.262430939
9\5/8\..................................................   0.261548913   0.262978142   0.264423077   0.265883978
9\3/4\..................................................   0.264945652   0.266393443   0.267857143   0.269337017
9\7/8\..................................................   0.268342391   0.269808743   0.271291209   0.272790055
10......................................................   0.271739130   0.273224044   0.274725275   0.276243094
10\1/8\.................................................   0.275135870   0.276639344   0.278159341   0.279696133
10\1/4\.................................................   0.278532609   0.280054645   0.281593407   0.283149171
10\3/8\.................................................   0.281929348   0.283469945   0.285027473   0.286602210
10\1/2\.................................................   0.285326087   0.286885246   0.288461538   0.290055249
10\5/8\.................................................   0.288722826   0.290300546   0.291895604   0.293508287
10\3/4\.................................................   0.292119565   0.293715847   0.295329670   0.296961326
10\7/8\.................................................   0.295516304   0.297131148   0.298763736   0.300414365
11......................................................   0.298913043   0.300546448   0.302197802   0.303867403
11\1/8\.................................................   0.302309783   0.303961749   0.305631868   0.307320442
11\1/4\.................................................   0.305706522   0.307377049   0.309065934   0.310773481
11\3/8\.................................................   0.309103261   0.310792350   0.312500000   0.314226519
11\1/2\.................................................   0.312500000   0.314207650   0.315934066   0.317679558
11\5/8\.................................................   0.315896739   0.317622951   0.319368132   0.321132597
11\3/4\.................................................   0.319293478   0.321038251   0.322802198   0.324585635
11\7/8\.................................................   0.322690217   0.324453552   0.326236264   0.328038674
12......................................................   0.326086957   0.327868852   0.329670330   0.331491713

[[Page 388]]

 
12\1/8\.................................................   0.329483696   0.331284153   0.333104396   0.334944751
12\1/4\.................................................   0.332880435   0.334699454   0.336538462   0.338397790
12\3/8\.................................................   0.336277174   0.338114754   0.339972527   0.341850829
12\1/2\.................................................   0.339673913   0.341530055   0.343406593   0.345303867
12\5/8\.................................................   0.343070652   0.344945355   0.346840659   0.348756906
12\3/4\.................................................   0.346467391   0.348360656   0.350274725   0.352209945
12\7/8\.................................................   0.349864130   0.351775956   0.353708791   0.355662983
13......................................................   0.353260870   0.355191257   0.357142857   0.359116022
13\1/8\.................................................   0.356657609   0.358606557   0.360576923   0.362569061
13\1/4\.................................................   0.360054348   0.362021858   0.364010989   0.366022099
13\3/8\.................................................   0.363451087   0.365437158   0.367445055   0.369475138
13\1/2\.................................................   0.366847826   0.368852459   0.370879121   0.372928177
13\5/8\.................................................   0.370244565   0.372267760   0.374313187   0.376381215
13\3/4\.................................................   0.373641304   0.375683060   0.377747253   0.379834254
13\7/8\.................................................   0.377038043   0.379098361   0.381181319   0.383287293
14......................................................   0.380434783   0.382513661   0.384615385   0.386740331
14\1/8\.................................................   0.383831522   0.385928962   0.388049451   0.390193370
14\1/4\.................................................   0.387228261   0.389344262   0.391483516   0.393646409
14\3/8\.................................................   0.390625000   0.392759563   0.394917582   0.397099448
14\1/2\.................................................   0.394021739   0.396174863   0.398351648   0.400552486
14\5/8\.................................................   0.397418478   0.399590164   0.401785714   0.404005525
14\3/4\.................................................   0.400815217   0.403005464   0.405219780   0.407458564
14\7/8\.................................................   0.404211957   0.406420765   0.408653846   0.410911602
15......................................................   0.407608696   0.409836066   0.412087912   0.414364641
15\1/8\.................................................   0.411005435   0.413251366   0.415521978   0.417817680
15\1/4\.................................................   0.414402174   0.416666667   0.418956044   0.421270718
15\3/8\.................................................   0.417798913   0.420081967   0.422390110   0.424723757
15\1/2\.................................................   0.421195652   0.423497268   0.425824176   0.428176796
15\5/8\.................................................   0.424592391   0.426912568   0.429258242   0.431629834
15\3/4\.................................................   0.427989130   0.430327869   0.432692308   0.435082873
15\7/8\.................................................   0.431385870   0.433743169   0.436126374   0.438535912
16......................................................   0.434782609   0.437158470   0.439560440   0.441988950
16\1/8\.................................................   0.438179348   0.440573770   0.442994505   0.445441989
16\1/4\.................................................   0.441576087   0.443989071   0.446428571   0.448895028
16\3/8\.................................................   0.444972826   0.447404372   0.449862637   0.452348066
16\1/2\.................................................   0.448369565   0.450819672   0.453296703   0.455801105
16\5/8\.................................................   0.451766304   0.454234973   0.456730769   0.459254144
16\3/4\.................................................   0.455163043   0.457650273   0.460164835   0.462707182
16\7/8\.................................................   0.458559783   0.461065574   0.463598901   0.466160221
17......................................................   0.461956522   0.464480874   0.467032967   0.469613260
17\1/8\.................................................   0.465353261   0.467896175   0.470467033   0.473066298
17\1/4\.................................................   0.468750000   0.471311475   0.473901099   0.476519337
17\3/8\.................................................   0.472146739   0.474726776   0.477335165   0.479972376
17\1/2\.................................................   0.475543478   0.478142077   0.480769231   0.483425414
17\5/8\.................................................   0.478940217   0.481557377   0.484203297   0.486878453
17\3/4\.................................................   0.482336957   0.484972678   0.487637363   0.490331492
17\7/8\.................................................   0.485733696   0.488387978   0.491071429   0.493784530
18......................................................   0.489130435   0.491803279   0.494505495   0.497237569
18\1/8\.................................................   0.492527174   0.495218579   0.497939560   0.500690608
18\1/4\.................................................   0.495923913   0.498633880   0.501373626   0.504143646
18\3/8\.................................................   0.499320652   0.502049180   0.504807692   0.507596685
18\1/2\.................................................   0.502717391   0.505464481   0.508241758   0.511049724
18\5/8\.................................................   0.506114130   0.508879781   0.511675824   0.514502762
18\3/4\.................................................   0.509510870   0.512295082   0.515109890   0.517955801
18\7/8\.................................................   0.512907609   0.515710383   0.518543956   0.521408840
19......................................................   0.516304348   0.519125683   0.521978022   0.524861878
19\1/8\.................................................   0.519701087   0.522540984   0.525412088   0.528314917
19\1/4\.................................................   0.523097826   0.525956284   0.528846154   0.531767956
19\3/8\.................................................   0.526494565   0.529371585   0.532280220   0.535220994
19\1/2\.................................................   0.529891304   0.532786885   0.535714286   0.538674033
19\5/8\.................................................   0.533288043   0.536202186   0.539148352   0.542127072
19\3/4\.................................................   0.536684783   0.539617486   0.542582418   0.545580110
19\7/8\.................................................   0.540081522   0.543032787   0.546016484   0.549033149
20......................................................   0.543478261   0.546448087   0.549450549   0.552486188
----------------------------------------------------------------------------------------------------------------


[[Page 389]]

    3. Short First Payment Period. In cases where the first interest 
payment period for a Treasury fixed-principal security covers less than 
a full half-year period (a ``short coupon''), we multiply the daily 
interest decimal by the number of days from, but not including, the 
issue date to, and including, the first interest payment date. This 
calculation results in the amount of the interest payable per $1,000 par 
amount. In cases where the par amount of securities is a multiple of 
$1,000, we multiply the appropriate multiple by the unrounded interest 
payment amount per $1,000 par amount.

                                 Example

    A 2-year note paying 8\3/8\% interest was issued on July 2, 1990, 
with the first interest payment on December 31, 1990. The number of days 
in the full half-year period of June 30 to December 31, 1990, was 184 
(See Table 1.). The number of days for which interest actually accrued 
was 182 (not including July 2, but including December 31). The daily 
interest decimal, $0.227581522 (See Table 2, line for 8\3/8\%, under the 
column for half-year of 184 days.), was multiplied by 182, resulting in 
a payment of $41.419837004 per $1,000. For $20,000 of these notes, 
$41.419837004 would be multiplied by 20, resulting in a payment of 
$828.39674008 ($828.40).
    4. Long First Payment Period. In cases where the first interest 
payment period for a bond or note covers more than a full half-year 
period (a ``long coupon''), we multiply the daily interest decimal by 
the number of days from, but not including, the issue date to, and 
including, the last day of the fractional period that ends one full 
half-year before the interest payment date. We add that amount to the 
regular interest amount for the full half-year ending on the first 
interest payment date, resulting in the amount of interest payable for 
$1,000 par amount. In cases where the par amount of securities is a 
multiple of $1,000, the appropriate multiple should be applied to the 
unrounded interest payment amount per $1,000 par amount.

                                 Example

    A 5-year 2-month note paying 7\7/8\% interest was issued on December 
3, 1990, with the first interest payment due on August 15, 1991. 
Interest for the regular half-year portion of the payment was computed 
to be $39.375 per $1,000 par amount. The fractional portion of the 
payment, from December 3 to February 15, fell in a 184-day half-year 
(August 15, 1990, to February 15, 1991). Accordingly, the daily interest 
decimal for 7\7/8\% was $0.213994565. This decimal, multiplied by 74 
(the number of days from but not including December 3, 1990, to and 
including February 15), resulted in interest for the fractional portion 
of $15.835597810. When added to $39.375 (the normal interest payment 
portion ending on August 15, 1991), this produced a first interest 
payment of $55.210597810, or $55.21 per $1,000 par amount. For $7,000 
par amount of these notes, $55.210597810 would be multiplied by 7, 
resulting in an interest payment of $386.474184670 ($386.47).

               B. Treasury Inflation-Protected Securities

    1. Indexing Process. We pay interest on marketable Treasury 
inflation-protected securities on a semiannual basis. We issue 
inflation-protected securities with a stated rate of interest that 
remains constant until maturity. Interest payments are based on the 
security's inflation-adjusted principal at the time we pay interest. We 
make this adjustment by multiplying the par amount of the security by 
the applicable Index Ratio.
    2. Index Ratio. The numerator of the Index Ratio, the Ref 
CPIDate, is the index number applicable for a specific day. 
The denominator of the Index Ratio is the Ref CPI applicable for the 
original issue date. However, when the dated date is different from the 
original issue date, the denominator is the Ref CPI applicable for the 
dated date. The formula for calculating the Index Ratio is:
[GRAPHIC] [TIFF OMITTED] TR28JY04.000

Where Date = valuation date

    3. Reference CPI. The Ref CPI for the first day of any calendar 
month is the CPI for the third preceding calendar month. For example, 
the Ref CPI applicable to April 1 in any year is the CPI for January, 
which is reported in February. We determine the Ref CPI for any other 
day of a month by a linear interpolation between the Ref CPI applicable 
to the first day of the month in which the day falls (in the example, 
January) and the Ref CPI applicable to the first day of the next month 
(in the example, February). For interpolation purposes, we truncate 
calculations with regard to the Ref CPI and the Index Ratio for a 
specific date to six decimal places, and round to five decimal places.
    Therefore the Ref CPI and the Index Ratio for a particular date will 
be expressed to five decimal places.
    (i) The formula for the Ref CPI for a specific date is:
    [GRAPHIC] [TIFF OMITTED] TR28JY04.001
    

[[Page 390]]


Where Date = valuation date

D = the number of days in the month in which Date falls
t = the calendar day corresponding to Date
CPIM = CPI reported for the calendar month M by the Bureau of 
Labor Statistics
Ref CPIM = Ref CPI for the first day of the calendar month in 
which Date falls, e.g., Ref CPIApril1 is the 
CPIJanuary
Ref CPIM+1 = Ref CPI for the first day of the calendar month 
immediately following Date

    (ii) For example, the Ref CPI for April 15, 1996 is calculated as 
follows:
[GRAPHIC] [TIFF OMITTED] TR28JY04.002

where D = 30, t = 15
Ref CPIApril 1, 1996 = 154.40, the non-seasonally adjusted 
CPI-U for January 1996.

Ref CPIMay 1, 1996 = 154.90, the non-seasonally adjusted CPI-
U for February 1996.

    (iii) Putting these values in the equation in paragraph (ii) above:
    [GRAPHIC] [TIFF OMITTED] TR28JY04.003
    
    This value truncated to six decimals is 154.633333; rounded to five 
decimals it is 154.63333.
    (iv) To calculate the Index Ratio for April 16, 1996, for an 
inflation-protected security issued on April 15, 1996, the Ref 
CPIApril 16, 1996 must first be calculated. Using the same 
values in the equation above except that t=16, the Ref 
CPIApril 16, 1996 is 154.65000.
    The Index Ratio for April 16, 1996 is:

Index RatioApril 16, 1996 = 154.65000/154.63333 = 
1.000107803.

    This value truncated to six decimals is 1.000107; rounded to five 
decimals it is 1.00011.
    4. Index Contingencies.
    (i) If a previously reported CPI is revised, we will continue to use 
the previously reported (unrevised) CPI in calculating the principal 
value and interest payments.
    If the CPI is rebased to a different year, we will continue to use 
the CPI based on the base reference period in effect when the security 
was first issued, as long as that CPI continues to be published.
    (ii) We will replace the CPI with an appropriate alternative index 
if, while an inflation-protected security is outstanding, the applicable 
CPI is:
     Discontinued,
     In the judgment of the Secretary, fundamentally 
altered in a manner materially adverse to the interests of an investor 
in the security, or
     In the judgment of the Secretary, altered by 
legislation or Executive Order in a manner materially adverse to the 
interests of an investor in the security.
    (iii) If we decide to substitute an alternative index we will 
consult with the Bureau of Labor Statistics or any successor agency. We 
will then notify the public of the substitute index and how we will 
apply it. Determinations of the Secretary in this regard will be final.
    (iv) If the CPI for a particular month is not reported by the last 
day of the following month, we will announce an index number based on 
the last available twelve-month change in the CPI. We will base our 
calculations of our payment obligations that rely on that month's CPI on 
the index number we announce.
    (a) For example, if the CPI for month M is not reported timely, the 
formula for calculating the index number to be used is:
[GRAPHIC] [TIFF OMITTED] TR28JY04.004

    (b) Generalizing for the last reported CPI issued N months prior to 
month M:
[GRAPHIC] [TIFF OMITTED] TR28JY04.005

    (c) If it is necessary to use these formulas to calculate an index 
number, we will use that number for all subsequent calculations that 
rely on the month's index number. We

[[Page 391]]

will not replace it with the actual CPI when it is reported, except for 
use in the above formulas. If it becomes necessary to use the above 
formulas to derive an index number, we will use the last CPI that has 
been reported to calculate CPI numbers for months for which the CPI has 
not been reported timely.
    5. Computation of Interest for a Regular Half-Year Payment Period. 
Interest on marketable Treasury inflation-protected securities is 
payable on a semiannual basis. The regular interest payment period is a 
full half-year or six calendar months. Examples of half-year periods are 
January 15 to July 15, and April 15 to October 15. An interest payment 
will be a fixed percentage of the value of the inflation-adjusted 
principal, in current dollars, for the date on which it is paid. We will 
calculate interest payments by multiplying one-half of the specified 
annual interest rate for the inflation-protected securities by the 
inflation-adjusted principal for the interest payment date.
    Specifically, we compute a semiannual interest payment on the basis 
of one-half of one year's interest regardless of the actual number of 
days in the half-year.

                                 Example

    A 10-year inflation-protected note paying 3\7/8%\ interest was 
issued on January 15, 1999, with the first interest payment on July 15, 
1999. The Ref CPI on January 15, 1999 (Ref CPIIssueDate) was 
164, and the Ref CPI on July 15, 1999 (Ref CPIDate) was 
166.2. For a par amount of $100,000, the inflation-adjusted principal on 
July 15, 1999, was (166.2/164) x $100,000, or $101,341. This amount was 
multiplied by .03875/2, or .019375, resulting in a payment of $1,963.48.

                           C. Accrued Interest

    1. You will have to pay accrued interest on a Treasury bond or note 
when interest accrues prior to the issue date of the security. Because 
you receive a full interest payment despite having held the security for 
only a portion of the interest payment period, you must compensate us 
through the payment of accrued interest at settlement.
    2. For a Treasury fixed-principal security, if accrued interest 
covers a fractional portion of a full half-year period, the number of 
days in the full half-year period and the stated interest rate will 
determine the daily interest decimal to use in computing the accrued 
interest. We multiply the decimal by the number of days for which 
interest has accrued.
    3. If a reopened bond or note has a long first interest payment 
period (a ``long coupon''), and the dated date for the reopened issue is 
less than six full months before the first interest payment, the accrued 
interest will fall into two separate half-year periods. A separate daily 
interest decimal must be multiplied by the respective number of days in 
each half-year period during which interest has accrued.
    4. We round all accrued interest computations to five decimal places 
for a $1,000 par amount, using normal rounding procedures. We calculate 
accrued interest for a par amount of securities greater than $1,000 by 
applying the appropriate multiple to accrued interest payable for $1,000 
par amount, rounded to five decimal places.
    5. For an inflation-protected security, we calculate accrued 
interest as shown in section III, paragraphs A and B of this appendix.
    Examples--(1) Treasury Fixed-Principal Securities--(i) Involving One 
Half-Year: A note paying interest at a rate of 6\3/4%\, originally 
issued on May 15, 2000, as a 5-year note with a first interest payment 
date of November 15, 2000, was reopened as a 4-year 9-month note on 
August 15, 2000. Interest had accrued for 92 days, from May 15 to August 
15. The regular interest period from May 15 to November 15, 2000, 
covered 184 days. Accordingly, the daily interest decimal, $0.183423913, 
multiplied by 92, resulted in accrued interest payable of $16.874999996, 
or $16.87500, for each $1,000 note purchased. If the notes have a par 
amount of $150,000, then 150 is multiplied by $16.87500, resulting in an 
amount payable of $2,531.25.
    (2) Involving Two Half-Years:
    A 10\3/4%\ bond, originally issued on July 2, 1985, as a 20-year 1-
month bond, with a first interest payment date of February 15, 1986, was 
reopened as a 19-year 10-month bond on November 4, 1985. Interest had 
accrued for 44 days, from July 2 to August 15, 1985, during a 181-day 
half-year (February 15 to August 15); and for 81 days, from August 15 to 
November 4, during a 184-day half-year (August 15, 1985, to February 15, 
1986). Accordingly, $0.296961326 was multiplied by 44, and $0.292119565 
was multiplied by 81, resulting in products of $13.066298344 and 
$23.661684765 which, added together, resulted in accrued interest 
payable of $36.727983109, or $36.72798, for each $1,000 bond purchased. 
If the bonds have a par amount of $11,000, then 11 is multiplied by 
$36.72798, resulting in an amount payable of $404.00778 ($404.01).

   II. Formulas for Conversion of Fixed-Principal Security Yields to 
                            Equivalent Prices

                               Definitions

P = price per 100 (dollars), rounded to six places, using normal 
rounding procedures.
C = the regular annual interest per $100, payable semiannually, e.g., 
6.125 (the decimal equivalent of a 6\1/8\% interest rate).
i = nominal annual rate of return or yield to maturity, based on 
semiannual interest payments and expressed in decimals, e.g., .0719.

[[Page 392]]

n = number of full semiannual periods from the issue date to maturity, 
except that, if the issue date is a coupon frequency date, n will be one 
less than the number of full semiannual periods remaining to maturity. 
Coupon frequency dates are the two semiannual dates based on the 
maturity date of each note or bond issue. For example, a security 
maturing on November 15, 2015, would have coupon frequency dates of May 
15 and November 15.
r = (1) number of days from the issue date to the first interest payment 
(regular or short first payment period), or (2) number of days in 
fractional portion (or ``initial short period'') of long first payment 
period.
s = (1) number of days in the full semiannual period ending on the first 
interest payment date (regular or short first payment period), or (2) 
number of days in the full semiannual period in which the fractional 
portion of a long first payment period falls, ending at the onset of the 
regular portion of the first interest payment.

v\n\ = 1 / [1 + (i/2)] \n\ = present value of 1 due at the end of n 
periods.
an = (1 - v\n\) / (i/2) = v + v\2\ + v\3\ + ... + v\n\ = 
present value of 1 per period for n periods

    Special Case: If i = 0, then an[rceil] = n. Furthermore, 
when i = 0, an[rceil] cannot be calculated using the formula: 
(1 - v\n\)/(i/2). In the special case where i = 0, an[rceil] 
must be calculated as the summation of the individual present values 
(i.e., v + v\2\ + v\3\ + ... + v\n\). Using the summation method will 
always confirm that an[rceil] = n when i = 0.

A = accrued interest.

    A. For fixed-principal securities with a regular first interest 
payment period:

Formula:

P[1 + (r/s)(i/2)] = (C/2)(r/s) + (C/2)an[rceil] + 100v\n\.

Example:

    For an 8\3/4\% 30-year bond issued May 15, 1990, due May 15, 2020, 
with interest payments on November 15 and May 15, solve for the price 
per 100 (P) at a yield of 8.84%.

Definitions:

C = 8.75.
i = .0884.
r = 184 (May 15 to November 15, 1990).
s = 184 (May 15 to November 15, 1990).
n = 59 (There are 60 full semiannual periods, but n is reduced by 1 
because the issue date is a coupon frequency date.)
v\n\ = 1 / [(1 + .0884 / 2)]\59\, or .0779403508.
an[rceil] = (1 - .0779403508) / .0442, or 20.8610780353.

Resolution:

P[1 + (r/s)(i/2)] = (C/2)(r/s) + (C/2)an[rceil] + 100v\n\ or
P[1 + (184/184)(.0884/2)] = (8.75/2)(184/184) + (8.75/2)(20.8610780353) 
+ 100(.0779403508).
(1) P[1 + .0442] = 4.375 + 91.2672164044 + 7.7940350840.
(2) P[1.0442] = 103.4362514884.
(3) P = 103.4362514884 / 1.0442.
(4) P = 99.057893.

    B. For fixed-principal securities with a short first interest 
payment period:

Formula:

P[1 + (r/s)(i/2)] = (C/2)(r/s) + (C/2)an[rceil] + 100v\n\.

Example:

    For an 8\1/2\% 2-year note issued April 2, 1990, due March 31, 1992, 
with interest payments on September 30 and March 31, solve for the price 
per 100 (P) at a yield of 8.59%.

Definitions:

C = 8.50.
i = .0859.
n = 3.
r = 181 (April 2 to September 30, 1990).
s = 183 (March 31 to September 30, 1990).
v\n\ = 1 / [(1 + .0859 / 2)]\3\, or .8814740565.
an[rceil] = (1 - .8814740565) / .04295, or 2.7596261590.

Resolution:

P[1 + (r/s)(i/2)] = (C/2)(r/s) + (C/2)an[rceil] + 100v\n\ or
P[1 + (181/183)(.0859/2)] = (8.50/2)(181/183) + (8.50/2)(2.7596261590) + 
100(.8814740565).
(1) P[1 + .042480601] = 4.2035519126 + 11.7284111757 + 88.14740565.
(2) P[1.042480601] = 104.0793687354.
(3) P = 104.0793687354 / 1.042480601.
(4) P = 99.838183.

    C. For fixed-principal securities with a long first interest payment 
period:

Formula:

P[1 + (r/s)(i/2)] = [(C/2)(r/s)]v + (C/2)an[rceil] + 100v\n\.

Example:

    For an 8\1/2\% 5-year 2-month note issued March 1, 1990, due May 15, 
1995, with interest payments on November 15 and May 15 (first payment on 
November 15, 1990), solve for the price per 100 (P) at a yield of 8.53%.

Definitions:

C = 8.50.
i = .0853.
n = 10.
r = 75 (March 1 to May 15, 1990, which is the fractional portion of the 
first interest payment).
s = 181 (November 15, 1989, to May 15, 1990).
v = 1 / (1 + .0853/2), or .9590946147.
v\n\ = 1 / (1+.0853/2)\10\, or .658589
an[rceil] = (1-.658589)/.04265, or 8.0049454082.

Resolution:

P[1 + (r/s)(i/2)] = [(C/2)(r/s)]v + (C/2)an[rceil] + 100v\n\ 
or
P[1 + (75/181)(.0853/2)] = [(8.50/2)(75/181)].9590946147 + (8.50/
2)(8.0049454082) + 100(.6585890783).
(1) P[1 + .017672652] = 1.6890133062 + 34.0210179850 + 65.8589078339.
(2) P[1.017672652] = 101.5689391251.
(3) P = 101.5689391251 / 1.017672652.
(4) P = 99.805118.


[[Page 393]]


    D. (1) For fixed-principal securities reopened during a regular 
interest period where the purchase price includes predetermined accrued 
interest.
    (2) For new fixed-principal securities accruing interest from the 
coupon frequency date immediately preceding the issue date, with the 
interest rate established in the auction being used to determine the 
accrued interest payable on the issue date.

Formula:

(P + A)[1 + (r/s)(i/2)] = C/2 + (C/2)an[rceil] + 100v\n\.
Where:

A = [(s-r)/s](C/2).

Example:

    For a 9\1/2\% 10-year note with interest accruing from November 15, 
1985, issued November 29, 1985, due November 15, 1995, and interest 
payments on May 15 and November 15, solve for the price per 100 (P) at a 
yield of 9.54%. Accrued interest is from November 15 to November 29 (14 
days).

Definitions:

C = 9.50.
i = .0954.
n = 19.
r = 167 (November 29, 1985, to May 15, 1986).
s = 181 (November 15, 1985, to May 15, 1986).
v\n\ = 1 / [(1 + .0954/2)]\19\, or .4125703996.
an[rceil] = (1 - .4125703996) / .0477, or 12.3150859630.
A = [(181 - 167) / 181](9.50/2), or .367403.

Resolution:

(P+A)[1 + (r/s)(i/2)] = C/2 + (C/2)an[rceil] + 100v\n\ or
(P + .367403)[1 + (167/181)(.0954/2)] = (9.50/2) + (9.50/
2)(12.3150859630) + 100(.4125703996).
(1) (P + .367403)[1 + .044010497] = 4.75 + 58.4966583243 + 41.25703996.
(2) (P + .367403)[1.044010497] = 104.5036982843.
(3) (P + .367403) = 104.5036982843 / 1.044010497.
(4) (P + .367403) = 100.098321.
(5) P = 100.098321 -.367403.
(6) P = 99.730918.

    E. For fixed-principal securities reopened during the regular 
portion of a long first payment period:

Formula:

(P + A)[1 + (r/s)(i/2)] = (r[min]s[sec])(C/2) + C/2 + (C/
2)an[rceil] + 100v\n\.

Where:

A = AI[min] + AI,
AI[min] = (r[min]/s[sec])(C/2),
AI = [(s-r) / s](C/2), and

r = number of days from the reopening date to the first interest payment 
date,
s = number of days in the semiannual period for the regular portion of 
the first interest payment period,
r[min] = number of days in the fractional portion (or ``initial short 
period'') of the first interest payment period,
s[sec] = number of days in the semiannual period ending with the 
commencement date of the regular portion of the first interest payment 
period.

Example:

    A 10\3/4\% 19-year 9-month bond due August 15, 2005, is issued on 
July 2, 1985, and reopened on November 4, 1985, with interest payments 
on February 15 and August 15 (first payment on February 15, 1986), solve 
for the price per 100 (P) at a yield of 10.47%. Accrued interest is 
calculated from July 2 to November 4.

Definitions:

C = 10.75.
i = .1047.
n = 39.
r = 103 (November 4, 1985, to February 15, 1986).
s = 184 (August 15, 1985, to February 15, 1986).
r[min] = 44 (July 2 to August 15, 1985).
s[sec] = 181 (February 15 to August 15, 1985).
v\n\ = 1 / [(1 + .1047 / 2)]\39\, or .1366947986.
an[rceil] = (1 - .1366947986) / .05235, or 16.4910258142.
AI[min] = (44 / 181)(10.75 / 2), or 1.306630.
AI = [(184 - 103) / 184](10.75 / 2), or 2.366168.
A = AI[min] + AI, or 3.672798.

Resolution:

(P + A)[1 + (r/s)(i/2)] = (r[min]/s[sec])(C/2) + C/2 + (C/
2)an[rceil] + 100v\n\ or
(P + 3.672798)[1 + (103/184)(.1047/2)] = (44/181)(10.75/2) +10.75/2 + 
(10.75/2)(16.4910258142) + 100(.1366947986).
(1) (P + 3.672798)[1 + .02930462] = 1.3066298343 + 5.375 + 88.6392637512 
+ 13.6694798628.
(2) (P + 3.672798)[1.02930462] = 108.9903734482.
(3) (P + 3.672798) = 108.9903734482 / 1.02930462.
(4) (P + 3.672798) = 105.887384.
(5) P = 105.887384 -3.672798.
(6) P = 102.214586.

    F. For fixed-principal securities reopened during a short first 
payment period:

Formula:

(P + A)[1 + (r/s)(i/2)] = (r[min]/s)(C/2) + (C/2)an[rceil] + 
100v \n\.

Where:

A = [(r[min] - r)/s](C/2) and

r[min] = number of days from the original issue date to the first 
interest payment date.

Example:

    For a 10\1/2\% 8-year note due May 15, 1991, originally issued on 
May 16, 1983, and reopened on August 15, 1983, with interest payments on 
November 15 and May 15 (first payment on November 15, 1983), solve for 
the price per 100 (P) at a yield of 10.53%. Accrued interest is 
calculated from May 16 to August 15.

Definitions:

C = 10.50.
i = .1053.
n = 15.
r = 92 (August 15, 1983, to November 15, 1983).
s = 184 (May 15, 1983, to November 15, 1983).
r[min] = 183 (May 16, 1983, to November 15, 1983).

[[Page 394]]

v \n\ = 1/[(1 + .1053/2)]\15\, or .4631696332.
an[rceil] = (1 - .4631696332) / .05265, or 10.1962082956.
A = [(183 - 92) / 184](10.50 / 2), or 2.596467.

Resolution:

(P + A)[1 + (r/s)(i/2)] = (r[min]/s)(C/2) + (C/2)an[rceil] + 
100v \n\ or
(P + 2.596467)[1+(92/184)(.1053/2)] = (183/184)(10.50/2) + (10.50/
2)(10.1962082956) + 100(.4631696332).
(1) (P + 2.596467)[1 + .026325] = 5.2214673913 + 53.5300935520 + 
46.31696332.
(2) (P + 2.596467)[1.026325] = 105.0685242633.
(3) (P + 2.596467) = 105.0685242633 / 1.026325.
(4) (P + 2.596467) = 102.373541.
(5) P = 102.373541 - 2.596467.
(6) P = 99.777074.

    G. For fixed-principal securities reopened during the fractional 
portion (initial short period) of a long first payment period:

Formula:

(P + A)[1 + (r/s)(i/2)] = [(r[min]/s)(C/2)]v + (C/2)an[rceil] 
+ 100v \n\.

Where:

A = [(r[min] - r)/s](C/2), and
r = number of days from the reopening date to the end of the short 
period.
r[min] = number of days in the short period.
s = number of days in the semiannual period ending with the end of the 
short period.

Example:

    For a 9\3/4\% 6-year 2-month note due December 15, 1994, originally 
issued on October 15, 1988, and reopened on November 15, 1988, with 
interest payments on June 15 and December 15 (first payment on June 15, 
1989), solve for the price per 100 (P) at a yield of 9.79%. Accrued 
interest is calculated from October 15 to November 15.

Definitions:

C = 9.75.
i = .0979.
n = 12.
r = 30 (November 15, 1988, to December 15, 1988).
s = 183 (June 15, 1988, to December 15, 1988).
r[min] = 61 (October 15, 1988, to December 15, 1988).
v = 1 / (1 + .0979/2), or .9533342867.
v \n\ = [1 / (1 + .0979/2)]\12\, or .5635631040.
an[rceil] = (1 - .5635631040)/.04895, or 8.9159733613.
A = [(61 - 30)/183](9.75/2), or .825820.

Resolution:

(P + A)[1 + (r/s)(i/2)] = [(r[min]/s)(C/2)]v + (C/2)an[rceil] 
+ 100v \n\ or
(P + .825820)[1 + (30/183)(.0979/2)] = [(61/183)(9.75/2)](.9533342867) + 
(9.75/2)(8.9159733613) + 100(.5635631040).
(1) (P + .825820)[1+ .00802459] = 1.549168216 + 43.4653701362 + 
56.35631040.
(2) (P + .825820)[1.00802459] = 101.3708487520.
(3) (P + .825820) = 101.3708487520 / 1.00802459.
(4) (P + .825820) = 100.563865.
(5) P = 100.563865 -. 825820.
(6) P = 99.738045.

  III. Formulas for Conversion of Inflation-Indexed Security Yields to 
                            Equivalent Prices

                               Definitions

P = unadjusted or real price per 100 (dollars).
Padj = inflation adjusted price; P x Index 
RatioDate.
A = unadjusted accrued interest per $100 original principal.
Aadj = inflation adjusted accrued interest; Ax Index 
RatioDate.
SA = settlement amount including accrued interest in current dollars per 
$100 original principal; Padj + Aadj.
r = days from settlement date to next coupon date.
s = days in current semiannual period.
i = real yield, expressed in decimals (e.g., 0.0325).
C = real annual coupon, payable semiannually, in terms of real dollars 
paid on $100 initial, or real, principal of the security.
n = number of full semiannual periods from issue date to maturity date, 
except that, if the issue date is a coupon frequency date, n will be one 
less than the number of full semiannual periods remaining until 
maturity. Coupon frequency dates are the two semiannual dates based on 
the maturity date of each note or bond issue. For example, a security 
maturing on July 15, 2026 would have coupon frequency dates of January 
15 and July 15.
v \n\ = 1/(1 + i/2)\n\ = present value of 1 due at the end of n periods.
an[rceil] = (1 - v \n\) /(i/2) = v + v \2\ + v \3\ + \...\ + 
v \n\ = present value of 1 per period for n periods.

    Special Case: If i = 0, then an[rceil] = n. Furthermore, 
when i = 0, an[rceil] cannot be calculated using the formula: 
(1 - v \n\)/(i/2). In the special case where i = 0, an[rceil] 
must be calculated as the summation of the individual present values 
(i.e., v + v \2\ + v \3\ + \...\ + v \n\). Using the summation method 
will always confirm that an[rceil] = n when i = 0.

Date = valuation date.
D = the number of days in the month in which Date falls.
t = calendar day corresponding to Date.
CPI = Consumer Price Index number.
CPIM = CPI reported for the calendar month M by the Bureau of 
Labor Statistics.
Ref CPIM = reference CPI for the first day of the calendar 
month in which Date falls (also equal to the CPI for the third preceding 
calendar month), e.g., Ref CPIApril 1 is the 
CPIJanuary.
Ref CPIM+1 = reference CPI for the first day of the calendar 
month immediately following Date.
Ref CPIDate = Ref CPIM - [(t - 1)/D][Ref 
CPIM+1-Ref CPIM].
Index RatioDate = Ref CPIDate / Ref 
CPIIssueDate.


[[Page 395]]


    Note: When the Issue Date is different from the Dated Date, the 
denominator is the Ref CPIDatedDate.

    A. For inflation-indexed securities with a regular first interest 
payment period:
Formulas:
[GRAPHIC] [TIFF OMITTED] TR02SE04.005

Padj = P x Index RatioDate.
A = [(s-r)/s] x (C/2).
Aadj = A x Index RatioDate.
SA = Padj + Aadj
Index RatioDate = Ref CPIDate/Ref 
CPIIssueDate.

Example:

    We issued a 10-year inflation-indexed note on January 15, 1999. The 
note was issued at a discount to yield of 3.898% (real). The note bears 
a 3\7/8\% real coupon, payable on July 15 and January 15 of each year. 
The base CPI index applicable to this note is 164. (We normally derive 
this number using the interpolative process described in Appendix B, 
section I, paragraph B.)

Definitions:

C = 3.875.
i = 0.03898.
n = 19 (There are 20 full semiannual periods but n is reduced by 1 
because the issue date is a coupon frequency date.).
r = 181 (January 15, 1999 to July 15, 1999).
s = 181 (January 15, 1999 to July 15, 1999).
Ref CPIDate = 164.
Ref CPIIssueDate = 164.

Resolution:

Index RatioDate = Ref CPIDate / Ref 
CPIIssueDate = 164/164 = 1.
A = [(181 - 181)/181] x 3.875/2 = 0.
Aadj = 0 x 1 = 0.
v\n\ = 1/(1 + i/2)\n\ = 1/(1 + .03898/2)\19\ = 0.692984572.
an[rceil] = (1 - v\n\)/(i/2) = (1-0.692984572) / (.03898/2) = 
15.752459107.

Formula:
[GRAPHIC] [TIFF OMITTED] TR02SE04.006

P = 99.811030.
Padj = P x Index RatioDate.
Padj = 99.811030 x 1 = 99.811030.
SA = Padj x Aadj.
SA = 99.811030 + 0 = 99.811030.

    Note: For the real price (P), we have rounded to six places. These 
amounts are based on 100 par value.

    B. (1) For inflation-indexed securities reopened during a regular 
interest period where the purchase price includes predetermined accrued 
interest.
    (2) For new inflation-indexed securities accruing interest from the 
coupon frequency date immediately preceding the issue date, with the 
interest rate established in the auction being used to determine the 
accrued interest payable on the issue date.
    Bidding: The dollar amount of each bid is in terms of the par 
amount. For example, if the Ref CPI applicable to the issue date of the 
note is 120, and the reference CPI applicable to the reopening issue 
date is 132, a bid of $10,000 will in effect be a bid of $10,000 x (132/
120), or $11,000.

Formulas:
[GRAPHIC] [TIFF OMITTED] TR02SE04.007

Padj = P x Index RatioDate.
A = [(s-r)/s] x (C/2).
Aadj = A x Index RatioDate.
SA = Padj + Aadj.
Index RatioDate = Ref CPIDate/Ref 
CPIIssueDate.

Example:

    We issued a 3\5/8\% 10-year inflation-indexed note on January 15, 
1998, with interest payments on July 15 and January 15. For a reopening 
on October 15, 1998, with inflation compensation accruing from January 
15, 1998 to October 15, 1998, and accrued interest accruing from July 
15, 1998 to October 15, 1998 (92 days), solve for the price per 100 (P) 
at a real yield, as determined in the reopening auction, of 3.65%. The 
base index applicable to the issue date of this note is 161.55484 and 
the reference CPI applicable to October 15, 1998, is 163.29032.

Definitions:

C = 3.625.
i = 0.0365.
n = 18.
r = 92 (October 15, 1998 to January 15, 1999).
s = 184 (July 15, 1998 to January 15, 1999).
Ref CPIDate = 163.29032.
Ref CPIIssueDate = 161.55484.

Resolution:


[[Page 396]]


Index RatioDate = Ref CPIDate/Ref 
CPIIssueDate = 163.29032/161.55484 = 1.01074.
v\n\ = 1/(1 + i/2)\n\ = 1/(1 + .0365/2)\18\ = 0.722138438.
an[rceil] = (1-v\n\)/(i/2) = (1 - 0.722138438)/(.0365/2) = 
15.225291068.

Formula:

[GRAPHIC] [TIFF OMITTED] TR02SE04.008

P = 100.703267 - 0.906250.
P = 99.797017.
Padj = P x Index RatioDate.
Padj = 99.797017 x 1.01074 = 100.86883696.
Padj = 100.868837.
A = [(184-92)/184] x 3.625/2 = 0.906250.
Aadj = A x Index RatioDate.
Aadj = 0.906250 x 1.01074 = 0.91598313.
Aadj = 0.915983.
SA = Padj + Aadj = 100.868837 + 0.915983.
SA = 101.784820.

    Note: For the real price (P), and the inflation-adjusted price 
(Padj), we have rounded to six places. For accrued interest 
(A) and the adjusted accrued interest (Aadj), we have rounded 
to six places. These amounts are based on 100 par value.

  IV. Computation of Adjusted Values and Payment Amounts for Stripped 
                 Inflation-Protected Interest Components

    Note: Valuing an interest component stripped from an inflation-
protected security at its adjusted value enables this interest component 
to be interchangeable (fungible) with other interest components that 
have the same maturity date, regardless of the underlying inflation-
protected security from which the interest components were stripped. The 
adjusted value provides for fungibility of these various interest 
components when buying, selling, or transferring them or when 
reconstituting an inflation-protected security.
Definitions:

c = C/100 = the regular annual interest rate, payable semiannually, 
e.g., .03625 (the decimal equivalent of a 3\5/8\% interest rate)
Par = par amount of the security to be stripped
Ref CPIIssueDate = reference CPI for the original issue date 
(or dated date, when the dated date is different from the original issue 
date) of the underlying (unstripped) security
Ref CPIDate = reference CPI for the maturity date of the 
interest component
AV = adjusted value of the interest component
PA = payment amount at maturity by Treasury

Formulas:

AV = Par(C/2)(100/Ref CPIIssueDate) (rounded to 2 decimals 
with no intermediate rounding)
PA = AV(Ref CPIDate/100) (rounded to 2 decimals with no 
intermediate rounding)

Example:

A 10-year inflation-protected note paying 3\7/8\% interest was issued on 
January 15, 1999, with the second interest payment on January 15, 2000. 
The Ref CPI of January 15, 1999 (Ref CPIIssueDate) was 
164.00000, and the Ref CPI on January 15, 2000 (Ref CPIDate) 
was 168.24516. Calculate the adjusted value and the payment amount at 
maturity of the interest component.

Definitions:

c = .03875
Par = $1,000,000
Ref CPIIssueDate = 164.00000
Ref CPIDate = 168.24516

Resolution:

For a par amount of $1 million, the adjusted value of each stripped 
interest component was $1,000,000(.03875/2)(100/164.00000), or 
$11,814.02 (no intermediate rounding).
For an interest component that matured on January 15, 2000, the payment 
amount was $11,814.02 (168.24516/100), or $19,876.52 (no intermediate 
rounding).

  V. Computation of Purchase Price, Discount Rate, and Investment Rate 
              (Coupon-Equivalent Yield) for Treasury Bills

    A. Conversion of the discount rate to a purchase price for Treasury 
bills of all maturities:

Formula:

P = 100 (1 - dr / 360).

Where:

d = discount rate, in decimals.
r = number of days remaining to maturity.
P = price per 100 (dollars).

Example:


[[Page 397]]


    For a bill issued November 24, 1989, due February 22, 1990, at a 
discount rate of 7.610%, solve for price per 100 (P).

Definitions:

d = .07610.
r = 90 (November 24, 1989 to February 22, 1990).

Resolution:

P = 100 (1 - dr / 360).
(1) P = 100 [1 - (.07610)(90) / 360].
(2) P = 100 (1 - .019025).
(3) P = 100 (.980975).
(4) P = 98.097500.

    Note: Purchase prices per $100 are rounded to six decimal places, 
using normal rounding procedures.

    B. Computation of purchase prices and discount amounts based on 
price per $100, for Treasury bills of all maturities:
    1. To determine the purchase price of any bill, divide the par 
amount by 100 and multiply the resulting quotient by the price per $100.

Example:

    To compute the purchase price of a $10,000 13-week bill sold at a 
price of $98.098000 per $100, divide the par amount ($10,000) by 100 to 
obtain the multiple (100). That multiple times 98.098000 results in a 
purchase price of $9,809.80.
    2. To determine the discount amount for any bill, subtract the 
purchase price from the par amount of the bill.

Example:

    For a $10,000 bill with a purchase price of $9,809.80, the discount 
amount would be $190.20, or $10,000 - $9,809.80.

    C. Conversion of prices to discount rates for Treasury bills of all 
maturities:

Formula:
[GRAPHIC] [TIFF OMITTED] TR02SE04.009

Where:

P = price per 100 (dollars).
d = discount rate.
r = number of days remaining to maturity.

Example:

    For a 26-week bill issued December 30, 1982, due June 30, 1983, with 
a price of $95.934567, solve for the discount rate (d).

Definitions:

P = 95.934567.
r = 182 (December 30, 1982, to June 30, 1983).

Resolution:
[GRAPHIC] [TIFF OMITTED] TR02SE04.010

(2) d = [.04065433 x 1.978021978].
(3) d = .080415158.
(4) d = 8.042%.

    Note: Prior to April 18, 1983, we sold all bills in price-basis 
auctions, in which discount rates calculated from prices were rounded to 
three places, using normal rounding procedures. Since that time, we have 
sold bills only on a discount rate basis.

    D. Calculation of investment rate (coupon-equivalent yield) for 
Treasury bills:
    1. For bills of not more than one half-year to maturity:

Formula:
[GRAPHIC] [TIFF OMITTED] TR02SE04.011

Where:

i = investment rate, in decimals.
P = price per 100 (dollars).
r = number of days remaining to maturity.
y = number of days in year following the issue date; normally 365 but, 
if the year following the issue date includes February 29, then y is 
366.

Example:

    For a cash management bill issued June 1, 1990, due June 21, 1990, 
with a price of $99.559444 (computed from a discount rate of 7.930%), 
solve for the investment rate (i).

Definitions:

P = 99.559444.
r = 20 (June 1, 1990, to June 21, 1990).
y = 365.

Resolution:
[GRAPHIC] [TIFF OMITTED] TR02SE04.012

(2) i = [.004425 x 18.25].
(3) i = .080756.
(4) i = 8.076%.

    2. For bills of more than one half-year to maturity:

Formula:

P [1 + (r - y/2)(i/y)] (1 + i/2) = 100.

    This formula must be solved by using the quadratic equation, which 
is:

ax \2\ + bx + c = 0.

    Therefore, rewriting the bill formula in the quadratic equation form 
gives:
[GRAPHIC] [TIFF OMITTED] TR02SE04.013

and solving for ``i'' produces:

[[Page 398]]

[GRAPHIC] [TIFF OMITTED] TR02SE04.014

Where:

i = investment rate in decimals.
b = r/y.
a = (r/2y) - .25.
c = (P-100)/P.
P = price per 100 (dollars).
r = number of days remaining to maturity.
y = number of days in year following the issue date; normally 365, but 
if the year following the issue date includes February 29, then y is 
366.

Example:

    For a 52-week bill issued June 7, 1990, due June 6, 1991, with a 
price of $92.265000 (computed from a discount rate of 7.65%), solve for 
the investment rate (i).

Definitions:

r = 364 (June 7, 1990, to June 6, 1991).
y = 365.
P = 92.265000.
b = 364 / 365, or .997260274.
a = (364 / 730) - .25, or .248630137.
c = (92.265 - 100) / 92.265, or -.083834607.

Resolution:
[GRAPHIC] [TIFF OMITTED] TR02SE04.015

(3) i = (-.997260274 + 1.038221216) / .497260274.
(4) i = .040960942 / .497260274.
(5) i = .082373244 or
(6) i = 8.237%.

[69 FR 45202, July 28, 2004, as amended at 69 FR 52967, Aug. 30, 2004; 
69 FR 53622, Sept. 2, 2004]

            Appendix C to Part 356--Investment Considerations

                    I. Inflation-Protected Securities

                  A. Principal and Interest Variability

    An investment in securities with principal or interest determined by 
reference to an inflation index involves factors not associated with an 
investment in a fixed-principal security. Such factors include the 
possibility that:
     The inflation index may be subject to significant 
changes,
     changes in the index may or may not correlate to 
changes in interest rates generally or with changes in other indices,
     the resulting interest may be greater or less 
than that payable on other securities of similar maturities, and
     in the event of sustained deflation, the amount 
of the semiannual interest payments, the inflation-adjusted principal of 
the security, and the value of stripped components will decrease. 
However, if at maturity the inflation-adjusted principal is less than a 
security's par amount, we will pay an additional amount so that the 
additional amount plus the inflation-adjusted principal equals the par 
amount. Regardless of whether or not we pay such an additional amount, 
we will always base interest payments on the inflation-adjusted 
principal as of the interest payment date. If a security has been 
stripped, we will pay any such additional amount at maturity to holders 
of principal components only. (See Sec. 356.30.)

                   B. Trading in the Secondary Market

    The Treasury securities market is the largest and most liquid 
securities market in the world. The market for Treasury inflation-
protected securities, however, may not be as active or liquid as the 
market for Treasury fixed-principal securities. In addition, Treasury 
inflation-protected securities may not be as widely traded or as well 
understood as Treasury fixed-principal securities. Lesser liquidity and 
fewer market participants may result in larger spreads between bid and 
asked prices for inflation-protected securities than the bid-asked 
spreads for fixed-principal securities with the same time to maturity. 
Larger bid-asked spreads normally result in higher transaction costs 
and/or lower overall returns. The liquidity of an inflation-protected 
security may be enhanced over time as we issue additional amounts or 
more entities participate in the market.

                          C. Tax Considerations

    Treasury inflation-protected securities and the stripped interest 
and principal components of these securities are subject to specific tax 
rules provided by Treasury regulations issued under sections 1275(d) and 
1286 of the Internal Revenue Code of 1986, as amended.

[[Page 399]]

                           D. Indexing Issues

    While the Consumer Price Index (``CPI'') measures changes in prices 
for goods and services, movements in the CPI that have occurred in the 
past do not necessarily indicate changes that may occur in the future.
    The calculation of the index ratio incorporates an approximate 
three-month lag, which may have an impact on the trading price of the 
securities, particularly during periods of significant, rapid changes in 
the index.
    The CPI is reported by the Bureau of Labor Statistics, a bureau 
within the Department of Labor. The Bureau of Labor Statistics operates 
independently of Treasury and, therefore, we have no control over the 
determination, calculation, or publication of the index. For a 
discussion of how we will apply the CPI in various situations, see 
Appendix B, Section I, Paragraph B of this part. In addition, for a 
discussion of actions that we would take in the event the CPI is: 
discontinued; in the judgment of the Secretary, fundamentally altered in 
a manner materially adverse to the interests of an investor in the 
security; or, in the judgment of the Secretary, altered by legislation 
or Executive Order in a manner materially adverse to the interests of an 
investor in the security, see Appendix B, Section I, Paragraph B.4 of 
this part.

     Appendix D to Part 356--Description of the Consumer Price Index

    The Consumer Price Index (``CPI'') for purposes of inflation-
protected securities is the non-seasonally adjusted U.S. City Average 
All Items Consumer Price Index for All Urban Consumers. It is published 
monthly by the Bureau of Labor Statistics (BLS), a bureau within the 
Department of Labor. The CPI is a measure of the average change in 
consumer prices over time in a fixed market basket of goods and 
services. This market basket includes food, clothing, shelter, fuels, 
transportation, charges for doctors' and dentists' services, and drugs.
    In calculating the index, price changes for the various items are 
averaged together with weights that represent their importance in the 
spending of urban households in the United States. The BLS periodically 
updates the contents of the market basket of goods and services, and the 
weights assigned to the various items, to take into account changes in 
consumer expenditure patterns.
    The CPI is expressed in relative terms in relation to a time base 
reference period for which the level is set at 100. For example, if the 
CPI for the 1982-84 reference period is 100.0, an increase of 16.5 
percent from that period would be shown as 116.5. The CPI for a 
particular month is released and published during the following month. 
From time to time, the CPI is rebased to a more recent base reference 
period. We provide the base reference period for a particular inflation-
protected security on the auction announcement for that security.
    Further details about the CPI may be obtained by contacting the BLS.



PART 357_REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS, NOTES AND BILLS 
HELD IN LEGACY TREASURY DIRECT--Table of Contents




                      Subpart A_General Information

Sec.
357.0 Book-entry systems.
357.1 Effective date.
357.2 Definitions.

     Subpart B_Treasury/Reserve Automated Debt Entry System (TRADES)

357.10 Laws governing a Treasury book-entry security, TRADES, and 
          security interests or entitlements.
357.11 Laws governing other interests in Treasury securities.
357.12 A Participant's Security Entitlement.
357.13 Obligations of the United States and the Federal Reserve Banks 
          with respect to Book-entry Securities and security interests.
357.14 What authority does a Federal Reserve Bank have?
357.15 How can a debtor's interest in a Security Entitlement be reached 
          by creditors?

 Subpart C_Legacy Treasury Direct Book-Entry Securities System (Legacy 
                            Treasury Direct)

357.20 Securities account in Legacy Treasury Direct[supreg].
357.21 Registration.
357.22 Transfers.
357.23 Judicial proceedings--sovereign immunity.
357.24 Availability and disclosure of Legacy Treasury Direct[supreg] 
          records.
357.25 Security interests.
357.26 Direct Deposit.
357.27 Reinvestment.
357.28 Transaction requests.
357.29 Time required for processing transaction request.
357.30 Cases of delay or suspension of payment.
357.31 Certifying individuals.
357.32 Submission of transaction requests; further information.

[[Page 400]]

                     Subpart D_Additional Provisions

357.40 Additional requirements.
357.41 Waiver of regulations.
357.42 Liability of Department and Federal Reserve Banks.
357.43 Liability for transfers to and from Legacy Treasury 
          Direct[supreg].
357.44 [Reserved]
357.45 Supplements, amendments, or revisions.

Appendix A to Part 357--Discussion of Final Rule
Appendix B to Part 357--TRADES Commentary

    Authority: 31 U.S.C. chapter 31; 5 U.S.C. 301; 12 U.S.C. 391.

    Source: 51 FR 18265, May 16, 1986, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 357 appear at 70 FR 
57431, Sept. 30, 2005.



                      Subpart A_General Information



Sec. 357.0  Book-entry systems.

    (a) Treasury securities. Treasury securities are maintained in one 
of the following book-entry systems:
    (1) Commercial book-entry system. The commercial book-entry system 
is the book-entry system in which Treasury securities are held in a 
tiered system through securities intermediaries such as financial 
institutions or brokerage firms. A Treasury security is maintained in 
the commercial book-entry system if it is credited by a Federal Reserve 
Bank to a Participant's Securities Account. The regulations governing 
the commercial book-entry system are found at subpart B of this part, 
and are referred to as Treasury/Reserve Automated Debt Entry System 
(TRADES).
    (2) Legacy Treasury Direct[supreg]. The Legacy Treasury Direct 
system is a non-Internet-based book-entry system maintained by Treasury 
for purchasing and holding marketable Treasury securities as book-entry 
products. A Treasury security is maintained in Legacy Treasury Direct if 
it is credited to a Legacy Treasury Direct account as described in Sec. 
357.20 of this part. Treasury securities are held directly by the 
Department of the Treasury in accounts maintained in the investor's 
name. A Legacy Treasury Direct account may be accessed through a 
designated Federal Reserve Bank or the Bureau of the Public Debt. See 
subpart C of this part for rules pertaining to Legacy Treasury Direct.
    (3) TreasuryDirect[supreg]. TreasuryDirect is a book-entry, online 
system maintained by the Department of the Treasury for purchasing and 
holding eligible marketable Treasury securities, United States Savings 
Bonds, and certificates of indebtedness in electronic form as a computer 
record on the books of Treasury. The regulations governing 
TreasuryDirect are found at 31 CFR part 363.
    (b) Transferability between TRADES and Legacy Treasury Direct. A 
Treasury security eligible to be maintained in Legacy Treasury Direct 
under the terms of its offering circular or pursuant to notice published 
by the Secretary may be transferred to or from an account in TRADES from 
or to an account in Legacy Treasury Direct in accordance with Sec. 
357.22(a).
    (c) TreasuryDirect system. TreasuryDirect is an Internet-based book-
entry system maintained by the Department of the Treasury. The 
regulations governing TreasuryDirect are found at part 363 of this 
chapter. Legacy Treasury Direct is a separate, non-Internet-based book-
entry system for marketable Treasury securities only.

[67 FR 64278, Oct. 17, 2002, as amended at 70 FR 57431, Sept. 30, 2005; 
70 FR 57441, Sept. 30, 2005]



Sec. 357.1  Effective date.

    Subpart B of this part, the definitions of Adverse Claim, Book-entry 
Security, Entitlement Holder, Federal Reserve Bank Operating Circular, 
Funds Account, Issue, Participant, Participant's Securities Account, 
Person, Revised Article 8, Securities Intermediary, Security 
Entitlement, State, and Transfer Message and revisions to the 
definitions of Security and TRADES, and Sec. Sec. 357.42 and 357.44 and 
the revisions to Sec. 357.41 are effective January 1, 1997. All other 
provisions in effect prior to January 1, 1997, remain in effect.

[61 FR 43628, Aug. 23, 1996]



Sec. 357.2  Definitions.

    In this part, unless the context indicates otherwise:

[[Page 401]]

    Adverse Claim means a claim that a claimant has a property interest 
in a Security and that it is a violation of the rights of the claimant 
for another Person to hold, transfer, or deal with the Security.
    Bill means an obligation of the United States, with a term of not 
more than one year, issued at a discount, under chapter 31 of title 31 
of the United States Code, in book-entry form.
    Bond means an obligation of the United States, with a term of more 
than ten years, issued under chapter 31 of title 31 of the United States 
Code, in book-entry form.
    Book-entry security means a Treasury security maintained as a 
computer record in the commercial book-entry system, Legacy Treasury 
Direct[supreg], or TreasuryDirect[supreg].
    Business day means any day other than a Saturday, Sunday, or other 
day on which the Federal Reserve Banks are not open for business.
    Department means the United States Department of the Treasury, and, 
where appropriate, the Federal Reserve Banks acting as fiscal agents of 
the United States.
    Depository institution means an entity described in section 
19(b)(1)(A)(i)-(vi) of the Federal Reserve Act (12 U.S.C. 
461(b)(1)(A)(i)-(vi). Under section 19(b) of the Federal Reserve Act, 
the term depository institution includes:
    (1) Any insured bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (2) Any mutual savings bank as defined in 12 U.S.C. 1813 or any bank 
which is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (3) Any savings bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (4) Any insured credit union as defined in 12 U.S.C. 1752 or any 
credit union which is eligible to make application to become an insured 
credit union under 12 U.S.C. 1781;
    (5) Any member as defined in 12 U.S.C. 1422; and
    (6) Any savings association (as defined in 12 U.S.C. 1813) which is 
an insured depository institution, as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811, et seq., or is eligible to apply to 
become an insured depository institution under such Act.
    Entitlement Holder means a Person to whose account an interest in a 
Book-entry Security is credited on the records of a Securities 
Intermediary.
    Federal Reserve Bank or Reserve Bank means a Federal Reserve Bank or 
Branch.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Reserve Bank maintains Book-entry Securities accounts 
and transfers Book-entry Securities.
    Financial institution means, for purposes of direct deposit, an 
institution which has agreed to receive credit payments under 31 CFR 
part 210, as amended from time to time, and has not withdrawn its 
participation in a direct deposit program under part 210, or an 
institution which is willing to agree to receive credit payments under 
31 CFR part 210 and has enrolled with its Federal Reserve Bank.
    Funds Account means a reserve and/or clearing account at a Federal 
Reserve Bank to which debits or credits are posted for transfers against 
payment, book-entry securities transaction fees, or principal and 
interest payments.
    Incompetent means an individual who is legally, medically or 
mentally incapable of handling his or her business affairs, except that 
a minor is not an incompetent solely because of age.
    Issue means a group of securities, as defined in this section, that 
is identified by the same CUSIP (Committee on Uniform Securities 
Identification Practices) number.
    Legacy Treasury Direct is the Legacy Treasury Direct Book-Entry 
Securities System.
    Maturity value is the amount that the Department is obligated to pay 
when a security matures.
    Minor means an individual who is under the age of majority, as 
determined by applicable state law.
    Note means an obligation of the United States, with a term of at 
least one year, but of not more than ten years, issued under chapter 31 
of title

[[Page 402]]

31 of the United States Code, in book-entry form.
    Original issue means Treasury's offering of a marketable Treasury 
security to the public and its issuance in book-entry form to be 
maintained in the commercial book-entry system, Legacy Treasury Direct, 
or TreasuryDirect.
    Owner, as used in subpart C, means the individual(s) or entity in 
whose name a security is registered. If a security is registered in more 
than one name, the term owner incudes all those whose names appear on 
the registration and are authorized by this Part to make a transaction 
request on a security held in Legacy Treasury Direct.
    Participant means a Person that maintains a Participant's Securities 
Account with a Federal Reserve Bank.
    Participant's Securities Account means an account in the name of a 
Participant at a Federal Reserve Bank to which Book-entry Securities 
held for a Participant are or may be credited.
    Person means and includes an individual, corporation, company, 
governmental entity, association, firm, partnership, trust, estate, 
representative and any other similar organization, but does not mean or 
include the United States or a Federal Reserve Bank.
    Redemption means payment of a security at maturity, or pursuant to a 
call for redumption in accordance with the terms of a security.
    Representative includes an executor, administrator, legal guardian, 
committee, conservator, and any similar person or entity appointed by a 
court to represent the estate of a decedent, minor, or incompetent, as 
well as a trustee, whether appointed by a court or otherwise.
    Revised Article 8 means Uniform Commercial Code, Revised Article 8, 
Investment Securities (with Conforming and Miscellaneous Amendments to 
Articles 1, 3, 4, 5, 9 and 10) 1994 Official Text. The Director of the 
Federal Register approves the incorporation by reference of Revised 
Article 8 of the Uniform Commercial Code in this part, pursuant to 5 
U.S.C. 552(a) and 1 CFR part 51. Revised Article 8 was adopted by the 
American Law Institute and the National Conference of Commissioners On 
Uniform State Laws and approved by the American Bar Association on 
February 14, 1995. Copies of Revised Article 8 are available from the 
Executive Office of the American Law Institute, 4025 Chestnut Street, 
Philadelphia, PA 19104, and the National Conference of Commissioners on 
Uniform State Laws, 211 East Ontario Street, Suite 1300, Chicago, IL 
60611. Copies are also available for public inspection at the Department 
of the Treasury Library, Room 1428, Main Treasury Building, 1500 
Pennsylvania Avenue, NW, Washington, DC 20220 or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    Revised Article 9 means Uniform Commercial Code, Revised Article 9, 
Secured Transactions (with conforming amendments to Articles 1, 2, 2A, 
4, 5, 6, 7, and 8), 1999 official text. The Director of the Federal 
Register approves the incorporation by reference of Revised Article 9 of 
the Uniform Commercial Code in this part, pursuant to 5 U.S.C. 552(a) 
and 1 CFR part 51. Revised Article 9 was approved by the American Law 
Institute and the National Conference of Commissioners On Uniform State 
Laws in 1998. Copies of Revised Article 9 are available from the 
Executive Office of the American Law Institute, 4025 Chestnut Street, 
Philadelphia, PA 19104, and the National Conference of Commissioners on 
Uniform State Laws, 211 East Ontario Street, Suite 1300, Chicago, IL 
60611. Copies are also available for public inspection at the Department 
of the Treasury Library, Room 1428, Main Treasury Building, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220,or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    Securities Intermediary means:
    (1) A Person that is registered as a ``clearing agency'' under the 
federal securities laws; a Federal Reserve Bank;

[[Page 403]]

any other person that provides clearance or settlement services with 
respect to a Book-entry Security that would require it to register as a 
clearing agency under the federal securities laws but for an exclusion 
or exemption from the registration requirement, if its activities as a 
clearing corporation, including promulgation of rules, are subject to 
regulation by a federal or state governmental authority; or
    (2) A Person (other than an individual, unless such individual is 
registered as a broker or dealer under the federal securities laws) 
including a bank or broker, that in the ordinary course of its business 
maintains securities accounts for others and is acting in that capacity.
    Security means a bill, note, or bond, each as defined in this 
section. It also means any other obligation issued by the Department 
that, by the terms of the applicable offering circular or announcement, 
is made subject to this part. Solely for purposes of this part, it also 
means:
    (1) The interest and principal components of a security eligible for 
Separate Trading of Registered Interest and Principal of Securities 
(``STRIPS''), if such security has been divided into such components as 
authorized by the express terms of the offering circular under which the 
security was issued and the components are maintained separately on the 
books of one or more Federal Reserve Banks; and
    (2) The interest coupons that have been converted to book-entry form 
under the Treasury's Coupons Under Book-Entry Safekeeping Program 
(``CUBES''), pursuant to agreement and the regulations in 31 CFR part 
358.
    Security Entitlement means the rights and property interest of an 
Entitlement Holder with respect to a Book-entry Security.
    Signature guarantee program means a signature guarantee program 
established in response to Rule 17 Ad-15 (17 CFR 240.17Ad-15), issued 
under authority of the Securities Exchange Act of 1934. For the purpose 
of the regulations in this part, the Securities Transfer Agents 
Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), 
and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) 
are recognized by Treasury as such signature guarantee programs.
    State means any State of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or any other territory or 
possession of the United States.
    Taxpayer identifying number or TIN means a social security account 
number or an employer identification number, as appropriate.
    TRADES is the Treasury/Reserve Automated Debt Entry System, also 
referred to as the commercial book-entry system.
    Transaction request means a request to effect a change in an account 
master record or securities portfolio maintained in Legacy Treasury 
Direct.
    Transaction request form means a form or series of forms prescribed 
for use by the Department to request a transaction in Legacy Treasury 
Direct. (This term includes a document that the Department has 
determined contains all of the elements required by the transaction 
request form.)
    Transfer Message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry Security maintained in 
TRADES, as set forth in Federal Reserve Bank Operating Circulars.
    Voluntary representative means the person qualified by the 
Department of the Treasury to accept payment or direct distribution of a 
decedent's securities pursuant to Sec. 357.28.

[51 FR 18265, May 16, 1986, as amended at 59 FR 59038, Nov. 15, 1994. 
Redesignated and amended at 61 FR 43628, Aug. 23, 1996; 62 FR 18694, 
Apr. 16, 1997; 62 FR 33548, June 20, 1997; 67 FR 7079, Feb. 15, 2002; 69 
FR 18803, Apr. 9, 2004; 70 FR 57431, Sept. 30, 2005; 70 FR 57441, Sept. 
30, 2005]



     Subpart B_Treasury/Reserve Automated Debt Entry System (TRADES)

    Source: 67 FR 7080, Feb. 15, 2002, unless otherwise noted.



Sec. 357.10  Laws governing a Treasury book-entry security, TRADES, and 
security interests or entitlements.

    (a) What law governs the rights and obligations of the United States 
and the

[[Page 404]]

Federal Reserve Banks; and the rights of any Person against the United 
States and the Federal Reserve Banks? Except as we provide in paragraph 
(b) of this section, the following are governed solely by Treasury 
regulations, including the regulations of this part, the applicable 
offering circular (which is 31 CFR part 356, in the case of securities 
issued on and after March 1, 1993), the announcement of the offering, 
and Federal Reserve Bank Operating Circulars:
    (1) The rights and obligations of the United States and the Federal 
Reserve Banks with respect to a Book-entry Security or Security 
Entitlement and the operation of TRADES, and
    (2) The rights of any Person, including a Participant, against the 
United States and the Federal Reserve Banks with respect to a Book-entry 
Security or Security Entitlement and the operation of TRADES.
    (b) What law governs security interests in Security Entitlements 
that are not recorded on a Federal Reserve Bank's books? See the 
following table:

------------------------------------------------------------------------
 If a security interest in a                         Then it is governed
  security entitlement is--        And it is--              by--
------------------------------------------------------------------------
(1) in favor of a Federal     not recorded on the   the law (not
 Reserve Bank from a           books of a Federal    including the
 Participant.                  Reserve Bank          conflict-of-law
                               pursuant to Sec.     rules) of the
                               357.12(e)(2).         jurisdiction where
                                                     the head office of
                                                     the Federal Reserve
                                                     Bank maintaining
                                                     the Participant's
                                                     Securities Account
                                                     is located.
(2) in favor of a Federal     not recorded on the   the law determined
 Reserve Bank from a Person    books of a Federal    in the manner
 that is not a Participant.    Reserve Bank          specified in Sec.
                               pursuant to Sec.     357.11.
                               357.12(e)(2).
------------------------------------------------------------------------

    (c) What law governs if the jurisdiction in paragraph (b)(1) of this 
section did not adopt Revised Article 8, or Revised Article 8 as amended 
by Revised Article 9 (both incorporated by reference, see Sec. 357.2)? 
The law specified in paragraph (b)(1) of this section shall be the law 
of that State as though that State adopted Revised Article 8.



Sec. 357.11  Laws governing other interests in Treasury securities.

    (a) What does the law (not including the conflict-of-law rules) of a 
Securities Intermediary's jurisdiction govern? To the extent not 
inconsistent with these regulations, the law (not including the 
conflict-of-law rules) of a Security Intermediary's jurisdiction governs 
the following:
    (1) When a Person acquires a Security Entitlement from the 
Securities Intermediary;
    (2) The rights and duties of the Securities Intermediary and 
Entitlement Holder that arise out of a Security Entitlement;
    (3) Whether the Securities Intermediary owes any duties to an 
adverse claimant to a Security Entitlement;
    (4) Whether a Person may assert an Adverse Claim against a Person 
who acquires a Security Entitlement from the Securities Intermediary or 
against a Person who purchases a Security Entitlement or interest 
therein from an Entitlement Holder; and
    (5) The perfection, effect of perfection or non-perfection and 
priority of a security interest in a Security Entitlement (except as 
otherwise provided in paragraph (c) of this section).
    (b) What is the ``Securities Intermediary's jurisdiction'' for 
purposes of this section? See the following table:

------------------------------------------------------------------------
                                                    Then the securities
                     If . . .                         intermediary's
                                                   jurisdiction is . . .
------------------------------------------------------------------------
(1) An agreement between the Securities           the jurisdiction
 Intermediary and its Entitlement Holder           agreed upon.
 governing the securities account expressly
 provides that a particular jurisdiction is the
 Securities Intermediary's jurisdiction for
 purposes of Part 1 of Article 8 of the Uniform
 Commercial Code, Article 8 of the Uniform
 Commercial Code, or the Uniform Commercial Code.
(2) An agreement between the Securities           the jurisdiction
 Intermediary and its Entitlement Holder           agreed upon.
 governing the securities account expressly
 provides that it is governed by the law of a
 particular jurisdiction.
(3) The statements in paragraphs (b)(1) and (2)   the jurisdiction where
 of this table do not apply, but the agreement     the office is
 expressly specifies that the securities account   located.
 is maintained at an office in a particular
 jurisdiction.

[[Page 405]]

 
(4) The statements in paragraphs (b)(1) through   the jurisdiction where
 (3) of this table do not apply and an account     the office is
 statement identifies the office serving the       located.
 Entitlement Holder's account.
(5) None of the statements in paragraphs (b)(1)   the jurisdiction in
 through (4) of this table apply.                  which the chief
                                                   executive office of
                                                   the Securities
                                                   Intermediary is
                                                   located.
------------------------------------------------------------------------

    (c) What law governs the perfection of a security interest 
automatically or by filing? The law (but not the conflict-of-law rules) 
of the jurisdiction in which the Person creating a security interest is 
located governs whether and how the security interest may be perfected 
automatically or by filing a financing statement. (This is despite the 
general rule in (a)(5) of this section).
    (d) Where is a Person located, for purposes of paragraph (c) of this 
section? A Person's location is determined under state law, including 
Revised Article 9 (incorporated by reference, see Sec. 357.2), as it 
may be amended from time to time.
    (e) What law governs if the jurisdiction in table (b) of this 
section did not adopt Revised Article 8 or Revised Article 8 as amended 
by Revised Article 9 (both incorporated by reference, see Sec. 357.2)? 
The law for the matters specified in paragraph (a) of this section shall 
be the law of that State as though the State adopted Revised Article 8.
    (f) What other rules apply? For purposes of the matters specified in 
paragraph (a) of this section, the Federal Reserve Bank maintaining the 
Securities Account is a clearing corporation and the Participant's 
interest in a Book-entry Security is a Security Entitlement.



Sec. 357.12  A Participant's Security Entitlement.

    (a) How is a Participant's Security Entitlement created? A Federal 
Reserve Bank indicates by book entry that a Book-entry Security has been 
credited to a Participant's Securities Account.
    (b) What else do I need to know about a Participant's Security 
Entitlement? See the following table:

------------------------------------------------------------------------
If a security interest in a security entitlement
             of a participant . . .                     Then . . .
------------------------------------------------------------------------
(1) Meets all of the following criteria:
    (i) is in favor of the United States          it is created; it is
    (ii) is marked on the books of a Federal       perfected; and it has
     Reserve Bank.                                 priority over any
    (iii) is to secure deposits of public money    other interest in the
     (including without limitation deposits to     securities.
     the Treasury tax and loan accounts, or
     other security interested required by
     Federal statute, regulation, or agreement).
------------------------------------------------------------------------

    (c) What is the effect of the marking of a security interest in 
favor of the United States in a Security Entitlement of a Participant on 
the books of a Federal Reserve Bank? Where a security interest in favor 
of the United States in a Security Entitlement of a Participant is 
marked on the books of a Federal Reserve Bank, such Reserve Bank may 
rely, and is protected in relying, exclusively on the order of an 
authorized Representative of the United States directing the transfer of 
the Security.
    (d) Who is an authorized Representative of the United States, for 
purposes of paragraph (c) in this section? The official designated in 
the applicable regulations or in an agreement to which a Federal Reserve 
Bank is a party, governing the security interest.
    (e)(1) Must the United States and the Federal Reserve Banks agree to 
act on behalf of any Person or to recognize the interest of any 
transferee of a security interest or other limited interest in favor of 
any Person? No, they need not agree to act or recognize any party's 
interest, except:
    (i) To the extent of any specific requirement of Federal law or 
regulation, or

[[Page 406]]

    (ii) To the extent set forth in any specific agreement with the 
Federal Reserve Bank on whose books the interest of the Participant is 
recorded.
    (2) May a security interest be created and perfected by a Federal 
Reserve Bank marking its books? Yes, a security interest in a Security 
Entitlement that is in favor of a Federal Reserve Bank or a Person may 
be created and perfected by a Federal Reserve Bank marking its books to 
record the security interest to the extent required by law, regulation, 
or an agreement with a Federal Reserve Bank or the Federal Reserve Bank 
Operating Circular.
    (3) Does this security interest have priority over other interests? 
A security interest in a Security Entitlement marked on the books of a 
Federal Reserve Bank has priority over any other interest in the 
securities, except a security in favor of the United States, as provided 
in table (b) of this section.
    (4) In addition to the method provided in paragraph (e)(2) of this 
section, may a security interest, including a security interest in favor 
of a Federal Reserve Bank, be perfected in another way? Yes, a security 
interest may be perfected by any method under applicable law as 
described in Sec. 357.10(b) or Sec. 357.11.
    (i) The applicable law governs the perfection, effect of perfection 
or non-perfection and priority of a security interest.
    (ii) A security interest in favor of a Federal Reserve Bank shall be 
treated as a security interest in favor of a clearing corporation in all 
respects under that law.
    (iii) A Federal Reserve Bank Operating Circular shall be treated as 
a rule adopted by a clearing corporation for these purposes.



Sec. 357.13  Obligations of the United States and the Federal Reserve 
Banks with respect to Book-entry Securities and security interests.

    (a) Who is entitled to deal with an interest in a Book-entry 
Security that has been credited to a Participant's Security Account? 
Except in the case of a security interest in favor of the United States 
or a Federal Reserve Bank or otherwise as provided in Sec. 357.12 (e), 
for the purposes of this subpart B, the United States and the Federal 
Reserve Banks treat the Participant as exclusively entitled to perform 
the following functions, even if the Treasury or a Federal Reserve Bank 
has any information or notice to the contrary:
    (1) Issue a Transfer Message,
    (2) Receive interest and other payments with respect thereof, and
    (3) Exercise all the rights and powers with respect to the Security,
    (b) Are the Federal Reserve Banks and Treasury liable for Adverse 
Claims? The Federal Reserve Banks and Treasury are not liable to a 
Person asserting or having an Adverse Claim to a Security Entitlement or 
to a Book-entry Security in a Participant's Securities Account. This 
includes any such claim arising as a result of the transfer or 
disposition of a Book-entry Security by a Federal Reserve Bank, pursuant 
to a Transfer Message that the Federal Reserve Bank reasonably believes 
to be genuine.
    (c) When is the obligation of the United States to pay interest and 
principal with respect to Book-entry Securities discharged? The 
obligation is discharged once payment is made as follows:
    (1) A Federal Reserve Bank credits the appropriate amount of 
interest on Book-entry Securities to a Funds Account maintained at the 
Bank, or pays it as directed by the Participant.
    (2) Book-entry Securities are redeemed according to their terms, a 
Federal Reserve Bank withdraws the securities from the Participant's 
Securities Account in which they are maintained, and either:
    (i) Credits the amount of the Redemption proceeds, including both 
principal and interest, where applicable, to a Funds Account at the 
Bank, or
    (ii) Pays such principal and interest as directed by the 
Participant.
    (d) What does a Participant need to do in connection with the 
Redemption of a Book-entry Security? No action by the Participant is 
required.



Sec. 357.14  What authority does a Federal Reserve Bank have?

    (a) Each Federal Reserve Bank has the authority as fiscal agent of 
the United States to:
    (1) Perform functions with respect to the issuance of Book-entry 
Securities offered and sold by the Department to

[[Page 407]]

which this subpart applies, in accordance with the terms of the 
applicable offering circular and with procedures established by the 
Department;
    (2) Service and maintain Book-entry Securities in accounts 
established for such purposes;
    (3) Make payments of principal and interest, as directed by the 
Department;
    (4) Effect transfer of Book-entry Securities between Participants' 
Securities Accounts as directed by the Participants; and
    (5) Perform such other duties as fiscal agent that the Department 
may request.
    (b) Each Federal Reserve Bank may issue Operating Circulars that are 
consistent with this part, governing the details of its handling of 
Book-entry Securities, Security Entitlements, and the operation of the 
book-entry system under this part.



Sec. 357.15  How can a debtor's interest in a Security Entitlement be 
reached by creditors?

    (a) The interest of a debtor may be reached by creditors only by 
legal process upon the Securities Intermediary with whom the debtor's 
securities account is maintained. Exception: If a Security Entitlement 
is maintained in the name of a secured party, the debtor's interest may 
be reached by legal process upon the secured party.
    (b) These regulations do not state whether a Federal Reserve Bank is 
required to honor an order or other notice of attachment in any 
particular case or class of cases.



 Subpart C_Legacy Treasury Direct Book-Entry Securities System (Legacy 
                            Treasury Direct)



Sec. 357.20  Securities account in Legacy Treasury Direct[supreg].

    (a) Account. A securities account consists of:
    (1) An account master record, and
    (2) A securities portfolio.
    (b) Security. A security in Legacy Treasury Direct is evidenced by 
the account master record and a description of the security as set out 
in the securities portfolio associated with an account master record.
    (c) Account master record. An owner must establish an account master 
record before the owner may deposit a security in Legacy Treasury 
Direct. If the security is being purchased on original issue, the 
request that an account master record be established may be made on the 
form used for purchase of the security. If the security is being 
acquired other than on original issue, the request that an account 
master record be established should be made on the appropriate form that 
is provided by the Department. The account master record includes, but 
is not limited to, the following data:
    (1) The exact form of registration in which the securities are held;
    (2) The Legacy Treasury Direct account number;
    (3) The correspondence address for the account;
    (4) The TIN of the owner, or in the case of ownership by two 
individuals, of the first-named owner; and
    (5) Payment instructions. (See Sec. 357.26.)
    (d) Securities portfolio. The securities portfolio contains a 
description of each security and is the aggregate of all securities in 
the securities account.
    (e) Statement of account. The Department shall send a statement of 
account (statement):
    (1) Upon the establishment of an account master record;
    (2) Upon a change in the securities portfolio;
    (3) At an owner's request; or
    (4) Upon the determination on December 31 that an owner has not 
received a statement of account for that current calendar year.
    The statement shall contain information regarding the account as of 
the date of such statement. The price associated with each security in 
the securities portfolio will also appear on the statement.\1\ The 
statement may be sent

[[Page 408]]

to the correspondence address designated in the account master record, 
or may be sent by electronic means. When the statement is issued as a 
result of a change in ownership of a security, statements will be sent, 
where appropriate, to both the former and current owners. Other 
information regarding the account may be obtained in accordance with 
Sec. 357.24.
---------------------------------------------------------------------------

    \1\ IRS regulations require reporting of income information on a 
security.
    (1) If the security is a bill, the price information will be used to 
comply with this requirement. The earnings reported to IRS for the year 
of a bill's maturity will be the difference between the par value of the 
bill and its price.
    (a) If a bill is deposited in Legacy Treasury Direct at original 
issue, the price shown will be the issue price.
    (b) If a bill is transferred to Legacy Treasury Direct from TRADES, 
the price shown will be that included in the transfer wire or supplied 
subsequently by the bill owner. If a price is not furnished, the price 
shown will be the weighted average price of the bill of the longest 
maturity having the identical CUSIP number.
    (c) If a bill is transferred from one Legacy Treasury Direct account 
to another, the price shown in the receiving (transferee's) account will 
be that shown on the transfer instructions or supplied subsequently by 
the transferee. If a price is not furnished, the price shown will be the 
weighted average price at original issue of the bill of the longest 
maturity having the identical CUSIP number, unless the term of the bill 
can be determined from the account record in which case the price shown 
will be the weighted average price at original issue of the bill with 
that term.
    (2) If the security is a note or bond, the earnings reported to IRS 
for a year will be the periodic interest payments made during that year. 
If a note or bond is transferred to a Legacy Treasury Direct account 
between interest payment dates, the earnings reported to IRS for the 
transferee will show the interest for the entire interest payment 
period. The price for notes and bonds will be shown on the statement of 
account for the account owner's information. The price shown will be 
determined following the procedures described above for bills.
    (3) The security owner should report directly to the IRS (a) 
adjustments to annual earnings amounts arising from acquisition of notes 
and bonds between interest payment periods and (b) price corrections for 
bills reported after preparation of the reports to the IRS.
---------------------------------------------------------------------------

    (f) Confirmation notice. The Department shall send a confirmation 
notice (notice):
    (1) Upon a change in an account master record;
    (2) Upon scheduling or canceling a reinvestment; or
    (3) To confirm the interest earned on a Treasury Inflation Indexed 
Security. The notice shall contain information regarding the account as 
of the date of such confirmation. The notice may be sent to the 
correspondence address designated in the account master record, or may 
be sent by electronic means. All changes reflected in paragraph (f) (1) 
and (2) of this section will be included in the next regularly scheduled 
statement of account. See paragraph (e) of this section for the 
statement schedule.
    (g) Account maintenance fees. An annual maintenance fee shall be 
charged for each Legacy Treasury Direct securities account holding 
securities that in the aggregate exceed a stipulated par amount. The 
amount of the fee will be published by notice in the Federal Register.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986, as amended at 60 FR 4377, Jan. 23, 1995; 62 
FR 18004, Apr. 11, 1997; 62 FR 32033, June 12, 1997]



Sec. 357.21  Registration.

    (a) General. (1) Registration of a security conclusively establishes 
ownership, except in the case of partnership nominees, in which case the 
Department reserves the right to treat the registration as conclusive of 
ownership. The registration may not, except as provided in this Subpart, 
include any restriction on the authority of an owner to change the data 
in the account master record, transfer the security, or effect any other 
change in the securities portfolio.
    (2) The registration of all securities held by an owner should be 
uniform with respect to the owner's name. An owner must be identified by 
the name by which the owner is ordinarily known, preferably including at 
least one full given name. A suffix, such as Sr. or Jr., must be 
included when ordinarily used, or when necessary to distinguish members 
of the same family.
    (3) If an additional security is deposited in an existing account, 
the security will be registered in the same name and form of 
registration that appears in the designated account master record. One 
who holds a security as John Allen Doe should use that name

[[Page 409]]

when depositing another security rather than J. Allen Doe, or John A. 
Doe'. Minor variations in names used in acquiring a security to be 
deposited in an established account may be resolved by the Department.
    (b) Natural persons. A security may be registered in the names of 
one or two individuals, but only in one of the following forms:
    (1) Single ownership. In the name of one individual.

    Example: Robert W. Woods


An individual who is sole proprietor of a business conducted under a 
trade name may include a reference to the trade name.

    Example: John A. Doe, doing business as Doe's Home Appliance Store.

    (2) Ownership by two individuals--(i) ``And'' form--Joint 
Ownership--(A) Without right of survivorship. In the names of two 
individuals, joined by the word ``and'', and followed by the words 
``without right of survivorship''. A security so registered shall 
conclusively confer on each owner an undivided interest in the security.

    Example: Elizabeth Black and Jane Brown, without right of 
survivorship.


Any request for registration which purports, by its terms, to preclude 
the right of survivorship, or which requests registration in the names 
of two persons without indicating whether survivorship rights attach 
(other than a registration under paragraph (b)(2)(ii) of this section), 
will be presumed to be a request for registration without right of 
survivorship. If a security is registered in this form, a transaction 
request, other than a request by one owner to transfer the security to 
the other owner, and other than a request for reinvestment, must be 
executed by both owners.
    (B) With right of survivorship. In the names of two individuals, 
joined by the word ``and'', and followed by the words ``with right of 
survivorship''. A security so registered shall confer on each owner an 
undivided interest in the security and shall create a conclusive right 
of survivorship.

    Example: Mark A. Doe and Mary B. Doe, with right of survivorship.


If a security is registered in this form, a transaction request, other 
than a request by one owner to transfer the security to the other owner, 
and other than a request for reinvestment, must be executed by both 
owners.
    (ii) ``Or'' form--``Coownership''. In the names of two individuals, 
joined by the word ``or''. A security so registered shall confer on each 
owner an undivided interest in the security and shall create a 
conclusive right of survivorship.

    Example: Robert Woods or Laura Woods.


If a security is registered in this form, either coowner may make a 
transaction request, but if the Department receives conflicting requests 
at or about the same time, it may refuse to process them.
    (iii) Beneficiary. In the name of one individual followed by the 
words ``Payable on death to'' (or ``P.O.D.'') another individual.

    Example: Jack S. Jones, payable on death to Marie Jones.


If a minor or an incompetent is named as a beneficiary, the status of 
the beneficiary must be identified in the registration. A minor or an 
incompetent may not be designated as an owner. See paragraphs (b)(3) and 
(4) of this section.

    Example: John Perry, P.O.D. John Perry, Jr., a minor.


Registration in this form shall create ownership rights in the 
beneficiary only if the beneficiary survives the owner. During an 
owner's lifetime, a transaction request may be executed by the owner 
without the consent of the beneficiary. If the beneficiary dies before 
the owner, the security will be deemed to be registered in the owner's 
name alone.
    (3) Minors--(i) General. A security may not be registered in the 
name of a minor in his or her own right as an owner. If a security is so 
registered and the Department thereafter receives evidence or 
information of that fact, the Department may suspend processing of any 
transaction request with respect to the security until either a legal 
guardian has been appointed or a natural guardian, as provided in 
paragraph (b)(3)(ii) of this section, has been

[[Page 410]]

recognized. Where a legal guardian is appointed, the Department will 
require a certified copy of the court order making such appointment. See 
Sec. 357.28(c).
    (ii) Natural guardians of minors. A security may be registered in 
the name of a natural guardian of a minor for whose estate no legal 
representative has been appointed. The parent with whom the minor 
resides will be recognized as the natural guardian. If the minor resides 
with both parents, either or both may be recognized as natural 
guardian(s). If the minor does not reside with either parent, the 
Department may recognize the person who furnishes the minor's chief 
support as the natural guardian.

    Examples: Michael Jones, as natural guardian of Alice Jones, a 
minor.

    Michael Jones and Evelyn Jones, as natural guardians of Alice Jones, 
a minor.


The security may also be registered in one of the forms authorized under 
paragraph (b)(2) of this section.

    Examples: James Green, as natural guardian of William Green, a 
minor, and Anne Green, without right of survivorship.

    James Green, as natural guardian of William Green, a minor, POD 
Lynne Green.

    (iii) Custodian under statute authorizing gifts to minors. A 
security may be registered as provided under an applicable gift to 
minors statute.

    Example: Virginia McDonald, as custodian for Lynne Gorman, under the 
New York Uniform Gifts to Minors Act.


Any request to alter the rights of ownership of the security must be 
made as provided in the applicable statute.
    (4) Incompetents--(i) General. A security may not be registered in 
the name of an individual in his or her own right as an owner if that 
individual is incompetent. If a security is so registered, or if the 
owner subsequently becomes incompetent after the security is purchased, 
and the Department receives evidence or information of that fact, the 
Department may suspend any transaction with respect to the security 
until a legal guardian, conservator, or other representative of the 
incompetent's estate has been appointed, or a voluntary guardian, as 
provided in paragraph (b)(3)(ii) of this section, has been recognized. 
Where a legal guardian, conservator, or other representative is 
appointed, the Department will require a certified copy of the court 
order making such appointment. See Sec. 357.28(c).
    (ii) Voluntary guardian of incompetent. If a legal guardian has not 
been appointed, and the face amount of the securities held in one or 
more accounts in Legacy Treasury Direct[supreg] by an owner who had 
become incompetent does not exceed, in the aggregate, $20,000 (par 
amount), upon submission to, and approval by, the Department of an 
appropriate form, a relative or other person responsible for an 
incompetent's care and support will be recognized as voluntary guardian 
for purpose of making a transaction request under Sec. 357.28(b)(4). 
All persons known by the Department to have an interest in the 
incompetent's estate, as required by the application form, must agree to 
the designation of the voluntary guardian. The security may be re-
registered in the name of the voluntary guardian.

    Example: Richard Melrose, as voluntary guardian for James W. 
Brundige.

    (c) Representatives. A security may be registered in the name of a 
representative of an estate. If there is more than one representative, 
the names of some representatives may be omitted if followed by language 
that indicates the existence of other representatives. In such cases, 
those named in the registration shall be conclusively presumed by the 
Department to have authority to make a transaction request on behalf of 
all the representatives. The form of registration must identify the 
specific capacity of the representative(s) and the estate represented.

    Examples: ABC National Bank of Chicago, Illinois and Harold Smith, 
co-executors of the will (or administrators of the estate) of Charles 
Johnson, deceased.

    William Brown, guardian of the estate of Henry Jones, a minor.
    Robert Smith, Richard Smith, et al., executors of the will of 
Lorraine Smith, deceased.


If the representative is a trustee, the form of registration must 
identify specifically the authority or document creating the trust.

    Examples: Sarah Jones and XYZ Trust Co., trustees under the will of 
Matthew Smith, deceased.


[[Page 411]]


    Cynthia Doe and Margaret Jones, trustees under agreement with Martha 
Roe, dated April 13, 1979.

    Cynthia Doe, trustee under declaration of trust, dated April 13, 
1979.

    Richard Smith, James Jones, and Frank Brown, trustees under the will 
of Henry K. James, deceased.

    ABC Corporation, Myrna Banker, et al., trustees of Profit-Sharing 
Plan of Ace Manufacturing Co., under B/D resolution, dated May 18, 1975.


If there are several trustees designated as a board or authorized to act 
as a unit, their names should be omitted and the words, ``Board of 
Trustees'' substituted.

    Example: Board of Trustees of Super Co. Retirement Fund, under 
collective bargaining agreement, dated March 18, 1969.


An organization (other than a bank) or individual seeking to act as 
trustee or custodian of an Individual Retirement Account (``IRA''), must 
be authorized to so act by the Internal Revenue Service. As appropriate, 
registration of the security should be in the form shown below:

    Examples: ABC Bank, trustee for John Doe IRA, under agreement dated 
December 21, 1990.
    EFG Broker, Inc., custodian for Mary Smith IRA, under agreement 
dated September 4, 1991.

    (d) Private organizations (corporations, unincorporated associations 
and partnerships). A security may be registered in the name of a private 
corporation, unincorporated association, or partnership. The full legal 
name of the organization, as set forth in its charter, articles of 
incorporation, constitution, partnership agreement, or other documents 
from which its powers are derived, must be included in the registration. 
The name may be followed by a reference to a particular account or fund, 
other than a trust fund, such as an escrow account.
    (1) A corporation. The legal name of a business, fraternal, 
religious, or other private corporation must be followed by descriptive 
words indicating the corporate status unless the term corporation or the 
abbreviation Inc. is part of the name or the name is that of a 
corporation or association organized under Federal law, such as a 
national bank or Federal savings and loan association.

    Examples: Brown Manufacturing Co., a corporation (Education Fund).

    The Apex Manufacturing Corporation.

    XYZ National Bank of El Paso, TX.

    Goodworks, Unlimited, a not-for-profit corporation.

    (2) An unincorporated association. Unless the name of a lodge, club, 
labor union, veterans or religious organization, or similar organization 
which is not incorporated (whether or not it is chartered by or 
affiliated with a parent organization which is incorporated) includes 
the words an unincorporated association, the registration must include 
descriptive words indicating the organization's unincorporated status. A 
security may not be registered in the name of an unincorporated 
association if the legal title to its property or the legal title to the 
funds with which the security is to be purchased is held by trustees. In 
such a case, the security should be registered in the name of the 
trustees in accordance with paragraph (c) of this section. The term 
unincorporated association should not be used to describe a trust fund, 
a partnership or a business conducted under a trade name.

    Examples: Local Union No. 13, Brotherhood of Operating Engineers, an 
unincorporated association.

    The Simpson Society, an unincorporated association.

    (3) Partnership. Unless the name of a partnership includes the word 
partnership, the registration must include descriptive words indicating 
partnership status.

    Examples: Red & Blue, a partnership.

    Abco and Co., a nominee partnership.

    (e) Governmental entities and officers. A security may be registered 
in the name of a State, county, city, town, village, school district, or 
other governmental entity, body, or corporation established by law. If a 
governmental officer is authorized to act as a trustee or custodian, a 
security may be registered in the title, or name and title, of the 
governmental officer. The form

[[Page 412]]

of registration should reflect the capacity in which the governmental 
entity or officer is authorized to hold property (e.g., it may be 
authorized to hold property in its own name or as trustee or custodian).

    Examples: Laura Woods, Treasurer, City of Twin Falls, Mo.

    State of Michigan.

    Village of Gaithersburg, Md.

    Pennsylvania State Highway Administration (Highway Road Repair 
Fund).

    Insurance Commissioner of Florida, trustee for benefit of policy 
holders of Sunshine Insurance Co. under F.S.A. Sec. 629.104.

    Commonwealth of Virginia, in trust for Virginia Surplus Property 
Agency.

    Gleason County Cemetery Commission, trustee under Md. Code Ann. Sec. 
310.29.

    (f) The United States Treasury. A security may be registered in the 
name of an individual, with the United States Treasury as beneficiary, 
provided a reference to the statute which authorizes gifts to be made to 
the United States to reduce the public debt, is included.

    Example: John S. Green, payable on death [or P.O.D.] to U.S. 
Treasury to reduce the public debt (31 U.S.C. 3113).

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986, as amended at 57 FR 38774, Aug. 27, 1992]



Sec. 357.22  Transfers.

    (a) General. A security may be transferred only as authorized by 
this part. A security may be transferred among accounts in Legacy 
Treasury Direct[supreg], the commercial book-entry system, and 
TreasuryDirect[supreg]. A security may also be transferred between 
accounts in Legacy Treasury Direct. The Department may delay transfer of 
a newly purchased security from a Legacy Treasury Direct account to an 
account in commercial book entry or TreasuryDirect for a period not to 
exceed (30) calendar days from the date of issue. This provides time for 
the investor to become aware of any unauthorized debits.
    (1) Identification of securities to be transferred. The owner must 
identify the securities to be transferred, in the manner required by the 
transaction request. If such identification is not provided, the request 
will not be processed and will be returned.
    (2) Denominational amounts. A security may be transferred from an 
account only in a denominational amount authorized by the offering under 
which the security was issued. Any security remaining in the securities 
portfolio after the transfer must also be in an authorized 
denominational amount.
    (3) When transfer effective. (i) Transfer within Legacy Treasury 
Direct or to Legacy Treasury Direct from the commercial book-entry 
system or TreasuryDirect. A transfer of a security within Legacy 
Treasury Direct, or to Legacy Treasury Direct from another book-entry 
system, is effective when an appropriate entry is made in the name of 
the transferee on the Legacy Treasury Direct records.
    (ii) Transfer from Legacy Treasury Direct to the commercial book-
entry system. A transfer of a security from Legacy Treasury Direct to 
the commercial book-entry system is effective as provided in Subpart B. 
If a transfer cannot be completed, and the security is sent back to 
Legacy Treasury Direct, the Department will redeposit the security in 
the original account.
    (iii) Transfer from Legacy Treasury Direct to TreasuryDirect. A 
transfer of a security from Legacy Treasury Direct to TreasuryDirect is 
effective as provided in 31 CFR part 363. If the transfer cannot be 
completed, the Department will redeposit the security in the original 
account.
    (b) Transfer to Federal Reserve Bank for sale of securities in the 
secondary market. (1) Upon authorization by the investor, an unmatured 
security may be transferred to a Federal Reserve Bank acting as the 
designated fiscal agent of the United States, to be sold on behalf of 
the investor.
    (2) Definitions. In this section, unless the context indicates 
otherwise:
    Dealer means an entity that is registered or has given notice of its 
status as a government securities broker or government securities 
dealer, pursuant to Section 15C(a)(1) of the Securities Exchange Act of 
1934.
    Par amount means the stated value of a security at original 
issuance.

[[Page 413]]

    Price means the dollar amount to be paid for a security expressed as 
a percent of its current par amount.
    Security means any amount held in a Legacy Treasury Direct account 
which is represented by a separate CUSIP number.
    Settlement amount, also referred to as net amount, is the amount 
deposited by the Federal Reserve Bank to the account of the investor at 
the financial institution designated by the investor to receive Legacy 
Treasury Direct payments. This amount is equal to the par amount of the 
securities multiplied by the price, plus any accrued interest, and less 
the transaction fee. For inflation indexed securities, the settlement 
amount also includes any applicable inflation adjustment, as provided in 
31 CFR Part 356. The settlement amount may be less than the par amount 
of the security.
    Settlement date is the date the settlement amount is released to the 
account at the financial institution designated by the investor for 
receipt of Legacy Treasury Direct payments.
    Trade date means the date on which the Federal Reserve Bank enters 
into an agreement with a dealer for the sale of the security.
    Yield, also referred to as yield to maturity, means the annualized 
rate of return to maturity on a fixed principal security expressed as a 
percentage. For an inflation-indexed security, yield means real yield, 
as defined in 31 CFR part 356.
    (3) Procedure. On an approved Treasury form, the owner must 
authorize a transfer of the security from the investor's Legacy Treasury 
Direct account to the designated Federal Reserve Bank, and authorize the 
Federal Reserve Bank to sell the security. Rules in subpart C of this 
part governing the transfer of securities will apply to the transfer of 
the security to the Federal Reserve Bank. Generally, on the day that the 
security is transferred to the Federal Reserve Bank, the Federal Reserve 
Bank will make reasonable efforts to obtain a price quote from at least 
three dealers, and will enter into an agreement to sell the security to 
the dealer with the highest price quote for next day settlement. What 
constitutes reasonable effort shall be determined solely by the Federal 
Reserve Bank. On the next full business day after the trade date, the 
settlement amount shall be released by direct deposit (electronic funds 
transfer), as provided in Sec. 357.26 of this part, to the account at 
the financial institution designated by the investor to accept Legacy 
Treasury Direct payments, except when the Department determines that 
extraordinary circumstances exist that require payment by other means. 
In the event that the Federal Reserve Bank is unable to obtain at least 
one price quote for the security, the security will be returned to the 
Legacy Treasury Direct account of the investor on the next full business 
day following the receipt of the securities by the Federal Reserve Bank, 
and the Federal Reserve Bank will notify the investor.
    (4) Confirmation. The Federal Reserve Bank will send a confirmation 
of the sale to the investor upon completion of the transaction. Such 
confirmation will include such information as price, trade date, 
settlement date, settlement amount, also referred to as net amount, 
transaction fee, and yield to maturity.
    (5) Price. By authorizing the transfer and sale of the securities, 
the investor agrees to accept the price received by the Federal Reserve 
Bank from the dealer selected as having the highest price quote.
    (6) Transaction fee. A transaction fee shall be charged for each 
security sold on behalf of the investor. If the Federal Reserve Bank is 
unable to complete the sale of the security, no fee will be charged. By 
authorizing the sale of the security, the investor authorizes the 
Federal Reserve Bank to withhold the transaction fee prior to the 
Federal Reserve Bank initiating the payment of the settlement amount to 
the account at the financial institution designated by the investor to 
receive Legacy Treasury Direct payments. The amount of the transaction 
fee will be published by notice in the Federal Register.
    (7) Termination. This service may be terminated at anytime without 
prior notice at the discretion of the Department.

[[Page 414]]

    (8) Rights. The provisions applicable to Legacy Treasury Direct 
transactions in subpart C shall apply to this section. The provisions 
applicable to transactions in TRADES in subpart B shall not apply to 
this section.
    (9) Irrevocability. The authorization of the investor for the 
transfer and sale of the securities shall be irrevocable when the 
transfer from the Legacy Treasury Direct account of the investor to the 
account at the Federal Reserve Bank is effected.
    (10) Liability. The Department and the designated Federal Reserve 
Bank shall not be liable for changes in market conditions affecting the 
price received for the security, or for any loss which the investor may 
incur as a result of the transaction or the inability of the Federal 
Reserve Bank to complete the transaction.
    (c) Transfer upon death of an owner--(1) Right of survivorship. If a 
security is registered in beneficiary form or a form which provides for 
a right of survivorship, upon the death of an owner, the beneficiary or 
survivor shall be the sole and absolute owner, notwithstanding any 
purported testamentary disposition by the decedent and notwithstanding 
any State or other law to the contrary. The Department will honor a 
transaction request by a beneficiary or a survivor (in the case of a 
security registered in the form described in Sec. 357.21(b)(2)(i)(B)) 
only upon proof of death of an owner.
    (2) Succession under law of domicile. If a security is registered in 
a form that does not provide for a right of survivorship, succession 
shall be determined in accordance with the applicable law of the 
deceased owner's domicile at the time of death.
    (d) Representative succession. If a security is registered in the 
name of a representative who has died, resigned, or been removed, 
succession shall be determined in accordance with applicable law and the 
terms of the document under which the representative was acting.
    (e) Organizational succession--(1) Corporation and unincorporated 
association. If a security is registered in the name of a corporation or 
an unincorporated association that has been dissolved, merged or 
consolidated into another organization, succession shall be determined 
in accordance with applicable law and the terms of the documents by 
which the dissolution, merger, or consolidation was effected.
    (2) Partnership. If a partnership is dissolved or terminated, 
succession shall be determined in accordance with applicable law and the 
terms of the partnership agreement.
    (f) Succession of governmental officer. If a security is registered 
in the name and title of a governmental officer who has died, resigned, 
or has been removed, succession shall be determined in accordance with 
applicable law.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986; 51 FR 18884, May 23, 1986, as amended at 53 
FR 10074, Mar. 29, 1988; 62 FR 46861, Sept. 4, 1997; 64 FR 6527, Feb. 
10, 1999; 70 FR 57441, Sept. 30, 2005]



Sec. 357.23  Judicial proceedings--sovereign immunity.

    (a) Department and Federal Reserve Banks not proper parties. The 
Department and the Federal Reserve Banks are not proper defendants in a 
judicial proceeding involving competing claims to a security held in 
Legacy Treasury Direct[supreg] nor are they subject to any injunction or 
restraining order issued with respect to a security. The Department will 
not recognize a notice of a pending or contemplated judicial or 
administrative proceeding affecting a security in Legacy Treasury 
Direct.
    (b) Orders--(1) Ownership rights. The Department will recognize a 
final order entered by a court that affects ownership rights in a 
security in Legacy Treasury Direct if:
    (i) The order is consistent with the provisions of this subpart and 
the terms and conditions of the security; and
    (ii) The Department has received evidence of the order, as provided 
in paragraph (c) of this section.
    (2) Transaction request. The Department will honor a transaction 
request submitted by a person appointed by a court and having authority 
under an order of a court to dispose of the security or payment with 
respect thereto if:

[[Page 415]]

    (i) The ordered disposition of the security or payments with respect 
thereto is consistent with the provisions of this subpart and the terms 
and conditions of the security; and
    (ii) The Department has received evidence of the appointment and 
order, as provided in paragraph (c) of this section.
    (c) Evidence required. Before the Department will recognize an order 
or determination entered by a court, the Department must have received a 
certified copy of the judgment, decree, or order and any additional 
documents deemed necessary by the Department. A certificate from the 
clerk of the court, bearing the seal of the court, must also be 
submitted stating that the judgment, decree, or order is still in full 
force and has not been stayed or appealed, and that the time for filing 
an appeal has passed. Before the Department will honor a transaction 
request submitted by a person appointed by a court, the Department must 
receive a certified copy of the order making the appointment and 
describing specifically the person's authority, and any additional 
documents deemed necessary by the Department.

(Approved by the Office of Management and Budget under control number 
1535-0068)



Sec. 357.24  Availability and disclosure of Legacy Treasury 
Direct[supreg] records.

    (a) General. All records with respect to a Legacy Treasury Direct 
account are held confidential. Consistent with the Privacy Act (5 U.S.C. 
552a), information relating to those accounts will be released only to 
the owner except:
    (1) As provided in these regulations;
    (2) As provided in Treasury regulations contained in 31 CFR Part 
323; or
    (3) As otherwise provided by law.
    (b) Inquiries by owners. Information requested will be disclosed to 
an owner provided that:
    (1) Sufficient information is provided to identify the owner; and
    (2) Sufficient information is provided to identify the Legacy 
Treasury Direct account.
    (c) Conditions for release. A request for information will be 
honored only if, in the sole judgment of the Department or the Federal 
Reserve Bank to which the inquiry is made, the identity and right of the 
requester to the information have been established.

[51 FR 18265, May 16, 1986; 51 FR 18884, May 23, 1986]



Sec. 357.25  Security interests.

    (a) General. The Department will not recognize any notice or claim 
of a lien, encumbrance, or security interest of any kind, including a 
pledge, in a security in Legacy Treasury Direct[supreg] except as 
provided in Sec. 357.23 and in paragraph (b) of this section.
    (b) Security for the performance of duty or obligation under Federal 
law. The Department will accept and hold pursuant to the provisions of 
31 U.S.C. 9303, book-entry bonds, notes or bills submitted in lieu of a 
surety bond as security for the performance of a duty or obligation 
required by Federal law in accordance with said section.



Sec. 357.26  Direct Deposit.

    (a) General. A payment by the Department with respect to a security 
shall be by direct deposit unless it is deemed necessary by the 
Department to make payment by another means. Direct Deposit payments are 
governed by the regulations at 31 CFR part 370.
    (b) Names on account. Where the Legacy Treasury Direct[supreg] 
securities account is in the name of individual(s) in their own right, 
and the deposit account at the financial institution is in the name of 
individual(s) in their own right, the two accounts must contain at least 
one name that is common to both.
    (c) Inquiry to financial institution. Where the deposit account to 
which payments are to be directed is held in the name of the financial 
institution itself acting as sole trustee, or as co-trustee, or is in 
the name of a commercially-managed investment fund, particular inquiry 
should first be made of the financial institution to make certain that 
the direct deposit payments can be received, and alternate arrangements 
made if it cannot do so.
    (d) Payments to master account. All payments relating to a single 
account master record must be made to the same designated account at a 
financial institution.
    (e) Deposit account. The deposit account to which payments are 
directed

[[Page 416]]

should preferably be established in a form identical to the registration 
of the securities account, particularly where the securities are 
registered jointly or with right of survivorship, to assure that the 
rights of ownership and of survivorship can be more easily identified 
and preserved. Neither the United States nor any Federal Reserve Bank 
shall be liable for any loss sustained because the interests of the 
holder(s) of a deposit account to which payments are made are not the 
same as the interests of the owner(s) of the security.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986, as amended at 57 FR 38774, Aug. 27, 1992; 61 
FR 6113, Feb. 16, 1996; 64 FR 40487, July 26, 1999]



Sec. 357.27  Reinvestment.

    (a) General. Upon the request of an owner, the redemption proceeds 
of a security may be reinvested at maturity in a new security in the 
same form of registration, provided a new security is then being offered 
by the Department and provision for reinvestment is made in the 
offering. The new security must be in an authorized denominational 
amount and will be issued in accordance with the terms of the offering. 
If the new security is issued at a premium or with accrued interest, an 
additional payment will be required from the investor. If the new 
security is issued at a discount, the difference will be remitted to the 
owner.
    (b) Treasury bills. A request by an owner for a single or successive 
reinvestment of a Treasury bill must be made in accordance with the 
terms prescribed on the tender form submitted at the time of purchase of 
the original bill, or by a subsequent transaction request received not 
less than ten (10) business days prior to the maturity date of the bill. 
A request to revoke a direction to reinvest the proceeds of a bill must 
be received by the Department not less than ten (10) business days prior 
to the maturity date of the bill. If either a request for reinvestment 
or revocation of a reinvestment request is received less than ten (10) 
business days prior to maturity of the original bill, the Department may 
in its discretion act on such request if sufficient time remains for 
processing.
    (c) Issue date not coincidental with maturity date. If the date on 
which a security matures or is called does not coincide with the issue 
date of the security being purchased through reinvestment, the 
Department may, at its option, hold the redemption proceeds in the same 
form of registration as the maturing or called security, but no interest 
shall accrue or be paid on such funds.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986, as amended at 62 FR 18694, Apr. 16, 1997]



Sec. 357.28  Transaction requests.

    (a) General. Unless otherwise authorized by the Department, a 
transaction request must be submitted on a transaction request form. In 
the case of certain transactions specified by the Department, the 
owner's signature on the form must be certified or guaranteed, as 
provided in Sec. 357.31. If the transaction request form is received 
more than six (6) months after its execution, it will not be honored by 
the Department and will be returned to the sender for further 
instructions.
    (b) Individuals--(1) General. A transaction request must be signed 
by the owner of the security. In addition to any required certification, 
a transaction request form executed by a person by mark, e.g., ``(X)'', 
must be witnessed by a disinterested person. The following language 
should be added to the form and be signed by the witness:

    Witness to signature by mark
________________________________________________________________________
Signature of witness
________________________________________________________________________
Address of witness

    (2) Change of name. If an individual's name has been changed from 
that appearing in the registration, the individual should sign both 
names to the transaction request form and state the manner in which the 
change occurred.

    Example: Deborah L. Gains, changed by order of court from Deborah G. 
O'Brien.


The individual must provide evidence, such as a certified copy of a 
court

[[Page 417]]

order, which confirms the change, unless it is indicated that the change 
of name resulted from marriage.

    Example: Catherine M. Cole, changed by marriage from Catherine T. 
Murray.

    (3) Natural guardians. A transaction request involving a security 
registered in the name of a natural guardian of a minor may be executed 
by the natural guardian. If a security is registered in the names of 
both parents as natural guardians of a minor, both must execute a 
transaction request. However, the Department will not honor a 
transaction request by the natural guardian(s):
    (i) Which would transfer the security to a natural guardian in his 
or her own right; or
    (ii) After the Department receives notice of the minor's attainment 
of majority, the qualification of a legal guardian or similar 
representative, or the death of the minor.
    (4) Voluntary guardians. A transaction request involving a security 
belonging to an owner who has become incompetent may be executed by a 
voluntary guardian, but only after approval by the Department of the 
voluntary guardian's application for such designation. However, the 
Department will not honor a transaction request by the voluntary 
guardian:
    (i) Which would transfer the security to a voluntary guardian in his 
or her own right; or
    (ii) After the Department receives notice of the ward's restoration 
to competency, the qualification of a legal guardian or similar 
representative, or the death of the ward. See Sec. 357.21(b)(4).
    (c) Representatives--(1) General. Any representative of an owner's 
estate, other than a trustee, may execute a transaction request form if 
the representative submits to the Department properly authenticated 
evidence of the authority to act. The evidence will not be accepted if 
dated more than one year prior to the date of submission of the 
transaction request.
    (2) Decedent's estate has been settled previously. If a decedent's 
estate has been settled previously through judicial proceedings, the 
persons entitled may make a transaction request. A certified copy of the 
court-approved final accounting for the estate, the court's decree of 
distribution, or other appropriate evidence will be required.
    (3) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the decedent's estate is to be appointed, the 
person appointed to receive or distribute the assets of a decedent's 
estate without regular administration under applicable local law summary 
or small estates procedures may make a transaction request. Appropriate 
evidence will be required.
    (4) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000, administration of the decedent's estate will 
be required. The redemption value of savings bonds and the principal 
amount of marketable securities will be used to determine the value of 
securities, and will be determined as of the date of death. 
Administration may also be required at the discretion of the Department 
for any case.
    (5) Voluntary representative for small estates of decedents that are 
not being otherwise administered. (i) General. A voluntary 
representative is a person qualified according to paragraph (c)(5)(iii) 
of this section, to make a transaction request. The voluntary 
representative procedures are for the convenience of the Department; 
entitlement to the decedent's securities and held payments, if any, is 
determined by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. Voluntary representative procedures may 
be used only if:
    (A) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (B) The total redemption value of the Treasury securities and held 
payments, if any, that are the property of the decedent's estate is 
$100,000 or less as of the date of death; and
    (C) There is a person eligible to serve as the voluntary 
representative according to paragraph (c)(5)(iii) of this section.

[[Page 418]]

    (ii) Authority of voluntary representative. A voluntary 
representative may make a transaction request to distribute the 
securities to or for the benefit of the persons entitled by laws of the 
jurisdiction in which the decedent was domiciled at the date of death.
    (iii) Order of precedence for voluntary representative. An 
individual eighteen years of age or older may act as a voluntary 
representative according to the following order of precedence: A 
surviving spouse; if there is no surviving spouse, then a child of the 
decedent; if there are none of the above, then a descendant of a 
deceased child of the decedent; if there are none of the above, then a 
parent of the decedent; if there are none of the above, then a brother 
or sister of the decedent; if there are none of the above, then a 
descendant of a deceased brother or sister of the decedent; if there are 
none of the above, then a next of kin of the decedent, as determined by 
the law of the jurisdiction in which the decedent was domiciled at the 
date of death. As used in this order of precedence, child means a 
natural or adopted child of the decedent.
    (iv) Liability. By serving, the voluntary representative warrants 
that the distribution of securities or proceeds is to or on behalf of 
the persons entitled by the law of the jurisdiction in which the 
decedent was domiciled at the date of death. The United States is not 
liable to any person for the improper distribution of securities or 
proceeds. Upon distribution of the securities or proceeds at the request 
of the voluntary representative, the United States is released to the 
same extent as if it had paid or delivered to a representative of the 
estate appointed pursuant to the law of the jurisdiction in which the 
decedent was domiciled at the date of death. The voluntary 
representative shall indemnify and hold harmless the United States and 
all creditors and persons entitled to the estate of the decedent. The 
amount of the indemnification is limited to an amount no greater than 
the value received by the voluntary representative.
    (v) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for payment of the amount of the debt, 
providing the debt has not been barred by applicable local law.
    (d) Private organizations--(1) Corporations and unincorporated 
associations. A transaction request involving a security registered in 
the name of a corporation or an unincorporated association (either in 
its own right or in a representative capacity), may be executed by an 
authorized person on its behalf. The request must be supported by 
evidence of the person's authority to act.
    (2) Partnerships. A transaction request involving a security 
registered in the name of a partnership must be executed by a general 
partner.
    (e) Government entities. A transaction request involving a security 
registered in the name of a State, county, city, school district, or 
other governmental entity, public body or corporation, must be executed 
by an authorized officer of the entity. The request must be supported by 
evidence of the officer's authority to act.
    (f) Public officers. A transaction request involving a security 
registered in the title of a public officer must be executed by the 
officer. The request must be supported by evidence of incumbency.
    (g) Attorneys-in-fact. A transaction request made by an attorney-in-
fact must be accompanied by the original power of attorney or a properly 
authenticated copy. A power of attorney must be executed in the presence 
of a notary public or a certifying individual. See Sec. 357.31. The 
power of attorney will not be accepted if it was executed more than two 
(2) years before the date the transaction request was executed, unless 
the power provides that the authority of the attorney-in-fact continues 
notwithstanding the incapacity of the principal. If two or more 
attorneys-in-fact are named, all must execute the transaction request 
unless the power authorizes fewer than all to act. A transaction request 
executed by an attorney-in-fact seeking transfer of a security to the 
attorney-

[[Page 419]]

in-fact will not be accepted unless expressly authorized by the document 
appointing the attorney-in-fact.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986; 51 FR 18884, May 23, 1986, as amended at 70 
FR 57431, Sept. 30, 2006]



Sec. 357.29  Time required for processing transaction request.

    For purposes of a transaction request affecting payment instructions 
with respect to a security, a proper request must be received not less 
than ten (10) business days preceding the next payment date. If a 
transaction request is received less than ten (10) business days 
preceding a payment date, the Department may in its discretion act on 
such request if sufficient time remains for processing. If a transaction 
request is received too late for completion of the requested 
transaction, the transaction request will be acted upon with respect to 
future payments only.

(Approved by the Office of Management and Budget under control number 
1535-0068)

[51 FR 18265, May 16, 1986, as amended at 62 FR 18694, Apr. 16, 1997]



Sec. 357.30  Cases of delay or suspension of payment.

    If evidence required by the Department in support of a transaction 
request is not received by the Department at least ten (10) business 
days before the maturity date of the security, or if payment at maturity 
has been suspended pursuant to 31 CFR 370.10, in cases of reinvestment, 
the Department will redeem the security and hold the redemption proceeds 
in the same form of registration as the security redeemed, pending 
further disposition. No other interest shall accrue or be paid on such 
proceeds after the security is redeemed.

[64 FR 40487, July 26, 1999]



Sec. 357.31  Certifying individuals.

    (a) General. The following individuals may certify signatures on 
transaction request forms:
    (1) Officers and employees of depository institutions, corporate 
central credit unions, and institutions that are members of Treasury-
recognized signature guarantee programs who have been authorized:
    (i) Generally to bind their respective institutions by their acts;
    (ii) Unqualifiedly to guarantee signatures to assignments of 
securities; or
    (iii) To certify assignments of securities.
    (2) Officers and authorized employees of Federal Reserve Banks.
    (3) Officers of Federal Land Banks, Federal Intermediate Credit 
Banks and Banks for Cooperatives, the Central Bank for Cooperatives, and 
Federal Home Loan Banks.
    (4) Commissioned officers and warrant officers of the Armed Forces 
of the United States but only with respect to signatures executed by 
Armed Forces personnel, civilian field employees, and members of their 
families.
    (5) Such other persons as the Commissioner of the Public Debt or his 
designee may authorize.
    (b) Foreign countries. The following individuals are authorized to 
certify signatures on transaction request forms executed in a foreign 
country:
    (1) United States diplomatic or consular officials.
    (2) Managers and officers of foreign branches of depository 
institutions and institutions that are members of Treasury-recognized 
signature guarantee programs.
    (3) Notaries public and other officers authorized to administer 
oaths, provided their official position and authority are certified by a 
United States diplomatic or consular official under seal of the office.
    (c) Duties and liabilities of certifying individuals-- (1) General. 
Except as specified in paragraph (c)(2) of this section, a certifying 
individual shall require that the transaction request form be signed in 
the certifying individual's presence after he or she has established the 
identity of the person seeking the certification. An employee who is not 
an officer should insert the words ``Authorized signature'' in the space 
provided for the title. A certifying individual and the organization for 
which he or she is acting are jointly and severally liable for any loss 
the United States may incur as a result of the individual's negligence 
in making the certification.

[[Page 420]]

    (2) Signature guaranteed. The transaction request form need not be 
executed in the presence of a certifying individual if he or she 
unqualifiedly guarantees the signature, in which case the certifying 
individual shall, after the signature, add the following endorsement: 
``Signature guaranteed, First National Bank of Smithville, Smithville, 
NH, by A.B. Doe, President'', and add the date. In guaranteeing a 
signature, the certifying individual and the organization for which he 
or she is acting warrant to the Department that the signature is genuine 
and that the signer had the legal capacity to execute the transaction 
request.
    (3) Absence of signature guaranteed by depository institution. A 
transaction request form need not be actually signed by the owner in any 
case where a certifying individual associated with a depository 
institution has placed an endorsement on the form reading substantially 
as follows: ``Absence of signature by owner and validity of transaction 
guaranteed, Second State Bank of Jonesville, Jonesville, NC, by B.R. 
Butler, Vice President''. The endorsement should be dated, and the seal 
of the institution should be added. This form of endorsement is an 
unconditional guarantee to the Department that the institution is acting 
for the owner under proper authorization.
    (d) Evidence of certifying individual's authority. The authority of 
a certifying individual to act is evidenced by affixing to the 
certification the following:
    (1) Officers and employees of depository institutions. The 
institution's seal or signature guarantee stamp; if the institution is 
an authorized paying agent for U.S. Savings Bonds, a legible imprint of 
the paying agent's stamp; or, if the institution is a member of the 
Security Transfer Agents Medallion Program (STAMP), a legible imprint of 
the STAMP signature guarantee stamp.
    (2) Officers and authorized employees of institutions that are 
members of Treasury-recognized signature guarantee programs. A legible 
imprint of the program's signature guarantee stamp, e.g., the STAMP, 
SEMP, MSP stamp for members of the Securities Transfer Agents Medallion 
Program, the Stock Exchanges Medallion Program, or the New York Stock 
Exchange Incorporated Medallion Signature Program, respectively.
    (3) Officers and authorized employees of Federal Reserve Banks. 
Whatever is prescribed in procedures established by the Department.
    (4) Officers and employees of corporate central credit unions and 
other entities listed in paragraph (a)(3) of this section. The entity's 
seal.
    (5) Notaries public, diplomatic or consular officials. The official 
seal or stamp of the office. If the certifying individual has no seal or 
stamp, then the official's position must be certified by some other 
authorized individual, under seal or stamp, or otherwise proved to the 
satisfaction of the Department.
    (6) Commissioned or warrant officers of the United States Armed 
Forces. A statement which sets out the officer's rank and the fact that 
the person executing the transaction request is one whose signature the 
officer is authorized to certify under the regulations in this part.
    (7) Such other persons as the Commissioner of the Public Debt or his 
designee may authorize. The evidence specified by the Commissioner or 
his designee.
    (e) Interested persons not to act as certifying individual. Neither 
the transferor, the transferee, nor any person having an interest in a 
security involved in the transaction may act as a certifying individual. 
However, an authorized officer or employee of a depository institution 
or of an institution that is a member of a Treasury-recognized signature 
guarantee program may act as a certifying individual on a transaction 
request for transfer of a security to the institution, or any request 
executed by another individual on behalf of the institution.

[59 FR 59038, Nov. 15, 1994]



Sec. 357.32  Submission of transaction requests; further information.

    Transaction requests and requests for forms and information may be 
submitted to any Federal Reserve Bank or to the Bureau of the Public 
Debt, Legacy Treasury Direct[supreg], Washington, DC 20239-0001. A list 
of the addresses of

[[Page 421]]

Federal Reserve Banks will be available upon request to the Bureau. The 
Federal Reserve Banks, as fiscal agents of the United States, are 
authorized to perform such functions as may be delegated to them by the 
Department in order to carry out the provisions of this part.



                     Subpart D_Additional Provisions



Sec. 357.40  Additional requirements.

    In any case or any class of cases arising under these regulations, 
the Secretary of the Treasury (``Secretary'') may require such 
additional evidence and a bond of indemnity, with or without surety, as 
may in the judgment of the Secretary be necessary for the protection of 
the interests of the United States.



Sec. 357.41  Waiver of regulations.

    The Secretary reserves the right, in the Secretary's discretion, to 
waive any provision(s) of these regulations in any case or class of 
cases for the convenience of the United States or in order to relieve 
any person(s) of unnecessary hardship, if such action is not 
inconsistent with law, does not adversely affect any substantial 
existing rights, and the Secretary is satisfied that such action will 
not subject the United States to any substantial expense or liability.

[61 FR 43630, Aug. 23, 1996]



Sec. 357.42  Liability of Department and Federal Reserve Banks.

    The Department and the Federal Reserve Banks may rely on the 
information provided in a tender, transaction request form, or Transfer 
Message, and are not required to verify the information. The Department 
and the Federal Reserve Banks shall not be liable for any action taken 
in accordance with the information set out in a tender, transaction 
request form, or Transfer Message, or evidence submitted in support 
thereof.

[61 FR 43630, Aug. 23, 1996]



Sec. 357.43  Liability for transfers to and from Legacy Treasury 
Direct[supreg].

    A depository institution or other entity that transfers to, or 
receives, a security from Legacy Treasury Direct is deemed to be acting 
as agent for its customer and agrees thereby to indemnify the United 
States and the Federal Reserve Banks for any claim, liability, or loss 
resulting from the transaction.



Sec. 357.44  [Reserved]



Sec. 357.45  Supplements, amendments, or revisions.

    The Secretary may, at any time, prescribe additional supplemental, 
amendatory or revised regulations with respect to securities, including 
charges and fees for the maintenance and servicing of securities in 
book-entry form.

            Appendix A to Part 357--Discussion of Final Rule

                               Background

    Twenty-four written comments were received to the notice of proposed 
rulemaking from various sources, including Federal agencies, trade 
associations, as well as financial and commercial investment 
institutions. With the exception of one bank, all commentators endorsed 
the concept of a certificateless security.
    The grouping and identification of the comments received have been 
made on a section-by-section basis, with an explanation of the action 
taken with respect thereto. As circumstances necessitated the 
publication of the rule in two segments, in order to make each part more 
understandable, certain definitions, such as those for ``Department'' 
and ``securities'', have appeared in the proposed rule for both Legacy 
Treasury Direct[supreg] and TRADES, and were slightly modified in the 
proposed rules on TRADES. Because these modifications represent non-
substantive clarifications, and to avoid confusion as between the two 
portions of the rules, the definitions as used in TRADES have been 
adopted.

                       Section-By-Section Analysis

                      Section 357.21 Registration.

    The forms of registrations provided for securities to be held in 
Legacy Treasury Direct have different legal effect from those currently 
provided for in the case of definitive Treasury securities and for the 
Treasury's book-entry Treasury bill system. A comment was received that, 
as a result, this could lead to some confusion, and that the Treasury 
bill forms of recordation currently offered should be changed, 
particularly since Treasury bills will be phased into Legacy Treasury 
Direct gradually. The Bureau believes that

[[Page 422]]

the benefits of uniformity of rights and interests that Legacy Treasury 
Direct investors will derive far outweigh any possible confusion. As for 
confusion with the current Treasury bill book-entry system, given the 
fact that Treasury bills have a term of not more than a year, it is 
believed that the problem, if any, will be short-lived.
    Given the importance of the change that Legacy Treasury Direct 
provides as to registration, the discussion thereof that accompanied the 
Notice of Proposed Rulemaking is re-published below.
    ``Forms of Registration. The proposed rule provides the investor 
with a variety of registration options. They are essentially similar to 
those provided for registered, definitive marketable Treasury 
securities. Investors should be particularly aware that, where the 
security is held in the names of two individuals, the registration 
chosen may establish rights of survivorship.
    ``The reason for establishing the rights of ownership for securities 
held in Legacy Treasury Direct is that it will give investors the 
assurance that the forms of registration they select will establish 
conclusively the rights to their book-entry securities. It will also 
serve to eliminate some of the uncertainties, as well as possible 
conflicts, between the varying laws of the several States.
    ``A Federal rule of ownership is being adopted by the Treasury for 
Legacy Treasury Direct securities. This regulatory approach is 
consistent with the one previously taken in the case of United States 
Savings Bonds. It will have the effect of overriding inconsistent State 
laws. See, Free v. Bland, 369 U.S. 663 (1962).
    ``In the case of individuals (who are likely to be by far the 
majority of holders of securities in Legacy Treasury Direct), the 
options offered will permit virtually all the preferred forms of 
ownership. At the investor's option, it will be possible to provide for 
the disposition of the securities upon death through rights of 
survivorship.
    ``Coownership registration. One option is the coownership form of 
registration, i.e., ``A or B.'' Unlike the current Treasury bill book-
entry system being administered by the Bureau of the Public Debt, a 
security held in Legacy Treasury Direct registered in this form will be 
transferable upon the written request of either coowner. Other changes 
in the account may also be made upon the request of either party. While 
this form of registration will facilitate the receipt of payments and 
provide ease in conducting transactions, care should obviously be 
exercised in designating a coowner.
    ``Joint ownership. For those who would prefer to have the 
transferability of a security held in two names contingent upon the 
request of both, the joint form of registration will be appropriate. 
This form of registration, i.e., ``A and B, with [without] the right of 
survivorship,'' will require the agreement of both parties to conduct 
any authorized transaction.
    ``Beneficiary form. The beneficiary form, i.e., ``A payable on death 
to (POD) B,'' will permit the owner to have sole control of the account 
during his/her lifetime, but in the event of death, the account will 
pass by right of survivorship to the beneficiary.''
    One commentator questioned the ``natural guardian'' and ``voluntary 
guardian'' forms of registration provided in the regulations, pointing 
out that financial institutions are reluctant to establish an account in 
the name of a natural guardian of a minor because of the uncertainties 
as to who might be entitled to the funds on the death of the natural 
guardian or minor, or when the minor reached majority. It was mentioned 
that a bank would be reluctant to open an account in the name of a 
voluntary guardian, or to release funds from an existing account to a 
voluntary guardian because of the potential risk in the event of a claim 
from a court-appointed guardian. It seems apparent that the comment was 
prompted by the provision that appeared in the proposed rule that the 
account held in Legacy Treasury Direct and the deposit account to which 
payments are to be directed should be in the same form. As hereafter 
pointed out in the discussion under the payment section, this is not a 
requirement.
    While parents are universally recognized as the natural guardians of 
the person of minors, they have generally not been recognized as 
entitled to control the estates of these minors, except perhaps in the 
case of small amounts. Traditionally, the guardian of the estate of a 
minor involves judicial appointment and supervision. In order to provide 
a means of dealing with the problem of disposing of securities 
inadvertently registered in the name of minors without requiring the 
appointment of a legal guardian and to provide a means for investing 
funds of a minor, which did not technically qualify for investment under 
the Uniform Gifts to Minors Act, the Department decided to provide 
recognition for natural guardians.
    The voluntary guardianship procedure is wholly a creature of the 
Department's regulations. It was established in recognition of the 
burden placed on an incompetent's estate and his/her family by requiring 
the appointment of a legal guardian to receive the interest on, or to 
redeem securities for, the account of an individual who has become 
incompetent, at least where the incompetent's estate is relatively 
modest. This form of registration is not available on original issue and 
is limited to an aggregate of $20,000 (par amount) of Legacy Treasury 
Direct securities. The $20,000 limit in connection with the use of the 
voluntary guardianship procedure

[[Page 423]]

is in keeping with the limits used in connection with the summary 
administration of decedents' estates under the laws of many States.

                  Section 357.23 Judicial proceedings.

    No comments were received regarding the provisions on judicial 
proceedings. Given their importance, the discussion that accompanied the 
publication thereof in proposed form is included here.
    Judicial proceedings. Under the principle of sovereign immunity, 
neither the Department nor a Federal Reserve Bank, acting as fiscal 
agent of the United States, will recognize a court order that attempts 
to restrain or enjoin the Department or a Federal Reserve Bank from 
making payment on a security or from disposing of a security in 
accordance with instructions of the owner as shown on the Department's 
records.
    ``The Department will recognize a final court order affecting 
ownership rights in Legacy Treasury Direct securities provided that the 
order is consistent with the provisions of subpart C and the terms and 
conditions of the security, and the appropriate evidence, as described 
in Sec. 357.23(c), is supplied to the Department. For example, the 
Department may recognize final orders arising from divorce or 
dissolution of marriage, creditor or probate proceedings, or cases 
involving application of a State slayer's act. The Department will also 
recognize a transaction request submitted by a person appointed by a 
court and having authority under an order of a court to dispose of the 
security or payment with respect thereto, provided conditions similar to 
those above are met.''

                   Section 357.25 Security interests.

    Legacy Treasury Direct is not designed to reflect or handle the 
various types of security interests that may arise in connection with a 
Treasury bond, note or bill. However, the Treasury has from time to time 
and to a limited extent held in safekeeping, for such agencies as the 
Customs Service and Immigration and Naturalization Service, Treasury 
securities submitted in lieu of surety bonds in accordance with 31 
U.S.C. 9303. While the Federal Reserve Banks handle the majority of such 
pledges and will continue to do so, as this statute requires the 
Treasury to accept these Government obligations so pledged, a provision 
has been added for accepting and holding book-entry securities submitted 
for such purposes.

                        Section 357.26 Payments.

    (a) General. Most comments focused on the provisions on payments. A 
key feature of Legacy Treasury Direct will be the making of payments by 
the direct deposit method (also known as the electronic funds transfer 
or ACH method). Checks will be issued only under extraordinary 
circumstances. A number of comments endorsed the concept of payment by 
direct deposit as an improvement given the difficulties associated with 
checks.
    One comment expressed concern as to who would have the burden of 
resolving errors in cases where a receiving financial institution fails 
to properly credit a payment. The Department has concluded that while 
the direct deposit payment method is not without risks, it is far 
superior to the use of checks, in terms of the risks, potential losses, 
and costs. In a case where a receiving institution fails to act in 
accordance with the instructions given it, the Bureau intends to use its 
best efforts to assist investors in rectifying the error.
    (b) Direct deposit. A number of comments expressed the view that the 
Legacy Treasury Direct payment system should adopt either the rules 
governing the direct deposit of Government payments (31 CFR part 210), 
or the rules of the National Automated Clearing House Association 
(``NACHA Rules''), but not separate rules. The final rules have adopted 
some of the existing practices applicable to commercial ACH payments, 
but it is not possible for the Department of the Treasury to conform to 
all of these rules. For example, the Treasury has no authority to 
indemnify recipients of direct deposit payments, although such 
indemnification by a sender is contemplated in the NACHA rules and was 
advocated in several comments. It should also be noted that the rules 
applicable to Legacy Treasury Direct payments are modeled, to some 
extent, on the rules for Government direct deposit payments in order to 
take advantage of the large number of entities that are a part of the 
Government direct deposit network. See the discussion under paragraph 
(b)(2). Where there are unique rules applicable to Legacy Treasury 
Direct, however, they are explained here.
    Given the variance between the procedures set out in the proposed 
rules and existing practice, and the increased burdens resulting 
therefrom, several clearing house associations and financial 
institutions requested that the implementation of Legacy Treasury Direct 
be delayed from July 1986 to July 1987. The Treasury is satisfied that 
the added burdens that would have been imposed on financial institutions 
to receive Legacy Treasury Direct payments under the proposed rules have 
been effectively eliminated in the final rule. Thus, Treasury plans to 
implement the system on or about the original target date. The final 
rules are being published, however, in advance of actual implementation 
so as to give financial institutions an opportunity to make whatever 
remaining, minor procedural changes as may be necessary.
    (b)(1) Information on deposit account at financial institution. The 
proposed regulations

[[Page 424]]

provided that the owner of a security in Legacy Treasury Direct, or in 
the case of ownership by two individuals, the first-named owner, must be 
an owner of, and so designated, on the account at the receiving 
financial institution. The regulations also provided that in any case in 
which a security is held jointly or with right of survivorship, the 
account at the financial institution should be established in a form 
that assures that the rights of each joint owner or survivor will be 
preserved.
    The rule requiring the naming of the first-named owner on the 
receiving financial institution account was based on tax reporting 
considerations. It has now been determined that the first-named security 
owner need not be named on the receiving deposit account.
    The rule relating to establishment of the receiving account in joint 
ownership cases in the same form as the registration of the security was 
intended to be a notice to investors of a potential problem, rather than 
a requirement. In cases where an investor intends a beneficiary, joint 
owner or coowner to receive securities after the investor's death, this 
intention may be defeated if the recipient is not also named on the 
receiving deposit account. It is up to the investor to examine his or 
her particular circumstances and determine whether the form in which the 
deposit account will be held is satisfactory. This matter has been 
clarified in paragraph (b)(1)(v) of the final rule. Except for the 
restriction described in paragraph (b)(1)(ii) (see below), the Treasury 
does not intend to establish any limitations on how the receiving 
deposit account is held.
    Several comments addressed the issue of the registration of the 
security versus the title of the deposit account. Two comments pointed 
out that if the deposit account must be in the same form as the 
registration of the security, then existing traditional forms of 
ownership for bank accounts, which do not include all the forms of 
registration for securities held in Legacy Treasury Direct, would not 
suffice. Concerns were also expressed that with multiple forms of 
ownership, financial institutions could become involved in disputes with 
investors. As noted above, there is no requirement that the Legacy 
Treasury Direct account and the deposit account be identical. The 
responsibility to choose the title of the deposit account rests with the 
investor.
    Another comment objected to the rule that the first-named security 
owner be named on the receiving deposit account because the rule would 
eliminate the possibility of payment to an account at a financial 
institution in the name of a mutual fund, security dealer, or insurance 
company. Although the change in the tax reporting rule described above 
permits payment to such accounts, as well as to trust accounts, since it 
appears that there is a question as to the capability of some receiving 
institutions to handle such payments, investors are strongly urged to 
consult their financial institution before requesting such payment 
arrangements. See paragraph (b)(1)(iii).
    It should be emphasized that any payments that must be made by check 
will be made in the form in which the Legacy Treasury Direct account is 
held, which may be different than the form of the deposit account. 
Investors should be aware that this may result in checks being issued, 
and thus payment being made, in a form different than they intended the 
direct deposit payments to be made. For example, if Investor A purchases 
a security in his or her name alone with instructions that payments be 
directed to a financial institution for the account of a money market 
fund, any checks that must be issued will be drawn in the name of 
Investor A. This could happen if Investor A furnishes erroneous payment 
instructions and the problem cannot be resolved before a payment date, 
in which case a check would be issued.
    The one restriction on the form of the deposit account that appears 
in paragraph (b)(1)(ii) of the final regulations is a rule that where 
the Legacy Treasury Direct account is in the name of individual(s), and 
the receiving deposit account is also in the name of individual(s), one 
of the individuals on the Legacy Treasury Direct account must be named 
on the deposit account. This rule is intended to provide a means to 
determine the disposition of the payment, if necessary. The Treasury 
does not expect financial institutions to monitor this rule.
    Provision has been made in paragraph (b)(1)(vii) to permit financial 
institutions to request ``mass changes'' of deposit account numbers 
without the submission of individual requests from investors to Legacy 
Treasury Direct. This procedure is intended for use where an institution 
changes all or an entire group of its account numbers, typically as a 
result of an organizational change. Legacy Treasury Direct will honor 
requests from a financial institution to change deposit account numbers 
under such circumstances, with the understanding that the institution 
agrees to indemnify the Treasury and the security owners for any losses 
resulting from errors made by the institution. If the institutions does 
not wish to use the ``mass change'' procedure, then the change in 
account number must be requested by the investor, using the authorized 
transaction request form. See Sec. 357.28.
    Some institutions voiced concern in general about investor errors in 
furnishing the Legacy Treasury Direct a deposit account number and the 
financial institution's routing number. Although the Treasury plans to 
provide as much assistance to investors as possible, the investor must 
bear the responsibility for securing accurate payment information. 
Investors are urged to consult with

[[Page 425]]

their receiving institution to verify the accuracy of the payment 
information, since neither the Treasury nor the receiving financial 
institution would be responsible for payment errors resulting from 
erroneous information provided by investors.
    The proposed rule provided in Sec. 357.26(b)(1)(iii) that the 
designation of a financial institution by a security owner to receive 
payments from Legacy Treasury Direct would constitute the appointment of 
the financial institution as agent for the owner for the receipt of 
payments. The crediting of a payment to the financial institution for 
deposit to the owner's account, in accordance with the owner's 
instructions, would discharge the United States of any further 
responsibility for the payment. One comment noted that, in contrast, the 
rule in 31 CFR 210.13 for Federal recurring payments is that the United 
States is not acquitted until the payment is credited to the account of 
the recipient on the books of a financial institution.
    Although, in principle, the same rules should apply to all 
Government payments, the proposed Legacy Treasury Direct rule has been 
retained in the final regulations on the basis of the major differences 
in the procedures to be used in Legacy Treasury Direct. Most 
significantly, the Treasury will not be securing any written 
verification (i.e., an enrollment form) from a financial institution as 
to the accuracy of the deposit account number and other payment 
information, as is now the practice in the case of payments under 31 CFR 
part 210. Under these circumstances, the Treasury cannot, in effect, 
guarantee that a payment will be credited by a financial institution to 
the correct account. It should also be noted that this rule on 
acquittance of the United States is consistent with the provision in 
Sec. 357.10(c) of the proposed regulations on TRADES. In practice, 
however, the Treasury plans to participate actively in seeking to locate 
and recover any payments that have been misdirected.
    (b)(2) Agreement of financial institution. The proposed rule 
provided, in Sec. 357.26(b)(2), that a financial institution which has 
agreed to accept payments under 31 CFR part 210 shall be deemed to have 
agreed to accept payments from Legacy Treasury Direct. The rule further 
provided that an institution could not be designated to receive Legacy 
Treasury Direct payments unless it had agreed to accept direct deposit 
payments under 31 CFR part 210.
    One financial institution commented that a receiving institution 
that has already agreed to accept part 210 payments should have the 
choice as to whether to accept payments from Legacy Treasury Direct. The 
basis for this comment was the perception that the receipt of Legacy 
Treasury Direct payments would require the implementation of special 
procedures by the financial institution and expose it to additional 
risks. As explained earlier, the Treasury has significantly modified the 
procedures and reduced the requirements imposed upon a financial 
institution in order to receive Legacy Treasury Direct payments, and 
decreased as well the risks an institution will incur in the receipt of 
such payments. Thus, the proposed rule on eligibility of receiving 
institutions has been retained in the final rule in essentially the same 
form.
    Two other comments were made to the effect that the category of 
institutions receiving payments should be broadened. In deciding to 
authorize payments to all institutions receiving part 210 payments, the 
Treasury considered the fact that many more institutions are designated 
endpoints for Government (direct deposit) payments than for commercial 
ACH payments. In order to afford investors the widest choice of 
recipient institutions, all institutions that had agreed to accept part 
210 payments were designated as authorized recipients. Treasury has now 
broadened the rule further to also authorize those financial 
institutions that are willing to agree to accept part 210 payments in 
the future. This rule will permit investors to designate institutions 
that are not now receiving Government direct deposit payments as the 
recipients of their Legacy Treasury Direct payments if the institutions 
make appropriate arrangements with the Federal Reserve Bank of their 
District.
    (b)(3) Pre-notification. A significant feature of the Legacy 
Treasury Direct payment procedure will be the use of a pre-notification 
message sent to the receiving financial institution in advance of the 
first payment. This procedure, already in use for commercial ACH 
payments, alerts the institution that a payment will be made and 
provides an opportunity for verification of the accuracy of the account 
information.
    The proposed regulations provided that the financial institution 
would be required to reject the pre-notification message within four 
calendar days after the date of receipt if the information contained in 
the message did not agree with the records of the institution or if for 
any other reason the institution would not be able to credit the 
payment. The rules also stated that a failure to reject the message 
within the specified time period would be deemed an acceptance of the 
pre-notification and a warranty that the information in the message was 
accurate.
    Because there was some confusion over when the pre-notification 
message woud be sent, the final rules clarify, in paragraph (b)(3)(i), 
that in most cases, this will occur shortly after establishment of a 
Legacy Treasury Direct account. The Treasury has under consideration a 
system change that would permit a second pre-notification to be sent 
closer to the time of the payment if the

[[Page 426]]

first payment is to occur a substantial length of time after account 
establishment.
    One of the items of information contained in a pre-notification 
message is the name the investor has indicated appears on the deposit 
account. Comments were received that existing procedures and software do 
not permit automatic verification of the account name. Although there is 
apparently some variation in practice, and some institutions undertake 
to verify the account name information manually, the Treasury has 
decided to drop the account name verification requirement in the final 
rules. This means that under paragraph (b)(3)(ii), a financial 
institution need only verify the account number and type designations on 
the pre-notification message. However, the Treasury urges institutions 
which are able to verify account names to do so and encourages the 
development of software that would have this capability.
    A number of comments urged that the four-day period provided for an 
institution to reject a pre-notification message be lengthened. After 
consideration of the various alternatives proposed, the Treasury has 
concluded that an eight-day period will meet the needs of most 
institutions. See paragraph (b)(3)(ii) of the final rule. In responding 
to a pre-notification message, an institution may use the NACHA's 
``notification of change'' procedure, standardized automated rejection 
codes, or any other similar standard procedure. Upon receipt of such 
notification, the Treasury will either make the necessary changes in the 
Legacy Treasury Direct account or contact the investor, depending on the 
circumstances.
    One commentator objected to the warranty by the receiving 
institution as to the accuracy of the pre-notification information, 
particularly in view of the manual verification or changes in procedures 
that would be required, and the resulting possibility of error. As 
previously noted, the requirement to verify an account name has been 
eliminated. In addition, language has been added to make it clear that 
the verification is limited to the time of pre-notification. The 
Treasury is of the view that the warranty is a useful concept in 
encouraging institutions to respond to pre-notification messages and 
will benefit all concerned by increasing the likelihood that payments 
will be made accurately and to the appropriate party.
    (b)(5) Responsibility of financial institution. The proposed 
regulations provided, in Sec. 357.26(b)(5)(ii), that a financial 
institution that receives a Legacy Treasury Direct payment on behalf of 
a customer would be required to promptly notify the Treasury when it has 
made a change in the status or ownership of the customer's deposit 
account, such as the deletion of the first-named owner of the security 
from the title of the account, or when the institution is on notice of 
the death or incompetency of the owner of the deposit account.
    Several financial institutions objected to this requirement on the 
grounds that it would be burdensome and would require the development of 
new procedures to monitor the changes in deposit accounts. Specifically, 
several institutions indicated they would be unable to relate the 
receipt of Legacy Treasury Direct payments, which would be handled in a 
centralized area of the institution, to the changes being made in a 
deposit account, which are handled in another operational area of the 
institution. These institutions said they would not necessarily be aware 
of who is the first-named owner of the security in Legacy Treasury 
Direct, and that more responsibility should be placed on the security 
owner in reporting changes.
    In response to these comments, the Treasury has narrowed the 
notification rule, in paragraph (b)(5)(ii) of the final rule, to require 
a financial institution to notify Legacy Treasury Direct only in cases 
where it is on notice of the death or legal incapacity of an individual 
named on the deposit account, or where it is on notice of the 
dissolution of a corporation named in the deposit account. Upon receipt 
of notice by the area of the institution that receives credit payments, 
the institution will be required to return any Legacy Treasury Direct 
payments received thereafter.
    (b)(6) Payments in error/duplicate payments. The proposed 
regulations, in Sec. 357.26(b)(6), set out rules describing the 
procedure that would be followed in cases where the Treasury or a 
Federal Reserve Bank has made a duplicate payment or a payment in error. 
First, the financial institution to which the payment was directed would 
be provided with a notice asking for the return of the amount of the 
payment remaining in the deposit account. If the financial institution 
were unable to return any part of the payment, it would be required to 
notify the Treasury or its Federal Reserve Bank, and provide the names 
and addresses of the persons who withdrew funds from the deposit account 
after the date of the duplicate payment or the payment in error. If the 
financial institution did not respond to the notice within 30 days, the 
financial institution's account at its Federal Reserve Bank could be 
debited in the amount of the duplicate or improper payment.
    Several institutions raised objections about various aspects of the 
above procedures. One stated that 30 days was an insufficient time to 
respond and urged conformity with the rules in 31 CFR part 210 
permitting a 60-day response time. Some objected to furnishing 
information about the persons who withdrew money from an account. 
Several objected in principle to the provision authorizing the debiting 
of their accounts. Several

[[Page 427]]

comments indicated that if a payment is returned by a financial 
institution using an automated payment reversal procedure, then only the 
full amount of the payment (not a partial amount) can be reversed.
    In the final rule, the Treasury has clarified the procedures. The 
requirement to provide the names of persons who withdrew funds from an 
account has been changed. In paragraph (b)(6)(i), financial institutions 
are asked to provide only such information as they have about the 
matter. The debiting of an institution's account at a Federal Reserve 
Bank is intended to be simply a last resort if the institution fails 
totally to respond to the notice of a duplicate payment or payment made 
in error. See paragraph (b)(6)(iii). The time provided for response to 
this notice has been lengthened to 60 days.
    The final rule has also been clarified in paragraph (b)(6)(i) to 
provide that the amount that should be returned is an amount equal to 
the payment. The Treasury reserves the right, however, to request the 
return by other than automated means of a partial amount of a payment 
made in error. It is anticipated that such a procedure would occur only 
if the notice of a payment made in error is not issued immediately after 
the payment was made.
    (d) Handling of payments by Federal Reserve Banks. Some of the 
comments raised a question about the liability of the Federal Reserve 
Banks in making payments. The proposed rule, in Sec. 357.26(d)(2), 
provided that each Federal Reserve Bank would be responsible only to the 
Department and would not be liable to any other party for any loss 
resulting from its handling of payments. This rule was taken from the 
existing regulations in 31 CFR part 210 (see Sec. 210.3(f)), and is 
simply a restatement of existing law.
    In making payments, the Federal Reserve Banks are acting in the 
capacity as fiscal agents of the United States, pursuant to 12 U.S.C. 
391. They are not acting in an individual (banking) capacity. If a 
Federal Reserve Bank misdirects a payment contrary to instructions 
provided by the investor, the United States, as principal, may remain 
liable to the investor for the payment. The United States could seek to 
recover any loss from its agent, the Fedeal Reserve Bank. However, 
because the proposed rule simply stated a legal conclusion and tended to 
create the impression that the rule was broader than intended, it has 
been omitted from the final regulations.

                 Section 357.31 Certifying individuals.

    For clarity, the warranties which accompany the use of a ``Signature 
guaranteed'' stamp have been set out.

             Section 357.42 Preservation of existing rights.

    This section has been deleted. The same subject-matter will be 
covered in Sec. 357.1, as finally adopted.

    Section 357.43 Liability of Department and Federal Reserve Banks.

    This section was published as Sec. 357.42 in the notice of proposed 
rulemaking for TRADES. The final version will be published after all the 
comments on the rulemaking for TRADES have been reviewed and considered.

          Section 357.46 Supplements, amendments, or revisions.

    Provision for ``charges and fees for services and maintenance of 
book-entry Treasury securities'' has been added in the event 
circumstances should dictate their imposition.

[51 FR 18260, May 16, 1986; 51 FR 18884, May 23, 1986]

                Appendix B to Part 357--TRADES Commentary

                              Introduction

    The adoption of regulations for the Treasury/Reserve Automated Debt 
Entry System (``TRADES'') is the culmination of a multi-year Treasury 
process of moving from issuing securities only in definitive (physical/
certificated/paper) form to issuing securities exclusively in book-entry 
form. The TRADES regulations provide the legal framework for all 
commercially-maintained Treasury book-entry securities. For a more 
detailed explanation of the procedural and legal development of book-
entry and the TRADES regulations, see the preamble to the rule proposed 
March 4, 1996 (61 FR 8420), as well as the earlier proposals cited 
therein 51 FR 8846 (March 14, 1986); 51 FR 43027 (November 28, 1986); 57 
FR 12244 (April 9, 1992).

             Comparison of TRADES and Legacy Treasury Direct

    A person may hold interests in Treasury book-entry securities either 
in TRADES \1\ or Legacy Treasury Direct. The following summarizes the 
major differences between the two systems.
---------------------------------------------------------------------------

    \1\ In TRADES a Person's interest in a Treasury book-entry security 
is a Security Entitlement, as described in TRADES. A Participant's 
interest in a marketable Treasury book-entry security also is a Security 
Entitlement. A Participant's Security Entitlement is different than a 
Security Entitlement as described in Revised Article 8, with respect to 
the Participant's rights against the issuer. A non-Participant's 
Security Entitlement is described in Revised Article 8.

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[[Page 428]]

    Persons holding Treasury book-entry securities in TRADES hold their 
interests in such securities in a tiered system of ownership accounts. 
In TRADES, Treasury, through its fiscal agents, the Federal Reserve 
Banks, recognizes the identity only of Participants (persons with a 
direct account relationship with a Federal Reserve Bank). While 
Participants may be beneficial owners of interests in Treasury book-
entry securities, there are many beneficial owners of such interests 
that are not Participants. Such beneficial owners hold their interests 
through one or more Securities Intermediaries such as banks, brokerage 
firms or securities clearing organizations.
    In TRADES, the rights of non-Participant beneficial owners may be 
exercised only through their Securities Intermediaries. Neither Treasury 
nor the Federal Reserve Banks have any obligation to a non-Participant 
beneficial owner of an interest in a Treasury book-entry security. Two 
examples illustrate this principle. First, except where a pledge has 
been recorded directly on the books of a Federal Reserve Bank pursuant 
to Sec. 357.12(c)(1), Federal Reserve Banks, as Treasury's fiscal 
agents, will act only on instructions of the Participant in whose 
Securities Account the Treasury book-entry security is maintained in 
recording transfers of an interest in a Treasury book-entry security. A 
beneficial owner of the interest that is a non-Participant has no 
ability to direct a transfer on the books of a Federal Reserve Bank. 
Second, Treasury discharges its payment obligation with respect to a 
Treasury book-entry security when payment is credited to a Participant's 
account or paid in accordance with the Participant's instructions. 
Neither Treasury nor a Federal Reserve Bank has any payment obligation 
to a non-Participant beneficial owner of an interest in a Treasury book-
entry security. A non-Participant beneficial owner receives its payment 
when its Securities Intermediary credits the owner's account.
    Persons holding Treasury book-entry securities in Legacy Treasury 
Direct, on the other hand, hold their securities accounts on records 
maintained by Treasury through its fiscal agents, the Federal Reserve 
Banks. The primary characteristic of Legacy Treasury Direct is a direct 
account relationship between the beneficial owner of a Treasury book-
entry security and Treasury. In Legacy Treasury Direct, Treasury 
discharges its payment obligation when payment is credited to the 
depository institution specified by the beneficial owner of the Treasury 
book-entry security, paid directly to the beneficial owner by check, or 
paid in accordance with the beneficial owner's instructions. Unlike 
TRADES, Legacy Treasury Direct does not provide a mechanism for the 
exchange of cash to settle a secondary market transaction, nor are 
pledges of Treasury book-entry securities held in Legacy Treasury Direct 
generally recognized. Accordingly, Legacy Treasury Direct is suited for 
persons who plan to hold their Treasury securities until maturity, and 
provides an alternative for investors who are concerned about holding 
securities through intermediaries and who do not wish to hold their 
interests in Treasury securities indirectly in TRADES.

                           Scope of Regulation

    Just as the scope of Revised Article 8 is limited,\2\ the scope of 
this regulation is limited. It is not a comprehensive codification of 
the law governing securities, transactions in securities or the law of 
contracts for the purchase or sale of securities. Similarly, it is not a 
codification of all laws that could affect a person's interest in a 
Treasury book-entry security. For example, state laws regarding divorce 
or intestate succession could well affect which persons have rights in 
the interest in a Treasury book-entry security. Moreover, the 
regulations deal with certain aspects of transactions in Treasury 
securities, such as perfection of a security interest and its effects 
and not other aspects, such as the contractual relationship between a 
debtor and its secured party, which are left to applicable law \3\. See 
the discussion under Sec. 357.10 of the Section-by-Section Analysis.
---------------------------------------------------------------------------

    \2\ U.C.C. Revised Article 8, Prefatory Note at 12.
    \3\ The regulations in 31 CFR 306.118(b), which are being supplanted 
by TRADES, state that ``applicable law'' covers how a transfer or pledge 
is ``effected'' as well as perfected. Except with respect to security 
interests marked on the books of a Federal Reserve Bank, TRADES does not 
address how a security interest in a Treasury book-entry security is 
created or what law governs the creation of a security interest. Section 
357.11(a) of TRADES, which establishes the choice of law for interests 
other than those covered by Sec. 357.10, addresses the choice of law 
with respect to the perfection, effect of perfection or non-perfection, 
and priority of security interests, but does not address the law 
governing creation or attachment of a security interest. This is 
consistent with the scope and choice of law provisions of Revised 
Article 8.
---------------------------------------------------------------------------

                       Section-by-Section Analysis

                 Section 357.0 Dual book-entry systems.

    Section 357.0 sets forth that Treasury provides two systems for 
maintaining Treasury book-entry securities--TRADES and Legacy Treasury 
Direct. Subpart A of part 357 of 31 CFR contains general information 
about TRADES and Legacy Treasury Direct. Subpart B contains the TRADES 
regulations.

[[Page 429]]

Subpart C contains the Legacy Treasury Direct regulations. Subpart D 
contains miscellaneous provisions. Thus, in its totality, part 357 sets 
forth in one place the complete set of governing rules for Treasury 
securities issued in book-entry form.

                      Section 357.1 Effective date.

    Section 357.1 establishes the effective date for TRADES. TRADES 
applies to outstanding securities formerly governed by 31 CFR part 306, 
subpart O. Conforming changes to parts 306, 356, and 358 are being made 
to coincide with the publication of TRADES in final form. Consistent 
with the approach set forth in Revised Article 8 (see Sec. 8-603 and 
the official comment thereto), on and after the effective date these 
regulations will apply to all transactions, including transactions 
commenced prior to the effective date. Revised Article 8, in Section 8-
603, gave secured parties four months after the effective date to take 
action to continue the perfection of their security interests. TRADES, 
through its delayed effectiveness, provides a similar period. In TRADES, 
January 1, 1997, becomes the date by which such actions must be 
completed.
    The effective date for TRADES is January 1, 1997. While TRADES is 
based in large part on Revised Article 8 that has received widespread 
attention in the financial community and already has been adopted in 28 
states,\4\ Treasury has determined that TRADES will be effective on 
January 1, 1997, to ensure a smooth transition to TRADES. In making that 
determination, Treasury has taken into account the time required by 
other Government-Sponsored Enterprises (GSEs) to promulgate similar 
regulations for their securities. Such an effective date, when combined 
with TRADES having been published in proposed form with a 60-day comment 
period, should provide sufficient time for an orderly transition to the 
new TRADES rules.
---------------------------------------------------------------------------

    \4\ As of August 1, 1996, those states are: Alabama, Alaska, 
Arizona, Arkansas, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, 
Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, 
Nebraska, New Mexico, Oklahoma, Oregon, Pennsylvania, Texas, Utah, 
Vermont, Virginia, Washington, West Virginia and Wyoming. See discussion 
accompanying footnote 11.
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                       Section 357.2 Definitions.

    Section 357.2 contains definitions for use in subparts B and C. 
While most of the definitions are straightforward, four terms--
Participant, Entitlement Holder, Security Entitlement and Securities 
Intermediary--are critical to an understanding of the proposed TRADES 
regulations.
    (a) Participant. A Participant is a person that has a securities 
account relationship in its name with a Federal Reserve Bank. 
Accordingly, the Federal Reserve Bank and Treasury know both the 
identity of the persons maintaining these accounts and the Treasury 
book-entry securities held in these accounts.
    (b) Securities Intermediary. Securities Intermediaries are persons 
(other than individuals, except as described below) that are in the 
business of holding interests in Treasury book-entry securities for 
others. Participants can be, and usually are, Securities Intermediaries.
    In addition, entities such as clearing corporations, banks, brokers 
and dealers can be Securities Intermediaries in a single chain of 
ownership of a Treasury security. An individual, unless registered as a 
broker or dealer under the federal securities laws, cannot be a 
Securities Intermediary. As an illustration of a possible chain of 
ownership, in the following chart, the Federal Reserve Bank, Participant 
and Broker-Dealer are all Securities Intermediaries.

                                Treasury
 
                          Federal Reserve Bank
                                [verbar]
                               Participant
                                [verbar]
                              Broker-Dealer
                                [verbar]
                            Individual Holder
 

    (c) Entitlement Holder. An Entitlement Holder is any person for whom 
a Securities Intermediary holds an interest in a Treasury book-entry 
security. In the above example Individual Holder, Broker-Dealer and 
Participant are all Entitlement Holders. Thus, a person can be both a 
Securities Intermediary and an Entitlement Holder. See also the 
commentary on ``Security Entitlement.''
    (d) Security Entitlement. A Security Entitlement is the interest 
that an Entitlement Holder has in a Treasury book-entry security. In the 
example, Participant, Broker-Dealer and Individual Holder all hold 
Security Entitlements. The rights and property interests associated with 
a Security Entitlement of a Participant held on the books of a Federal 
Reserve Bank (``Participant's Security Entitlement'') are, however, 
different from the rights and property interests associated with other 
Security Entitlements. As provided in Sec. 357.10(a), Federal law 
defines the scope and nature of a Participant's Security Entitlement. 
While TRADES is based in large part on Revised Article 8, the meaning of 
Security Entitlement under federal law is different than under Revised 
Article 8. For example, Participants have a direct claim against the 
United States for interest and principal even though, under state law, 
an Entitlement Holder would only have a claim against its Securities 
Intermediary for such

[[Page 430]]

payment. To the extent not inconsistent with this regulation, the scope 
and nature of a Security Entitlement of an Entitlement Holder below the 
level of a Participant, (Broker-dealer and Individual Holder in the 
example above), is defined by applicable state law, as determined 
pursuant to Sec. 357.11. It should also be noted that while a 
Participant's rights have Federal law components under Sec. 357.10(a), 
the nature of a Security Entitlement held by a lower tier intermediary 
on the books of a Participant is determined pursuant to applicable law 
as provided in Sec. 357.11.

    Section 357.10 Law governing the United States and Reserve Banks.

    Section 357.10(a) provides that the rights and obligations of the 
United States and the Federal Reserve Banks (with one exception detailed 
below), with respect to both the TRADES system and Treasury book-entry 
securities maintained in TRADES are governed solely and exclusively by 
Federal law. Thus, claims against the United States and Federal Reserve 
Banks of both Participants and all other persons with an interest (or 
claiming an interest) in a Treasury book-entry security maintained in 
TRADES are governed by Federal law. Federal law is defined to include 
TRADES, the offering circulars pursuant to which the Treasury securities 
are sold, the offering announcements and Federal Reserve Bank Operating 
Circulars.\5\ Prior to March 1, 1993, the terms of each offering of 
Treasury securities, except for Treasury bills were set forth in an 
offering circular published in the Federal Register.\6\ Since March 1, 
1993, all Treasury book-entry securities have been offered pursuant to a 
uniform offering circular set forth at 31 CFR part 356.
---------------------------------------------------------------------------

    \5\ A ``Federal Reserve Bank Operating Circular'' is defined in 
Sec. 357.2 as the publication issued by each Federal Reserve Bank that 
sets forth the terms and conditions under which the Reserve Bank 
maintains Book-entry Securities Accounts and transfers Book-entry 
Securities.
    \6\ Treasury bills were issued pursuant to one master offering 
circular (31 CFR part 349, removed, and replaced by 31 CFR part 356) 
effective March 1, 1993. (58 FR 412)
---------------------------------------------------------------------------

    While TRADES is based in large measure on Revised Article 8, a 
fundamental principle of these regulations (and a divergence from 
Revised Article 8) is that the obligations of the issuer (the United 
States) and the Federal Reserve Banks, as well as all claims with 
respect to TRADES or a Treasury book-entry security against Treasury or 
a Federal Reserve Bank, are governed solely by Federal law. Thus, for 
example, those parts of Revised Article 8 that detail obligations of 
issuers (or their agents) of securities are not applicable to either the 
United States or Federal Reserve Banks.\7\ In addition, neither the 
United States nor Federal Reserve Banks have any obligations to persons 
holding their interests in a Treasury book-entry security at levels 
below the level of a Participant or to any other person claiming an 
interest in a Treasury book-entry security (with the limited exception 
set out in Sec. 357.12(c)(1)). Thus, there are no derivative rights 
against either the United States or the Federal Reserve Banks.
---------------------------------------------------------------------------

    \7\ The regulations in subpart C of this part set out other 
obligations of the United States and the Federal Reserve Banks for 
securities held in Legacy Treasury Direct. These regulations preempt 
applicable state law.
---------------------------------------------------------------------------

    In interpreting this section, it is important to note that the scope 
of TRADES, like that of Revised Article 8, is limited. Accordingly, the 
governing law set forth in Sec. 357.10(a) is applicable only to the 
matters set forth in Sec. 357.10(a). Other laws remain applicable and 
could affect the holders of book-entry securities.
    For example, the tax treatment of Securities Entitlements is outside 
the scope of TRADES and other law (the Federal income tax code) is 
applicable in determining such tax treatment. Similarly, nothing in 
Sec. 357.10(a) limits the applicability of other laws to matters such 
as whether the activities of Participants or Securities Intermediaries 
with respect to interests in Treasury book-entry securities are subject 
to banking or securities laws.
    While TRADES in Sec. 357.10(a) defines what law governs the 
contract between the United States, as issuer, and the holder of a 
Security Entitlement, it is not a complete statement of the contract law 
applicable to the United States or Federal Reserve Banks. For example, 
if a Participant obtains a discount window loan from a Federal Reserve 
Bank and agrees to pledge collateral, including Treasury book-entry 
securities, to the Federal Reserve Bank as security for the loan, Sec. 
357.10(a) does not establish the law for determining the validity or 
enforceability of the contract or the law applicable to the creation and 
perfection of security interests in property that is not a Treasury 
book-entry security. Section 357.10(a) does provide the law applicable 
for how a security interest in Treasury book-entry securities is 
perfected, the priority of such interest and, if Sec. 357.12(c)(1) is 
applicable, how such security interest is created. Similarly, nothing in 
Sec. 357.10(a) affects the continuing applicability or enforceability 
of Federal Reserve Bank operating circulars such as the circular setting 
forth provisions regarding electronic access to services provided by 
Federal Reserve

[[Page 431]]

Banks and agreements executed in connection with such circulars.
    The law applicable with respect to interests granted to a Federal 
Reserve Bank depends on the manner in which the security interest is 
granted.
    Where a security interest in favor of a Federal Reserve Bank is 
marked on the books of the Federal Reserve Bank under Section 
357.12(c)(1), Sec. 357.10(a) establishes the applicable law. A security 
interest in favor of a Federal Reserve Bank would be recorded on the 
Federal Reserve Bank's books where, for example, the Federal Reserve 
Bank made a discount window loan to a depository institution and any 
Treasury book-entry securities provided by the depository institution as 
collateral have been deposited to a pledge account on the books of the 
Federal Reserve Bank. For a borrowing depository institution that is not 
a Participant, the book-entry securities used as collateral generally 
would be deposited to the Federal Reserve Bank pledge account by the 
borrowing institution's Securities Intermediary. See Hypothetical 5.
    Section 357.10(b) sets forth law applicable with respect to security 
interests in favor of a Federal Reserve Bank that have not been marked 
on the books of a Federal Reserve Bank. A security interest in the 
Securities Entitlement of a Participant in favor of a Federal Reserve 
Bank that is not marked on the books of the Federal Reserve Bank is 
governed by the law of the state in which the head office of the Federal 
Reserve Bank is located. Such a security interest could arise, for 
example, where the delivery of book-entry securities to the securities 
account of the Participant results in an overdraft in the Participant's 
Funds Account. The extent to which the Federal Reserve Bank has an 
interest in the Participant's book-entry securities to secure the 
overdraft therefore would be determined under the law of the state in 
which the Reserve Bank's head office is located. If the State in which 
the head office of the Federal Reserve Bank is located has not adopted 
Revised Article 8, under Sec. 357.10(c) that State is deemed to have 
adopted Revised Article 8.
    In certain very limited circumstances, a Federal Reserve Bank also 
may have a security interest in the book-entry securities of a non-
Participant that is not marked on the books of the Federal Reserve Bank. 
Section 357.10(b) provides a separate rule for such a security interest, 
which would be governed by the law of the non-Participant's Securities 
Intermediary, as determined under Sec. 357.11. Under Sec.  357.11, the 
perfection, effect of perfection, and priority of a security interest 
created under such an agreement would be governed by the law of the 
Securities Intermediary's jurisdiction, as determined under Sec. 
357.11(b). Under Sec. 357.11(d), if the jurisdiction specified in Sec.  
357.11(b) has not adopted Revised Article 8, jurisdiction would be 
deemed to have adopted Revised Article 8.\8\
---------------------------------------------------------------------------

    \8\ An interest in book-entry securities of a non-Participant that 
is not marked on the books of the Federal Reserve Bank, while uncommon, 
could arise where the Federal Reserve Bank lends to a non-Participant 
depository institution and enters into a triparty agreement with the 
depository institution and its Securities Intermediary rather than 
requiring the deposit of the book-entry securities in a pledge account 
on the books of the Federal Reserve Bank through an instruction given by 
the non-Participant depository institution to its Securities 
Intermediary.
---------------------------------------------------------------------------

    For purposes of applying the state law chosen under the rules of 
Sec. 357.10(b), Federal Reserve Banks are treated as clearing 
corporations. As a result, a security interest in a Securities 
Entitlement of a Participant in favor of a Federal Reserve Bank under 
Sec. 357.12(c)(2) has the same priority as security interests granted 
to other clearing corporations under state law. This is consistent with 
the treatment accorded to Federal Reserve Banks generally under Revised 
Article 8.

              Section 357.11 Law governing other interests.

    (a) Law governing the rights and obligation of Participants and 
third parties. Section 357.11 is a choice of law rule. The substantive 
matters subject to this choice of law rule are set forth in Sec. 
357.11(a). The matters set forth in Sec. 357.11(a) are meant to be 
coextensive with those matters covered by Revised Article 8 with respect 
to a person's interest in a Treasury book-entry security (other than 
those related to a person's relationship to Treasury or a Federal 
Reserve Bank which are governed solely by federal law). For purposes of 
these choice of law rules Participants are Securities Intermediaries.
    Section 357.11(b) adopts Revised Article 8's general choice of law 
rule. Section 357.11(c) sets forth a special choice of law rule with 
respect to security interests perfected automatically or by filing, 
which also is included in Revised Article 8. Generally, the law 
applicable to the Securities Intermediary will govern matters involving 
an interest in a book-entry security held through that intermediary. 
This approach is not followed with respect to perfection of security 
interests automatically or by filing. In those cases, the law of the 
jurisdiction in which the debtor is located is the governing law. Since 
filing systems are based on the location of the debtor, this approach 
should reduce uncertainty and preserve the normal practice of

[[Page 432]]

searching records based on the debtor's location.\9\ The language 
``person creating a security interest'' is used in lieu of the term 
``debtor'' in this provision to avoid any confusion. The word ``debtor'' 
has two meanings in the Uniform Commercial Code and the expression 
``person creating a security interest'' provides clarity with respect to 
who is covered by this section. The term does not refer to a creditor. 
The language ``is located'' is intended to conform to its meaning under 
applicable law, as it may be amended from time to time. See, e.g., 
U.C.C. section 9-103(3)(d). Section 357.11(d) provides for the 
application of Revised Article 8 if the choice of law analysis required 
by Sec. 357.11(b) results in the choice of the law of a State that has 
not yet adopted Revised Article 8. As noted elsewhere, in such a 
situation, the State's law is viewed as if it had adopted Revised 
Article 8. This section also provides that, for purposes of applying 
state law, the Federal Reserve Banks are clearing corporations and 
Participants' interests in book-entry securities are Security 
Entitlements.
---------------------------------------------------------------------------

    \9\ The substantive effect of filing is limited and applies only in 
states which have adopted Revised Article 8. Since the effect of filing 
is a unique state law matter, in this one area, Treasury has determined 
that possible lack of uniformity does not justify altering state law.
---------------------------------------------------------------------------

    (b) Limited scope of Federal preemption. In an earlier TRADES 
proposal Treasury contemplated adopting a comprehensive regulation 
governing the rights of all persons in Treasury book-entry securities 
held in TRADES. Such an approach was proposed because Treasury believed 
that a uniform rule was necessary to preserve the efficiency and 
liquidity of the market for Treasury securities--the most liquid and 
efficient market in the world. Treasury believed then, and believes now, 
that the material rights of a holder in the United States of an interest 
in a Treasury security should not vary solely by virtue of such holder's 
geographic location or the location of the financial institution through 
which it holds its interest in Treasury securities. In light of Revised 
Article 8, Treasury has determined that it is possible to achieve this 
uniformity without developing an independent system of Federal 
commercial law.\10\ The questions inherent in a tiered system of 
ownership have been analyzed, and, in Treasury's view, satisfactorily 
addressed by Revised Article 8.
---------------------------------------------------------------------------

    \10\ As noted previously, the substantive scope of this regulation 
is limited.
---------------------------------------------------------------------------

    As of August 1, 1996, 28 states have adopted Revised Article 8 and 
Treasury understands that it will soon be adopted in additional states. 
As with all uniform laws, the adoption process takes several years. In 
order to assure uniformity, in light of the unavoidable delays in the 
state-by-state adoption process of Revised Article 8, Treasury is 
promulgating regulations with a limited form of preemption. As provided 
in both Sec. Sec. 357.10(c) and 357.11(d), if the choice of law rules 
set forth in TRADES would lead to the application of the law of a State 
that has not yet adopted Revised Article 8, TRADES will apply Revised 
Article 8 (with conforming and miscellaneous amendments to other 
Articles) in the form approved by the ALI and NCCUSL. Treasury expects 
that these provisions will be operative only during the state-by-state 
adoption process and would plan to amend TRADES to delete reference to 
these provisions once the adoption process has been completed.
    While Revised Article 8 is defined to mean the official text of 
Article 8 as approved by the ALI and NCCUSL, Treasury recognizes that 
states may make minor changes in that text when adopting Article 8. 
Treasury has concluded that minor changes should not prevent Revised 
Article 8, as adopted by a state, from being the appropriate law. In 
other words, if a state passes a version of Article 8 that is 
substantially identical to Revised Article 8, reference to Revised 
Article 8 (as defined) would no longer be required. Treasury has 
determined that the versions of Article 8 passed by 50\11\ states that 
have enacted Article 8 meet this standard. Accordingly, Sec. Sec. 
357.10(c) and 357.11(d) would not be applicable if the choice of law 
provisions of TRADES directed a person to one of those states. As 
additional states adopt Revised Article 8, Treasury will provide notice 
in the Federal Register as to whether the enactments are ``substantially 
identical'' to the uniform version for purposes of these regulations and 
on an annual basis, the Commentary will be amended to reflect subsequent 
enactments. This approach represents a significantly reduced form of 
preemption of state law from former versions of TRADES and preserves 
Treasury's preeminent interest in a uniform system of rules applicable 
to all holders of interests in Treasury book-entry securities.
---------------------------------------------------------------------------

    \11\ Alabama, Alaska, Arizona, Arkansas, California, Colorado, 
Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, 
Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, 
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, 
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New 
York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, 
Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Utah, 
Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

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[[Page 433]]

     Section 357.12 Obtaining an interest in a book-entry security.

    (a) Creation of a Participant's Security Entitlement. A 
Participant's interest in a Treasury book-entry security is a Securities 
Entitlement. Section 357.12(a) provides that a Participant's Securities 
Entitlement is created when a Federal Reserve Bank indicates by book 
entry that a Book-entry Security has been credited to a Participant's 
Securities Account. Instead of the concept of initial credit and 
transfer of a Treasury book-entry security, as set forth in the existing 
regulations, this proposal focuses on the creation of a Participant's 
Securities Entitlement and, in this way, is similar to Section 8-501 of 
Revised Article 8.
    The regulation focuses on the creation of a Participant's Security 
Entitlement because Security Entitlement is the term used to describe 
the Participant's interest in a Treasury book-entry security. Once a 
Participant obtains that interest, the regulation sets forth what that 
interest is. Thus, as provided in Sec. 357.10, federal law describes a 
Participant's rights against the United States and the Federal Reserve 
Bank where it maintains its Securities Account. To the extent not 
inconsistent with Sec. 357.10, Sec.  357.11 describes the applicable 
law to determine Participants' rights and obligations with respect to 
all other persons. Under these regulations, Participants can still 
transfer their interests in a Treasury book-entry security as they did 
before--by issuing a Transfer Message to the Federal Reserve Bank where 
they hold such interest. Transfer of interests between Participants can 
occur by a Participant holding such interest issuing a Transfer Message. 
As a result of such message, the Federal Reserve Bank will make a book 
entry in favor of the receiving Participant (thereby creating a Security 
Entitlement in favor of such Participant) and also will make a book 
entry deleting the initiator Participant's interest in such Treasury 
book-entry security (thereby eliminating that Participant's Security 
Entitlement). In addition, if authorized under applicable state law, 
Participants may enter into agreements with other Participants that, as 
to the Participants, constitute a transfer. Such action is without 
effect to either the United States or a Federal Reserve Bank.
    (b) Creation and priority of a Security Interest. (i) Security 
Interests of the United States. Section 357.12(b) provides that a 
security interest in favor of the United States has priority over the 
interests of any other person in a Treasury book-entry security. The 
United States obtains security interests in Treasury securities as 
collateral to secure funds in a variety of situations such as Treasury 
Tax and Loan accounts; government agency funds or funds under the 
control of the Federal Courts held at financial institutions; and 
securities pledged in lieu of surety by contractors and others. The 
priority provided the United States in these situations is consistent 
with existing law.
    In addition, Federal Reserve Banks do recognize on their books and 
records security interests in favor of the United States. In that 
situation, the Federal Reserve Bank will not transfer the security 
without the permission of the United States. This section provides that 
a Federal Reserve Bank may rely exclusively on the directions of an 
authorized representative of the United States to transfer a security 
and is protected in so relying. Ordinarily, an authorized representative 
of the United States would take such action under circumstances such as 
the default or insolvency of the pledgor.
    (ii) Security Interests on the books of a Reserve Bank. Where 
required by Federal law or regulation or pursuant to a specific 
agreement with a Federal Reserve Bank, a security interest in favor of a 
Federal Reserve Bank or other person may be created or perfected by a 
Federal Reserve Bank marking its books to record the security interest 
under Sec. 357.12(c)(1). An example of a security interest that is 
marked on the books of a Federal Reserve Bank would be the pledge in 
favor of a Federal Reserve Bank of a Participant's book-entry securities 
as collateral for a discount window loan.\12\ For limited categories of 
pledges, Federal Reserve Banks may agree to record a security interest 
in favor of a third party on their books. For example, in some 
circumstances a Federal Reserve Bank may permit the establishment of a 
pledge account to hold book-entry securities pledged to governmental 
entities other than the United States government. It is important to 
note that there is no obligation for either Treasury or a Federal 
Reserve Bank to agree to record a security interest on the books of a 
Federal Reserve Bank, except as required by Federal law or regulation. 
If they do so, the security interest is perfected when the Federal 
Reserve Bank records a security interest on its books. In addition, the 
security interest has priority over all other interests in the Treasury 
book-entry security except an interest of the United States.
---------------------------------------------------------------------------

    \12\ Book-entry securities pledged by a non-Participant to a Federal 
Reserve Bank generally would be deposited by the non-Participant's 
Securities Intermediary to a pledge account at the Federal Reserve Bank, 
and therefore also would be marked on the books of the Federal Reserve 
Bank. See the discussion under D. (Sec. 357.10).
---------------------------------------------------------------------------

    (iii) Other Security Interests. As provided in Sec. 357.12(c)(2), a 
security interest in a book-entry security may be perfected by any 
method available under applicable state law,

[[Page 434]]

as determined under Sec. 357.10(b) or Sec.  357.11.\13\ The perfection 
and priority of such interests shall be governed by applicable law. 
Security interests under this section may include security interests in 
favor of a Federal Reserve Bank, such as a clearing lien or pledge by a 
non-participant of book-entry securities held through a Securities 
Intermediary where the securities have not been deposited to a Federal 
Reserve Bank pledge account. Consistent with Revised Article 8, a 
Federal Reserve Bank would be treated as a clearing corporation under 
the applicable state law.
---------------------------------------------------------------------------

    \13\ Under both of these sections, if the state has not yet adopted 
Revised Article 8, the applicable law would be that state's law as it 
would be amended by Revised Article 8.
---------------------------------------------------------------------------

    If a Person perfects a security interest pursuant to Sec. 
357.12(c)(2), obligations of the Treasury and the Federal Reserve Banks 
with respect to that security interest are limited. Specifically, unless 
special arrangements are agreed to by the United States or a Federal 
Reserve Bank pursuant to Sec. 357.12(c)(1), neither the Federal Reserve 
Bank nor the United States will recognize the interests of any person 
other than the person in whose securities account the interest in a 
Treasury book-entry security is maintained. This does not mean that such 
a security interest is invalid. Rather, it means that the creditor's 
recourse will be solely against the debtor Participant or other third 
party.

Section 357.13 Rights and obligations of Treasury and the Reserve Banks.

    (a) Adverse claims. Section 357.13(a) sets forth the general rule 
that, with limited exceptions, Treasury and the Federal Reserve Banks 
will recognize only the interest of a Participant in a Treasury book-
entry security in whose Securities Account such interest is maintained.
    As noted previously, Treasury book-entry securities maintained in 
TRADES are held in a tiered system of ownership. The records of a 
Federal Reserve Bank reflect only the ownership at the top tier. 
Institutions maintaining a Securities Account with a Federal Reserve 
Bank frequently will hold interests in Treasury book-entry securities 
for their customers (which can include broker-dealers and other 
Securities Intermediaries) and in certain cases those customers will 
hold interests in securities for their customers. Accordingly, neither 
Treasury nor a Federal Reserve Bank will know the identity or recognize 
a claim of a Participant's customer if that customer were to present it 
to Treasury or a Federal Reserve Bank.
    In addition, except in the limited case where a security interest is 
marked on the books of a Federal Reserve Bank pursuant to Sec. 
357.12(c)(1), neither the Treasury nor a Federal Reserve Bank will 
recognize the claims of any other person asserting a claim in a Treasury 
book-entry security. Persons at levels below the Participant level must 
present their claims to their Securities Intermediary.
    (b) Payment obligations. Section 357.13(b) contains a corollary to 
the rule set forth in Sec. 357.13(a). This section provides that 
Treasury discharges its payment responsibility with respect to a 
security that it has issued when a Federal Reserve Bank credits the 
funds account of a Participant with amounts due on that security or 
makes payment in some other manner specified by the Participant. This is 
consistent with existing law and the first TRADES proposal.\14\ In 
Revised Article 8, the issuer discharges its obligations when it makes 
payment to an owner registered on its books. Under common commercial 
practice, the registered owner in the indirect system may be a clearing 
corporation or the clearing corporation's nominee. Although the Federal 
Reserve Banks are treated as clearing corporations under both Revised 
Article 8 and TRADES, Treasury remains liable until payment is made to, 
or in accordance with the instructions of, a Participant. Section 
357.13(b)(2) establishes the mechanism of how Treasury book-entry 
securities are paid at maturity. It is intended to cover a variety of 
procedures, including where the proceeds of pledged securities are 
credited to a suspense account pending substitution or release. This 
paragraph makes clear that the payment takes place automatically and 
that, unlike with physical certificates, there is no act of presentment 
required by the Participant.
---------------------------------------------------------------------------

    \14\ 51 FR 8846, 8848 (March 14, 1986).
---------------------------------------------------------------------------

               Section 357.14 Authority of Reserve Banks.

    Section 357.14 provides that Federal Reserve Banks are authorized, 
as fiscal agents of Treasury, to operate the commercial book-entry 
system for Treasury.

                         Section 357.44 Notices.

    Section 357.44 contains a revised version of a provision that 
appeared in earlier TRADES proposals. Similar to the rule in Revised 
Article 8 (see section 8-112), it provides where certain legal process 
should be directed. While providing instructions on where notice should 
be directed, it makes clear that the regulations do not establish 
whether a Federal Reserve Bank is required to honor any such order or 
notice.

                            J. Hypotheticals

                             Hypothetical 1

                                TREASURY
 

[[Page 435]]

 
                          FEDERAL RESERVE BANK
                                [verbar]
                               PARTICIPANT
                                [verbar]
                                 DEALER
                                [verbar]
                                INVESTOR
 

    The first hypothetical is designed to show what law applies at 
different levels of the tiered book-entry system. TRADES provides that 
federal law, and only federal law (defined in Sec. 357.10(a)), governs 
the rights and obligations of the United States and the Federal Reserve 
Banks (except for those matters involving Federal Reserve Banks set 
forth in Sec. 357.10(b)). Thus, for example, Treasury discharges its 
payment obligations with respect to a security it has issued in the 
manner described in Sec. 357.13(b). Federal law both defines the 
payment obligation and describes how Treasury fulfills that obligation. 
Those portions of Revised Article 8 dealing with issuer obligations are 
not applicable to Treasury or the Federal Reserve Banks.\15\ Similarly, 
with certain limited exceptions as set forth in Sec. 357.12(c)(1), 
Treasury and the Federal Reserve Banks will recognize only the interest 
of a Participant in a Treasury book-entry security in whose Security 
Account the interest is maintained. Accordingly, as a matter of federal 
law, neither Treasury nor a Federal Reserve Bank will recognize any 
claim by Dealer or Investor.\16\
---------------------------------------------------------------------------

    \15\ As provided in Sec. 357.14, Federal Reserve Banks, among other 
things, effect transfers of book-entry securities between Participants' 
Security Accounts.
    \16\ One comment questioned whether similar language in the March 4, 
1996 release implied that, under Revised Article 8, in the above example 
Investor could have a claim against Participant. No such implication was 
intended. The only point of the language is to make it clear that 
Federal, not state, law governs the rights and obligations of Treasury 
and the Federal Reserve Banks.
---------------------------------------------------------------------------

    In the hypothetical above, as between Participant and Dealer, 
Participant is the Securities Intermediary. With respect to the matters 
set forth in Sec. 357.11(a), the law of the Securities Intermediary's 
jurisdiction governs. Thus, with respect to the matters in Sec. 
357.11(a), the law of Participant's jurisdiction applies as between 
Participant and Dealer.\17\ If Participant's jurisdiction, as determined 
under Sec. 357.11(b), has not adopted Revised Article 8, the law of 
Participant's jurisdiction, as it would be amended by Revised Article 8, 
applies. Similarly, as between Dealer and Investor, Dealer is a 
Securities Intermediary, with respect to the matters in Sec. 357.11(a), 
the law of Dealer's jurisdiction applies as between Dealer and Investor. 
If Dealer's jurisdiction has not adopted Revised Article 8, the law of 
Dealer's jurisdiction, as it would be amended by Article 8, applies.
---------------------------------------------------------------------------

    \17\ As described in the March 4 Release, the scope of TRADES is 
limited. As a general rule, if a matter is not covered in Sec. 
357.11(a), TRADES is not applicable. One comment questioned whether 
TRADES covered the creation and attachment of a security interest. The 
omission of creation and attachment in Sec. 357.11(a) is intentional.
---------------------------------------------------------------------------

                             Hypothetical 2

    Assume that Dealer A sells its interest in a Treasury book-entry 
security to Dealer B. The transaction likely would take the following 
form. Dealer A will instruct Participant A to transfer its interest in a 
Treasury security to Participant B against cash payment. Dealer B will 
instruct Participant B to transfer cash to Participant A against 
delivery of an interest in the specified securities. Participant A will 
instruct the Federal Reserve Bank to transfer its interest in the 
Treasury security to Participant B against simultaneous credit of cash. 
The Federal Reserve Bank will debit Participant A's security account and 
credit Participant B's security account and simultaneously credit 
Participant A's cash account and debit Participant B's cash account. 
Participant A will mark its books to show that it has debited Dealer A's 
securities account and credited Dealer A's cash account. Participant B 
will mark its books to show the Security Entitlement in the Treasury 
security in favor of Dealer B and a debit against Dealer B's cash 
account. Federal law, set forth in Sec. 357.12(a) provides that 
Participant B acquires its interest in the Treasury book-entry security 
when the Federal Reserve Bank indicates by book-entry that the interest 
in the security has been credited to Participant B's Securities Account. 
Pursuant to Sec. 357.11(a), but subject to Sec.  357.11(d), Participant 
B's jurisdiction governs Dealer B's acquisition of a Securities 
Entitlement from Participant B.

                             Hypothetical 3

                                TREASURY
 
                          FEDERAL RESERVE BANK
                                [verbar]
                               PARTICIPANT
 

    Assume Participant wishes to obtain a loan from Federal Reserve Bank 
and, as part of the transaction, will grant Federal Reserve Bank a 
security interest in its Securities Entitlement with respect to Treasury 
book-entry securities. The transaction can be accomplished in one of two 
ways. Pursuant to Sec. 357.12(c)(1), the Federal Reserve Bank can mark 
its books to reflect the security interest. As a matter of federal law, 
that action creates and perfects the Federal Reserve

[[Page 436]]

Bank's security interest and grants the Federal Reserve Bank priority 
over all other claimants (other than the United States pursuant to Sec. 
357.12(b)).\18\ A second method for completing the transaction, as set 
forth in Sec. 357.12(c)(2), would be to take whatever actions are 
authorized by applicable law. In that case, applicable law is the law of 
the jurisdiction of the head office of the Federal Reserve Bank. If that 
jurisdiction had adopted Revised Article 8, it would be the law of that 
jurisdiction. If that jurisdiction had not adopted Revised Article 8, it 
would be the law of that jurisdiction as if the jurisdiction had adopted 
Revised Article 8. Under Revised Article 8, the Federal Reserve Bank's 
interest would be that of a clearing corporation.
---------------------------------------------------------------------------

    \18\ In certain limited circumstances, a Federal Reserve Bank may 
enter into an agreement under which it agrees to record on its books an 
interest in Participant's book-entry securities in favor of a non-
Participant, such as a governmental entity. Under these circumstances, 
the non-Participant would have a perfected security interest with 
priority over other claimants (other than the United States under Sec. 
357.12(b)). It should be noted that, as set forth in Sec. 357.12(c)(1), 
there is no requirement that either the United States or a Federal 
Reserve Bank agree to creation and perfection of a security interest in 
this way, except as provided in Sec. 357.12(c)(1).
---------------------------------------------------------------------------

                             Hypothetical 4

                                TREASURY
 
                          FEDERAL RESERVE BANK
[verbar]............................  .........  [verbar]
PARTICIPANT A.......................  .........  PARTICIPANT B
 

    Assume that Participant A wishes to borrow from Participant B and 
grant Participant B a security interest in its Security Entitlement in 
Treasury book-entry securities. As provided in Sec. 357.12(c)(2), the 
transaction would be completed pursuant to applicable law determined in 
accordance with 357.11. Although such an interest could be recorded on 
the books of a Federal Reserve Bank under Sec. 357.12(c)(1), Federal 
Reserve Banks generally do not mark their books to record this type of 
security interest for Participants.

                             Hypothetical 5

                                TREASURY
 
                          FEDERAL RESERVE BANK
                                [verbar]
                              PARTICIPANT A
                                [verbar]
                                DEALER A
                                [verbar]
                                 BANK A
 

    Assume that Bank A wishes to borrow from the Federal Reserve Bank 
and will pledge its interest in Treasury book-entry securities held at 
Dealer A to collateralize that loan. The transaction could be 
accomplished in two ways. Pursuant to Sec. 357.12(c)(1), the interest 
could be created and perfected on the books of a Federal Reserve Bank. 
Such a transaction would take place in the following fashion. Bank A 
could have Dealer A instruct Participant A to deposit securities to a 
pledge account specified by the Federal Reserve Bank. The Federal 
Reserve Bank likely would create an account on its books and specify 
that account to Bank A as the account to receive Bank A's interest in 
Treasury book-entry securities. Participant A, upon receiving Dealer A's 
instructions, would then instruct the Federal Reserve Bank to debit its 
account at the Federal Reserve Bank and credit the account created by 
the Federal Reserve Bank. The second way the transaction could take 
place is by any method permitted by the law of Dealer A's (Bank A's 
Securities Intermediary) jurisdiction. This could involve a tri-party 
agreement among the Federal Reserve Bank, Dealer A, and Bank A. As set 
forth in Sec. 357.11(b)(1), that agreement likely would specify which 
jurisdiction's law is to govern the transaction and could specify that 
such choice of law supersedes any other choice of law agreement 
previously entered into by Dealer A and Bank A. If Dealer A's 
jurisdiction has not adopted Revised Article 8, the applicable law would 
be the law of Dealer A's jurisdiction as it would be amended by Revised 
Article 8.

[61 FR 43631, Aug. 23, 1996, as amended at 62 FR 43284, Aug. 13, 1997; 
63 FR 69191, Dec. 16, 1998]



PART 358_REGULATIONS GOVERNING BOOK-ENTRY CONVERSION OF BEARER CORPORA 
AND DETACHED BEARER COUPONS--Table of Contents




Sec.
358.0 What does this part cover?
358.1 What special terms apply to this part?
358.2 What regulations cover these securities?
358.3 Are there any bearer corpora or detached bearer coupons that are 
          not eligible for conversion?

[[Page 437]]

358.4 Which bearer corpora or detached bearer coupons are eligible for 
          conversion to transferable BECCS or CUBES securities?
358.5 Which bearer corpora or detached bearer coupons are eligible for 
          conversion to non-transferable BECCS or CUBES securities?
358.6 What is the procedure for converting bearer corpora and detached 
          bearer coupons to book-entry?
358.7 Where do I send my bearer corpora and detached bearer coupons to 
          be converted?
358.8 Are there fees for the conversion of bearer corpora or detached 
          bearer coupons?
358.9 Who is responsible for the cost and risks associated with the 
          shipment of securities?
358.10 How are amounts of less than one dollar credited?
358.11 What is required to establish the authority of a depository 
          institution to request conversion?
358.12 What is Treasury's liability if the depository institution does 
          not have authority to convert securities?
358.13 What is Treasury's liability if the depository institution incurs 
          a loss because it does not follow required procedures?
358.14 What happens when securities are accepted for conversion?
358.15 What happens if securities are adjusted?
358.16 Are BECCS and CUBES accounts maintained separately from the 
          STRIPS program?
358.17 Can BECCS and CUBES securities be reconstituted to physical form?
358.18 What limitations exist on liability?
358.19 Who is responsible for any loss resulting from the conversion of 
          a bearer corpus missing callable coupons?
358.20 Can these regulations be waived?
358.21 Can these regulations be amended?

    Authority: 12 U.S.C. 391, 31 U.S.C. Ch. 31.

    Source: 65 FR 65701, Nov. 1, 2000, unless otherwise noted.



Sec. 358.0  What does this part cover?

    (a) This part applies to the conversion to book-entry of United 
States Treasury bearer corpora and detached bearer coupons.
    (b) These instruments are accepted from depository institutions for 
conversion under the Bearer Corpora Conversion System (BECCS) and 
Coupons Under Book Entry Safekeeping (CUBES) programs.
    (1) For coupons converted after November 1, 2000, these regulations 
supersede the terms and conditions governing CUBES set forth in the 
written ``Agreements to the Terms and Conditions Governing CUBES'' 
signed by depository institutions that previously participated in the 
CUBES program.
    (2) Depository institutions that submit bearer corpora and detached 
bearer coupons are deemed to agree to the terms and conditions in this 
part and any other requirements we may prescribe.



Sec. 358.1  What special terms apply to this part?

    Bearer security means a definitive security payable to the bearer on 
its face at maturity or when called for redemption before maturity in 
accordance with its terms. Ownership of a bearer security is not 
recorded. Title to the security may pass by delivery without endorsement 
or notice. The only remaining unmatured bearer securities are bearer 
bonds.
    BECCS means the Treasury's Bearer Corpora Conversion System.
    BECCS security means a United States Treasury bearer security 
converted to book-entry form and held in BECCS.
    Callable means a United States Treasury security subject to call 
before maturity.
    Callable Coupons means the coupons associated with a callable 
security that are due after the date the security is subject to call.
    Conversion, as used in this part, means a change in the form of a 
security from definitive form to book-entry form.
    Corpus (plural corpora) means the principal portion of a United 
States Treasury bearer security.
    Coupon means a definitive bearer interest instrument associated with 
a United States Treasury bearer security.
    CUBES means the Treasury's Coupon Under Book-Entry Safekeeping 
program.
    CUBES security means a definitive coupon detached from a United 
States Treasury security and held in CUBES.
    Definitive security means a security held in paper form.
    Depository institution means:
    (1) Any insured bank, mutual savings bank, or savings bank as 
defined in 12 U.S.C. 1813, or any institution eligible

[[Page 438]]

to become an insured bank under 12 U.S.C. 1815;
    (2) Any insured credit union as defined in 12 U.S.C. 1752, or any 
credit union eligible to become an insured credit union under 12 U.S.C. 
1781;
    (3) Any member as defined in 12 U.S.C. 1422; and
    (4) Any savings association as defined in 12 U.S.C. that is an 
insured depository institution as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811 et seq., or is eligible to become an 
insured depository institution under that Act.
    Non-callable means a United States Treasury bearer security not 
subject to call before maturity.
    Non-callable coupons means coupons associated with a non-callable 
bearer security or coupons associated with a callable bearer security 
that are due on or before the date on which the callable bearer security 
is subject to call.
    Non-transferable means the ownership of a security held in BECCS or 
CUBES may not be transferred. See Sec. 358.5.
    Transferable means the ownership of a security held in BECCS or 
CUBES may be transferred. See Sec. 358.4 of this part.
    We (or ``us'') refers to the Secretary of the Treasury and the 
Secretary's delegates at the Treasury Department and the Bureau of the 
Public Debt. The term also extends to any fiscal or financial agent we 
designate to act on behalf of the United States.



Sec. 358.2  What regulations cover these securities?

    BECCS and CUBES securities are deemed to be securities for the 
purposes of 31 CFR part 357, subparts A, B, and D, and are governed by 
that part. Notwithstanding the provisions of 31 CFR part 357, certain 
BECCS and CUBES securities are non-transferable. See Sec. 358.5.



Sec. 358.3  Are there any bearer corpora or detached bearer coupons that 
are not eligible for conversion?

    Bearer corpora and detached bearer coupons will not be accepted if 
they are submitted:
    (a) Within 30 days of their maturity date; or
    (b) If the call provision has been invoked, within 30 days of their 
call date.



Sec. 358.4  Which bearer corpora or detached bearer coupons are eligible 
for conversion to transferable BECCS or CUBES securities?

    (a) For a callable corpus to be eligible for conversion to a 
transferable BECCS security, all associated callable coupons must be 
submitted with the corpus. These callable coupons will be linked with 
the corpus within BECCS when converted. Once the coupons are linked to 
the corpus, they may not be transferred separately.
    (b) A corpus that is not subject to call will be converted to a 
transferable BECCS security.
    (c) Non-callable coupons will be converted to transferable CUBES 
securities.



Sec. 358.5  Which bearer corpora or detached bearer coupons are eligible 
for conversion to non-transferable BECCS or CUBES securities?

    If all of the callable coupons associated with the corpus are not 
submitted with the corpus, the corpus will be converted to a non-
transferable BECCS security. Any remaining callable coupons submitted 
with the corpus will be converted to individual non-transferable CUBES 
securities.



Sec. 358.6  What is the procedure for converting bearer corpora and 
detached bearer coupons to book-entry?

    Bearer corpora and detached bearer coupons must be submitted in 
accordance with our procedures. They must be accompanied by an approved 
form executed by an authorized officer of the submitting depository 
institution. Until we verify the submission, the bearer corpora and 
detached bearer coupons are subject to rejection or adjustment.



Sec. 358.7  Where do I send my bearer corpora and detached bearer 
coupons to be converted?

    Send bearer corpora and detached bearer coupons to be converted to: 
Bureau of the Public Debt, Division of Customer Service, P. O. Box 426, 
Parkersburg, WV 26106-0426.

[[Page 439]]



Sec. 358.8  Are there fees for the conversion of bearer corpora or 
detached bearer coupons?

    We do not charge fees for the conversion of bearer corpora or 
detached bearer coupons to BECCS or CUBES securities.



Sec. 358.9  Who is responsible for the cost and risks associated with 
the shipment of securities?

    The following guidelines apply to the transportation of bearer 
corpora and detached bearer coupons:
    (a) Shipment from the depository institution is at the risk and 
expense of the depository institution;
    (b) Shipment between our designated agent and the Department, if 
required, is at our risk and expense; and
    (c) Shipment of securities that are returned to the depository 
institution is at the risk and expense of the depository institution.



Sec. 358.10  How are amounts of less than one dollar credited?

    Only full dollar amounts can be held in CUBES; principal amounts 
that include cents cannot be held in CUBES. Upon the conversion of 
coupons to CUBES, amounts of less than one dollar in aggregate per CUBES 
CUSIP will not be credited to the account of the depository institution.

    Example: A depository institution submits five coupons with face 
amount of $346.88 each, and a total dollar amount of $1,734.40. Upon 
conversion of these coupons to CUBES, only $1,734.00 will be credited to 
the depository institution's account.



Sec. 358.11  What is required to establish the authority of a depository 
institution to request conversion?

    By submitting bearer corpora and detached bearer coupons for 
conversion to BECCS and CUBES securities, a depository institution 
represents that it has the authority to request the conversion.



Sec. 358.12  What is Treasury's liability if the depository institution 
does not have authority to convert securities?

    We are not liable if the depository institution has no authority to 
convert the bearer corpora and detached bearer coupons to book-entry 
form or to take other actions in respect to book-entry accounts in BECCS 
and CUBES.



Sec. 358.13  What is Treasury's liability if the depository institution 
incurs a loss because it does not follow required procedures?

    We are not liable for any loss incurred by the depository 
institution as a result of its failure to properly follow our 
procedures.



Sec. 358.14  What happens when securities are accepted for conversion?

    (a) After processing and initial verification, we will transfer the 
securities accepted to the depository institution's book-entry account, 
establishing a securities entitlement in TRADES according to 31 CFR part 
357 subpart B.
    (b) We will do the final verification within twenty (20) business 
days of initial receipt of the bearer corpora and detached bearer 
coupons.
    (c) If at any time after this twenty (20) day period we determine 
that the security was improperly credited to the BECCS or CUBES account 
of the depository institution, such as in the case of a previously 
undetected, counterfeit security, we reserve the right to adjust the 
BECCS or CUBES account.



Sec. 358.15  What happens if securities are adjusted?

    (a) If we make an adjustment to all or part of the submitted 
securities, we will instruct the depository institution to transfer 
BECCS or CUBES securities of the same payment date and face amount from 
the depository institution's account to an account that we designate.
    (b) If no such BECCS or CUBES securities exist in the depository 
institution's account, we will instruct the depository institution as to 
how the adjustment will be made.
    (c) If the depository institution fails to comply with our 
instructions within five (5) business days of receipt of the 
instructions, we reserve the right to debit the master account of the 
depository institution for the face value of the adjusted bearer corpora 
and detached bearer coupons. By the submission of the bearer corpora and 
detached

[[Page 440]]

bearer coupons, the depository institution is deemed to agree to this 
debit.



Sec. 358.16  Are BECCS and CUBES accounts maintained separately from 
the STRIPS program?

    BECCS and CUBES accounts are maintained separately from accounts 
maintained in Treasury's STRIPS (Separate Trading of Registered Interest 
and Principal of Securities) program.



Sec. 358.17  Can BECCS and CUBES securities be reconstituted to physical 
form?

    After bearer corpora and detached bearer coupons have been converted 
to book-entry form, reconversion to physical form is prohibited. The 
reconstitution of a BECCS security with CUBES securities or any 
combination of Treasury obligations is prohibited.



Sec. 358.18  What limitations exist on liability?

    (a) Except as otherwise provided by regulation, circular, or written 
agreement, any fiscal agent designated to act on our behalf is liable 
for its action or omission only if it failed to exercise ordinary care.
    (b) We do not assume any responsibility to any party except the 
sending and receiving depository institutions involved in a BECCS or 
CUBES transaction.
    (c) We do not assume any responsibility in connection with a BECCS 
or CUBES transaction for the insolvency, neglect, misconduct, mistake, 
or default of another bank or person, including the immediate 
participants.



Sec. 358.19  Who is responsible for any loss resulting from the 
conversion of a bearer corpus missing callable coupons?

    The submitting depository institution shall indemnify the United 
States against any loss resulting from the conversion of a bearer corpus 
that is missing one or more associated callable coupons.



Sec. 358.20  Can these regulations be waived?

    We reserve the right to waive or modify any provision of the 
regulations in this part for the convenience of the United States or to 
relieve any person of unnecessary hardship, if such action is not 
inconsistent with law, does not impair existing rights, and does not 
subject the United States to any substantial expense or liability.



Sec. 358.21  Can these regulations be amended?

    We may at any time supplement, amend, or revise the regulations in 
this part.



PART 359_OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I--Table of 
Contents




                      Subpart A_General Information

Sec.
359.0 What does this part cover?
359.1 What regulations govern Series I savings bonds?
359.2 [Reserved]
359.3 What special terms do I need to know to understand this part?
359.4 In what form are Series I savings bonds issued?
359.5 What is the maturity period of a Series I savings bonds?
359.6 When may I redeem my Series I bond?
359.7 If I redeem a Series I savings bonds before five years after the 
          issue date, is there an interest penalty?
359.8 How does interest accrue on Series I savings bonds?
359.9 When are interest rates for Series I savings bonds announced?
359.10 What is the fixed rate of return?
359.11 What is the semiannual inflation rate?
359.12 What happens in deflationary conditions?
359.13 What are composite rates?
359.14 How are composite rates determined?
359.15 When is the composite rate applied to Series I savings bonds?
359.16 When does interest accrue on Series I savings bonds?
359.17 When is interest payable on Series I savings bonds?
359.18 Is the determination of the Secretary on rates and values final?
359.19 How is interest calculated?
359.20-359.24 [Reserved]

               Subpart B_Definitive Series I Savings Bonds

359.25 What are the denominations and prices of definitive Series I 
          savings bonds?
359.26 When are definitive Series I savings bonds validly issued?
359.27 What is the issue date of a definitive Series I savings bonds?

[[Page 441]]

359.28 Are taxpayer identification numbers (TINs) required for the 
          registration of definitive Series I savings bonds?
359.29 What amount of definitive Series I savings bonds may I purchase 
          per year?
359.30 Are definitive Series I savings bonds purchased in the name of an 
          individual computed separately from bonds purchased in a 
          fiduciary capacity?
359.31 What definitive Series I savings bonds are included in the 
          computation?
359.32 What definitive Series I savings bonds are excluded from the 
          computation?
359.33 What happens if I purchase definitive Series I savings bonds in 
          excess of the maximum amount?
359.34 May I purchase definitive Series I savings bonds over-the-
          counter?
359.35 May I purchase definitive Series I savings bonds through a 
          payroll savings plan?
359.36 May I purchase definitive Series I savings bonds through employee 
          thrift, savings, vacation, and similar plans?
359.37 How are definitive Series I savings bonds delivered?
359.38 How is payment made when definitive Series I savings bonds are 
          redeemed?
359.39 How are redemption values calculated for definitive Series I 
          savings bonds?
359.40 How can I find out what my definitive Series I savings bonds are 
          worth?
359.41-359.44 [Reserved]

               Subpart C_Book-Entry Series I Savings Bonds

359.45 How are book-entry Series I savings bonds purchased and held?
359.46 What are the denominations and prices of book-entry Series I 
          savings bonds?
359.47 How is payment made for purchases of book-entry Series I savings 
          bonds?
359.48 How are redemption payments made for my redeemed book-entry 
          Series I savings bonds?
359.49 What is the issue date of a book-entry Series I savings bonds?
359.50 What amount of book-entry Series I savings bonds may I purchase 
          per year?
359.51 What book-entry Series I savings bonds are included in the 
          computation?
359.52 What happens if any person purchases book-entry Series I savings 
          bonds in excess of the maximum amount?
359.53 Are taxpayer identification numbers (TINs) required for the 
          registration of book-entry Series I savings bonds?
359.54 When is a book-entry Series I savings bonds validly issued?
359.55 How are redemption values calculated for book-entry Series I 
          savings bonds?
359.56 How can I find out what my book-entry Series I savings bonds are 
          worth?
359.57-359.64 [Reserved]

                   Subpart D_Miscellaneous Provisions

359.65 [Reserved]
359.66 Is the Education Savings Bonds Program available for Series I 
          savings bonds?
359.67 Does Public Debt prohibit the issuance of Series I savings bonds 
          in a chain letter scheme?
359.68 May Public Debt issue Series I savings bonds only in book-entry 
          form?
359.69 Does Public Debt make any reservations as to issue of Series I 
          savings bonds?
359.70 May Public Debt waive any provision in this part?
359.71 What is the role of Federal Reserve Banks and Branches?
359.72 May the United States supplement or amend the offering of Series 
          I savings bonds?

Appendix A to Part 359--Redemption Value Calculations
Appendix B to Part 359--Composite Semiannual Rate Period Table
Appendix C to Part 359--Investment Considerations
Appendix D to Part 359--Tax Considerations

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.

    Source: 67 FR 64278, Oct. 17, 2002, unless otherwise noted.



                      Subpart A_General Information



Sec. 359.0  What does this part cover?

    This part is the offering of United States Savings Bonds of Series I 
(referred to as Series I bonds or bonds) for sale to the people of the 
United States by the Secretary of the Treasury (Secretary). This offer 
was effective September 1, 1998, and will continue until terminated by 
the Secretary.



Sec. 359.1  What regulations govern Series I savings bonds?

    (a) The regulations in 31 CFR part 360 apply to definitive (paper) 
Series I savings bonds that have not been converted to book-entry bonds 
through New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series I savings bonds that were originally issued as 
book-entry bonds in New Treasury Direct; and
    (2) definitive Series I savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.

[[Page 442]]

    (c) We expressly disclaim any representations or warranties 
regarding Series I savings bonds that in any way conflict with these 
regulations and other applicable law.

[67 FR 64278, Oct. 17, 2002, as amended at 70 FR 14942, Mar. 23, 2005]



Sec. 359.2  [Reserved]



Sec. 359.3  What special terms do I need to know to understand this part?

    Accrual date is the first day of any month on which earnings on a 
Series I bond accrue. The redemption value of a bond does not change 
between these accrual dates.
    Automated Clearing House (ACH) means a funds transfer system 
governed by the Rules of the National Automated Clearing House 
Association (NACHA). NACHA provides for the interbank clearing of 
electronic entries for participating financial institutions.
    Bank account means your account at a United States depository 
financial institution (whether a bank or other financial institution) to 
which you have directed that ACH debits and payments be made.
    Beneficiary refers to the second individual named in the 
registration of a security held in definitive form registered ``John Doe 
SSN 123-45-6789 POD (payable on death to) Joseph Doe.'' In the New 
Treasury Direct system, beneficiary refers to the second individual 
named in the registration of a security registered ``John Doe SSN 123-
45-6789 POD (payable on death to) Joseph Doe SSN 987-65-4321.'' In these 
examples, Joseph Doe is the beneficiary.
    Book-entry bond means a Series I savings bonds maintained by 
Treasury solely as a computer record.
    Composite annual rate means an annual interest rate that combines an 
annual fixed rate of return and a semiannual inflation rate.
    Converted bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a book-
entry savings bond to be maintained by Treasury solely as a computer 
record.
    Coowner means either the first or the second individual named in the 
registration of a definitive Series I savings bonds registered ``John 
Doe SSN 123-45-6789 or Joseph Doe.'' In this example, John Doe and 
Joseph Doe are coowners.
    CPI-U, or U.S. City Average All Items Consumer Price Index for All 
Urban Consumers (non seasonally adjusted) is a monthly index of the 
prices paid by consumers for consumer goods and services, maintained by 
the Bureau of Labor Statistics of the U.S. Department of Labor.
    Definitive bond means a Series I savings bonds issued in paper form.
    Deflation means a decrease in the CPI-U from one month to another.
    Face amount refers to the amount inscribed on the front of a 
definitive Series I savings bonds.
    Fiduciary means the court-appointed or otherwise qualified person, 
regardless of title, who is legally authorized to act for another.
    Fixed rate or fixed rate of return is a component of the composite 
annual rate for a Series I savings bonds that is established by the 
Secretary of the Treasury for the life of the bond.
    Individual means a natural person. Individual does not mean an 
organization, representative, or fiduciary.
    Inflation means an increase in the CPI-U from one month to another.
    Interest, as used in this part, is the difference between the 
principal amount and the redemption value of the bond.
    Issue date is the first day of the month in which an authorized 
issuing agent receives payment of the issue price of the bond.
    Issuing agent means an organization that has been qualified under 
part 317.
    New Treasury Direct system (New Treasury Direct) is an online 
account system in which you may hold and conduct transactions in 
eligible book-entry Treasury securities.
    Owner is either a single owner, the first individual named in the 
registration of a bond held in the owner with beneficiary form of 
registration, or the primary owner of a book-entry bond held in the 
primary owner with secondary owner form of registration.
    Par means the principal amount of a Series I savings bond; for 
definitive bonds, par is the same as the face amount.

[[Page 443]]

    Paying agent means a financial institution that has been qualified 
under part 321.
    Person means an entity including an individual, trust, estate, 
corporation, government entity, association, partnership, and any other 
similar organization. Person does not mean a Federal Reserve Bank.
    Primary owner means the first individual named in the registration 
of a book-entry bond held in New Treasury Direct registered ``John Doe 
SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this example, John 
Doe is the primary owner.
    Principal amount means the amount of the original investment. 
Principal amount does not include any interest earned.
    Redemption of a book-entry Series I savings bonds refers to payment 
of principal and accrued interest on the bond at final maturity, or, at 
the option of the owner, prior to final maturity. The owner of a book-
entry savings bonds held in New Treasury Direct may redeem all principal 
and interest or a portion of the principal and the proportionate amount 
of interest.
    Redemption of a definitive Series I savings bonds refers to the 
payment of principal and accrued interest when the owner presents the 
bond for payment.
    Redemption value means principal plus accrued interest of a Series I 
savings bonds, as of the date of redemption. In the case of book-entry 
Series I savings bonds, it also refers to a portion of the principal 
amount plus a proportionate amount of accrued interest of a bond, as of 
the date of redemption.
    Registration of a book-entry Series I savings bonds means that the 
name and Taxpayer Identification Number (TIN) of all registrants are 
maintained on our records for a book-entry bond.
    Registration of a definitive Series I savings bonds means that the 
name and TIN of the owner or first-named co-owner are inscribed on the 
face of the bond.
    Secondary owner means the second individual named in the 
registration of a book-entry bond held in New Treasury Direct registered 
``John Doe SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this 
example, Joseph Doe is the secondary owner.
    Semiannual inflation rate means a component of the composite annual 
rate that is based on the six-month percentage change in the CPI-U.
    Semiannual rate periods are the six-month periods beginning on the 
date of issue and on each semiannual anniversary of the date of issue to 
maturity.
    Series I savings bond means a savings bonds, whether definitive or 
book-entry, that is purchased at par and pays interest based on a 
formula that incorporates both an annual fixed rate and a semiannual 
inflation rate.
    Single owner means the person named in the registration of a savings 
bonds without a coowner, beneficiary or secondary owner.
    Taxpayer identification number (TIN) means the identifying number 
required on tax returns and other documents submitted to the Internal 
Revenue Service; that is, an individual's social security account number 
(SSN) or an employer identification number (EIN). A SSN is composed of 
nine digits separated by two hyphens, for example, 123-45-6789. An EIN 
is composed of nine digits separated by one hyphen, for example, 12-
3456789. The hyphens are an essential part of the numbers.
    We, us, or our refers to the agency, the Bureau of the Public Debt. 
The term extends to the Secretary of the Treasury and the Secretary's 
delegates at the Treasury Department and Bureau of the Public Debt. The 
term also extends to any fiscal or financial agent we designate to act 
on behalf of the United States.
    You or your refers to an owner of a Series I savings bonds.

[67 FR 64278, Oct. 17, 2002, as amended at 70 FR 14942, Mar. 23, 2005]



Sec. 359.4  In what form are Series I savings bonds issued?

    Series I savings bonds are issued in either book-entry or definitive 
form.



Sec. 359.5  What is the maturity period of a Series I savings bonds?

    Series I savings bonds have a total maturity period of 30 years from 
the issue date, consisting of an original maturity period of 20 years 
and an extension period of 10 years.

[[Page 444]]



Sec. 359.6  When may I redeem my Series I bond?

    (a) Bonds issued on December 1, 2002, or earlier. You may redeem 
your Series I savings bond issued on January 1, 2003, or earlier, at any 
time after six months from its issue date.
    (b) Bonds issued on February 1, 2003, or thereafter. You may redeem 
your Series I savings bond issued on February 1, 2003, or thereafter, at 
any time after 12 months from its issue date.

[68 FR 2667, Jan. 17, 2003, as amended at 68 FR 7427, Feb. 14, 2003]



Sec. 359.7  If I redeem a Series I savings bonds before five years after 
the issue date, is there an interest penalty?

    If you redeem a bond less than five years after the issue date, we 
will reduce the overall earning period by three months. For example, if 
you redeem a bond issued January 1, 2002, nine months later on October 
1, 2002, the redemption value will be determined by applying the value 
calculation procedures and composite rate for that bond as if the 
redemption date were three months earlier (July 1, 2002). However, we 
will not reduce the redemption value of a bond subject to the three-
month interest penalty below the issue price (par). This penalty does 
not apply to bonds redeemed five years or more after the issue date.



Sec. 359.8  How does interest accrue on Series I savings bonds?

    A bond accrues interest based on both a fixed rate of return and a 
semiannual inflation rate. A single, annual rate called the composite 
rate reflects the combined effects of the fixed rate and the semiannual 
inflation rate. For more information, see Appendix B of part 359.



Sec. 359.9  When are interest rates for Series I savings bonds announced?

    (a) The Secretary will furnish fixed rates, semiannual inflation 
rates, and composite rates for Series I savings bonds in announcements 
published each May 1 and November 1.
    (b) If the regularly scheduled date for the announcement is a day 
when the Treasury is not open for business, then the Secretary will make 
the announcement on the next business day. However, the effective date 
of the rates remains the first day of the month of the announcement.
    (c) The Secretary may announce rates at any other time.



Sec. 359.10  What is the fixed rate of return?

    The Secretary, or the Secretary's designee determines the fixed rate 
of return. The fixed rate is established for the life of the bond.\1\ 
The most recently announced fixed rate is only for bonds purchased 
during the six months following the announcement, or for any other 
period of time announced by the Secretary.
---------------------------------------------------------------------------

    \1\ However, the fixed rate is not a guaranteed minimum rate; the 
composite rate could possibly be less than the fixed rate in 
deflationary situations.
---------------------------------------------------------------------------



Sec. 359.11  What is the semiannual inflation rate?

    The index used to determine the semiannual inflation rate is the 
non-seasonally adjusted CPI-U (the Consumer Price Index for All Urban 
Consumers for the U.S. City Average for All Items, 1982-84=100) 
published by the Bureau of Labor Statistics of the U.S. Department of 
Labor. (For further information on CPI-U considerations, see Appendix C 
to part 359 at section 1.) The semiannual inflation rate reflects the 
percentage change, if any, in the CPI-U over a six-month period. We 
announce this rate twice a year, in May and November. The semiannual 
inflation rate we announced in May 2002 reflects the percentage change 
between the CPI-U figures from the preceding March 2002 and September 
2001. The rate of change over the six-month period, if any, will be 
expressed as a percentage, rounded to the nearest one-hundredth of one 
percent. More specifically, the semiannual inflation rate will be 
determined by the following formula (the resulting rate will be rounded 
to the nearest one-hundredth of one percent):

Semiannual inflation rate = (CPI - UCurrent - CPI - 
    UPrior) / CPI -UPrior

[[Page 445]]



Sec. 359.12  What happens in deflationary conditions?

    In certain deflationary situations, the semiannual inflation rate 
may be negative. Negative semiannual inflation rates will be used in the 
same way as positive semiannual inflation rates. However, if the 
semiannual inflation rate is negative to the extent that it completely 
offsets the fixed rate of return, the redemption value of a Series I 
bond for any particular month will not be less than the value for the 
preceding month.



Sec. 359.13  What are composite rates?

    Composite rates are single, annual interest rates that reflect the 
combined effects of the fixed rate and the semiannual inflation rate.



Sec. 359.14  How are composite rates determined?

    Composite rates are set according to the following formula (See 
Appendix A to part 359 for examples of calculations involving composite 
interest rates.):

Composite rate = {(Fixed rate / 2) + Semiannual inflation rate + 
    [Semiannual inflation rate x (Fixed rate / 2)]{time}  x 2.\2\
---------------------------------------------------------------------------

    \2\ Example for I bonds issued May 2002-October 2002:
    Fixed rate = 2.00%
    Inflation rate = 0.28%
    Composite rate = [0.0200 / 2 + 0.0028 + (0.0028 x 0.0200 / 2)] x2
    Composite rate = [0.0100 + 0.0028 + 0.000028] x2
    Composite rate = 0.012828 x 2
    Composite rate = 0.025656
    Composite rate = 0.0257 (rounded)
    Composite rate = 2.57% (rounded)
---------------------------------------------------------------------------



Sec. 359.15  When is the composite rate applied to Series I savings 
bonds?

    The most recently announced composite rate applies to a bond during 
its next semiannual rate period. A bond's semiannual rate periods are 
consecutive six-month periods, the first of which begins with the bond's 
issue date. This means that there can be a delay of several months from 
the time of a composite rate announcement to the time that rate 
determines interest earnings for a bond. For example, if you purchased a 
bond in April, its semiannual rate periods begin every April and 
October. At the beginning of the semiannual rate period in April, the 
most recently announced composite rate would have been the rate we 
announced the previous November. This rate will determine interest 
earnings for your bond for the next six months, through the end of 
September. At the beginning of the semiannual rate period in October, 
the most recently announced composite rate would be the rate announced 
the previous May. This rate will determine interest earnings for your 
bond through the end of the following March. However, if you purchased a 
bond instead in May, its semiannual rate periods begin in May and 
November. Therefore, the composite rates announced in May and November 
will apply immediately to this bond. (See Appendix C to part 359 at 
Sec. 2 for a discussion of rate lag.)



Sec. 359.16  When does interest accrue on Series I savings bonds?

    (a) Interest, if any, accrues on the first day of each month; that 
is, we add the interest earned on a bond during any given month to its 
value at the beginning of the following month.
    (b) The accrued interest compounds semiannually.



Sec. 359.17  When is interest payable on Series I savings bonds?

    Interest earnings are payable upon redemption.



Sec. 359.18  Is the determination of the Secretary on rates and values 
final?

    The Secretary's determination of fixed rates of return, semiannual 
inflation rates, composite rates, and savings bonds redemption values is 
final and conclusive.



Sec. 359.19  How is interest calculated?

    We base all calculations of interest on a $25 unit. We use the value 
of this unit to determine the value of bonds in higher denominations. 
The effect of rounding off the value of the $25 unit increases at higher 
denominations. This can work to your slight advantage

[[Page 446]]

or disadvantage, depending on whether we round the value up or down.\3\
---------------------------------------------------------------------------

    \3\ For example: A composite rate of 2.57% will result in a newly 
purchased $25 unit increasing in value after six months to $25.32, when 
rounded to the nearest cent. Thus, a $5,000 bond purchased at the same 
time as the $25 unit will be worth $5,064 after six months ([$5,000 
divided by $25] x $25.32 = $5,064.) In contrast, if it applied directly 
to a $5,000 bond, the rate would render a value of $5,064.25 after six 
months, a difference of 25 cents. (This example does not include any 
discussion of the three-month interest penalty that applies if you 
redeem a bond less than five years after its issue date.)
---------------------------------------------------------------------------



Sec. Sec. 359.20-359.24  [Reserved]



               Subpart B_Definitive Series I Savings Bonds



Sec. 359.25  What are the denominations and prices of definitive Series 
I savings bonds?

    Definitive bonds are issued in denominations of $50, $75, $100, 
$200, $500, $1,000, $5,000, and $10,000. These bonds are sold at par; 
that is, the purchase price is the same as the denomination (face 
value).



Sec. 359.26  When are definitive Series I savings bonds validly issued?

    A definitive bond is validly issued when it is registered as 
provided in part 360, and when it bears an issue date and the validation 
indicia of an authorized issuing agent.



Sec. 359.27  What is the issue date of a definitive Series I savings 
bonds?

    The issue date of a definitive bond is the first day of the month in 
which an authorized issuing agent receives payment of the issue price.



Sec. 359.28  Are taxpayer identification numbers (TINs) required for the 
registration of definitive Series I savings bonds?

    The inscription of a definitive bond must include the TIN of the 
owner or first-named co-owner. If the bond is being purchased as a gift 
or award and the owner's TIN is not known, the TIN of the purchaser must 
be included in the inscription on the bond.



Sec. 359.29  What amount of definitive Series I savings bonds may I 
purchase per year?

    The principal amount of definitive bonds that may be purchased in 
the name and TIN of any person, in any calendar year, is limited to 
$30,000.



Sec. 359.30  Are definitive Series I savings bonds purchased in the name 
of an individual computed separately from bonds purchased in a fiduciary 
capacity?

    We compute the purchases of bonds in the name of any person in an 
individual capacity separately from purchases in a fiduciary capacity 
(for instance, as representative for the estate of an individual).



Sec. 359.31  What definitive Series I savings bonds are included in the 
computation?

    In computing the purchases for each person, we include the following 
outstanding definitive bonds purchased in that calendar year:
    (a) All bonds registered in the name of and bearing the taxpayer 
identification number (TIN) of that person alone or as co-owner;
    (b) All bonds registered in the name of the representative of the 
estate of that person and bearing that person's TIN; and
    (c) All gift bonds registered in the name of that person but bearing 
the TIN of the purchaser.



Sec. 359.32  What definitive Series I savings bonds are excluded from 
the computation?

    In computing the purchases for each person, the following are 
excluded:
    (a) Bonds on which that person is named as beneficiary;
    (b) Bonds to which that person has become entitled upon the death of 
the registered owner;
    (c) Bonds to which that person has become entitled by virtue of the 
termination of a trust or the occurrence of a similar event; and
    (d) Bonds that are purchased and redeemed within the same calendar 
year.

[[Page 447]]



Sec. 359.33  What happens if I purchase definitive Series I savings 
bonds in excess of the maximum amount?

    If you have bonds issued during any one calendar year in excess of 
the prescribed maximum amount, we reserve the right to take any action 
we deem necessary to adjust the excess. You should obtain instructions 
for adjustment of the excess from the Bureau of the Public Debt, 
Parkersburg, WV 26106-1328, or e-mail at [email protected].



Sec. 359.34  May I purchase definitive Series I savings bonds 
over-the-counter?

    You may purchase definitive bonds over-the-counter through any 
participating issuing agent.\4\ To purchase over-the-counter, you must 
submit a purchase application, along with payment in the amount of the 
issue price to an issuing agent. You may use any means of payment 
acceptable to the issuing agent. You may authorize purchases on a 
recurring basis in your application. The issuing agent bears the burden 
of collection and the risk of loss for non-collection or return of the 
payment.
---------------------------------------------------------------------------

    \4\ However, an organization serving as an issuing agent because of 
its status as an employer or an organization operating an employer's 
payroll savings plan under Sec. 317.2(c) may sell bonds only through 
payroll savings plans.
---------------------------------------------------------------------------



Sec. 359.35  May I purchase definitive Series I savings bonds through a 
payroll savings plan?

    You may purchase definitive bonds through deductions from your pay 
if your employer maintains a payroll savings plan. An authorized issuing 
agent must issue the bonds.



Sec. 359.36  May I purchase definitive Series I savings bonds through 
employee thrift, savings, vacation, and similar plans?

    You may purchase bonds registered in the names of employee plans in 
authorized denominations through a designated Federal Reserve Bank, as 
provided in part 360 of this chapter.



Sec. 359.37  How are definitive Series I savings bonds delivered?

    We deliver definitive bonds by mail to your address. If your address 
is within the United States, its territories or possessions, or the 
Commonwealth of Puerto Rico, we will deliver bonds at our risk. Bonds 
delivered elsewhere will be delivered at your risk; however, at our 
discretion, we may require delivery to an address within the United 
States, or refuse delivery to addresses in countries referred to in part 
211 of this chapter.



Sec. 359.38  How is payment made when definitive Series I savings bonds 
are redeemed?

    A financial institution qualified as a paying agent under the 
provisions of part 321 will pay the current redemption value of a 
definitive Series I bond presented for payment. The bond must meet the 
requirements for payment specified in part 360. You must establish your 
identity and entitlement to redemption to the satisfaction of the agent, 
in accordance with our instructions and identification guidelines, and 
must sign and complete the request for payment.



Sec. 359.39  How are redemption values calculated for definitive Series 
I savings bonds?

    We determine the redemption value of a definitive savings bonds for 
the accrual date (the first day of each month) by first determining the 
composite rate as defined in Sec. 359.13. If the result of the 
composite rate calculation is a negative value, zero will be the assumed 
composite rate in the redemption value calculation. Redemption values 
are calculated using the following formula (For examples of the 
calculation, see Appendix A to part 359):

FV = PV x {[1 + (CR / 2)] (m/6){time} 

Where:

FV (future value) = redemption value on the accrual date rounded to the 
nearest cent without consideration of penalty.
PV (present value) = redemption value at the beginning of the semiannual 
rate period calculated without consideration of penalty. For bonds that 
are older than five years, PV will equal the redemption value at the 
start of the semiannual rate period.

[[Page 448]]

CR = composite rate converted to decimal form by dividing by 100.
m = number of full calendar months elapsed during the semiannual rate 
period.



Sec. 359.40  How can I find out what my definitive Series I savings 
bonds are worth?

    (a) Redemption values. Redemption values are available for 
definitive bonds in various formats and media.
    (1) You may determine the redemption value for definitive bonds on 
the Internet at www.savingsbonds.gov.
    (2) You may download savings bonds calculators from the Internet at 
www.savingsbonds.gov.
    (3) You may obtain paper tables from the Bureau of the Public Debt, 
Parkersburg, West Virginia 26106-1328. We reserve the right to cease 
making paper tables of redemption values available.
    (b) Redemption penalty. Redemption values published in the tables 
reflect the three-month interest penalty applied to bonds redeemed prior 
to five years from the date of issue.



Sec. 359.41-359.44  [Reserved]



               Subpart C_Book-Entry Series I Savings Bonds



Sec. 359.45  How are book-entry Series I savings bonds purchased and 
held?

    Book-entry bonds must be purchased and held online through your New 
Treasury Direct account. We provide instructions for opening an account 
online at http://www.publicdebt.treas.gov.



Sec. 359.46  What are the denominations and prices of book-entry Series 
I savings bonds?

    Book-entry bonds are issued in a minimum amount of $25, with 
additional increments of one cent. Book-entry bonds are sold at par 
value.



Sec. 359.47  How is payment made for purchases of book-entry Series I 
savings bonds?

    You may only purchase book-entry Series I savings bonds online 
through your New Treasury Direct account. You may pay for your 
securities through a debit to your designated account at a United States 
depository financial institution, or by applying the redemption proceeds 
of a certificate of indebtedness held in your New Treasury Direct 
account.

[69 FR 50308, Aug. 16, 2004]



Sec. 359.48  How are redemption payments made for my redeemed book-entry 
Series I savings bonds?

    We will make payments electronically by direct deposit, using the 
ACH method, to your designated account at a United States depository 
financial institution. You may also direct that a payment be used to 
purchase a certificate of indebtedness to be held in your New Treasury 
Direct account.

[69 FR 50308, Aug. 16, 2004]



Sec. 359.49  What is the issue date of a book-entry Series I savings 
bond?

    The issue date of a book-entry Series I savings bond is the first 
day of the month in which the security posts to the current holdings of 
the account owner.

[69 FR 50308, Aug. 16, 2004]



Sec. 359.50  What amount of book-entry Series I savings bonds may I 
acquire per year?

    The principal amount of book-entry bonds that you may acquire in any 
calendar year is limited to $30,000.

[68 FR 24806, May 8, 2003]



Sec. 359.51  What book-entry Series I savings bonds are included in the 
computation?

    (a) We include all bonds that you purchased in that calendar year.
    (b) Bonds purchased as gifts or in a fiduciary capacity are not 
included in the computation for the purchaser.
    (c) Bonds transferred or delivered from one New Treasury Direct 
account to another New Treasury Direct account are included in the 
computation for the recipient, unless you have become entitled to the 
transferred bonds due to the death of the registered owner.

[68 FR 24806, May 8, 2003]

[[Page 449]]



Sec. 359.52  What happens if any person purchases book-entry Series I 
savings bonds in excess of the maximum amount?

    We reserve the right to take any action we deem necessary to adjust 
the excess, including the right to remove the excess bonds from your New 
Treasury Direct account and refund the payment price to your bank 
account of record using the ACH method of payment.



Sec. 359.53  Are taxpayer identification numbers (TINs) required for 
registration of book-entry Series I savings bonds?

    The TIN of each person named in the registration is required to 
purchase a book-entry bond.



Sec. 359.54  When is a book-entry Series I savings bonds validly issued?

    A book-entry bond is validly issued when it is posted to your New 
Treasury Direct account.



Sec. 359.55  How are redemption values calculated for book-entry Series 
I savings bonds?

    We base current redemption values (CRV) for book-entry Series I 
savings bonds on the definitive savings bonds CRV. To calculate the 
book-entry values, we use the CRV for the $100 denomination Series I 
savings bonds and calculate a CRV prorated to the book-entry par 
investment amount for the corresponding issue and redemption dates. 
Calculated book-entry CRV will be rounded to the nearest one cent.\5\ 
The formula is as follows (Examples of the calculation are given in 
Appendix A to part 359.):
---------------------------------------------------------------------------

    \5\ Example: Calculated value of $25.044 rounds to $25.04; 
calculated value of $25.045 rounds to $25.05.

[Book-entry par investment / 100] x [CRV value for $100 bond].



Sec. 359.56  How can I find out what my book-entry Series I savings 
bonds are worth?

    (a) Redemption values. You may access redemption values for your 
book-entry bonds through your New Treasury Direct account.
    (b) Redemption penalty. Redemption values shown in your New Treasury 
Direct account reflect the three-month interest penalty applied to bonds 
redeemed prior to five years from the date of issue.



Sec. Sec. 359.57-359.64  [Reserved]



                   Subpart D_Miscellaneous Provisions



Sec. 359.65  [Reserved]



Sec. 359.66  Is the Education Savings Bonds Program available for Series 
I savings bonds?

    You may be able to exclude from income for Federal income tax 
purposes all or part of the interest received on the redemption of 
qualified bonds during the year. To qualify for the program, you or the 
co-owner (in the case of definitive savings bonds) must have paid 
qualified higher education expenses during the same year. You also must 
have satisfied certain other conditions. This exclusion is known as the 
Education Savings Bonds Program. Information about the program can be 
found in Internal Revenue Service Publications. (For example, see 
Publication 17, ``Your Federal Income Tax,'' Publication 550, 
``Investment Income and Expenses,'' and Publication 970, ``Tax Benefits 
of Higher Education.'')



Sec. 359.67  Does Public Debt prohibit the issuance of Series I savings 
bonds in a chain letter scheme?

    We do not permit bonds to be issued in a chain letter or pyramid 
scheme. We authorize an issuing agent to refuse to issue a bond or 
accept a purchase order if there is reason to believe that a purchase is 
connected with a chain letter. The agent's decision is final.



Sec. 359.68  May Public Debt issue Series I savings bonds only in 
book-entry form?

    We reserve the right to issue bonds only in book-entry form.



Sec. 359.69  Does Public Debt make any reservations as to issue of 
Series I savings bonds?

    We may reject any application for Series I bonds, in whole or in 
part. We may refuse to issue, or permit to be

[[Page 450]]

issued, any bonds in any case or class of cases, if we deem the action 
to be in the public interest. Our action in any such respect is final.



Sec. 359.70  May Public Debt waive any provision in this part?

    We may waive or modify any provision of this part in any particular 
case or class of cases for the convenience of the United States or in 
order to relieve any person or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity;
    (b) If it does not impair any material existing rights; and
    (c) If we are satisfied that such action would not subject the 
United States to any substantial expense or liability.



Sec. 359.71  What is the role of Federal Reserve Banks and Branches?

    (a) Federal Reserve Banks and Branches are fiscal agents of the 
United States. They are authorized to perform such services as we may 
request of them, in connection with the issue, servicing and redemption 
of Series I bonds.
    (b) We have currently designated the following Federal Reserve 
Offices to provide savings bonds services:

------------------------------------------------------------------------
                                   Reserve district     Geographic area
         Servicing site                 served              served
------------------------------------------------------------------------
Federal Reserve Bank, Buffalo     New York, Boston..  Connecticut,
 Branch, 160 Delaware Avenue,                          Maine,
 Buffalo, NY 14202.                                    Massachusetts,
                                                       New Hampshire,
                                                       New Jersey
                                                       (Northern half),
                                                       New York, Rhode
                                                       Island, Vermont,
                                                       Puerto Rico,
                                                       Virgin Islands.
Federal Reserve Bank, Pittsburgh  Cleveland,          Delaware, Kentucky
 Branch, 717 Grant Street,         Philadelphia.       (eastern half),
 Pittsburgh, PA 15219.                                 New Jersey,
                                                       (southern half),
                                                       Ohio,
                                                       Pennsylvania,
                                                       West Virginia
                                                       (northern
                                                       panhandle).
Federal Reserve Bank of           Richmond, Atlanta.  Alabama, District
 Richmond, 701 East Byrd Street,                       of Columbia,
 Richmond, VA 23219.                                   Florida, Georgia,
                                                       Louisiana
                                                       (southern half),
                                                       Maryland,
                                                       Mississippi
                                                       (southern half),
                                                       North Carolina,
                                                       South Carolina,
                                                       Tennessee
                                                       (eastern half),
                                                       Virginia, West
                                                       Virginia (except
                                                       northern
                                                       panhandle).
Federal Reserve Bank of           Minneapolis,        Illinois (northern
 Minneapolis, 90 Hennepin          Chicago.            half), Indiana
 Avenue, Minneapolis, MN 55401.                        (northern half),
                                                       Iowa, Michigan,
                                                       Minnesota,
                                                       Montana, North
                                                       Dakota, South
                                                       Dakota,
                                                       Wisconsin.
Federal Reserve Bank of Kansas    Dallas, San         Alaska, Arizona,
 City, 925 Grand Boulevard,        Francisco, Kansas   Arkansas,
 Kansas City, MO 64106.            City, St. Louis.    California,
                                                       Colorado, Hawaii,
                                                       Idaho, Illinois
                                                       (southern half),
                                                       Indiana (southern
                                                       half), Kansas,
                                                       Kentucky (western
                                                       half), Louisiana
                                                       (northern half),
                                                       Mississippi
                                                       (northern half),
                                                       Missouri,
                                                       Nebraska, Nevada,
                                                       New Mexico,
                                                       Oklahoma, Oregon,
                                                       Tennessee
                                                       (western half),
                                                       Texas, Utah,
                                                       Washington,
                                                       Wyoming, Guam.
------------------------------------------------------------------------



Sec. 359.72  May the United States supplement or amend the offering of 
Series I savings bonds?

    We may supplement or amend the terms of this offering of Series I 
bonds at any time.

          Appendix A to Part 359--Redemption Value Calculations

              1. What are some general tax considerations?

    Interest on savings bonds is subject to taxes imposed under the 
Internal Revenue Code of 1986, as amended. The bonds are exempt from 
taxation by any State or political subdivision of a State, except for 
estate or inheritance taxes. (See 31 U.S.C. 3124.)

2. What is an example of a book-entry Series I savings bonds redemption 
                           value calculation?

    Assume a New Treasury Direct par investment amount in a book-entry 
Series I savings bonds of $34.59, with an issue date of May, 2001, and a 
redemption date of December, 2001. The published CRV for a definitive 
$100 Series I savings bonds issued May, 2001 and redeemed December, 2001 
= $101.96.

Calculation:
[(Book-entry par investment) / (100)] x CRV value for $100 bond
[(34.59 / 100)] x 101.96
[0.3459] x 101.96

[[Page 451]]

 35.267964
= $35.27

     Appendix B to Part 359--Composite Semiannual Rate Period Table

    1. What months make up the composite semiannual rate period?
    You may use the following table to find when a bond's semiannual 
rate period begins and when we'll announce the rate that applies during 
each period.

----------------------------------------------------------------------------------------------------------------
                                   Then its semiannual
  If your Bond has an issue date   rate period begins--  We announce the rate that applies during a rate period
               of--                                                               in--
----------------------------------------------------------------------------------------------------------------
January..........................  January 1..........  November 1 (of the previous year).
                                   July 1.............  May 1.
February.........................  February 1.........  November 1 (of the previous year).
                                   August 1...........  May 1.
March............................  March 1............  November 1 (of the previous year).
                                   September 1........  May 1.
April............................  April 1............  November 1 (of the previous year).
                                   October 1..........  May 1.
May..............................  May 1..............  May 1.
                                   November 1.........  November 1.
June.............................  June 1.............  May 1.
                                   December 1.........  November 1.
July.............................  July 1.............  May 1.
                                   January 1..........  November 1 (of the previous year).
August...........................  August 1...........  May 1.
                                   February 1.........  November 1 (of the previous year).
September........................  September 1........  May 1
                                   March 1............  November 1 (of the previous year).
October..........................  October 1..........  May 1.
                                   April 1............  November 1 (of the previous year).
November.........................  November 1.........  November 1.
                                   May 1..............  May 1.
December.........................  December 1.........  November 1.
                                   June 1.............  May 1.
----------------------------------------------------------------------------------------------------------------

            Appendix C to Part 359--Investment Considerations

    1. What are some index contingencies?
    (a) If a previously reported CPI-U is revised, we will continue to 
use the previously reported CPI-U in calculating redemption values.
    (b) If the CPI-U is rebased to a different year, we will continue to 
use the CPI-U based on the base reference period in effect when the 
security was first issued, as long as that CPI-U continues to be 
published.
    (c) If, while an inflation-indexed savings bonds is outstanding, the 
applicable CPI-U is discontinued or, in the judgment of the Secretary, 
fundamentally altered in a manner materially adverse to the interests of 
an investor in the security, or, in the judgment of the Secretary, 
altered by legislation or Executive Order in a manner materially adverse 
to the interests of an investor in the security, Treasury, after 
consulting with the Bureau of Labor Statistics or any successor agency, 
will substitute an appropriate alternative index. Treasury will then 
notify the public of the substitute index and how it will be applied. 
The Secretary's determinations in this regard will be final.
    (d) If the CPI-U for a particular month is not reported by the last 
day of the following month, we will announce an index number based on 
the last 12-month change in the CPI-U available. Any calculations of our 
payment obligations on the inflation-indexed savings bonds that rely on 
that month's CPI-U will be based on the index number that we have 
announced.
    2. How will inflation lag affect my Series I savings bonds?
    The inflation rate component of investor earnings will be determined 
twice each year. This rate will be the percentage change in the CPI-U 
for the six months ending each March and September. The rate will be 
included in the composite rate that is announced each May and November. 
For Series I bonds offered from September 1, 1998, through October 31, 
1998, the inflation rate component of investor earnings will be the 
percentage change in the CPI-U for the six months ending March 31, 1998. 
This rate will be included in the composite rate that is announced for 
Series I bonds offered effective from September 1, 1998, through October 
31, 1998. In the event the Secretary, or the Secretary's designee, 
announces a composite rate at an effective date other than May 1 or 
November 1, the announcement will specify the period to be used to 
calculate the semiannual inflation rate. Each composite rate

[[Page 452]]

will be effective for the entirety of the applicable rate period that 
begins while the rate is in effect. Thus, an inflation rate may affect 
interest accruals from 3 to 13 months from the date that the CPI-U is 
measured.

    Example 1. The inflation rate determined from the CPI-U for the six-
month period from October, 2003, through March, 2004, will be included 
in the composite rate announced in May, 2004. For a bond purchased in 
May 1999, this rate would go into effect immediately, since a new 
semiannual rate period for this bond will begin in May, 2004. Series I 
bonds issued in May begin new semiannual rate periods in the months of 
May and November. In this example, the inflation rate will have its 
earliest impact in June 2004, when interest from May accrues, three 
months after the end of the six-month CPI-U period that ends in March, 
2004.
    Example 2. The May 1, 2004, rate will apply similarly to a bond 
purchased in October 1999. Series I bonds issued in October begin new 
semiannual rate periods in the months of April and October. Thus, for 
this bond, the May 1, 2004, composite rate (which includes the inflation 
rate) will not go into effect until a new semiannual rate period begins 
on October 1, 2004. This rate, therefore, will determine the inflation-
indexed portion of each interest accrual from November, 2004, through 
April, 2005. In this example, the inflation rate will have its latest 
impact in April 2005, 13 months following the six-month CPI-U period 
that ended March 31, 2004.

               Appendix D to Part 359--Tax Considerations

    1. What are some general tax considerations?
    General. Interest is subject to all taxes imposed under the Internal 
Revenue Code of 1986, as amended. The bonds are also subject to Federal 
and State estate, inheritance, gift, or other excise taxes. The bonds 
are exempt from all other taxation by any State or local taxing 
authority.
    2. What reporting methods are available for savings bonds?
    (a) Reporting methods. You may use either of the following two 
methods for reporting the increase in the redemption value of the bond 
for Federal income tax purposes:
    (1) Cash basis method. You may defer reporting the increase to the 
year of final maturity, redemption, or other disposition, whichever is 
earliest; or
    (2) Accrual basis method. You may elect to report the increase each 
year, in which case the election applies to all Series I bonds that you 
then own, those subsequently acquired, and to any other obligations 
purchased on a discount basis, such as savings bonds of Series E or EE.
    (b) Changing methods. If you use the cash basis method, you may 
change to the accrual basis method without obtaining permission from the 
Internal Revenue Service. However, once you elect to use the accrual 
basis method in paragraph (a)(2), you may change the method of reporting 
the increase only by following the specific procedures prescribed by the 
Internal Revenue Service for making an automatic method change. For 
further information, you may contact the Internal Revenue Service 
director for your area, or the Internal Revenue Service, Washington, DC 
20224.
    3. What transactions have potential tax consequences?
    The following types of transactions, among others, may have 
potential tax consequences:
    (a) A reissue that affects the rights of any of the persons named on 
a definitive Series I savings bonds may have tax consequences for the 
owner.
    (b) The transfer of a book-entry Series I savings bonds from one 
owner to another may have tax consequences for the purchaser.
    (c) The redemption of a book-entry Series I savings bonds by the 
secondary owner may have tax consequences for the primary owner.
    (d) The purchase of a Series I savings bonds as a gift may have gift 
tax consequences for the purchaser.

[67 FR 64278, Oct. 17, 2002, as amended at 68 FR 24806, May 8, 2003]



PART 360_REGULATIONS GOVERNING DEFINITIVE UNITED STATES SAVINGS BONDS, 
SERIES I--Table of Contents




                      Subpart A_General Information

Sec.
360.0 Applicability.
360.1 Official agencies.
360.2 Definitions.
360.3 Converting definitive savings bonds to book-entry bonds in New 
          Treasury Direct.

                         Subpart B_Registration

360.5 General rules.
360.6 Authorized forms of registration.
360.7 Chain letters prohibited.

                Subpart C_Limitations on Annual Purchases

360.10 Amounts which may be purchased.
360.11 Computation of amount.
360.12 Disposition of excess.
360.13 Employee plans--Conditions of eligibility.

[[Page 453]]

               Subpart D_Limitations on Transfer or Pledge

360.15 Transfer.
360.16 Pledge.

                     Subpart E_Judicial Proceedings

360.20 General.
360.21 Payment to judgment creditors.
360.22 Payment or reissue pursuant to divorce.
360.23 Evidence.
360.24 Payment pursuant to judicial or administrative forfeiture.

 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds

360.25 General.
360.26 Application for relief; after receipt of bond.
360.27 Application for relief; nonreceipt of bond.
360.28 Recovery or receipt of bond before or after relief is granted.
360.29 Adjudication of claims.

                Subpart G_General Provisions for Payment

360.35 Payment (redemption).
360.36 Payment during life of sole owner.
360.37 Payment during lives of both coowners.
360.38 Payment during lifetime of owner of beneficiary bond.
360.39 Surrender for payment.
360.40 Special provisions for payment.
360.41 Partial redemption.
360.42 Nonreceipt or loss of remittance issued in payment.
360.43 Effective date of request for payment.
360.44 Withdrawal of request for payment.

              Subpart H_Reissue and Denominational Exchange

360.45 General.
360.46 Effective date of request for reissue.
360.47 Authorized reissue; during lifetime.
360.48 Restrictions on reissue; denominational exchange.
360.49 Correction of errors.
360.50 Change of name.
360.51 Requests for reissue.

                      Subpart I_Certifying Officers

360.55 Individuals authorized to certify.
360.56 General instructions and liability.
360.57 When a certifying officer may not certify.
360.58 Forms to be certified.

     Subpart J_Minors, Incompetents, Aged Persons, Absentees, et al.

360.60 Payment to representative of an estate.
360.61 Payment after death.
360.62 Payment to minor.
360.63 Payment to a parent or other person on behalf of a minor.
360.64 Payment or reinvestment--voluntary guardian of an incapacitated 
          person.
360.65 Reissue.

            Subpart K_Deceased Owner, Coowner or Beneficiary

360.70 General rules governing entitlement.
360.71 Decedent's estate.
360.72 [Reserved]

                          Subpart L_Fiduciaries

360.75 Payment or reissue during the existence of the fiduciary estate.
360.76 Payment or reissue after termination of the fiduciary estate.

                   Subpart M_Miscellaneous Provisions

360.90 Waiver of regulations.
360.91 Additional requirements; bond of indemnity.
360.92 Supplements, amendments, or revisions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 3105 and 3125.

    Source: 63 FR 38049, July 14, 1998, unless otherwise noted.



                      Subpart A_General Information



Sec. 360.0  Applicability.

    (a) The regulations in this part apply to definitive (paper) Series 
I savings bonds that have not been converted to book-entry bonds through 
New Treasury Direct.
    (b) The regulations in 31 CFR part 363 apply to:
    (1) book-entry Series I savings bonds that were originally issued as 
book-entry bonds in New Treasury Direct; and
    (2) definitive Series I savings bonds that have been converted to 
book-entry bonds through New Treasury Direct.

[70 FR 14942, Mar. 23, 2005]



Sec. 360.1  Official agencies.

    (a) The Bureau of the Public Debt of the Department of the Treasury 
is responsible for administering the Savings

[[Page 454]]

Bond Program. Authority to process transactions has been delegated to 
Federal Reserve Banks and Branches listed in paragraph (b) of this 
section, as fiscal agents of the United States. The Federal Reserve 
Banks and Branches, and their authority to process transactions, as 
fiscal agents of the United States, are subject to change, as determined 
by the Secretary of the Treasury, or his or her designee.
    (b) Communications concerning transactions and requests for forms 
should be addressed to:
    (1) A Federal Reserve Bank or Branch in the list below; or, the 
Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-1328.
    (2) The following Federal Reserve Offices have been designated to 
provide savings bond services:

----------------------------------------------------------------------------------------------------------------
            Servicing office                Reserve district served              Geographic area served
----------------------------------------------------------------------------------------------------------------
Federal Reserve Bank, Buffalo Branch,     New York, Boston...........  Connecticut, Maine, Massachusetts, New
 160 Delaware Avenue, Buffalo, NY 14202.                                Hampshire, New Jersey, (northern half),
                                                                        New York, Rhode Island, Vermont, Puerto
                                                                        Rico, Virgin Islands.
Federal Reserve Bank, Pittsburgh Branch,  Cleveland, Philadelphia....  Delaware, Kentucky (eastern half), New
 717 Grant Street, Pittsburgh, PA 15219.                                Jersey, (southern half), Ohio,
                                                                        Pennsylvania, West Virginia.
Federal Reserve Bank of Richmond, 701     Richmond, Atlanta..........  Alabama, District of Columbia, Florida,
 East Byrd Street, Richmond, VA 23219.                                  Georgia, Louisiana, (southern half),
                                                                        Maryland, Mississippi (southern half),
                                                                        North Carolina, South Carolina,
                                                                        Tennessee (eastern half), Virginia, West
                                                                        Virginia (except northern panhandle).
Federal Reserve Bank of Minneapolis, 90   Minneapolis, Chicago.......  Illinois (northern half), Indiana,
 Hennepin Avenue, Minneapolis, MN 55401.                                (northern half), Iowa, Michigan,
                                                                        Minnesota, Montana, North Dakota, South
                                                                        Dakota, Wisconsin.
Federal Reserve Bank of Kansas City, 925  Dallas, San Francisco,       Alaska, Arizona, Arkansas, California,
 Grand Boulevard, Kansas City, MO 64106.   Kansas City, St. Louis.      Colorado, Hawaii, Idaho, Illinois
                                                                        (southern half), Indiana (southern
                                                                        half), Kansas, Kentucky, (western half),
                                                                        Louisiana (northern half), Mississippi
                                                                        (northern half), Missouri, Nebraska,
                                                                        Nevada, New Mexico, Oklahoma, Oregon,
                                                                        Tennessee (western half), Texas, Utah,
                                                                        Washington, Wyoming, Guam.
----------------------------------------------------------------------------------------------------------------

    (c) Notices and documents must be filed with the agencies referred 
to in paragraphs (a) and (b) of this section and as indicated in the 
regulations in this part.



Sec. 360.2  Definitions.

    (a) Bond, or Series I savings bonds, as used in this part, means a 
definitive United States Savings Bonds of Series I.
    (b) Converted savings bond means a savings bond originally issued as 
a definitive bond that has been surrendered to us and converted to a 
book-entry savings bond to be maintained by Treasury solely as a 
computer record.
    (c) Incompetent means an individual who is incapable of handling his 
or her business affairs because of a legal, mental or medical 
disability, except that a minor is not an incompetent solely because of 
age.
    (d) Issuing agent means an organization that has been qualified 
under the provisions of Department of the Treasury Circular, Public Debt 
Series No. 4-67, as revised and amended (31 CFR part 317), to issue 
savings bonds.
    (e) Paying agent means a financial institution that has been 
qualified under the provisions of Department of the Treasury Circular 
No. 750, as revised and amended (31 CFR part 321), to make payment of 
savings bonds.
    (f) Payment means redemption, unless otherwise indicated by the 
context.
    (g) Person means a legal entity including an individual or fiduciary 
estate.
    (h) Personal trust estates means trust estates established by 
natural persons in their own right for the benefit of themselves or 
other natural persons in whole or in part, and common trust funds 
comprised in whole or in part of such trust estates.
    (i) Reissue means the cancellation and retirement of a bond and the 
issuance of a new bond or bonds of the same series, same issue date, and 
same total face amount.

[[Page 455]]

    (j) Representative of the estate of a minor, incompetent, aged 
person, absentee, et al. means the court-appointed or otherwise 
qualified person, regardless of title, who is legally authorized to act 
for the individual. The term does not include parents in their own 
right, voluntary or natural guardians, attorneys-in-fact, trustees of 
personal and similar trust estates, or the executors or administrators 
of decedents' estates.
    (k) Surrender means the actual receipt of a definitive bond with an 
appropriate request for payment or reissue by either a Federal Reserve 
Bank or Branch or the Bureau of the Public Debt, or, if a paying agent 
is authorized to handle the transaction, the actual receipt of the 
definitive bond and the request for payment by the paying agent.
    (l) Taxpayer Identifying Number means a social security account 
number or an employer identification number.
    (m) Voluntary guardian means an individual who is recognized as 
authorized to act for an incompetent, as provided by Sec. 360.64.
    (n) Voluntary representative means the person qualified by the 
Department of the Treasury to request payment or distribution of a 
decedent's savings bonds pursuant to Sec. 360.71.

[63 FR 38049, July 14, 1998, as amended at 67 FR 64268, Oct. 17, 2002; 
70 FR 14942, Mar. 23, 2005; 70 FR 57432, Sept. 30, 2005]



Sec. 360.3  Converting definitive savings bonds to book-entry bonds 
in New Treasury Direct.

    Series I savings bonds that were originally issued as definitive 
bonds may be converted to book-entry bonds through New Treasury Direct, 
an online system for holding Treasury securities. The Web address for 
New Treasury Direct is www.treasurydirect.gov. Bond owners who wish to 
convert their definitive savings bonds should follow online instructions 
for conversion. Regulations governing converted bonds are found at 31 
CFR part 363.

[70 FR 14942, Mar. 23, 2005]



                         Subpart B_Registration



Sec. 360.5  General rules.

    (a) Registration is conclusive of ownership. Savings bonds of Series 
I are issued only in registered form. The registration must express the 
actual ownership of, and interest in, the bond. The registration is 
conclusive of ownership, except as provided in Sec. 360.49.
    (b) Requests for registration. (1) Registrations requested must be 
clear, accurate and complete, conform substantially with one of the 
forms set forth in this subpart, and include the taxpayer identifying 
number of the owner or first-named coowner. The registration of all 
bonds owned by the same individual or fiduciary estate should be uniform 
with respect to the name of the owner and any description of the 
fiduciary capacity.
    (2) An individual should be designated by the name he or she is 
ordinarily known by or uses in business, including at least one full 
given name. The name may be preceded or followed by any applicable 
title, such as Mr., Mrs., Ms., Miss, Dr., Rev., M.D., or D.D. A suffix, 
such as Sr. or Jr., must be included when ordinarily used or when 
necessary to distinguish the owner from another member of his family. A 
married woman's own first name, not that of her husband, must be used, 
for example, Mary A. Jones or Mrs. Mary A. Jones, NOT Mrs. Frank B. 
Jones. The address must include, where appropriate, the number and 
street, route, or any other local feature, city, State, and ZIP Code.
    (c) Inscription of bonds purchased as gifts. If the bonds are 
purchased as gifts, awards, prizes, etc., and the taxpayer identifying 
numbers of the intended owners are not known, the purchaser's number 
must be furnished. Bonds so inscribed will not be associated with the 
purchaser's own holdings. A bond registered in the name of a purchaser 
with another person as coowner or beneficiary is not considered a gift 
or an award. If the purchaser so requests, a bond may be inscribed to 
provide a ``Mail to'' instruction, followed by a delivery name and 
address. No rights of ownership are conferred on such designee.

[[Page 456]]



Sec. 360.6  Authorized forms of registration.

    Subject to any limitations or restrictions contained in these 
regulations on the right of any person to be named as owner, coowner, or 
beneficiary, bonds should be registered as indicated in this section. A 
savings bond inscribed in a form not substantially in agreement with one 
of the forms authorized by this subpart is not considered validly 
issued.
    (a) Natural persons. A bond may be registered in the names of 
individuals in their own right, but only in one of the forms authorized 
by this paragraph (a).
    (1) Single ownership form. A bond may be registered in the name of 
one individual.

    Example: Julie B. Jones, 123-45-6789.

    (2) Coownership form. A bond may be registered in the names of two 
individuals in the alternative as coowners. The form of registration ``A 
and B'' is not authorized.

    Examples: David R. Johnson 123-45-6789 or Anna B. Johnson. Maria S. 
Gonzalez 987-65-4321 or Juan C. Gonzalez.

    (3) Beneficiary form. A bond may be registered in the name of one 
individual payable on death to another. ``Payable on death to'' may be 
abbreviated to ``P.O.D.''.

    Examples: Catherine B. Jordan 123-45-6789 payable on death to Daniel 
A. Jordan. Henry C. Rodriguez 123-45-6789 P.O.D. Maria S. Rodriguez.

    (b) Fiduciaries (including legal guardians, trustees, and similar 
representatives)--(1) General. A bond may be registered in the name of 
any person or persons or any organization acting as fiduciary of a 
single fiduciary estate, but not where the fiduciary will hold the bond 
merely or principally as security for the performance of a duty, 
obligation, or service. A bond's registration should conform to a form 
authorized by this paragraph. A common trust fund established and 
maintained by a financial institution authorized to act as a fiduciary 
will be considered a single fiduciary estate within the meaning of the 
regulations in this part.
    (2) Legal guardians, conservators, similar representatives, certain 
custodians, etc. A bond may be registered in the name and fiduciary 
capacity of the legally appointed or authorized representative of the 
estate of a minor, incompetent, aged or infirm person, absentee, et al., 
or of a personal or testamentary trust.

    Examples: Tenth National Bank, Guardian (or Conservator, Trustee, 
etc.) of the Estate of George N. Brown 123-45-6789, a minor (or an 
incompetent, aged person, infirm person, or absentee). Henry C. Smith, 
Conservator of the Estate of John R. White 123-45-6789, an adult, 
pursuant to Sec. 633.572 of the Iowa Code. Juan B. Gonzalez 123-45-6789, 
a minor (or an incompetent) under custodianship by designation of the 
Veterans Administration. Frank M. Redd 123-45-6789, an incompetent for 
whom Eric A. Redd has been designated trustee by the Department of the 
Army pursuant to 37 U.S.C. 602. Richard A. Rowe 123-45-6789, for whom 
Reba L. Rowe is representative payee for social security benefits (or 
black lung benefits, as the case may be). Henry L. Green 123-45-6789 or 
George M. Brown, a minor under legal guardianship of the Tenth National 
Bank. Henry L. Green 123-45-6789 P.O.D. George M. Brown, a minor under 
legal guardianship of the Tenth National Bank. Harbor State Hospital and 
School, selected payee for Beth R. Weber 123-45-6789, a Civil Service 
annuitant, pursuant to 5 U.S.C. 8345(e). John F. Green or Mary B. Doe, 
Trustees of the Estate of Moe Green 123-45-6789. Thomas J. White and 
Tenth National Bank, Trustees under the Will of Robert J. Benjamin, 
deceased 12-3456789. Tenth National Bank, Trustee under Agreement with 
Mark S. Dunston, dated 2/1/98, 12-3456789. Ruth B. Grace and Pat A. 
Banks, Trustees under Agreement with Susan L. Chambers, dated 7/30/97, 
12-3456789. Dennis R. Adams, Trustee under Declaration of Trust, dated 
5/1/98, 12-3456789.

    (3) Employee thrift, savings, vacation and similar plans. Bonds may 
be registered in the name and title, or title alone, of the trustee of 
an eligible employee thrift, savings, vacation, 401(k) or similar plan, 
as defined in Sec. 360.13. If the instrument creating the trust 
provides that the trustees shall serve for a limited term, their names 
may be omitted.

    Examples: Tenth National Bank, trustee of Pension Fund of Safety 
Manufacturing Company, U/A with the company, dated March 31, 1996, 12-
3456789.
    Trustees of Retirement Fund of Safety Manufacturing Company, under 
directors' resolution adopted March 31, 1996, 12-3456789.

[[Page 457]]

    County Trust Company, trustee of the Employee Savings Plan of Jones 
Company, Inc., U/A dated January 17, 1996, 12-3456789.
    Trustees of the Employee Savings Plan of Brown Brothers, Inc., U/A 
dated January 20, 1996, 12-3456789.

    (c) The United States Treasury. A person who desires to have a bond 
become the property of the United States upon his or her death may 
designate the United States Treasury as beneficiary.

    Example: George T. Jones 123-45-6789 P.O.D. the United States 
Treasury.



Sec. 360.7  Chain letters prohibited.

    The issuance of bonds in the furtherance of a chain letter, pyramid, 
or similar scheme is against the public interest and is prohibited.



                Subpart C_Limitations on Annual Purchases



Sec. 360.10  Amounts which may be purchased.

    The amount of savings bonds of Series I which may be purchased and 
held, in the name of any one person in any one calendar year, is 
computed according to the provisions of Sec. 360.11 and is limited as 
follows:
    (a) General annual limitation, $30,000 (par value).
    (b) Special limitation, $4,000 (par value) multiplied by the highest 
number of employees participating in an eligible employee plan, as 
defined in Sec. 360.13, at any time during the calendar year in which 
the bonds are issued.



Sec. 360.11  Computation of amount.

    (a) General. The purchases of bonds in the name of any person in an 
individual capacity are computed separately from purchases in a 
fiduciary capacity, e.g., as representative for the estate of an 
individual.
    (b) Bonds included in computation. In computing the purchases for 
each person, the following outstanding bonds are included:
    (1) All bonds registered in the name and bearing the taxpayer 
identifying number of that person alone;
    (2) All bonds registered in the name of the representative of the 
estate of that person and bearing that person's taxpayer identifying 
number; and
    (3) All bonds registered in the name of that person as coowner that 
also bear that person's taxpayer identifying number.
    (c) Bonds excluded from computation. In computing the purchases for 
each person, the following are excluded:
    (1) Bonds on which that person is named beneficiary;
    (2) Bonds to which that person has become entitled--
    (i) Under Sec. 360.70 as surviving beneficiary upon the death of 
the registered owner;
    (ii) As an heir or a legatee of the deceased owner;
    (iii) By virtue of the termination of a trust or the happening of a 
similar event; and
    (3) Bonds that are purchased and redeemed within the same calendar 
year.



Sec. 360.12  Disposition of excess.

    If any person at any time has savings bonds issued during any one 
calendar year in excess of the prescribed amount, instructions should be 
obtained from the Bureau of the Public Debt, Parkersburg, WV 26106-1328, 
for appropriate adjustment of the excess. Under the conditions specified 
in Sec. 360.90, the Commissioner of the Public Debt may permit excess 
purchases to stand in any particular case or class of cases.



Sec. 360.13  Employee plans--Conditions of eligibility.

    (a) Definition of plan. Employee thrift, savings, vacation, 401(k), 
and similar plans are contributory plans established by the employer for 
the exclusive and irrevocable benefit of its employees or their 
beneficiaries. Each plan must afford employees the means of making 
regular savings from their wages through payroll deductions and provide 
for employer contributions to be added to these savings.
    (b) Definition of terms used in this section. (1) The term assets 
means all the employees' contributions and assets purchased with them 
and the employer's contributions and assets purchased with them, as well 
as accretions, such as dividends on stock, the increment in value on 
bonds and all other income;

[[Page 458]]

but, notwithstanding any other provision of this section, the right to 
demand and receive all assets credited to the account of an employee 
shall not be construed to require the distribution of assets in kind 
when it would not be possible or practicable to make such a 
distribution; for example, Series I bonds may not be reissued in 
unauthorized denominations.
    (2) The word beneficiary means:
    (i) The person or persons, if any, designated by the employee in 
accordance with the terms of the plan to receive the benefits of the 
plan upon the employee's death; or
    (ii) The estate of the employee.
    (c) Conditions of eligibility. An employee plan must conform to the 
following rules in order to be eligible for the special limitation 
provided in Sec. 360.10.
    (1) Crediting of assets. All assets of a plan must be credited to 
the individual accounts of participating employees and may be 
distributed only to them or their beneficiaries, except as provided in 
paragraph (c)(3) of this section.
    (2) Purchase of bonds. Bonds may be purchased only with assets 
credited to the accounts of participating employees and only if the 
amount taken from any account at any time for that purpose is equal to 
the purchase price of a $50 bond or bonds in an authorized denomination 
or denominations, and shares in the bonds are credited to the accounts 
of the individuals from which the purchase price was derived, in amounts 
corresponding with their shares. For example, if $100 credited to the 
account of John Jones is commingled with funds credited to the accounts 
of other employees to make a total of $5,000 with which a Series I bond 
in the denomination of $5,000 (face amount) is purchased in December 
1998 and registered in the name and title of the trustee, the plan must 
provide, in effect, that John Jones' account be credited to show that he 
is the owner of a Series I bond in the denomination of $100 (face 
amount) bearing an issue date of December 1, 1998.
    (3) Irrevocable right of withdrawal. Each participating employee has 
an irrevocable right to request and receive from the trustee all assets 
credited to the employee's account (or their value, if the employee 
prefers) without regard to any conditions other than the loss or 
suspension of the privilege of participating further in the plan. A plan 
may limit or modify such right in any manner required for qualification 
of the plan under section 401 of the Internal Revenue Code of 1986, as 
amended (26 U.S.C. 401).
    (4) Rights of beneficiary. Upon the death of an employee, his or her 
beneficiary shall have the absolute and unconditional right to demand 
and receive from the trustee all assets credited to the account of the 
employee or their value, if he or she so prefers.
    (5) Reissue or payment upon distribution. (i) When settlement is 
made with an employee or his or her beneficiary with respect to any bond 
registered in the name and title of the plan trustee in which the 
employee has a share, the bond must be paid or reissued to the extent of 
the share.
    (ii) If an employee or the beneficiary is to receive distribution in 
kind, bonds bearing the same issue dates as those credited to the 
employee's account will be reissued in the name of the employee or the 
employee's beneficiary to the extent entitled, in authorized 
denominations, in any authorized form of registration, upon the request 
and certification of the trustee.
    (d) Application for special limitation. A trustee of an employee 
plan who desires to purchase bonds under the special limitation should 
submit to the designated Federal Reserve Bank or Branch a copy of:
    (1) The plan;
    (2) Any instructions issued under the plan that concern Series I 
bonds; and
    (3) The trust agreement, in order to establish the plan's 
eligibility.
    (e) Vacation plans. Savings bonds may be purchased under certain 
vacation plans. Questions concerning the eligibility of these plans to 
purchase bonds in excess of the general limitation should be addressed 
to the Bureau of the Public Debt, Parkersburg, WV 26106-1328.

[[Page 459]]



               Subpart D_Limitations on Transfer or Pledge



Sec. 360.15  Transfer.

    Savings bonds are not transferable and are payable only to the 
owners named on the bonds, except as specifically provided in these 
regulations and then only in the manner and to the extent so provided.



Sec. 360.16  Pledge.

    A savings bond may not be hypothecated, pledged, or used as security 
for the performance of an obligation.



                     Subpart E_Judicial Proceedings



Sec. 360.20  General.

    (a) The Department of the Treasury will not recognize a judicial 
determination that gives effect to an attempted voluntary inter vivos 
transfer of a bond, or a judicial determination that impairs the rights 
of survivorship conferred by the regulations in this part upon a coowner 
or beneficiary. All provisions of this subpart are subject to these 
restrictions, except as provided in Sec. 360.24.
    (b) The Department of the Treasury will recognize a claim against an 
owner of a savings bond and conflicting claims of ownership of, or 
interest in, a bond between coowners or between the registered owner and 
the beneficiary, if established by valid judicial proceedings, but only 
as specifically provided in this subpart. Section 360.23 specifies the 
evidence required to establish the validity of the judicial proceedings.
    (c) The Department of the Treasury and the agencies that issue, 
reissue, or redeem savings bonds will not accept a notice of an adverse 
claim or notice of pending judicial proceedings, nor undertake to 
protect the interests of a litigant not in possession of a savings bond.



Sec. 360.21  Payment to judgment creditors.

    (a) Purchaser or officer under levy. The Department of the Treasury 
will pay (but not reissue) a savings bond to the purchaser at a sale 
under a levy or to the officer authorized under appropriate process to 
levy upon property of the registered owner or coowner to satisfy a money 
judgment. Payment will be made only to the extent necessary to satisfy 
the money judgment. The amount paid is limited to the redemption value 
60 days after the termination of the judicial proceedings. Except in the 
case of a levy by the Internal Revenue Service, payment of a bond 
registered in coownership form pursuant to a judgment or a levy against 
only one coowner is limited to the extent of that coowner's interest in 
the bond. That interest must be established by an agreement between the 
coowners or by a judgment, decree, or order of a court in a proceeding 
to which both coowners are parties. Payment of a bond registered in 
coownership form pursuant to a levy by the Internal Revenue Service will 
be made if the levy is against either coowner on the bond.
    (b) Trustee in bankruptcy, receiver, or similar court officer. The 
Department of the Treasury will pay, at current redemption value, a 
savings bond to a trustee in bankruptcy, a receiver of an insolvent's 
estate, a receiver in equity, or a similar court officer under the 
provisions of paragraph (a) of this section.



Sec. 360.22  Payment or reissue pursuant to divorce.

    (a) Divorce. (1) The Department of the Treasury will recognize a 
divorce decree that ratifies or confirms a property settlement agreement 
disposing of bonds or that otherwise settles the interests of the 
parties in a bond. Reissue of a savings bond may be made to eliminate 
the name of one spouse as owner, coowner, or beneficiary or to 
substitute the name of one spouse for that of the other spouse as owner, 
coowner, or beneficiary pursuant to the decree. However, if the bond is 
registered in the name of one spouse with another person as coowner, 
there must be submitted either:
    (i) A request for reissue by the other person; or
    (ii) a certified copy of a judgment, decree, or court order entered 
in proceedings to which the other person and

[[Page 460]]

the spouse named on the bond are parties, determining the extent of the 
interest of that spouse in the bond. Reissue will be permitted only to 
the extent of that spouse's interest.
    (2) The evidence required under Sec. 360.23 must be submitted in 
every case. When the divorce decree does not set out the terms of the 
property settlement agreement, a certified copy of the agreement must be 
submitted. Payment, rather than reissue, will be made if requested.
    (b) Date for determining rights. When payment or reissue under this 
section is to be made, the rights of the parties will be those existing 
under the regulations current at the time of the entry of the final 
judgment, decree, or court order.



Sec. 360.23  Evidence.

    (a) General. To establish the validity of judicial proceedings, 
certified copies of the final judgment, decree, or court order, and of 
any necessary supplementary proceedings, must be submitted. If the 
judgment, decree, or court order was rendered more than six months prior 
to the presentation of the bond, there must also be submitted a 
certification from the clerk of the court, under court seal, dated 
within six months of the presentation of the bond, showing that the 
judgment, decree, or court order is in full force.
    (b) Trustee in bankruptcy or receiver of an insolvent's estate. A 
request for payment by a trustee in bankruptcy or a receiver of an 
insolvent's estate must be supported by appropriate evidence of 
appointment and qualification. The evidence must be certified by the 
clerk of the court, under court seal, as being in full force on a date 
that is not more than six months prior to the presentation of the bond.
    (c) Receiver in equity or similar court officer. A request for 
payment by a receiver in equity or a similar court officer, other than a 
receiver of an insolvent's estate, must be supported by a copy of an 
order that authorizes the presentation of the bond for redemption, 
certified by the clerk of the court, under court seal, as being in full 
force on a date that is not more than six months prior to the 
presentation of the bond.



Sec. 360.24  Payment pursuant to judicial or administrative forfeiture.

    (a) Definitions. As used in this part:
    (1) Contact point means the individual designated to receive 
referrals from the Bureau of the Public Debt, as provided for in this 
section, by the Federal investigative agency, United States Attorney's 
Office, or forfeiting agency specified in Public Debt Form 1522.
    (2) Forfeiting agency means the federal law enforcement agency 
responsible for the forfeiture.
    (3) Forfeiture. (i) Administrative forfeiture means the process by 
which property may be forfeited by a federal agency rather than through 
judicial proceedings.
    (ii) Judicial forfeiture means either a civil or a criminal 
proceeding in a United States District Court that may result in a final 
judgment and order of forfeiture.
    (4) Public Debt Form 1522 means the written notification of the 
forfeiture provided by the forfeiting agency to the Bureau of the Public 
Debt on a Public Debt Form 1522 SPECIAL FORM OF REQUEST FOR PAYMENT OF 
UNITED STATES SAVINGS AND RETIREMENT SECURITIES WHERE USE OF A DETACHED 
REQUEST IS AUTHORIZED. Public Debt Form 1522 must specify: the contact 
point; the issue date of each bond; the serial number for each bond; the 
date of forfeiture; the forfeiture fund to which payment is to be made; 
and be signed by an individual authorized by the forfeiting agency. The 
forfeited bonds and the completed Public Debt Form 1522 are to be mailed 
to the Department of the Treasury, Bureau of the Public Debt, 
Parkersburg, WV 26106-1328.
    (b) Forfeiture of bond. (1) Upon receipt and review of the Public 
Debt Form 1522, as described in paragraph (a)(4) of this section, the 
Bureau of the Public Debt will make payment to the forfeiture fund 
specified on the form.
    (2) The Bureau of the Public Debt will record the forfeiture, the 
forfeiture fund into which the proceeds were paid, the contact point, 
and any related information.
    (3) The Bureau of the Public Debt will rely exclusively upon the 
information provided by the Federal agency in the Public Debt Form 1522 
and will not

[[Page 461]]

make any independent evaluation of the validity of the forfeiture order, 
the request for payment, or the authority of the individual signing the 
request for payment.
    (4) The amount paid is limited to the redemption value of the 
savings bonds as of the date of forfeiture specified in the Public Debt 
Form 1522.
    (c) Inquiry from previous owner. (1) Upon payment made pursuant to 
paragraph (b) of this section, all inquiries from the previous owner, 
including requests for payment, reissue, or applications for relief, 
related to forfeited savings bonds, will be referred by the Bureau of 
the Public Debt to the contact point named in the Public Debt Form 1522.
    (2) The Bureau of the Public Debt will notify the submitter of the 
inquiry of the referral to the contact point.
    (3) The Bureau of the Public Debt will not investigate the inquiry 
and will defer to the forfeiting agency's determination of the 
appropriate course of action, including settlement where appropriate. 
Any settlement will be paid from the forfeiture fund into which the 
proceeds were deposited.



 Subpart F_Relief for Loss, Theft, Destruction, Mutilation, Defacement, 
                         or Nonreceipt of Bonds



Sec. 360.25  General.

    Relief, by the issue of a substitute bond or by payment, is 
authorized for the loss, theft, destruction, mutilation, or defacement 
of a bond after receipt by the owner or his or her representative. As a 
condition for granting relief, the Commissioner of the Public Debt, as 
designee of the Secretary of the Treasury, may require a bond of 
indemnity, in the form, and with the surety, or security, he or she 
considers necessary to protect the interests of the United States. In 
all cases, the claimant or claimants must identify the lost, stolen, 
destroyed, mutilated, or defaced savings bond or savings bonds by serial 
number or serial numbers and must submit satisfactory evidence of the 
loss, theft, or destruction, or a satisfactory explanation of the 
mutilation or defacement.



Sec. 360.26  Application for relief; after receipt of bond.

    (a) If the serial numbers of the lost, stolen, or destroyed bonds 
are known, the claimant should execute an application for relief on the 
appropriate form and submit it to the Bureau of the Public Debt, 
Parkersburg, WV 26106-1328.
    (b) If the bond serial numbers are not known, the claimant must 
provide sufficient information to enable the Bureau of the Public Debt 
to identify the bond by serial number. See Sec. 360.29(c). The Bureau 
will furnish the proper application form and instructions.
    (c) A defaced bond and all available fragments of a mutilated bond 
should be submitted to a Federal Reserve Office listed in Sec. 
360.1(b)(2) or the Bureau of the Public Debt.
    (d) The application must be made by the person or persons (including 
both coowners, if living) authorized under the regulations in this part 
to request payment of the bond. In addition:
    (1) If the bond is in beneficiary form and the owner and beneficiary 
are both living, the application must be made by the owner, and the 
beneficiary may also be required to join in the application to protect 
the interests of the United States.
    (2) If a minor named on a bond as owner, coowner, or beneficiary is 
not of sufficient competency and understanding to request payment, the 
parents or other person authorized to request payment under Sec. 360.63 
will ordinarily be required to join in the application.
    (e) If the application is approved, relief will be granted either by 
the issuance of a bond bearing the same issue date as the bond for which 
the claim was filed or by the issuance of a remittance in payment.



Sec. 360.27  Application for relief; nonreceipt of bond.

    If a bond issued on any transaction is not received, the issuing 
agent must be notified as promptly as possible and given all information 
available about the nonreceipt. An appropriate form and instructions 
will be provided. If the application is approved, relief will be granted 
by the issuance of a bond bearing the same issue date as the bond

[[Page 462]]

that was not received. Also, relief is authorized for the issuance of 
bonds for which the Secretary has not received payment, in order to 
preserve public confidence in dealing with issuing agents.



Sec. 360.28  Recovery or receipt of bond before or after relief is 
granted.

    (a) If a bond reported lost, stolen, destroyed, or not received, is 
recovered or received before relief is granted, the Bureau of the Public 
Debt, Parkersburg, WV 26106-1328, must be notified promptly.
    (b) A bond for which relief has been granted is the property of the 
United States and, if recovered, must be promptly submitted to the 
Bureau of the Public Debt, Parkersburg, 26106-1328, for cancellation.



Sec. 360.29  Adjudication of claims.

    (a) General. The Bureau of the Public Debt will adjudicate claims 
for lost, stolen or destroyed bonds on the basis of records created and 
regularly maintained in the ordinary course of business.
    (b) Claims filed 10 years after payment. Any claim filed 10 years or 
more after the recorded date of redemption or other retirement will be 
barred.
    (c) Claims filed 10 years after maturity. Any claim filed 10 years 
or more after the maturity of a savings bond will be barred.



                Subpart G_General Provisions for Payment



Sec. 360.35  Payment (redemption).

    (a) General. Payment of a Series I savings bond will be made to the 
person or persons entitled under the provisions of the regulations in 
this part, except that the redemption payment will not be delivered to 
addresses in areas with respect to which the Department of the Treasury 
restricts or regulates the delivery of remittances, including checks and 
electronic payments, drawn against funds of the United States. See 
Department of the Treasury Circular No. 655, current revision (31 CFR 
part 211). Payment will be made without regard to any notice of adverse 
claims to a bond and no stoppage or caveat against payment of a bond 
will be entered.
    (b) Mandatory initial holding period. A Series I bond issued on 
January 1, 2003, or earlier, will be paid at any time after six months 
from issue date. A Series I bond issued on February 1, 2003, or 
thereafter, will be paid at any time after 12 months from issue date. 
Bonds will be paid at the current redemption value determined in the 
manner described in Department of the Treasury Circular, Public Debt 
Series No. 1-98 (31 CFR part 359).

[63 FR 38049, July 14, 1998, as amended at 68 FR 2667, Jan. 17, 2003; 68 
FR 7427, Feb. 14, 2003]



Sec. 360.36  Payment during life of sole owner.

    A savings bond registered in single ownership form (i.e., without a 
coowner or beneficiary) will be paid to the owner during his or her 
lifetime upon surrender with an appropriate request.



Sec. 360.37  Payment during lives of both coowners.

    A savings bond registered in coownership form will be paid to either 
coowner upon surrender with an appropriate request, and upon payment (as 
determined in Sec. 360.43), the other coowner will cease to have any 
interest in the bond. If both coowners request payment, the payment will 
be made in the form, ``John A. Jones AND Mary C. Jones''.



Sec. 360.38  Payment during lifetime of owner of beneficiary bond.

    A savings bond registered in beneficiary form will be paid to the 
registered owner during his or her lifetime upon surrender with an 
appropriate request. Upon payment (as determined in Sec. 360.43) the 
beneficiary will cease to have any interest in the bond.



Sec. 360.39  Surrender for payment.

    (a) Procedure for definitive bonds of Series I presented at 
authorized paying agents. The owner, coowner, or other person entitled 
to payment of a definitive Series I bond may present the bond to an 
authorized paying agent for redemption. The presenter must establish his 
or her identity and entitlement

[[Page 463]]

to payment in accordance with Treasury instructions and identification 
guidelines. The presenter must sign the request for payment on the bond 
or, if authorized, on a separate detached request, and add his or her 
address. If the request for payment has been signed, or signed and 
certified, before presentation of the bond, the paying agent must be 
satisfied that the person presenting the bond for payment is the owner, 
coowner, or other person entitled to payment, and may require the person 
to sign the request for payment again. If the bond is in order for 
payment, the paying agent will make payment at the current redemption 
value without charge to the presenter. Paying agents are not authorized 
to process any case involving partial redemption.
    (b) Procedure for all other cases. In the case of definitive bonds 
to which the procedure in paragraph (a) of this section, does not apply, 
or if otherwise preferred, the owner or coowner, or other person 
entitled to payment should establish his or her identity to the 
satisfaction of an officer authorized by the regulations in this part to 
certify requests for payment, sign the requests for payment, and provide 
delivery information for the payment. The bonds must be forwarded to a 
designated Federal Reserve Bank or Branch or the Bureau of the Public 
Debt. Usually, payment will be expedited by submission to a designated 
Federal Reserve Bank or Branch. In all cases, the cost and risk of 
presentation of a bond will be borne by the owner. Payment will be made 
to the registered owner or other person entitled and will be delivered 
according to the instructions of the owner or the other person entitled 
and the regulations in this part.
    (c) Date of request. Requests executed more than six months before 
the date of receipt of a bond for payment will not be accepted. Neither 
will a bond be accepted if payment is requested as of a date more than 
three months in the future.



Sec. 360.40  Special provisions for payment.

    (a) Owner's signature not required. A bond may be paid by a paying 
agent or a designated Federal Reserve Bank or Branch without the owner's 
signature to the request for payment if the bond bears the special 
endorsement of a paying agent specifically qualified to place such an 
endorsement on savings bonds.
    (b) Signature by mark. A signature by mark (X) must be witnessed by 
at least one disinterested person and a certifying officer. See subpart 
I of this part. The witness must attest to the signature by mark 
substantially as follows: ``Witness to signature by mark'', followed by 
his or her signature and address.
    (c) Name change. If the name of the owner, coowner, or other person 
entitled to payment, as it appears in the registration or in any related 
evidence or documents has been changed in any legal manner, the 
signature to the request for payment must show both names and the manner 
in which the change was made; for example, ``Mary T. Jones Smith (Mary 
T. J. Smith or Mary T. Smith) changed by marriage from Mary T. Jones'', 
or ``John R. Young, changed by order of court from Hans R. Jung''. See 
Sec. 360.50.
    (d) Attorneys-in-fact. A request for payment executed by an 
attorney-in-fact on behalf of the bond owner or other person entitled to 
payment of the bond will be recognized if it is accompanied by a copy of 
the power of attorney which meets the following requirements:
    (1) The power of attorney must bear the grantor's signature, 
properly certified or notarized, in accordance with applicable State 
law;
    (2) The power of attorney must grant, by its terms, authority for 
the attorney-in-fact to sell or redeem the grantor's securities, sell 
his or her personal property, or otherwise contain similar authority; 
and
    (3) In the case of a grantor who has become incapacitated, the power 
of attorney must conform with pertinent provisions of State law 
concerning its durability. Generally, in such circumstances, the power 
of attorney should provide that the authority granted will not be 
affected by the subsequent incompetence or incapacity of the grantor. 
Medical evidence or other proof of the grantor's condition may be 
required in any case.

[[Page 464]]



Sec. 360.41  Partial redemption.

    A bond may be redeemed in part at current redemption value, but only 
in amounts corresponding to authorized denominations, upon surrender of 
the bond to a designated Federal Reserve Bank or Branch or to the Bureau 
of the Public Debt in accordance with Sec. 360.39(b). In any case in 
which partial redemption is requested, the phrase ``to the extent of $--
-------- (face amount) and reissue of the remainder'' should be added to 
the request. Upon partial redemption of the bond, the remainder will be 
reissued as of the original issue date, as provided in subpart H of this 
part.



Sec. 360.42  Nonreceipt or loss of remittance issued in payment.

    If a remittance in payment of the redemption value of a bond 
surrendered for redemption is not received within a reasonable time or 
is lost after receipt, notice should be given to the same agency to 
which the bond was surrendered for payment. The notice should give the 
date the bond was surrendered for payment and describe the bond by 
series, denomination, serial number, and registration, including the 
taxpayer identifying number of the owner.



Sec. 360.43  Effective date of request for payment.

    The Department of the Treasury will treat the receipt of a bond with 
an appropriate request for payment by:
    (a) A Federal Reserve Bank or Branch;
    (b) The Bureau of the Public Debt; or
    (c) A paying agent authorized to pay that bond, as the date upon 
which the rights of the parties are fixed for the purpose of payment.



Sec. 360.44  Withdrawal of request for payment.

    (a) Withdrawal by owner or coowner. An owner or coowner, who has 
surrendered a bond to a Federal Reserve Bank or Branch or to the Bureau 
of the Public Debt or to an authorized paying agent with an appropriate 
request for payment, may withdraw the request if notice of intent to 
withdraw is received by the same agency prior to payment.
    (b) Withdrawal on behalf of deceased owner or incompetent. A request 
for payment may be withdrawn under the same conditions as in paragraph 
(a) of this section by the executor or administrator of the estate of a 
deceased owner or by the person or persons who could have been entitled 
to the bond under subpart K of this part, or by the legal representative 
of the estate of a person under legal disability, unless surrender of 
the bond for payment has eliminated the interest of a surviving coowner 
or beneficiary. See Sec. 360.70(b) and (c).



              Subpart H_Reissue and Denominational Exchange



Sec. 360.45  General

    Reissue of a bond may be made only under the conditions specified in 
these regulations, and only at: A designated Federal Reserve Bank or 
Branch, or the Bureau of the Public Debt. Reissue will not be made if 
the request is received less than one full calendar month before the 
maturity date of a bond. See 31 CFR part 359. The request, however, will 
be effective to establish ownership as though the requested reissue had 
been made.



Sec. 360.46  Effective date of request for reissue.

    The Department of the Treasury will treat the receipt by: A Federal 
Reserve Bank or Branch, or the Bureau of the Public Debt of a bond and 
an acceptable request for reissue as determining the date upon which the 
rights of the parties are fixed for the purpose of reissue. For example, 
if the owner or either coowner of a bond dies after the bond has been 
surrendered for reissue, the bond will be regarded as having been 
reissued in the decedent's lifetime.



Sec. 360.47  Authorized reissue; during lifetime.

    A bond belonging to a living individual may be reissued in any form 
of registration authorized by the regulations in this part upon an 
appropriate request under the conditions and for the purposes outlined 
in this section.
    (a) Single ownership. A bond registered in single ownership form may 
be reissued:

[[Page 465]]

    (1) To add a coowner or beneficiary; or
    (2) To name a new owner, with or without a coowner or beneficiary as 
requested by the new owner, but only if the previous owner and the new 
owner are parties to a divorce or annulment; or
    (3) To name as new sole owner the personal trust estate created by 
the previous owner or which designates as beneficiary the previous 
owner.
    (b) Coownership. During the lifetime of both coowners:
    (1) A coownership bond may be reissued to name a new owner, with or 
without a coowner or beneficiary as requested by the new owner, but only 
if at least one of the coowners and the new owner are parties to a 
divorce or annulment, but reissue is limited to the extent of that 
coowner's interest in the bond (See Sec. 360.22(a)); or
    (2) To name as new sole owner the personal trust estate created by 
at least one of the coowners or which designates as beneficiary at least 
one of the coowners.
    (c) Beneficiary. A bond registered in beneficiary form may be 
reissued:
    (1) To substitute another individual as beneficiary; or
    (2) To eliminate the beneficiary, and, if the beneficiary is 
eliminated, to effect any of the reissues authorized by paragraph (a) of 
this section.



Sec. 360.48  Restrictions on reissue; denominational exchange.

    Reissue is not permitted solely to change denominations.



Sec. 360.49  Correction of errors.

    A bond may be reissued to correct an error in registration upon 
appropriate request supported by satisfactory proof of the error.



Sec. 360.50  Change of name.

    An owner, coowner, or beneficiary whose name is changed by marriage, 
divorce, annulment, order of court, or in any other legal manner after 
the issue of the bond should submit the bond with a request for reissue 
to substitute the new name for the name inscribed on the bond. 
Documentary evidence may be required in any appropriate case.



Sec. 360.51  Requests for reissue.

    Subject to the conditions set out in this subpart, a request for 
reissue of bonds in coownership form must be signed by both coowners, 
except that a request solely to eliminate the name of one coowner may be 
signed by that coowner only. A bond registered in beneficiary form may 
be reissued upon the request of the owner, without the consent of the 
beneficiary. Public Debt forms are available for requesting reissue.



                      Subpart I_Certifying Officers



Sec. 360.55  Individuals authorized to certify.

    The following individuals are authorized to act as certifying 
officers for the purpose of certifying a request for payment, reissue, 
or a signature to a Public Debt form:
    (a) Officers generally authorized--(1) Banks, trust companies, and 
member organizations of the Federal Home Loan Bank System. (i) Any 
officer of a bank incorporated in the United States, the territories or 
possessions of the United States, or the Commonwealth of Puerto Rico.
    (ii) Any officer of a trust company incorporated in the United 
States, the territories or possessions of the United States, or the 
Commonwealth of Puerto Rico.
    (iii) Any officer of an organization that is a member of the Federal 
Home Loan Bank System. This includes Federal savings and loan 
associations.
    (iv) Any officer of a foreign branch or domestic branch of an 
institution indicated in paragraphs (a)(1)(i) through (iii) of this 
section.
    (v) Any officer of a Federal Reserve Bank, a Federal Land Bank, or a 
Federal Home Loan Bank.
    (vi) Any employee of an institution in paragraphs (a)(1)(i) through 
(v) of this section, who is expressly authorized to certify by the 
institution.
    (2) Credit unions. Any officer or employee of a credit union, who is 
expressly authorized to certify by the institution. Certification by 
these officers or designated employees must be authenticated by a 
legible imprint of either the corporate seal of the institution or of 
the issuing or paying agent's

[[Page 466]]

stamp. The employee expressly authorized to certify by an institution 
must sign his or her name over the title ``Designated Employee''.
    (3) Issuing and paying agents. Any officer or expressly authorized 
employee of an organization that is not included in paragraphs (a)(1)(i) 
through (v) of this section but is qualified as an issuing or paying 
agent for savings bonds of Series E, EE, or I. The agent's stamp must be 
imprinted in the certification.
    (4) By United States officials. Any judge, clerk, or deputy clerk of 
a United States court, including United States courts for the 
territories and possessions of the United States and the Commonwealth of 
Puerto Rico; any United States Commissioner, United States Attorney, or 
United States Collector of Customs, including their deputies; in the 
Internal Revenue Service, any Regional Commissioner, District Director, 
Service Center Director, or Internal Revenue agent.
    (b) Officers with limited authority--(1) In the Armed Forces. Any 
commissioned officer or warrant officer of the Armed Forces of the 
United States, but only for members of the respective services, their 
families, and civilian employees at posts, bases, or stations. The 
certifying officer must indicate his or her rank and state that the 
individual signing the request is one of the class whose request the 
certifying officer is authorized to certify.
    (2) Veterans Administration, Federal penal institutions, and United 
States Public Health Service hospitals. Any officer in charge of a home, 
hospital or other facility of the Veterans Administration, but only for 
the patients, or employees of the facility; any officer of a Federal 
penal institution or a United States Public Health Service hospital 
expressly authorized to certify by the Secretary of the Treasury or his 
designee, but only for the inmates, patients or employees of the 
institution involved. Officers of Veterans Administration facilities, 
Federal penal institutions, and Public Health Service hospitals must use 
the stamp or seal of the particular institution or service.
    (c) Authorized officers in foreign countries. Any United States 
diplomatic or consular representative, or the officer of a foreign 
branch of a bank or trust company incorporated in the United States 
whose signature is attested by an imprint of the corporate seal or is 
certified to the Department of the Treasury. If none of these 
individuals is available, a notary public or other officer authorized to 
administer oaths may certify, but, if not in a country that is a party 
to the Hague Convention, his or her official character and jurisdiction 
must be certified by a United States diplomatic or consular officer 
under seal of his or her office.
    (d) Authorized officers in particular localities. The Governor and 
the Treasurer of Puerto Rico; the Governor and the Commissioner of 
Finance of the Virgin Islands; the Governor and the Director of Finance 
of Guam; or the Governor and the Director of Administrative Services of 
American Samoa.
    (e) Special provisions. If no certifying officer is readily 
accessible, the Commissioner of the Public Debt, Deputy Commissioner, 
any Assistant Commissioner, or other designated official of the Bureau 
or of a Federal Reserve Bank or Branch is authorized to make special 
provision for any particular case.



Sec. 360.56  General instructions and liability.

    (a) The certifying officer must:
    (1) Require the person presenting a bond, or an appropriate Public 
Debt transaction form, to establish his or her identity in accordance 
with Department of the Treasury instructions and identification 
guidelines;
    (2) Place a notation on the back of the bond or on the appropriate 
Public Debt transaction form, or in a separate record, showing exactly 
how identification was established; and
    (3) Affix, as part of the certification, his or her official 
signature, title, seal or issuing or paying agent's stamp, address, and 
the date of execution.
    (b) The certifying officer and, if such person is an officer or an 
employee of an organization, the organization will be held fully 
responsible for the adequacy of the identification.
    (c) A signature guaranteed stamp under the Securities Transfer 
Agents Medallion Program (STAMP) is an acceptable official seal.

[[Page 467]]



Sec. 360.57  When a certifying officer may not certify.

    Certifying officers may not certify the requests for payment or 
reissue of bonds, or appropriate Public Debt transaction forms if, in 
their own right or in a representative capacity, they:
    (a) Have an interest in the bonds; or
    (b) Will, by virtue of the requests being certified, acquire an 
interest in the bonds.



Sec. 360.58  Forms to be certified.

    When required in the instructions on a Public Debt transaction form, 
the form must be signed before an authorized certifying officer.



     Subpart J_Minors, Incompetents, Aged Persons, Absentees, et al.



Sec. 360.60  Payment to representative of an estate.

    (a) The representative of an estate of an owner who is a minor, an 
aged person, incompetent, absentee, et al., may receive payment upon 
request:
    (1) If the registration shows the name and capacity of the 
representative;
    (2) If the registration shows the capacity but not the name of the 
representative and the request is accompanied by appropriate evidence; 
or
    (3) If the registration includes neither the name of the 
representative nor his or her capacity but the request is accompanied by 
appropriate evidence.
    (b)(1) Appropriate evidence for paragraphs (a) (2) and (3) of this 
section includes Public Debt Forms 5385 (redemption) and 5386 (reissue) 
completed and signed by the representative in accordance with the proper 
form's instructions, which are incorporated herein, or a certified copy 
of the letters of appointment or, if the representative is not appointed 
by a court, other proof of qualification.
    (2) Except in the case of corporate fiduciaries, the evidence must 
show that the appointment is in full force and be dated not more than 
one year prior to the presentation of the bond for payment. The request 
for payment appearing on the back of a bond must be signed by the 
representative as such, for example, ``John S. Jones, guardian 
(committee) of the estate of Henry W. Smith, a minor (an incompetent)''.



Sec. 360.61  Payment after death.

    After the death of the ward, and at any time prior to the 
representative's discharge, the representative of the estate will be 
entitled to obtain payment of a bond to which the ward was solely 
entitled.



Sec. 360.62  Payment to minor.

    If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of the 
minor's estate, payment will be made to the minor upon his or her 
request, provided the minor is of sufficient competency to sign the 
request for payment and to understand the nature of the transaction. In 
general, the fact that the request for payment has been signed by a 
minor and certified will be accepted as sufficient proof of competency 
and understanding.



Sec. 360.63  Payment to a parent or other person on behalf of a minor.

    (a) If the owner of a savings bond is a minor and the form of 
registration does not indicate that there is a representative of his or 
her estate, and if the minor is not of sufficient competency to sign the 
request for payment and to understand the nature of the transaction, 
payment will be made to either parent with whom the minor resides or to 
whom legal custody has been granted. If the minor does not reside with 
either parent, payment will be made to the person who furnishes the 
chief support for the minor.
    (b) The request must appear on the back of the bond in one of the 
following forms:
    (1) Request by parent:

    I certify that I am the mother of John C. Jones (with whom he 
resides) (to whom legal custody has been granted). He is ---- years of 
age and is not of sufficient understanding to make this request.

Mary Jones on behalf of John C. Jones

    (2) Request by other person:

    I certify that John C. Jones does not reside with either parent and 
that I furnish his chief support. He is ---- years of age and is

[[Page 468]]

not of sufficient understanding to make this request.

Alice Brown, grandmother, on behalf of John C. Jones



Sec. 360.64  Payment or reinvestment--voluntary guardian of an 
incapacitated person.

    (a) Payment of bonds. (1) When an adult owner of bonds is incapable 
of requesting payment as a result of incapacity and there is no other 
person legally qualified to do so, the relative, or other person, 
responsible for the owner's care and support may submit an application 
for recognition as voluntary guardian for the purpose of redeeming the 
owner's bonds, if the total redemption value of all of the owner's bonds 
does not exceed $20,000. The bonds and application should be submitted 
to a designated Federal Reserve Bank or the Bureau of the Public Debt.
    (2) The redemption value of the bonds shall be determined as of the 
date the bonds are received, accompanied by an appropriate request for 
payment. If the total redemption value exceeds $20,000, a legal 
representative must be appointed, as set forth in Sec. 360.60.
    (b) Reinvestment of bonds. (1) If the bonds have matured and ceased 
earning interest, they may be redeemed and the proceeds reinvested in 
any other savings bonds available. The new bonds must be registered in 
the name of the incapacitated person, followed by words showing that he 
or she is under voluntary guardianship; for example, ``John Jones 123-
45-6789, under voluntary guardianship''. A living coowner or beneficiary 
named on the matured bonds must be designated on the new bonds, unless 
such person furnishes a certified statement consenting to omission of 
his or her name.
    (2) If an amount insufficient to purchase an additional bond of any 
authorized denomination of savings bond remains after the reinvestment, 
the voluntary guardian may furnish additional funds sufficient to 
purchase another savings bond of the lowest available denomination. If 
additional funds are not furnished, the remaining amount will be paid to 
the voluntary guardian for the use and benefit of the incapacitated 
person.



Sec. 360.65  Reissue.

    A bond on which a minor or other person under legal disability is 
named as the owner or coowner, or in which he or she has an interest, 
may be reissued under the following conditions, but only in accordance 
with subpart H of this part:
    (a) A minor for whose estate no representative has been appointed 
may request reissue if the minor is of sufficient competency to sign his 
or her name to the request and to understand the nature of the 
transaction.
    (b) Except to the extent provided in paragraph (a) of this section, 
reissue will be restricted to a form of registration which does not 
adversely affect the existing ownership or interest of a minor or other 
person under legal disability. Requests for reissue should be executed 
by the person authorized to request payment under Sec. Sec. 360.60 and 
360.63, or the person who may request recognition as voluntary guardian 
under Sec. 360.64.



            Subpart K_Deceased Owner, Coowner or Beneficiary



Sec. 360.70  General rules governing entitlement.

    The rules in this section govern ownership or entitlement where one 
or both of the persons named on a bond have died without the bond having 
been surrendered for payment or reissue. Appropriate proof of death will 
be required.
    (a) Single owner bond. If the owner of a bond registered in single 
ownership form has died, the bond becomes the property of that 
decedent's estate, and payment or reissue will be made as provided in 
this subpart.
    (b) Coowner bond--(1) One coowner deceased. If one of the coowners 
named on a bond has died, the surviving coowner will be recognized as 
the sole and absolute owner, and payment or reissue will be made as 
though the bond were registered in the name of the survivor alone. Any 
request for reissue by the surviving coowner must be supported by proof 
of death of the other coowner.
    (2) Both coowners deceased. If both coowners named on a bond have 
died, the

[[Page 469]]

bond becomes the property of the estate of the coowner who died last, 
and payment or reissue will be made as if the bond were registered in 
the name of the last deceased coowner alone. Proof of death of both 
coowners will be required to establish the order of death.
    (3) Simultaneous death of both coowners. If both coowners die under 
conditions where it cannot be established, either by presumption of law 
or otherwise, which coowner died first, the bond becomes the property of 
the estates of both equally, and payment or reissue will be made 
accordingly.
    (c) Beneficiary bond--(1) Owner deceased. If the owner of a bond 
registered in beneficiary form has died and is survived by the 
beneficiary, upon proof of death of the owner, the beneficiary will be 
recognized as the sole and absolute owner of the bond. Payment or 
reissue will be made as though the bond were registered in the 
survivor's name alone. A request for payment or reissue by the 
beneficiary must be supported by proof of death of the owner.
    (2) Beneficiary deceased. If the beneficiary's death occurs before, 
or simultaneously with, that of the registered owner, payment or reissue 
will be made as though the bond were registered in the owner's name 
alone. Proof of death of the owner and beneficiary is required to 
establish the order of death.
    (d) Nonresident aliens. If the person who becomes entitled to a bond 
because of the death of an owner is an alien who is a resident of an 
area with respect to which the Department of the Treasury restricts or 
regulates the delivery of remittances, including checks and electronic 
payments, drawn against funds of the United States or its agencies or 
instrumentalities, delivery of the redemption payment will not be made 
so long as the restriction applies. See Department of the Treasury 
Circular No. 655, current revision (31 CFR part 211).

[63 FR 38049, July 14, 1998, as amended at 70 FR 57432, Sept. 30, 2005]



Sec. 360.71  Decedent's estate.

    (a) Estate is being administered. (1) A legal representative of a 
deceased owner's estate may request payment of savings bonds to the 
estate, or may distribute the savings bonds to the persons entitled.
    (2) Appropriate proof of appointment for the legal representative of 
the estate is required. Letters of appointment must be dated not more 
than one year prior to the date of submission of the letters of 
appointment.
    (b) Estate has been settled previously. If the estate has been 
settled previously through judicial proceedings, the persons entitled 
may request payment or reissue of the savings bonds. A certified copy of 
the court-approved final accounting for the estate, the court's decree 
of distribution, or other appropriate evidence is required.
    (c) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the estate is to be appointed, the person appointed 
to receive or distribute the assets of a decedent's estate without 
regular administration under applicable local law summary or small 
estates procedures may request payment or reissue of savings bonds. 
Appropriate evidence is required.
    (d) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000, administration of the decedent's estate will 
be required. The redemption value of savings bonds and the principal 
amount of marketable securities will be used to determine the value of 
securities, and will be determined as of the date of death. 
Administration may also be required at the discretion of the Department 
for any case.
    (e) Voluntary representative for small estates that are not being 
otherwise administered--(1) General. A voluntary representative is a 
person qualified according to paragraph (e)(3) of this section, to 
request payment or distribution of a decedent's savings bonds. The 
voluntary representative procedures are for the convenience of the 
Department; entitlement to the decedent's savings bonds and held 
payments, if any, is determined by the law of the jurisdiction in which 
the decedent was

[[Page 470]]

domiciled at the date of death. Voluntary representative procedures may 
be used only if:
    (i) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (ii) The total redemption value of the Treasury securities and held 
payments, if any, held directly on our records that are the property of 
the decedent's estate is $100,000 or less as of the date of death; and
    (iii) There is a person eligible to serve as the voluntary 
representative according to paragraph (e)(3) of this section.
    (2) Authority of voluntary representative. A voluntary 
representative may:
    (i) Redeem the decedent's savings bonds that are eligible for 
redemption on behalf of the persons entitled by the law of the 
jurisdiction in which the decedent was domiciled at the date of death;
    (ii) Distribute the decedent's savings bonds to the persons entitled 
by the law of the jurisdiction in which the decedent was domiciled at 
the date of death.
    (3) Order of precedence for voluntary representative. An individual 
eighteen years of age or older may act as a voluntary representative 
according to the following order of precedence: A surviving spouse; if 
there is no surviving spouse, then a child of the decedent; if there are 
none of the above, then a descendant of a deceased child of the 
decedent; if there are none of the above, then a parent of the decedent; 
if there are none of the above, then a brother or sister of the 
decedent; if there are none of the above, then a descendant of a 
deceased brother or sister of the decedent; if there are none of the 
above, then a next of kin of the decedent, as determined by the law of 
the jurisdiction in which the decedent was domiciled at the date of 
death. As used in this order of precedence, child means a natural or 
adopted child of the decedent.
    (4) Liability. By serving, the voluntary representative warrants 
that the distribution of payments or savings bonds is to the persons 
entitled by the law of the jurisdiction in which the decedent was 
domiciled at the date of death. The United States is not liable to any 
person for the improper distribution of payments or securities. Upon 
payment or distribution of the securities at the request of the 
voluntary representative, the United States is released to the same 
extent as if it had paid or delivered to a representative of the estate 
appointed pursuant to the law of the jurisdiction in which the decedent 
was domiciled at the date of death. The voluntary representative shall 
indemnify and hold harmless the United States and all creditors and 
persons entitled to the estate of the decedent. The amount of the 
indemnification is limited to an amount no greater than the value 
received by the voluntary representative.
    (f) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for payment of the amount of the debt, 
providing the debt has not been barred by applicable local law.

[70 FR 57432, Sept. 30, 2005]



Sec. 360.72  [Reserved]



                          Subpart L_Fiduciaries



Sec. 360.75  Payment or reissue during the existence of the fiduciary 
estate.

    (a) Request from the fiduciaries named in the registration. A 
request for reissue or payment signed by at least one, but less than 
all, of the fiduciaries named in the registration shall be deemed 
sufficient and acceptable proof that less than all of the fiduciaries 
may properly execute the request. If the fiduciaries named in the 
registration are still acting, no further evidence will be required. In 
other cases, i.e., cases in which the fiduciary is not designated by 
name and title in the bond registration or a fiduciary designated in the 
bond registration is no longer acting, the request must be made in 
accordance with subparts J and K of this part.
    (b) Corporate fiduciaries. If a bond is registered in the name of a 
public or

[[Page 471]]

private corporation, such as a financial institution, or a governmental 
body as fiduciary, the request must be signed by an authorized officer 
in the name of the organization as fiduciary. Ordinarily, a signed and 
certified request will be accepted without further evidence.
    (c) Trustee of a common trust fund. A bond held by a financial 
institution as a trustee may be reissued in the name of the institution 
as trustee of its common trust fund to the extent that participation in 
the common trust fund is authorized by law or regulation. The request 
for reissue should be executed by the institution and any co-trustee.
    (d) Successor fiduciary. If the fiduciary in whose name the bond is 
registered has been replaced by another fiduciary, a properly executed 
form or satisfactory evidence of successorship should be furnished.



Sec. 360.76  Payment or reissue after termination of the fiduciary 
estate.

    A bond registered in the name or title of a fiduciary may be paid or 
reissued to the person who has become entitled by reason of the 
termination of an estate, other than a decedent's estate (see subpart K 
of this part). Requests for reissue made by a fiduciary pursuant to the 
termination of a fiduciary estate should be made on the appropriate 
form. Requests for payment or reissue by other than the fiduciary must 
be accompanied by evidence to show that the person has become entitled 
in accordance with applicable State law or otherwise. When two or more 
persons have become entitled, the request for payment or reissue must be 
signed by each of them.



                   Subpart M_Miscellaneous Provisions



Sec. 360.90  Waiver of regulations.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may waive or modify any provision or provisions of the 
regulations in this part. He or she may do so in any particular case or 
class of cases for the convenience of the United States or in order to 
relieve any person or persons of unnecessary hardship:
    (a) If such action would not be inconsistent with law or equity;
    (b) If it does not impair any material existing rights; and
    (c) If he or she is satisfied that such action would not subject the 
United States to any substantial expense or liability.



Sec. 360.91  Additional requirements; bond of indemnity.

    The Commissioner of the Public Debt, as designee of the Secretary of 
the Treasury, may require:
    (a) Such additional evidence as he or she may consider necessary or 
advisable; or
    (b) A bond of indemnity, with or without surety, in any case in 
which he or she may consider such a bond necessary for the protection of 
the interests of the United States.



Sec. 360.92  Supplements, amendments, or revisions.

    The Secretary of the Treasury may at any time, or from time to time, 
prescribe additional, supplemental, amendatory, or revised rules and 
regulations governing United States Savings Bonds.



PART 361_CLAIMS PURSUANT TO THE GOVERNMENT LOSSES IN SHIPMENT ACT--Table 
of Contents




Sec.
361.1 Scope of regulations.
361.2 Definitions.
361.3 Shipping procedure.
361.4 Preparation of shipment.
361.5 Record of shipment.
361.6 Advice of shipment.
361.7 Report of loss, destruction or damage.
361.8 Claim for replacement.
361.9 Proof of claim.
361.10 Recoveries.

    Authority: Sec. 6, 50 Stat. 480; 40 U.S.C. 728.

    Source: 41 FR 19302, May 12, 1976, unless otherwise noted. 
Redesignated at 49 FR 47002, Nov. 30, 1984, and further redesignated at 
50 FR 51394, Dec. 17, 1985.



Sec. 361.1  Scope of regulations.

    This part governs the reporting of loss or destruction of, or damage 
to, valuables shipped pursuant to section 1 of the Government Losses in 
Shipment Act (hereafter the Act) (40 U.S.C. 721)

[[Page 472]]

and proof of claim for replacement under section 3 of the Act (40 U.S.C. 
723) by executive departments, independent establishments, agencies, 
wholly owned corporations, officers and employees of the United States, 
and Federal Reserve banks when acting on behalf of the United States or 
agencies thereof (hereafter consignors). Failure by any consignor or 
agent or employee thereof to comply with these regulations may delay 
recoveries, preclude reimbursement from the fund for the payment of 
Government losses in shipment (hereafter the Fund) or other relief under 
the Act, and render the consignor responsible for any loss occurring 
through such failure.



Sec. 361.2  Definitions.

    (a) The term valuables means any articles or things or 
representatives of value in which the United States has any interest, or 
in connection with which it has any obligation or responsibility, direct 
or indirect, and which have been declared to be valuables by the 
Secretary of the Treasury (hereafter Secretary) pursuant to the Act, as 
listed in Sec. 362.1 of this title.
    (b) The term shipment means the transportation, or the effecting of 
transportation, of valuables, without limitation as to the means or 
facilities used or by which the transportation is effected or the person 
to whom it is made, and includes, but is not limited to, shipments made 
to any executive department, independent establishment, agency, wholly 
or partly owned corporation, officer, or employee of the United States, 
or any person acting on his or its behalf or at his or its direction.
    (c) The term replacement means payment, reimbursement, replacement, 
or duplication or the expenses incident thereto.
    (d) The term carrier means any person, corporation, or other entity 
which effectuates the shipment for consignors of valuables.



Sec. 361.3  Shipping procedure.

    Shipments of valuables shall be made so as to provide the greatest 
possible protection against risk of loss and destruction of, and damage 
to, valuables, in accordance with requirements prescribed by the 
consignors after notice to the Secretary.



Sec. 361.4  Preparation of shipment.

    Each shipment shall be inspected and verified by two responsible 
employees of a consignor before final preparation (i.e., before sealing, 
locking, etc.) for delivery to the carrier. The shipment shall be 
finally prepared for delivery in the presence of the two employees and 
before leaving their immediate control. If strict compliance herewith is 
impossible or impracticable, administrative officers of the consignor 
shall make adequate provision, through the establishment of accounting 
controls or otherwise, for the maintenance of basic records which will 
enable them to prove, to the satisfaction of the Secretary, the extent 
of loss, destruction, or damage in connection with a claim against the 
Fund. The requirements of this section shall apply irrespective of the 
carrier or method of transportation employed in making shipments.



Sec. 361.5  Record of shipment.

    (a) A record of each shipment shall be maintained by the consignor. 
The record shall include:
    (1) The name and address of the consignee designated to receive the 
shipment;
    (2) A complete description of the contents of the shipment (if the 
shipment is made up of securities, the record shall be maintained by 
issue, series, denomination and serial number, and a description of any 
coupons attached to such securities at the time of shipment);
    (3) The face or par value of the shipment in the case of securities, 
currency, etc., or the replacement value in the case of other valuables;
    (4) The registry number or the lock and rotary numbers, if any, 
under which shipped;
    (5) The number of the registry receipt, or other receipt of the 
carrier;
    (6) The date and hour of delivery to the carrier;
    (7) A record of the signatures of the consignor's employees who 
verified the contents of the package and witnessed its sealing;
    (8) A record of the signature(s) of the consignor's employee(s) who 
thereafter

[[Page 473]]

had custody of the package until it was delivered at the post office for 
registration or deposited with the post office or other carrier for 
shipment; and
    (9) The name of the carrier.
    (b) The consignor shall also preserve, until assured that shipment 
has been completed and no claims action will be initiated, all registry 
receipts or other carriers' receipts, and other documents incidental to 
the shipments.



Sec. 361.6  Advice of shipment.

    (a) If the value of any one shipment to one consignee at one time by 
one consignor, except in the case of any intracity shipment or the 
shipment of registered securities by certified mail, or by another means 
providing the same protection as certified mail, equals or exceeds 
$10,000, immediate notice thereof shall be forwarded by the consignor to 
the consignee by separate mail. Such notice shall include:
    (1) A complete record of the contents of the shipment;
    (2) The method of transportation employed and the name of the 
carrier; and
    (3) The date of delivery to such carrier.
    (b) The consignee shall arrange that:
    (1) Shipment when received, be opened and inspected by one or more 
responsible employees;
    (2) Immediate advice of any difference between the amounts or 
quantity indicated in the notice by the consignor to the consignee and 
in the shipment when opened be forwarded to the consignor;
    (3) The consignor and the post office, or office of other carrier 
through which delivery would be made, be notified immediately in the 
event of the failure of the shipment to arrive in due course;
    (4) The consignor be advised immediately concerning any damage to 
the shipment; and
    (5) All findings of the consignee in such cases be made a matter of 
record subject to the inspection of the Secretary or other Government 
officer, in connection with any necessary investigation.

[41 FR 19302, May 12, 1976. Redesignated at 49 FR 47002, Nov. 30, 1984. 
Further redesignated at 50 FR 51394, Dec. 17, 1985, as amended at 51 FR 
19751, June 2, 1986]



Sec. 361.7  Report of loss, destruction or damage.

    (a) If a consignor receives notice that loss or destruction of, or 
damage to, valuables shipped in accordance with the Act has occurred, an 
immediate written report shall be forwarded by the consignor to the 
Secretary, to the attention of the Bureau of the Public Debt, Division 
of Financial Management, Room 201, P. O. Box 1328, Parkersburg, WV 
26106-1328. If the loss, destruction or damage represents a value equal 
to, or in excess of, $10,000 or if delay in reporting is likely to delay 
the Government in recovering such valuables, the report shall be 
transmitted by wire and promptly confirmed in writing.
    (b) The report shall state:
    (1) The date of shipment;
    (2) The amount and character of the valuables lost, destroyed, or 
damaged;
    (3) The name and address of the consignee;
    (4) The method of transportation, the name of the carrier, and the 
location of the office of the carrier from which shipment was made;
    (5) The registry or other receipt number; and
    (6) The cause of the loss, destruction or damage, if known.
    (c) The consignor shall immediately report the loss, destruction or 
damage to the agent in charge of the nearest United States Secret 
Service office, and to the local post office or local office of other 
carrier. The consignor shall also place a tracer on the shipment and 
take such other action as may be necessary to facilitate recovery.

[41 FR 19302, May 12, 1976. Redesignated and amended at 49 FR 47002, 
Nov. 30, 1984. Further redesignated and amended at 50 FR 51394, Dec. 17, 
1985; 61 FR 20437, May 7, 1996]



Sec. 361.8  Claim for replacement.

    Claim for replacement shall be made in writing to the Secretary, to 
the attention of the Bureau of the Public Debt, Division of Financial 
Management, Room 201, P. O. Box 1328, Parkersburg, WV 26106-1328. The 
claim, accompanied by a recommendation regarding the manner of 
replacement, shall be submitted through the head of

[[Page 474]]

the consignor concerned, or his designee. The manner of replacement 
shall be determined by the Secretary in accordance with section 3 of the 
Act, i.e., by replacement out of the Fund or by a credit in the accounts 
of the claimant.

[41 FR 19302, May 12, 1976. Redesignated and amended at 49 FR 47002, 
Nov. 30, 1984. Further redesignated and amended at 50 FR 51394, Dec. 17, 
1985; 61 FR 20437, May 7, 1996]



Sec. 361.9  Proof of claim.

    The Secretary will require proof of claim in such form, and in such 
manner, as he deems necessary. Proof of claim will include satisfactory 
proof of shipment and satisfactory proof of loss, destruction or damage. 
The claim shall be supported by the original ``record of shipment'' 
required pursuant to Sec. 361.5, which will be returned after 
adjustment of the claim. The consignor shall submit a statement 
concerning the loss or destruction of, or damage to, the shipment or any 
part thereof. If the shipment has been received by the consignee with 
contents not intact, such statement shall set forth all the 
circumstances relating to the condition in which the shipment was 
received and the manner of inspection and verification of its contents. 
Affidavits covering the loss, destruction or damage to the shipment 
shall be obtained from the consignee and the carrier. The consignor 
shall submit the statement and recommendations of the investigating 
officers.



Sec. 361.10  Recoveries.

    If relief is granted, the consignor shall take all necessary and 
reasonable steps to recover the lost, destroyed or damaged valuables, or 
their value. All recoveries and repayments, in connection with valuables 
for which replacement has been made out of the Fund, shall be forwarded 
to the Secretary for credit to the Fund.



PART 362_DECLARATION OF VALUABLES UNDER THE GOVERNMENT LOSSES IN SHIPMENT 
ACT--Table of Contents




Sec.
362.1 Declaration of ``valuables''.
362.2 Amendments.

    Authority: Secs. 6, 7, 50 Stat. 480; 40 U.S.C. 728, 729.



Sec. 362.1  Declaration of ``valuables''.

    It is determined that replacements, in accordance with the procedure 
established under section 3 of the Government Losses in Shipment Act (50 
Stat. 479, as amended; 5 U.S.C. 134b), of the articles or things or 
representatives of value enumerated and referred to in this section 
would be in the public interest; accordingly, they are hereby declared 
to be ``valuables'' within the meaning of the act.
    (a) Money of the United States and foreign countries. Currency, 
included mutilated currency and canceled currency, coins, including 
uncurrent coins, and specie.
    (b) Securities and other instruments or documents, private and 
public.

Abstracts of title.
Assignments.
Bills.
Bonds.
Certificates of deposit.
Certificates of indebtedness.
Checks, drafts and money orders.
Coupons.
Debentures.
Deeds.
Equipment trust certificates.
Mortgages.
Notes.
Stamps, including postage, revenue, license, food order and public debt.
Stamped envelopes and postal cards.
Stock certificates.
Trust receipts.
Voting trust receipts.
Warehouse receipts.
Warrants.


And other instruments or documents similar to the foregoing and whether 
complete, incomplete, mutilated, canceled, in definitive form or 
represented by interim documents.
    (c) Precious metals and stones. Diamonds and other precious stones. 
Gold, silver and any other precious or rare metal, including articles 
composed thereof.
    (d) All other. Works and collections of artistic, historical, 
scientific or educational value which are the property of the United 
States or which may be

[[Page 475]]

loaned to the United States at its request, or which may be shipped on 
authority of the United States for its examination or acceptance as a 
gift.

[4 FR 3796, Sept. 1, 1939, as amended at 5 FR 2653, July 25, 1940. 
Redesignated at 49 FR 47002, Nov. 30, 1984. Further redesignated at 50 
FR 51394, Dec. 17, 1985]



Sec. 362.2  Amendments.

    The Secretary of the Treasury may, at any time, or from time to 
time, make supplemental or amendatory declaration of valuables.

[4 FR 3796, Sept. 1, 1939, as amended at 5 FR 2653, July 25, 1940. 
Redesignated at 49 FR 47002, Nov. 30, 1984. Further redesignated at 50 
FR 51394, Dec. 17, 1985]



PART 363_REGULATIONS GOVERNING SECURITIES HELD IN TREASURYDIRECT--Table 
of Contents




                            Subpart A_General

Sec.
363.0 What is the TreasuryDirect[supreg] system?
363.1 What Treasury securities are covered by these regulations?
363.2 What agency administers TreasuryDirect[supreg]?
363.3 [Reserved]
363.4 How is TreasuryDirect[supreg] different from the Legacy Treasury 
          Direct system and the commercial book-entry system?
363.5 How do I contact Public Debt?
363.6 What special terms do I need to know to understand this part?
363.7-363.8 [Reserved]

Subpart B_General Provisions Governing Securities Held in TreasuryDirect

363.9 What does this subpart cover?
363.10 What is a TreasuryDirect[supreg] account?
363.11 Who is eligible to open a TreasuryDirect[supreg] account?
363.12 Who may purchase and hold book-entry securities in 
          TreasuryDirect[supreg]?
363.13 How can I open a TreasuryDirect[supreg] account?
363.14 How will you authenticate my identity?
363.15 What is the procedure for offline authentication?
363.16 How do I access my account?
363.17 Who is liable if someone else accesses my TreasuryDirect[supreg] 
          account using my password?
363.18 Is Public Debt liable if the electronic transmission of my data 
          is intercepted?
363.19 What should I do if I become aware that my password has become 
          compromised?
363.20 What do I need to know about the forms of registration that are 
          available for purchases of securities through my 
          TreasuryDirect[supreg] account?
363.21 What transactions can I perform online through my 
          TreasuryDirect[supreg] account?
363.22 Who has the right to conduct online transactions in book-entry 
          securities?
363.23-363.24 [Reserved]
363.25 How do I conduct transactions in my account or in Treasury 
          securities held in my account?
363.26 What is a transfer?
363.27 What do I need to know about accounts for minors who have not had 
          a legal guardian appointed by a court?
363.28 Does Public Debt reserve the right to require that any 
          TreasuryDirect[supreg] transaction be conducted in paper form?
363.29 May Treasury close an account, suspend transactions in an 
          account, or refuse to open an account?
363.30-363.32 [Reserved]
363.33 Can an attorney-in-fact conduct transactions in my 
          TreasuryDirect[supreg] account?
363.34 What happens if an owner becomes incompetent after opening a 
          TreasuryDirect[supreg] account?
363.35 When is a transaction effective?
363.36 What securities can I purchase and hold in my 
          TreasuryDirect[supreg] account?
363.37 How do I purchase and make payment for eligible Treasury 
          securities through my TreasuryDirect[supreg] account?
363.38 What happens if my financial institution returns an ACH debit?
363.39 Will I receive a confirmation of my request to purchase a 
          Treasury security?
363.40 How are payments of principal and interest made?
363.41 What happens if an ACH payment is returned to Public Debt?
363.42 How will my interest income be reported for tax purposes?
363.43 What are the procedures for certifying my signature on an offline 
          application for a TreasuryDirect[supreg] account, or on an 
          offline transaction form?
363.44 What happens when a TreasuryDirect[supreg] account owner dies and 
          the estate is entitled to securities held in the account?
363.45 What are the rules for judicial and administrative actions 
          involving securities held in TreasuryDirect[supreg]?
363.46 What evidence is required to establish the validity of judicial 
          proceedings?
363.47 Will Public Debt pay Treasury securities pursuant to a forfeiture 
          proceeding?
363.48-363.49 [Reserved]

[[Page 476]]

   Subpart C_Book-Entry Savings Bonds Purchased Through TreasuryDirect

                                 General

363.50 What Treasury securities does this subpart cover?
363.51 [Reserved]
363.52 What amount of book-entry Series EE and I savings bonds may I 
          purchase in one year?
363.53 What is the minimum amount of book-entry savings bonds that I may 
          purchase in any transaction?
363.54 What is the minimum amount of a book-entry savings bond that I 
          must hold in my account?
363.55 May I transfer my book-entry savings bonds to another person?
363.56 What is the minimum amount of book-entry savings bonds that I may 
          transfer in any one transaction?
363.57 What is the minimum amount of book-entry savings bonds that I may 
          redeem in any one transaction?
363.58 May book-entry savings bonds be pledged or used as collateral?
363.59-363.82 [Reserved]

                                 Minors

363.83 May an account owner transfer a book-entry savings bond to a 
          minor?
363.84-363.94 [Reserved]

                                  Gifts

363.95 How may I give a book-entry savings bond as a gift?
363.96 What do I need to know if I initially purchase a bonds as a gift?
363.97 What do I need to know if I transfer a book-entry savings bond to 
          another person as a gift?
363.98 [Reserved]
363.99 What is the minimum amount of a bond that I may transfer or 
          deliver as a gift in any one transaction?
363.100 What are the rules for purchasing and delivering gift savings 
          bonds to minors?
363.101 Can an account owner transfer a book-entry savings bond to a 
          minor?
363.102-363.124 [Reserved]

                                 Payment

363.125 How is payment made on a book-entry savings bond?
363.126 Under what circumstances will payment be made?
363.127-363.129 [Reserved]

                  Subpart D_Certificate of Indebtedness

363.130 What does this subpart cover?
363.131 What is a TreasuryDirect[supreg] certificate of indebtedness?
363.132 Can the sale of the certificate of indebtedness be suspended?
363.133 What happens to my certificate of indebtedness if the offering 
          is terminated by the Secretary?
363.134 What regulations cover a certificate of indebtedness?
363.135 In what form is a certificate of indebtedness issued?
363.136 Do certificates of indebtedness pay interest?
363.137 What do I need to know about the registration of a certificate 
          of indebtedness?
363.138 How do I purchase a certificate of indebtedness?
363.139 Is Treasury liable for the purchase of a certificate of 
          indebtedness that is made in error?
363.140 When is a certificate of indebtedness issued?
363.141 How do I purchase a security using the redemption proceeds of my 
          certificate of indebtedness?
363.142 May I redeem my certificate of indebtedness for cash?
363.143 What happens if an ACH payment used to purchase a certificate of 
          indebtedness is later reversed?
363.144 May I delete a pending transaction involving a certificate of 
          indebtedness?
363.145 May I transfer or deliver my certificate of indebtedness?
363.146 May a certificate of indebtedness be pledged or used as 
          collateral?
363.147-363.152 [Reserved]

            Subpart E_Conversion of a Definitive Savings Bond

363.160 What subparts govern the conversion of definitive savings bonds?
363.161 What definitive savings bonds are eligible to be converted to 
          book-entry bonds?
363.162 Who may convert a definitive savings bond?
363.163 How do I convert an eligible definitive savings bond?
363.164 Is a converted savings bond eligible to be converted back into a 
          definitive bond?
363.165 What happens when I convert a savings bond that is registered in 
          my name as the owner, either coowner, or the owner with a 
          beneficiary?
363.166 What happens when I convert a savings bond that is not 
          registered in my name as owner, either coowner, or owner with 
          beneficiary (including a bond registered in the name of a 
          minor)?
363.167 How will a converted savings bond be registered?
363.168 What rules regarding registration apply to a converted savings 
          bond?
363.169 What transactions can I conduct in a converted savings bond on 
          which I am registered as the single owner, either coowner, or 
          the owner with a beneficiary?

[[Page 477]]

363.170 What transactions can I conduct in a savings bond that I 
          converted on which I am not registered as the owner, either 
          coowner, or owner with beneficiary?
363.171 How do I redeem a converted savings bond?
363.172-363.175 [Reserved]
363.176 May a converted savings bond be pledged or used as collateral?
363.177-363.178 [Reserved]
363.179 Does Public Debt make any reservations as to the conversion of 
          an eligible savings bond?
363.180-363.199 [Reserved]

                Subpart F_Marketable Treasury Securities

363.200 What Treasury securities does this subpart govern?
363.201 What other regulations govern book-entry marketable book-entry 
          Treasury bills, notes, and bonds?
363.202 What marketable Treasury securities may I purchase and hold 
          through my TreasuryDirect[supreg] account?
363.203 After I purchase my marketable Treasury security in 
          TreasuryDirect[supreg], is there a period of time during which 
          I may not transfer the security?
363.204 What registrations are available for my marketable Treasury 
          securities held in TreasuryDirect[supreg]?
363.205 How do I reinvest the proceeds of a maturing security held in 
          TreasuryDirect[supreg]?
363.206 How can I transfer my marketable Treasury security into my 
          TreasuryDirect[supreg] account from another book-entry system?
363.207 Can I transfer my marketable Treasury security from my 
          TreasuryDirect[supreg] account to another 
          TreasuryDirect[supreg] account?
363.208 Can I transfer my marketable Treasury security from my 
          TreasuryDirect[supreg] account to an account in another book-
          entry system?
363.209 How can I direct that my marketable Treasury security be sold on 
          the open market (Sell Direct[supreg])?
363.210 Is there any period of time during which I will be unable to 
          process certain transactions regarding my security?
363.211-363.249 [Reserved]

Subpart G [Reserved]

                         Subpart H_Miscellaneous

363.250 May Public Debt waive these regulations?
363.251 Can I be required to provide additional evidence to support a 
          transaction?
363.252 May Public Debt amend or supplement these regulations?

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3102, et seq.; 31 
U.S.C. 3121, et seq.

    Source: 67 FR 64286, Oct. 17, 2002, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 363 appear at 70 FR 
57433, Sept. 30, 2005 and 70 FR 57442, Sept. 30, 2005.



                            Subpart A_General



Sec. 363.0  What is the TreasuryDirect[supreg] system?

    The TreasuryDirect system (TreasuryDirect) is an online account 
system in which you may hold and conduct transactions in eligible book-
entry Treasury securities.



Sec. 363.1  What Treasury securities are covered by these regulations?

    The regulations in this part apply to book-entry Treasury securities 
held in the TreasuryDirect[supreg] system.



Sec. 363.2  What agency administers TreasuryDirect[supreg]?

    The Bureau of the Public Debt (Public Debt), Department of the 
Treasury (Treasury) is responsible for administering TreasuryDirect. 
Public Debt may delegate authority to process certain transactions in 
TreasuryDirect to Federal Reserve Banks and Branches as fiscal agents of 
the United States.



Sec. 363.3  [Reserved]



Sec. 363.4  How is TreasuryDirect[supreg] different from the Legacy 
Treasury Direct system and the commercial book-entry system?

    (a) TreasuryDirect. TreasuryDirect is a book-entry, online system 
maintained by Treasury for purchasing, holding and conducting permitted 
transactions in eligible Treasury securities in electronic form as a 
computer record on the books of Treasury. TreasuryDirect currently 
provides for the purchase and holding of eligible book-entry savings 
bonds, certificates of indebtedness, and eligible marketable Treasury 
securities.
    (b) Legacy Treasury Direct. The Legacy Treasury Direct system is a 
non-Internet-based book-entry system maintained by Treasury for 
purchasing, holding, and conducting permitted transactions in eligible 
marketable Treasury securities as book-entry products. The terms and 
conditions for

[[Page 478]]

the Legacy Treasury Direct system are found at 31 CFR part 357, subpart 
C.
    (c) Commercial book-entry system. The commercial book-entry system 
is the book-entry system in which Treasury securities are held in a 
tiered system through securities intermediaries such as financial 
institutions or brokerage firms. The regulations governing the 
commercial book-entry system are found at 31 CFR part 357, subpart B, 
and may be referred to in that part as Treasury/Reserve Automated Debt 
Entry System (TRADES).

[70 FR 57442, Sept. 30, 2005]



Sec. 363.5  How do I contact Public Debt?

    (a) You may use the ``Contact Us'' feature within 
TreasuryDirect[supreg] to communicate information to us over a secure 
Internet connection.
    (b) Emails may be sent to: [email protected]. We will 
reply by e-mail unless you request otherwise. We are not responsible for 
the security of e-mail messages you may send to us, or replies we may 
send to you.
    (c) Letters should be addressed to: Bureau of the Public Debt, 
TreasuryDirect, P.O. Box 5312, Parkersburg, WV 26106-5312.

[67 FR 64286, Oct. 17, 2002, as amended at 70 FR 57442, Sept. 30, 2005]



Sec. 363.6  What special terms do I need to know to understand this part?

    Account means a TreasuryDirect[supreg] account as described in Sec. 
363.10.
    Authentication service means a public or private service that 
authenticates the identity of an online applicant for a TreasuryDirect 
account using information provided by the applicant.
    Automated Clearing House (ACH) means a funds transfer system 
governed by the Rules of the National Automated Clearing House 
Association (NACHA). NACHA provides for the interbank clearing of 
electronic entries for participating financial institutions.
    Beneficiary refers to the second individual named in the 
registration of a definitive savings bond, a converted definitive 
savings bond, or a book-entry security purchased through the 
TreasuryDirect system, registered, e.g., ``John Doe SSN 123-45-6789 POD 
(payable on death to) Joseph Doe SSN 987-65-4321.
    Book-entry security means a Treasury security maintained by us in 
electronic or paperless form as a computer record.
    Business day means any day that funds may be settled through ACH.
    Certificate of Indebtedness is a one-day non-interest-bearing 
security held within your primary or linked account, including a minor 
account for which you are the custodian, that automatically matures and 
is rolled over each day until you request that it be redeemed.
    Commercial book-entry system refers to the book-entry system in 
which you hold your Treasury securities in a tiered system through 
securities intermediaries such as financial institutions or brokerage 
firms. (See Sec. 363.4.)
    Court means a court of law with jurisdiction over the parties and 
the subject matter.
    Conversion account means a linked account in TreasuryDirect that 
contains only savings bonds that have been converted from definitive 
bonds to book-entry bonds.
    Converted savings bond means a savings bond originally issued as a 
definitive bond that has been surrendered to us and converted to a book-
entry savings bond to be maintained by Treasury solely as a computer 
record.
    Converting coowner is the coowner who initiates and completes the 
transaction to convert a definitive savings bond to a book-entry bond 
through his or her TreasuryDirect account.
    Coowner means either of the persons named in the registration of a 
definitive or a converted definitive savings bond, registered, e.g., 
``John Doe SSN 123-45-6789 or Joseph Doe.''
    Custodian of a minor account means a person who opens an account on 
behalf of the minor. (See Sec. 363.27 for more information about minor 
accounts.)
    Custom account means an account that you establish for a specific 
purpose that is linked to your primary account. You use your primary 
account as the portal to open and access your custom linked account. 
(See Sec. 363.10 for more information about custom accounts.)
    Definitive security means a Treasury security held in paper form.

[[Page 479]]

    De-link means the online process by which all securities contained 
within the minor linked account are moved to the minor's primary 
TreasuryDirect account and the linked account is deactivated.
    Delivery means moving a minimum amount of $25 (consisting of 
principal and proportionate interest) of a security held as a gift from 
the account of the purchaser to the account of the recipient.
    Federal Reserve Bank (Reserve Bank) means a Federal Reserve Bank or 
Branch.
    Final maturity of a savings bond means the date beyond which an 
unredeemed savings bond no longer earns interest.\1\
---------------------------------------------------------------------------

    \1\ Series EE and Series I savings bonds currently have an original 
maturity period of 20 years and an extended maturity period of 10 years 
beyond original maturity during which the bonds continue to earn 
interest.
---------------------------------------------------------------------------

    Financial institution, or depository financial institution, means an 
entity described in 12 U.S.C. 461 (b)(1)(A)(i)-(vi).
    Gift means a Treasury security purchased for or transferred to an 
intended recipient, without consideration.
    Individual means a natural person. Individual does not mean an 
organization, representative, or fiduciary.
    Interest on a savings bond means the difference between the purchase 
price and the redemption value of the bond.
    Legacy Treasury Direct system is a non-Internet-based book-entry 
system maintained by Treasury since 1986 for purchasing and holding 
marketable Treasury securities directly with Treasury as book-entry 
products. (See Sec. 363.4.)
    Legal guardian of a minor or incompetent person refers to the court-
appointed or otherwise qualified person, regardless of title, who is 
legally authorized to act for the minor or incompetent individual.
    Legal representative refers to the court-appointed or otherwise 
qualified person, regardless of title, who is legally authorized to 
manage and settle the estate of a decedent. The term includes an 
executor and an administrator.
    Legally incompetent means a court has declared an individual to be 
incapable of handling his or her business affairs.
    Linked account means an account that is a separate account from your 
primary account, but connected to your primary account. You use your 
primary account as a portal to open and access the linked account. (See 
Sec. 363.10 for more information about linked accounts.)
    Marketable Treasury security refers to a Treasury bill, note, or 
bond that is negotiable and transferable, that is, may be bought and 
sold in the secondary market.
    Minor means an individual under the age of 18 years. The term minor 
is also used to refer to an individual who has attained the age of 18 
years but has not yet taken control of the securities contained in his 
or her minor account.
    Minor account means an account that a custodian controls on behalf 
of a minor, that is linked to the custodian's primary account. (See 
Sec. Sec. 363.10 and 363.27 for more information about minor accounts.)
    Non-converting coowner is the coowner who does not participate in 
the transaction to convert a definitive savings bond to a book-entry 
bond.
    Online means use of the Internet.
    Owner is either a single owner, the first person named in the 
registration of a security held in the owner with beneficiary form of 
registration, the primary owner of a security held in the primary owner 
with secondary owner form of registration, or either coowner of a 
converted savings bond.
    Person means an entity including an individual, trust, estate, 
corporation, government entity, association, partnership, and any other 
similar organization. Person does not mean a Federal Reserve Bank.
    Primary account means the account that you establish when you first 
open your TreasuryDirect account; your primary account is the portal 
used to open and access all your linked accounts. (See Sec. 363.10 for 
more information about primary accounts.)
    Primary owner means the first person named in the registration of a 
security held in TreasuryDirect registered, e.g., ``John Doe SSN 123-45-
6789 with Joseph Doe SSN 987-65-4321.'' In this example, John Doe is the 
primary owner.
    Principal amount means the amount of the original investment. 
Principal

[[Page 480]]

amount does not include any interest earned.
    Recipient means the person to whom a gift is given.
    Redemption of a savings bond refers to the payment of principal and 
interest at final maturity, or prior to final maturity at the option of 
the owner. The owner may redeem all principal and interest or a portion 
of the principal and the proportionate amount of interest.
    Redemption value means principal plus accrued interest of a bond, or 
a portion of the principal plus a proportionate amount of accrued 
interest on the bond, as of the date of redemption.
    Registration or Registered means that the name and taxpayer 
identification number(s) (TIN) of the person(s) named on the security 
are maintained on our records.
    Sell Direct[reg] is a service in which Treasury, through 
our agent, will sell your marketable Treasury security held in 
TreasuryDirect or Legacy Treasury Direct on the open market for a fee.
    Secondary owner means the second person named in the registration of 
a book-entry security held in TreasuryDirect registered, e.g. ``John Doe 
SSN 123-45-6789 with Joseph Doe SSN 987-65-4321.'' In this example, 
Joseph Doe is the secondary owner.
    Security, or Treasury security, as used in this part, means an 
obligation issued by Treasury that may be held in TreasuryDirect.
    Series EE savings bond is an accrual-type savings bond, issued 
either in definitive (paper) form or in book-entry form, that accrues 
interest on the principal based on rates determined by Treasury.
    Series I savings bond is a savings bond, issued either in definitive 
(paper) form or in book-entry form, that accrues interest in accordance 
with a formula that includes a fixed component and a component indexed 
to the rate of inflation.
    Signature guarantee program means a signature guarantee program 
established under 17 CFR 240.17Ad-15, issued under authority of the 
Securities Exchange Act of 1934. For the purpose of this part, we 
recognize the Securities Transfer Agents Medallion Program (STAMP), the 
Stock Exchanges Medallion Program (SEMP), and the New York Stock 
Exchange, Inc., Medallion Signature Program (MSP). These certifications 
are acceptable for transfers of securities, but are not acceptable for 
offline account establishment.
    Single owner means the individual named in the registration of a 
book-entry Treasury security or a converted savings bond without a 
beneficiary, secondary owner, or coowner.
    Social security account number or social security number (SSN) means 
the identifying number required on tax returns and other documents 
submitted to the Internal Revenue Service by an individual. A SSN is 
composed of nine digits separated by two hyphens, for example, 123-45-
6789.
    Taxpayer identification number (TIN) means the identifying number 
required on tax returns and other documents submitted to the Internal 
Revenue Service; that is, an individual's social security number (SSN) 
or an employer identification number (EIN). A SSN is composed of nine 
digits separated by two hyphens, for example, 123-45-6789. An EIN is 
composed of nine digits separated by one hyphen, for example, 12-
3456789. The hyphens are an essential part of the numbers.
    Tender means an offer, or bid, to purchase a marketable Treasury 
security.
    Transaction is any action affecting Treasury securities or account 
information.
    Transfer is a transaction to move a security, or a portion of a 
security, from one account to another within TreasuryDirect, or to move 
a marketable Treasury security to or from a TreasuryDirect account and 
an account in Legacy Treasury Direct or the commercial book-entry 
system.
    Voluntary representative means the person qualified by the 
Department of the Treasury to accept payment or direct distribution of a 
decedent's securities pursuant to Sec. 363.44.
    We, us, or our refers to the Bureau of the Public Debt. The term 
includes the Secretary of the Treasury and the Secretary's delegates at 
the Treasury Department and Bureau of the Public Debt. The term also 
includes any fiscal or financial agent we designate to act on behalf of 
the United States.

[[Page 481]]

    You or your refers to a TreasuryDirect primary account holder.

[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003; 69 
FR 2507, Jan. 16, 2004; 69 FR 50308, Aug. 16, 2004; 70 FR 14942, Mar. 
23, 2005; 70 FR 57433, Sept. 30, 2005; 70 FR 57442, Sept. 30, 2005]



Subpart B_General Provisions Governing Securities Held in TreasuryDirect



Sec. Sec. 363.7-363.8  [Reserved]



Sec. 363.9  What does this subpart cover?

    This subpart provides general rules governing securities held within 
the TreasuryDirect[supreg] system. Provisions in the subparts governing 
specific securities that conflict with these general rules will 
supersede these general rules.

[70 FR 57433, Sept. 30, 2005]



Sec. 363.10  What is a TreasuryDirect[supreg] account?

    A TreasuryDirect account is an online account maintained by us 
solely in your name in which you may hold and conduct transactions in 
eligible book-entry Treasury securities.
    (a) Primary Account. Your primary account that you establish when 
initially opening your TreasuryDirect account may contain the following 
Treasury securities:
    (1) Treasury securities purchased initially as book-entry securities 
that are your personal holdings, in sole owner, owner with beneficiary, 
and primary owner with secondary owner forms of registration;
    (2) Gifts of savings bonds that have not yet been delivered;
    (3) Converted savings bonds that you have transferred from your 
conversion linked account.
    (b) Linked account. A linked account is an account that is a 
separate account from your primary account, but that is connected to 
your primary account. You use your primary account as a portal to open 
and access the linked account. Linked accounts include the following:
    (1) Custom account. A custom account is an account that is linked to 
your primary account. You use your primary account as the portal to open 
and access your custom account. You may informally designate a purpose 
for the custom account, for example, ``vacation fund'', or ``Johnny's 
college fund''. However, the designation as to purpose has no legal 
effect; the registration of the securities held in the custom account 
determines ownership (Annual purchase limitations include securities 
held in custom accounts). You may use your custom account to buy, redeem 
and transfer securities that you own in sole owner, owner with 
beneficiary, and primary owner with secondary owner forms of 
registration. You may also buy and deliver gift savings bonds from your 
custom account.
    (2) Minor account. A minor account is an account established by a 
custodian for a person who has not yet reached the age of 18 years. A 
minor account is linked to the custodian's primary account. The minor is 
the owner of the securities, but the custodian controls the account on 
behalf of the minor. (See Sec. 363.27 for more information about minor 
accounts.)
    (3) Conversion account means a linked account in TreasuryDirect that 
contains only savings bonds that have been converted from definitive 
bonds to book-entry bonds.

[69 FR 2507, Jan. 16, 2004, as amended at 70 FR 14943, Mar. 23, 2005. 
Redesignated at 70 FR 57433, Sept. 30, 2005, as amended at 70 FR 57442, 
Sept. 30, 2005]



Sec. 363.11  Who is eligible to open a TreasuryDirect[supreg] account?

    In order to open a TreasuryDirect account, you must:
    (a) Have a valid social security number;
    (b) Have a United States address of record;
    (c) Have an account at a United States depository financial 
institution that will accept debits and credits using the Automated 
Clearing House method of payment;
    (d) Be 18 years of age or over;
    (e) Be legally competent; and
    (f) Be an individual.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57433, Sept. 30, 
2005]

[[Page 482]]



Sec. 363.12  Who may purchase and hold book-entry securities in 
TreasuryDirect[supreg]?

    (a) A TreasuryDirect account owner may purchase and hold securities 
through his or her account.
    (b) We do not permit a legally incompetent person to open an 
account, purchase securities, or convert savings bonds once we have been 
provided with an order from a court with appropriate jurisdiction 
determining incompetence to perform such activities.
    (c) We do not permit a legal representative, a legal guardian, or a 
voluntary representative to purchase securities on behalf of the estate 
of a decedent or an incompetent person.
    (d) We may reject any application for the purchase of a security, in 
whole or in part. We may refuse to issue a security in any case or class 
of cases, if we deem the action to be in the public interest. Our 
decision in any such respect is final.

[70 FR 57433, Sept. 30, 2005]



Sec. 363.13  How can I open a TreasuryDirect[supreg] account?

    You must establish a TreasuryDirect account online before you 
purchase a Treasury security to be held in your account. Instructions 
for online account establishment may be found at the official Public 
Debt website at http://www.publicdebt.treas.gov, or such other Internet 
address as Public Debt may from time to time announce by publication in 
the Federal Register. When you have completed the application, you will 
create a password to access your account. We will authenticate your 
identity and send your account number to you by email when your account 
application is approved.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.14  How will you authenticate my identity?

    We may use an online authentication service to authenticate your 
identity using information you provide about yourself on the 
application. At our option, we may require offline authentication.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.15  What is the procedure for offline authentication?

    In the event we require offline authentication, we will provide a 
printable authentication form. Your signature on the form must be 
certified or guaranteed as provided at Sec. 363.43, and the form must 
be mailed to us at the address provided in Sec. 363.5.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.16  How do I access my account?

    You may access your account online using your account number and 
password.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.17  Who is liable if someone else accesses my 
TreasuryDirect[supreg] account using my password?

    You are solely responsible for the confidentiality and use of your 
password. We will treat any transactions conducted using your password 
as having been authorized by you. We are not liable for any loss, 
liability, cost or expense that you may incur as a result of 
transactions made using your password.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.18  Is Public Debt liable if the electronic transmission of 
my data is intercepted?

    We are not liable for any interception of electronic data or 
communication.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]



Sec. 363.19  What should I do if I become aware that my password has 
become compromised?

    You should change your password immediately if you become aware that 
your password has become compromised. If you become aware of any misuse 
of your password, you should notify us by email at 
[email protected] or call us at 304-480-8783.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 57434, Sept. 30, 
2005]

[[Page 483]]



Sec. 363.20  What do I need to know about the forms of registration that 
are available for purchases of securities through my TreasuryDirect[supreg] 
account?

    (a) General principles. (1) Registration must express the actual 
ownership of, and interest in, the security. Registration conclusively 
establishes ownership of a security.
    (2) You must provide a last name and a first name for each 
individual included in the registration of the security.
    (3) You must provide the valid taxpayer identification number for 
each person named in the registration of the security.
    (b) Forms of registration. The forms of registration available for 
purchases of securities made through your TreasuryDirect account are 
single owner, owner with beneficiary, and primary owner with secondary 
owner, unless the forms of registration available for a security are 
specifically limited by the subpart governing that security.
    (c) Single owner. (1) A single owner is the individual named in the 
registration of a book-entry security or a converted savings bond 
without a beneficiary, secondary owner, or coowner.
    (2) A single owner may add a beneficiary or secondary owner.
    (3) A single owner may conduct permitted online transactions on 
securities held in his or her account.
    (4) Upon the death of the single owner, his or her estate is 
entitled to the security. In determining entitlement, the law of the 
decedent's domicile will be followed.
    (5) Registration example: ``John Doe, SSN 123-45-6789.''
    (d) Owner with beneficiary. (1) The purchaser must be named as the 
owner with another individual as beneficiary.
    (2) The owner may remove or change the beneficiary without the 
consent of the beneficiary.
    (3) The owner may conduct permitted online transactions on 
securities held in his or her account without the consent of the 
beneficiary.
    (4) The beneficiary has no ownership rights to the security during 
the owner's lifetime. Upon the death of the owner, the security becomes 
the property of the surviving beneficiary, despite any attempted 
testamentary disposition or any applicable local law to the contrary.
    (5) If the beneficiary does not survive the owner, the security 
belongs to the estate of the owner.
    (6) If both the owner and the beneficiary die under conditions where 
it cannot be established, either by presumption of law or otherwise, who 
died first, the security is the property of the estate of the owner.
    (7) In order for the beneficiary to obtain the security or the 
redemption proceeds after the death of the owner, the beneficiary must 
provide proof of death of the owner. If the beneficiary has a 
TreasuryDirect account, the security will be transferred to that 
account. If the beneficiary does not have an account, he or she may 
establish an account. Alternatively, a beneficiary named on a savings 
bond may request redemption. If the beneficiary requests redemption, he 
or she must provide ACH instructions for the payment.
    (8) Registration example: ``John Doe, SSN 123-45-6789 POD (payable 
on death to) Jane Doe, SSN 987-65-4321.''
    (e) Primary owner with secondary owner. (1) The purchaser must be 
named in the registration as the primary owner with another individual 
as secondary owner.
    (2) The primary owner holds the securities in his or her account and 
may view or conduct permitted online transactions in the securities.
    (3) The primary owner may remove the secondary owner without the 
consent of the secondary owner.
    (4) The secondary owner has no rights to view or conduct 
transactions in any security unless the primary owner gives the 
secondary owner these rights.
    (5) The primary owner may give the secondary owner the right to view 
any security or rights to view and conduct transactions in any security 
online from the account of the secondary owner.
    (6) Once the right to conduct transactions in a security has been 
given to the secondary owner, the primary owner may view and conduct 
transactions in the security from his or her account, and the secondary 
owner may view and conduct transactions in the security using his or her 
own account.

[[Page 484]]

    (7) The primary owner may revoke any rights previously given to the 
secondary owner at any time.
    (8) Upon the death of either the primary or secondary owner, the 
security becomes the property of the survivor, despite any attempted 
testamentary disposition or any applicable local law to the contrary.
    (9) If both the primary and the secondary owner die under conditions 
where it cannot be established, either by presumption of law or 
otherwise, who died first, the security is the property of the estate of 
the primary owner.
    (10) In order for the secondary owner to obtain the security or the 
security proceeds after the death of the primary owner, the secondary 
owner must provide proof of death of the primary owner. If the secondary 
owner has a TreasuryDirect account, the security will be transferred to 
that account. If the secondary owner does not have an account, he or she 
may establish an account. Alternatively, a secondary owner named on a 
savings bond may request redemption. If the secondary owner requests 
redemption, he or she must provide ACH instructions.
    (11) Registration example: ``John Doe, SSN 123-45-6789 with Joseph 
Doe, SSN 987-65-4321.''

[70 FR 57434, Sept. 30, 2005]



Sec. 363.21  What transactions can I perform online through my 
TreasuryDirect[supreg] account?

    The following transactions are by way of illustration only, and are 
not intended to limit transactions that may be added to the system:
    (a) You can purchase, transfer, and change the registration of an 
eligible Treasury security, including a transfer of a marketable 
security for a Sell Direct transaction;
    (b) You can redeem a savings bond;
    (c) You can deliver a gift savings bond to the account of the 
recipient;
    (d) You can grant and revoke the right to view an eligible security 
to a secondary owner or beneficiary named on the security, if the 
secondary owner or beneficiary is a TreasuryDirect account owner;
    (e) You, as the primary owner, can grant certain transaction rights 
to the secondary owner, and you can also revoke those rights. The 
secondary owner can exercise those rights, provided they have not been 
revoked, if the secondary owner is a TreasuryDirect account owner;
    (f) You can make changes to your account information, including ACH 
information, password changes, and account security information;
    (g) You can view a history of purchases, transactions, changes to 
account information, and pending transactions;
    (h) You can schedule future transactions, and change or delete 
pending transactions;
    (i) You can open and access any linked accounts using your primary 
account as a portal; and
    (j) You can convert eligible definitive savings bonds to book-entry 
bonds.

[70 FR 14943, Mar. 23, 2005. Redesignated at 70 FR 57434, Sept. 30, 2005 
and amended at 70 FR 57442, Sept. 30, 2005]



Sec. 363.22  Who has the right to conduct online transactions in 
book-entry securities?

    (a) Single owner form of registration. A single owner can conduct 
transactions in securities held in his or her TreasuryDirect account.
    (b) Owner with beneficiary form of registration. The owner can 
conduct transactions in securities held in his or her TreasuryDirect 
account. The beneficiary has no rights during the lifetime of the owner 
and therefore cannot conduct transactions in the securities.
    (c) Primary owner with secondary owner form of registration. (1) The 
primary owner can conduct any permitted transaction in a security held 
in the primary owner's TreasuryDirect account. (See Sec. 363.20(e)).
    (2) If the primary owner has given the secondary owner the right to 
conduct transactions in a security, and has not revoked that right, then 
the secondary owner can conduct transactions in the security. 
Transactions that may be conducted by the secondary owner include 
transferring a marketable security, including a transfer for a Sell 
Direct transaction, redeeming a savings bond, and changing

[[Page 485]]

the destination of interest and redemption payments for marketable 
securities.
    (d) Converted savings bonds. The rules for transactions governing 
converted savings bonds are contained in subpart E of this part.

[70 FR 57434, Sept. 30, 2005 as amended at 70 FR 57443, Sept. 30, 2005]



Sec. 363.23-363.24  [Reserved]



Sec. 363.25  How do I conduct transactions in my account or in Treasury 
securities held in my account?

    We will provide online instructions for conducting transactions 
through your account. If you are unable to conduct a transaction online, 
you should contact us at the address provided in Sec. 363.5. Offline 
transactions will require a certified or guaranteed signature. See Sec. 
363.43 for instructions for obtaining a certified or guaranteed 
signature.



Sec. 363.26  What is a transfer?

    (a) A transfer is a transaction to:
    (1) Move a Treasury security, or a portion of a Treasury security, 
from one account to another within TreasuryDirect[supreg];
    (2) Move a marketable Treasury security to or from a TreasuryDirect 
account and an account in Legacy Treasury Direct or the commercial book-
entry system.
    (b) Transfers of a specific type of security may be limited by the 
subparts that refer to that security.
    (c) Gift delivery is not a transfer. A transfer does not include 
delivery of a gift savings bond from the donor to the recipient. This is 
referred to as a delivery.

[67 FR 64286, Oct. 17, 2002, as amended at 70 FR 57443, Sept. 30, 2005]



Sec. 363.27  What do I need to know about accounts for minors who have 
not had a legal guardian appointed by a court?

    (a) We do not permit a minor to purchase securities.
    (b) Opening an account in the name of a minor. (1) A parent or a 
person who provides the chief financial support of a minor may open an 
account for a minor. The person opening the account for a minor is 
referred to as the custodian of the minor's account.
    (2) The custodian is a fiduciary for the minor as to the securities 
held in the minor's account.
    (3) The custodian must have an existing primary 
TreasuryDirect[supreg] account in order to open the minor's account.
    (i) The minor's account is an account that is linked to the 
custodian's primary account.
    (ii) The custodian must use his or her primary TreasuryDirect 
account as a portal to open and access the minor's account.
    (4) Securities contained in the minor's account will be registered 
in the name and SSN of the minor, in either sole owner, owner with 
beneficiary, or primary owner with secondary owner forms of 
registration.
    (c) Procedure for opening an account for a minor. (1) Online 
instructions will be provided for establishing an account for a minor.
    (2) The custodian must certify that all transactions conducted 
through the account will be on the minor's behalf.
    (d) Procedure for conducting transactions in the minor's account. 
The custodian must conduct all transactions in the minor's account on 
behalf of the minor. Access to the minor's account is through the 
custodian's primary account.
    (e) Transactions permitted in the minor's account. (1) The custodian 
may purchase securities for and on behalf of the minor through the 
minor's account.
    (2) The custodian may redeem savings bonds on behalf of the minor 
through the minor's account. We will report the interest earned on the 
security to the name and SSN of the minor.
    (3) The custodian may not purchase gift savings bonds from the 
minor's account.
    (4) The custodian may transfer a security to another TreasuryDirect 
account, provided the account is a linked account bearing the name and 
taxpayer identification number of the minor. The custodian can transfer 
a marketable Treasury security to an account in Legacy Treasury Direct 
or the commercial book-entry system, and may request a Sell Direct 
transaction.

[[Page 486]]

    (5) Securities may be transferred to the minor's account.
    (6) Gift savings bonds may be delivered to the minor's account.
    (7) The custodian may grant rights to view and conduct transactions 
in the security as may be permitted by Sec. 363.22.
    (8) The custodian may purchase a certificate of indebtedness on 
behalf of the minor. The certificate of indebtedness is the property of 
the minor.
    (f) When the minor reaches the age of 18 years. (1) The only 
transactions that the custodian may make in the minor's account after 
the minor attains the age of 18 years are to purchase new securities, 
and to transfer the securities contained in the minor's account to 
another account in the name and SSN of the minor. The receiving account 
in the name and SSN of the minor may be a primary account established by 
the minor, or it may be another minor linked account with the same or a 
different custodian. The custodian may transfer one or more of the 
securities at a time, or the custodian may de-link the account and 
transfer all of the securities contained in the account to the minor's 
previously established primary TreasuryDirect account. The minor must 
establish his or her own primary TreasuryDirect account prior to 
transfer of his or her securities.
    (2) In order to gain control of the securities held in the minor's 
account, the minor must first open his or her own primary account.
    (3) The minor may gain control of the securities held in the minor's 
account by the custodian transferring the securities held in the minor's 
account to the minor's primary account, or the minor may request that 
Public Debt transfer the securities to his or her primary account.
    (4) The minor may gain control of his or her certificate of 
indebtedness by the custodian de-linking the account and transferring 
the certificate of indebtedness to the minor's primary account, or the 
minor may request that Public Debt de-link the account and transfer the 
certificate of indebtedness to his or her primary account.
    (g) Liability. We rely on the certification of the custodian that he 
or she is acting on behalf of the minor. We are not liable to the minor, 
or any other person or party acting on behalf of the minor, for the 
actions of the custodian, nor are we liable for the application of any 
proceeds from the transfer or redemption of securities held in the 
minor's account. The custodian agrees to indemnify and hold harmless the 
United States in the event that we suffer any loss on account of any 
claim relating to a minor account.

[69 FR 2507, Jan. 16, 2004, as amended at 69 FR 50309, Aug. 16, 2004; 70 
FR 57443, Sept. 30, 2005]



Sec. 363.28  Does Public Debt reserve the right to require that any 
TreasuryDirect[supreg] transaction be conducted in paper form?

    We reserve the right to require any transaction to be conducted in 
paper form. Signatures on paper transactions must be certified or 
guaranteed as provided in Sec. 363.43.

[70 FR 57434, Sept. 30, 2005]



Sec. 363.29  May Treasury close an account, suspend transactions in an 
account, or refuse to open an account?

    We reserve the right to take any of the following actions if, in our 
sole discretion, we deem the action to be in the best interests of the 
United States:
    (a) Refuse to open an account for any person;
    (b) Close any existing account;
    (c) Suspend transactions with respect to an account or any security 
held in an account; or
    (d) Take any other action with regard to any account that we deem 
necessary, if not inconsistent with existing law and existing rights.

[70 FR 57434, Sept. 30, 2005]



Sec. Sec. 363.30-363.32  [Reserved]



Sec. 363.33  Can an attorney-in-fact conduct transactions in my 
TreasuryDirect[supreg] account?

    (a) An attorney-in-fact who provides a copy of a durable power of 
attorney granting him or her the authority to conduct TreasuryDirect 
transactions on behalf of the owner may conduct transactions online.
    (b) An attorney-in-fact who provides a copy of a limited power of 
attorney

[[Page 487]]

may only conduct transactions that he or she is permitted by his or her 
power. Such transactions will be through an offline process.
    (c) A written copy of the power of attorney must be sent to the 
address provided in Sec. 363.5. We may require any additional evidence 
that we consider necessary to support the power.



Sec. 363.34  What happens if an owner becomes incompetent after opening 
a TreasuryDirect[supreg] account?

    If we receive notice that the owner of a TreasuryDirect account has 
become incompetent, we will suspend all transactions in the account 
until we establish the authority of another person to act in his or her 
behalf.

[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003]



Sec. 363.35  When is a transaction effective?

    A transaction is effective when we post it to our records.



Sec. 363.36  What securities can I purchase and hold in my 
TreasuryDirect[supreg] account?

    You can purchase and hold eligible Treasury securities in your 
account. Eligible securities are Series EE and Series I savings bonds, 
certificates of indebtedness, and marketable Treasury securities that 
are available for purchase through the TreasuryDirect Web site. In 
addition, you can hold converted savings bonds and eligible marketable 
Treasury securities that have been transferred from the Legacy Treasury 
Direct system or the commercial book-entry system.

[70 FR 57443, Sept. 30, 2005]



Sec. 363.37  How do I purchase and make payment for eligible Treasury 
securities through my TreasuryDirect[supreg] account?

    (a) Online purchase. Purchases of eligible Treasury securities 
through your TreasuryDirect account must be made online.
    (b) Payment for savings bonds and marketable Treasury securities. 
You can pay for eligible savings bonds and marketable Treasury 
securities by either a debit to your designated account at a United 
States financial institution using the ACH method, or by using the 
redemption proceeds of your certificate of indebtedness.
    (c) Payment for certificate of indebtedness. You can pay for a 
certificate of indebtedness by a direct deposit from your financial 
institution or employer to your TreasuryDirect account using the ACH 
method; by a debit from your designated account at a financial 
institution using the ACH method, but the amount of the debit is limited 
to $1000 or less; or by using the proceeds of maturing securities held 
in your Treasury Direct account.

[70 FR 57443, Sept. 30, 2005]



Sec. 363.38  What happens if my financial institution returns an ACH 
debit?

    If your designated financial institution returns an ACH debit, we 
reserve the right to reinitiate the debit at our option. We also reserve 
the right to reverse the transaction, thereby removing the security from 
your TreasuryDirect[supreg] account. If the ACH return occurs after the 
security has been redeemed, transferred, or has matured and the proceeds 
paid, we reserve the right to reverse previously processed security 
transactions. We are not responsible for any fees your financial 
institution may charge relating to returned ACH debits.

[70 FR 57443, Sept. 30, 2005]



Sec. 363.39  Will I receive a confirmation of my request to purchase 
a Treasury security?

    At the time that you submit a request to purchase a Treasury 
security through your TreasuryDirect[supreg] account, we will make 
available a printable online confirmation of your request. Final 
confirmation will occur when the security is issued into your account. 
You will not receive a mailed confirmation.



Sec. 363.40  How are payments of principal and interest made?

    (a) Payment of a savings bond that has reached final maturity. We 
will purchase a certificate of indebtedness in your 
TreasuryDirect[supreg] account using the proceeds of a matured savings 
bond.
    (b) Payments of interest and principal (except a savings bond that 
has reached

[[Page 488]]

final maturity). (1) We provide two methods of receiving payments of 
principal and interest:
    (i) Payment to your account at a financial institution by the ACH 
method, or
    (ii) Payment to your TreasuryDirect account to purchase a 
certificate of indebtedness.
    (2) You may select different payment destinations for principal and 
interest for a marketable Treasury security. You may change your payment 
destination at any time, unless the security is in the closed book 
period. (See Sec. 363.210.)
    (3) If we are unable to deliver a payment, we will use the payment 
to purchase a certificate of indebtedness in your TreasuryDirect 
account.

[70 FR 57443, Sept. 30, 2005]



Sec. 363.41  What happens if an ACH payment is returned to Public Debt?

    We will notify you electronically of the returned payment. We will 
hold your payment until you provide us with instructions. Returned 
payments will not earn interest. We reserve the right to redirect a 
returned payment to the bank account at a financial institution that you 
have designated in your TreasuryDirect[supreg] account as your primary 
bank account, if that account is different from the one that returned 
the payment to us. We are not responsible for any fees your financial 
institution may charge relating to returned ACH payments.

[69 FR 50308, Aug. 16, 2004]



Sec. 363.42  How will my interest income be reported for tax purposes?

    When you open your TreasuryDirect[supreg] account, you consent to 
receive the appropriate tax reporting forms by electronic means. We will 
notify you when your tax reporting forms are available. The form will be 
available in printable form through your TreasuryDirect account. If you 
withdraw your consent to receive tax reporting forms by electronic 
means, we reserve the right to redeem any savings bonds held in your 
account and close your account.

[67 FR 64286, Oct. 17, 2002, as amended at 70 FR 57435, Sept. 30, 2005]



Sec. 363.43  What are the procedures for certifying my signature on an 
offline application for a TreasuryDirect[supreg] account, or on an offline 
transaction form?

    (a) Certification within the United States. For certifications 
within the United States, the certifying individual must be authorized 
to bind his or her institution by his or her acts, to guarantee 
signatures to assignments of securities, or to certify assignments of 
securities. The following table provides a list of authorized certifying 
individuals and the required evidence of authority. Members of Treasury-
recognized signature guarantee programs are for security transfers only.

------------------------------------------------------------------------
                                              Evidence of certifying
 Who can certify signatures in the U.S.       individual's authority
------------------------------------------------------------------------
(1) Officers and employees of            (i) We require the
 depository institutions.                 institution's seal or
                                          signature guarantee stamp.
                                         (ii) If the institution is an
                                          authorized paying agent for
                                          U.S. Savings Bonds, we require
                                          a legible imprint of the
                                          paying agent's stamp.
(2) Institutions that are members of     We require the imprint of the
 Treasury--recognized signature           signature guarantee stamp,
 guarantee programs (for security         i.e., the STAMP, SEMP, or MSP
 transfers only).                         stamp for members of the
                                          Securities Transfer Agents
                                          Medallion Program, the Stock
                                          Exchanges Medallion Program,
                                          or the New York Stock Exchange
                                          Inc. Medallion Signature
                                          Program.
(3) Officers and employees of corporate  We require the entity's seal.
 central credit unions, Federal Land
 Banks, Federal Intermediate Credit
 Banks and Banks for Cooperatives, the
 Central Bank for Cooperatives, and
 Federal Home Loan Banks.
(4) Commissioned or warrant officers of  (i) We require a statement that
 the United States Armed Forces, for      the person executing the
 signatures executed by Armed Forces      assignment is one whose
 personnel, civilian field employees,     signature the officer is
 and members of their families.           authorized to certify under
                                          our regulations.
                                         (ii) The certifying official's
                                          rank must be shown.
(5) A judge or clerk of the court......  We require the seal of the
                                          court.
(6) Other persons as designated by the   Evidence is determined by our
 Commissioner or Deputy Commissioner of   procedures.
 Public Debt.
------------------------------------------------------------------------


[[Page 489]]

    (b) Certification within foreign countries. The following table 
lists the authorized certifying individuals for foreign countries and 
the required evidence of the individual's authority.

------------------------------------------------------------------------
 Who can certify signatures in foreign        Evidence of certifying
               countries                      individual's authority
------------------------------------------------------------------------
(1) United States diplomatic or          (i) We require the seal or
 consular officials.                      stamp of the office.
                                         (ii) If there is no seal or
                                          stamp, then we require
                                          certification by some other
                                          authorized individual, under
                                          seal or stamp.
(2) Managers and officers of foreign     We require the seal of the
 branches of U.S. depository              depository institution, or the
 institutions and institutions that are   imprint of the signature
 members of Treasury-recognized           guarantee stamp, i.e., the
 signature guarantee programs (for        STAMP, SEMP, or MSP stamp for
 security transfers only).                members of the Securities
                                          Transfer Agents Medallion
                                          Program, the Stock Exchanges
                                          Medallion Program, or the New
                                          York Stock Exchange
                                          Incorporated Medallion
                                          Signature Program.
(3) Notaries Public and other officers   (i) We require the official
 authorized to administer oaths,          seal or stamp of the office.
 provided their authority is certified   (ii) If there is no seal or
 by a United States diplomatic or         stamp, the position must be
 consular official.                       certified by some other
                                          authorized individual, under
                                          seal or stamp, or otherwise
                                          proved to our satisfaction.
------------------------------------------------------------------------

    (c) Duties and liabilities of certifying individuals. (1) The 
certifying individual must first establish the identity of the signer.
    (2) The form must be signed in the presence of the certifying 
individual.
    (3) If the certifying individual is not an officer, the certifying 
individual must insert the words ``Authorized Signature'' in the space 
provided for the title.
    (4) If the certifying individual is negligent in making the 
certification, the certifying individual and his or her organization are 
jointly and severally liable for any loss the United States may incur as 
a result of the negligence.
    (d) Guaranteed signatures. (1) A security or other form requiring 
certification need not be executed in the presence of a certifying 
individual if the signature is unconditionally guaranteed by the 
certifying individual. To guarantee a signature, the certifying 
individual must add a dated endorsement after the signature. For 
example:

Signature guaranteed, First National Bank of Smithville, Smithville, NH, 
by A. B. Doe, President, dated 1/1/2001.

    (2) The certifying individual and his or her organization 
unconditionally guarantee to us that the signature is genuine and the 
signer had the legal capacity to execute the assignment or related form.
    (e) Guaranteed absence of a signature. (1) A form requiring a 
certified signature need not be signed when a certifying individual 
associated with a depository financial institution places the following 
endorsement on the security or the form:

Absence of signature by owner and validity of transaction guaranteed, 
Second State Bank of Jonesville, Jonesville, NC, by B. R. Butler, Vice 
President, dated 11/1/2001.

    (2) The endorsement must be dated and the seal of the institution 
must be added.
    (3) This form of endorsement is an unconditional guarantee to us 
that the institution is acting for the signer under proper 
authorization.
    (f) Persons who cannot act as certifying individuals. Any person 
having an interest in a security involved in the transaction cannot act 
as a certifying individual. However, an authorized officer or employee 
of a depository financial institution that is a member of a Treasury-
recognized signature guarantee program can act as a certifying 
individual for transfer of a security to the institution or on behalf of 
the institution.

[67 FR 64286, Oct. 17, 2002, as amended at 70 FR 57435, Sept. 30, 2005]



Sec. 363.44  What happens when a TreasuryDirect[supreg] account owner 
dies and the estate is entitled to securities held in the account?

    (a) Estate is being administered. (1) For an estate that is being 
administered, the legal representative of the estate may request payment 
of securities, if the securities are eligible for payment, to the estate 
or to the persons entitled, or may:

[[Page 490]]

    (i) Request transfer of securities to the TreasuryDirect account of 
the persons entitled, if the securities are eligible for transfer;
    (ii) Request transfer of marketable Treasury securities to the 
commercial book-entry system; or
    (iii) Request a Sell Direct transaction.
    (2) We will require appropriate proof of appointment for the legal 
representative of the estate. Letters of appointment must be dated not 
more than one year prior to the date of submission of the letters of 
appointment.
    (3) The legal representative of the estate may not purchase 
securities on behalf of the estate.
    (4) If payment is requested, we will require ACH instructions to 
process the request.
    (b) Estate has been settled previously. If the estate has been 
settled previously through judicial proceedings, the persons entitled 
may request payment of securities, if the securities are eligible for 
redemption, or may transfer the securities to the TreasuryDirect 
accounts of the persons entitled, if the securities are eligible for 
transfer. We will require a certified copy of the court-approved final 
accounting for the estate, the court's decree of distribution, or other 
appropriate evidence. If payment is requested, we will require ACH 
instructions to process the request.
    (c) Special provisions under the law of the jurisdiction of the 
decedent's domicile. If there is no formal or regular administration and 
no representative of the estate is to be appointed, the person appointed 
to receive or distribute the assets of a decedent's estate without 
regular administration under summary or small estates procedures under 
applicable local law may request payment of securities, if the 
securities are eligible for redemption, or may transfer the securities 
to or on behalf of the persons entitled by the law of the jurisdiction 
in which the decedent was domiciled at the date of death, if the 
securities are eligible for transfer. We will require appropriate 
evidence. If payment is requested, we will require ACH instructions to 
process the request.
    (d) When administration is required. If the total redemption value 
of the Treasury securities and undelivered payments, if any, held 
directly on our records that are the property of the decedent's estate 
is greater than $100,000, administration of the decedent's estate will 
be required. The redemption value of savings bonds and the principal 
amount of marketable securities will be used to determine the value of 
securities, and will be determined as of the date of death. 
Administration may also be required at the discretion of the Department 
for any case.
    (e) Voluntary representative for small estates that are not being 
otherwise administered--(1) General. A voluntary representative is a 
person qualified according to paragraph (e)(3) of this section, to 
redeem or transfer a decedent's securities. The voluntary representative 
procedures are for the convenience of the Department; entitlement to the 
decedent's securities and held payments, if any, is determined by the 
law of the jurisdiction in which the decedent was domiciled at the date 
of death. Voluntary representative procedures may be used only if:
    (i) There has been no administration, no administration is 
contemplated, and no summary or small estate procedures under applicable 
local law have been used;
    (ii) The total redemption value of the Treasury securities and held 
payments, if any, held directly on our records that are the property of 
the decedent's estate is $100,000 or less, as of the date of death, and
    (iii) There is a person eligible to serve as the voluntary 
representative according to paragraph (e)(3) of this section.
    (2) Authority of voluntary representative. A voluntary 
representative may:
    (i) Redeem the decedent's savings bonds that are eligible for 
redemption. Payment may be made to the voluntary representative on 
behalf of or directly to the persons entitled by the law of the 
jurisdiction in which the decedent was domiciled at the date of death;
    (ii) Transfer the decedent's securities to the persons entitled by 
the law of the jurisdiction in which the decedent was domiciled at the 
date of death.
    (3) Order of precedence for voluntary representative. An individual 
eighteen

[[Page 491]]

years of age or older may act as a voluntary representative according to 
the following order of precedence: a surviving spouse; if there is no 
surviving spouse, then a child of the decedent; if there are none of the 
above, then a descendant of a deceased child of the decedent; if there 
are none of the above, then a parent of the decedent; if there are none 
of the above, then a brother or sister of the decedent; if there are 
none of the above, then a descendant of a deceased brother or sister of 
the decedent; if there are none of the above, then a next of kin of the 
decedent, as determined by the laws of the decedent's domicile at the 
date of death. As used in this order of precedence, child means a 
natural or adopted child of the decedent.
    (4) Liability. By serving, the voluntary representative warrants 
that the distribution of payments or securities are to or on behalf of 
the persons entitled by the law of the jurisdiction in which the 
decedent was domiciled at the date of death. The United States is not 
liable to any person for the improper distribution of payments or 
securities. Upon payment or transfer of the securities to the voluntary 
representative, the United States is released to the same extent as if 
it had paid or delivered to a representative of the estate appointed 
pursuant to the law of the jurisdiction in which the decedent was 
domiciled at the date of death. The voluntary representative shall 
indemnify and hold harmless the United States and all creditors and 
persons entitled to the estate of the decedent. The amount of the 
indemnification is limited to an amount no greater than the value 
received by the voluntary representative.
    (5) Creditor. If there has been no administration, no administration 
is contemplated, no summary or small estate procedures under applicable 
local law have been used, and there is no person eligible to serve as a 
voluntary representative pursuant to paragraph (e) of this section, then 
a creditor may make a claim for payment of the amount of the debt, 
providing the debt has not been barred by applicable local law.

[70 FR 57435, Sept. 30, 2005, as amended at 70 FR 57443, Sept. 30, 2005]



Sec. 363.45  What are the rules for judicial and administrative actions 
involving securities held in TreasuryDirect[supreg]?

    (a) Notice of adverse claim or pending judicial proceedings. We are 
not subject to and will not accept a notice of an adverse claim or 
notice of pending judicial proceedings involving a security held in 
TreasuryDirect.
    (b) Competing claims to a security. The Department of the Treasury, 
Public Debt, and the Federal Reserve Banks are not proper defendants in 
a judicial proceeding involving competing claims to a security held in 
TreasuryDirect.
    (c) Divorce decree. We will recognize a divorce decree that either 
disposes of a security held in TreasuryDirect or ratifies a property 
settlement agreement disposing of a security that is the property of 
either of the parties. If the divorce decree does not set out the terms 
of the property settlement agreement, we will require a certified copy 
of the agreement.
    (d) Final court order. We will recognize a final order entered by a 
court that affects ownership rights in a security held in TreasuryDirect 
only to the extent that the order is consistent with the provisions of 
this part. The owner of the security must be a party to the proceedings.
    (e) Levy to satisfy money judgment. We will honor a transaction 
request submitted by a person appointed by a court and having authority 
under an order of a court to dispose of a security held in 
TreasuryDirect pursuant to a money judgment against the owner of the 
security, as owner is defined in section 363.6 of this part. In the case 
of savings bonds, we will only make payment pursuant to the court order 
to the extent of the money judgment. We will not transfer the savings 
bonds.
    (f) IRS levy. We will honor an IRS notice of levy under section 6331 
of the Internal Revenue Code with respect to:
    (1) The owner, as owner is defined in section 363.6 of this part; 
and
    (2) A secondary owner, if the secondary owner has the right to 
conduct transactions in a security at the date and time the notice of 
levy is delivered to Public Debt.
    (g) Trustee in bankruptcy, a receiver of an insolvent's estate, a 
receiver in equity,

[[Page 492]]

or a similar court officer. We will honor a transaction request 
submitted by a trustee in bankruptcy, a receiver of an insolvent's 
estate, a receiver in equity, or a similar court officer, if the 
original court order is against the owner, as owner is defined in Sec. 
363.6 of this part. In the case of savings bonds, we will only make 
payment. We will not transfer the savings bonds.
    (h) Court order that attempts to defeat or impair survivorship 
rights. We will not recognize a court order that attempts to defeat or 
impair the survivorship rights of a beneficiary, secondary owner, 
coowner of a converted savings bond, or the registered owner of an 
undelivered gift security held in TreasuryDirect.

[70 FR 57435, Sept. 30, 2005]



Sec. 363.46  What evidence is required to establish the validity of 
judicial proceedings?

    (a) We will require certified copies of the final judgment, decree, 
or court order, and any necessary supplementary proceedings.
    (b) A transaction request by a trustee in bankruptcy or a receiver 
of an insolvent's estate must be supported by evidence of appointment 
and qualification.
    (c) A transaction request by a receiver in equity or a similar court 
officer (other than a receiver of an insolvent's estate) must be 
supported by a copy of an order that authorizes the receiver or similar 
court officer to take possession and control of the security.

[70 FR 57435, Sept. 30, 2005]



Sec. 363.47  Will Public Debt pay Treasury securities pursuant to a 
forfeiture proceeding?

    (a) General. We will honor a judicial or administrative forfeiture 
order or declaration of forfeiture submitted by a federal agency. We 
will rely exclusively upon the information provided by the Federal 
forfeiting agency and will not make any independent evaluation of the 
validity of the forfeiture order, the request for payment, or the 
authority of the individual signing the transaction request. The amount 
to be paid or transferred is limited to the value of the security as of 
the date of forfeiture.
    (b) Definition of special terms relating to forfeitures.
    Contact point means the individual designated by the Federal 
investigative agency, United States Attorney's Office, or forfeiting 
agency, to receive referrals from Public Debt.
    Forfeiting agency means the federal law enforcement agency 
responsible for the forfeiture.
    Forfeiture means the process by which property may be forfeited by a 
federal agency. Administrative forfeiture is forfeiture by a federal 
agency without judicial proceedings resulting in a declaration of 
forfeiture; judicial forfeiture is a forfeiture through either a civil 
or criminal proceeding in a United States District Court resulting in a 
final judgment and order of forfeiture.
    (c) Procedures for a forfeiting agency to request forfeiture of 
Treasury securities. A forfeiting agency must request forfeiture. An 
individual authorized by the forfeiting agency must sign the transaction 
request. The request must be mailed to the Department of the Treasury, 
Bureau of the Public Debt, Parkersburg, WV 26106-7015.
    (d) Public Debt procedures upon receipt of forfeiture request. Upon 
receipt and review of the transaction request, we will make payment to 
the forfeiture fund specified, if the security is eligible for payment, 
or we will transfer the security pursuant to the transaction request. We 
will record the forfeiture, the forfeiture fund into which the proceeds 
were paid or the security transfer records, the contact point, and any 
related information.
    (e) Inquiries from previous owner. All inquiries or claims from the 
previous owner will be referred to the contact point of the forfeiting 
agency. We will tell the person who inquired that we referred his or her 
inquiry to the contact point. We will not investigate the inquiry. We 
will defer to the forfeiting agency's determination of the appropriate 
course of action, including settlement where appropriate. Any settlement 
will be paid from the forfeiture fund into which the proceeds were 
deposited.

[70 FR 57436, Sept. 30, 2005]

[[Page 493]]



Sec. Sec. 363.48-363.49  [Reserved]



   Subpart C_Book-Entry Savings Bonds Purchased Through TreasuryDirect

                                 General



Sec. 363.50  What Treasury securities does this subpart govern?

    This subpart governs:
    (a) Series EE and Series I book-entry savings bonds that were 
originally issued as book-entry bonds through TreasuryDirect[supreg]; 
and
    (b) Converted savings bonds that are registered in:
    (1) The single owner form of registration of any series,
    (2) The owner with beneficiary form of registration of Series EE and 
Series I savings bonds,
    (3) The owner with beneficiary form of registration of Series E 
savings bonds in which the beneficiary has consented to a change in the 
registration of the bond after conversion, and
    (4) The coowner form of registration of any series in which the non-
converting coowner has consented to a change in the registration of the 
bond after conversion.

[70 FR 14943, Mar. 23, 2005]



Sec. 363.51  [Reserved]



Sec. 363.52  What amount of book-entry Series EE and I savings bonds may 
I purchase in one year?

    (a) Purchase limitation. The amount of bonds that you may purchase 
in any calendar year is limited to $30,000 for Series EE savings bonds, 
and $30,000 for Series I savings bonds.
    (b) Computation of amount for gifts. Bonds purchased or transferred 
as gifts will be included in the computation of the purchase limitation 
for the account of the recipient for the year in which the bonds are 
delivered to the recipient.

[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003]



Sec. 363.53  What is the minimum amount of book-entry savings bonds that 
I may purchase in any transaction?

    Each bond purchase must be in a minimum amount of $25, with 
additional one-cent increments above that amount, in any one 
transaction. For example, a purchase may be $25.00, $25.01, $25.02, or 
$25.03, and so forth.



Sec. 363.54  What is the minimum amount of a book-entry savings bond 
that I must hold in my account?

    Each bond held in your account must have a redemption value of at 
least $25. If you request a transaction that would reduce the remaining 
redemption value of the bond to an amount less than $25, we will not 
permit the transaction to occur.



Sec. 363.55  May I transfer my book-entry savings bonds to another 
person?

    (a) You may transfer a savings bond or a portion of a savings bond 
to the TreasuryDirect[supreg] account of another individual in a minimum 
amount of $25. The transfer may only be made as a gift or in response to 
a final judgment, court order, divorce decree, or property settlement 
agreement. You must certify online that the transfer is a gift or a 
specified exception.
    (b) We do not permit the transfer of savings bonds for 
consideration, unless it is an exception specified in paragraph (a) of 
this section.
    (c) The bond will be transferred in the single owner form of 
registration.
    (d) We reserve the right to limit the transferability of savings 
bonds at any time by amendment to these regulations.

[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003; 70 
FR 57436, Sept. 30, 2005]



Sec. 363.56  What is the minimum amount of book-entry savings bonds that 
I may transfer in any one transaction?

    Each transfer must be in a minimum amount of $25 redemption value, 
with additional one-cent increments above that amount, in any one 
transaction. For example, you may transfer $25.00, $25.01, $25.02, or 
$25.03, and so forth. Transfers will be comprised of principal and 
proportionate interest.

[[Page 494]]



Sec. 363.57  What is the minimum amount of book-entry savings bonds that 
I may redeem in any one transaction?

    Each redemption must be in a minimum amount of $25 redemption value, 
with additional one-cent increments above that amount, in any one 
transaction. For example, you may redeem $25.00, $25.01, $25.02, or 
$25.03, and so forth. Redemptions will be comprised of principal and 
proportionate interest.



Sec. 363.58  May book-entry savings bonds be pledged or used as 
collateral?

    Bonds may not be pledged or used as collateral for the performance 
of an obligation.



Sec. Sec. 363.59-363.82  [Reserved]



Sec. 363.83  May an account owner transfer a book-entry savings bond to 
a minor?

    An account owner may transfer a bond to a minor as a gift or 
pursuant to one of the specified exceptions in Sec. 363.55(a).



Sec. Sec. 363.84-363.94  [Reserved]

                                  Gifts



Sec. 363.95  How may I give a book-entry savings bond as a gift?

    You may give a book-entry savings bond as a gift in two ways:
    (a) You may purchase a bond online as a gift; or
    (b) You may transfer a bond that you own to another person as a gift 
with immediate delivery.

[67 FR 64286, Oct. 17, 2002, as amended at 68 FR 24807, May 8, 2003; 70 
FR 57437, Sept. 30, 2005]



Sec. 363.96  What do I need to know if I initially purchase a bond as 
a gift?

    (a) The gift bond will be registered in the name of the 
recipient(s). The registration is irrevocable with regard to the owner 
named on the gift bond.
    (b) You must provide the SSN of the recipient.
    (c) You may deliver the bond upon purchase, or you may hold the bond 
in your TreasuryDirect[supreg] account until you are ready to deliver 
the bond to the owner named on the gift bond.
    (d) If the purchaser dies before delivering a gift bond to the 
recipient, the bond belongs to the owner named on the gift bond, 
notwithstanding any testamentary attempts to the contrary by the 
purchaser, or any state law to the contrary. We will hold the bond until 
we receive instructions from the owner named on the gift bond.

[67 FR 64286, Oct. 17, 2002, as amended at 69 FR 2508, Jan. 16, 2004]



Sec. 363.97  What do I need to know if I transfer a book-entry savings 
bond to another person as a gift?

    (a) You must certify online that the transfer is a gift.
    (b) You must provide the SSN of the recipient.
    (c) Once the transfer is made, the gift is irrevocable.
    (d) The bond will be transferred in the single owner form of 
registration to the recipient.



Sec. 363.98  [Reserved]



Sec. 363.99  What is the minimum amount of a bond that I may transfer 
or deliver as a gift in any one transaction?

    You may transfer or deliver gift bonds in any one-cent increment 
value equal to or greater than $25.00 redemption value. For example, you 
may deliver a gift bond with a redemption value of $25.00, $25.01, 
$25.02, and so forth. If the bond was held in your account prior to 
delivery to the recipient for a period of time and has accrued interest, 
the delivery will include principal and proportionate interest.



Sec. 363.100  What are the rules for purchasing and delivering gift 
savings bonds to minors?

    (a) A TreasuryDirect[supreg] account owner can purchase a savings 
bond as a gift with a minor as the recipient.
    (b) An account owner can deliver a bond purchased as a gift to a 
minor. The account owner must deliver the security to the minor's linked 
account. Once delivered, the bond will be under the control of the 
custodian of the minor's account. (See Sec. 363.27.)

[70 FR 57444, Sept. 30, 2005]

[[Page 495]]



Sec. 363.101  Can an account owner transfer a book-entry savings bond 
to a minor?

    An account owner can transfer a book-entry savings bond held in 
TreasuryDirect[supreg] to a minor as a gift or pursuant to one of the 
specified exceptions in Sec. 363.55(a).

[70 FR 57444, Sept. 30, 2005]



Sec. Sec. 363.102-363.124  [Reserved]

                                 Payment



Sec. 363.125  How is payment made on a book-entry savings bond?

    We will make payment by the ACH method to the designated account at 
a United States depository financial institution.



Sec. 363.126  Under what circumstances will payment be made?

    We will make payment:
    (a) Upon your request for redemption prior to maturity;
    (b) When the bond reaches final maturity; and
    (c) If a person who becomes entitled to the bond is unable, 
unwilling or ineligible to open a TreasuryDirect[supreg] account.



Sec. Sec. 363.127-363.129  [Reserved]



                  Subpart D_Certificate of Indebtedness

    Source: 69 FR 50309, Aug. 16, 2004, unless otherwise noted.



Sec. 363.130  What does this subpart cover?

    This subpart is the offering of the certificate of indebtedness by 
the Secretary of the Treasury (Secretary), and will continue until 
suspended or terminated by the Secretary. This subpart is also the 
governing regulations for the certificate of indebtedness.



Sec. 363.131  What is a TreasuryDirect[supreg] certificate of 
indebtedness?

    A TreasuryDirect certificate of indebtedness (certificate of 
indebtedness) is a security held within your primary or linked account, 
including a minor account for which you are the custodian, that is 
issued daily, with a one-day maturity, that automatically rolls over at 
maturity until you request redemption. A certificate of indebtedness has 
a minimum purchase amount of one cent. The only purpose of a certificate 
of indebtedness is to accumulate funds for the purchase of another 
eligible security in the TreasuryDirect system. A certificate of 
indebtedness within a minor's account is the property of the minor 
alone.



Sec. 363.132  Can the sale of the certificate of indebtedness be 
suspended?

    The Secretary may suspend and rescind the suspension of sales of the 
certificate of indebtedness by announcement at any time.



Sec. 363.133  What happens to my certificate of indebtedness if the 
offering is terminated by the Secretary?

    Upon the termination of this offering by the Secretary, the 
certificate of indebtedness ceases to roll over; the proceeds will be 
paid by the ACH method to the bank account at a financial institution 
that you designated in your TreasuryDirect[supreg] account as your 
primary bank account.



Sec. 363.134  What regulations cover a certificate of indebtedness?

    The regulations in part 363 apply to a certificate of indebtedness. 
We expressly disclaim representations or warranties regarding a 
certificate of indebtedness that in any way conflict with these 
regulations and other applicable law.



Sec. 363.135  In what form is a certificate of indebtedness issued?

    A certificate of indebtedness is issued in electronic form only in 
the TreasuryDirect[supreg] system.



Sec. 363.136  Do certificates of indebtedness pay interest?

    Certificates of indebtedness do not pay any interest. However, the 
Secretary may prescribe a rate of interest, or change the interest rate, 
for certificates of indebtedness by announcement at any time. The new 
rate would apply to certificates of indebtedness issued thereafter, as 
provided in the announcement. The Secretary's determination of the rate 
will be final.

[[Page 496]]



Sec. 363.137  What do I need to know about the registration of a 
certificate of indebtedness?

    A certificate of indebtedness is automatically registered in the 
single ownership form of registration in the TreasuryDirect[supreg] 
account owner's name.



Sec. 363.138  How do I purchase a certificate of indebtedness?

    You may purchase your certificate of indebtedness through one or 
more of the following four methods:
    (a) payroll deduction, in which your employer sends funds through 
the ACH method to your TreasuryDirect[supreg] account;
    (b) deposit by your financial institution, in which your financial 
institution sends funds by the ACH method to your TreasuryDirect account 
on a recurring or one-time basis;
    (c) through the Buy Direct[supreg] function of your TreasuryDirect 
account, in which you direct us to debit funds from your account at a 
financial institution to purchase a certificate of indebtedness. This 
method is limited to an amount no greater than $1000 per transaction. 
When you use the Buy Direct function to debit funds to purchase all or a 
portion of a certificate of indebtedness, you will not be permitted to 
schedule a redemption for cash from your certificate of indebtedness 
within five business days after the date of the debit entry; or
    (d) by using the proceeds from the redemption or interest payment of 
a security to purchase a certificate of indebtedness.

[69 FR 50309, Aug. 16, 2004, as amended at 70 FR 57444, Sept. 30, 2005]



Sec. 363.139  Is Treasury liable for the purchase of a certificate of 
indebtedness that is made in error?

    We are not liable for any deposits of funds for the purchase of a 
certificate of indebtedness that are made in error by your financial 
institution or employer.



Sec. 363.140  When is a certificate of indebtedness issued?

    A certificate of indebtedness is issued the business day after the 
purchase transaction is made.



Sec. 363.141  How do I purchase a security using the redemption proceeds 
of my certificate of indebtedness?

    You may purchase an eligible security by redeeming all or a portion 
of your certificate of indebtedness and applying the proceeds toward the 
purchase of another eligible security. To do this, your certificate of 
indebtedness must be of sufficient value to cover the cost of the 
security. If you are paying for a security using the redemption proceeds 
of a certificate of indebtedness, you must pay the full amount of the 
purchase price of the security using the redemption proceeds.



Sec. 363.142  Can I redeem my certificate of indebtedness for cash?

    You can redeem part or all of the value of your certificate of 
indebtedness at any time, with one exception: if you purchased all or a 
portion of your certificate of indebtedness through a debit using the 
ACH method, you may not schedule a redemption from your certificate of 
indebtedness within five business days after the date of the debit 
entry.

[70 FR 57444, Sept. 30, 2005]



Sec. 363.143  What happens if an ACH payment used to purchase a 
certificate of indebtedness is later reversed?

    If an ACH payment used to purchase a certificate of indebtedness is 
later reversed, we reserve the right to reverse the purchase of the 
certificate of indebtedness. If the ACH reversal occurs after the 
certificate of indebtedness has been redeemed, we reserve the right to 
reverse previously processed security transactions, including securities 
that were purchased as gifts and securities that have been transferred 
or delivered from your account to the account of another 
TreasuryDirect[supreg] account owner.



Sec. 363.144  May I delete a pending transaction involving a certificate 
of indebtedness?

    (a) You may delete a pending purchase of a certificate of 
indebtedness initiated from your TreasuryDirect[supreg] account.
    (b) You may delete a pending purchase of a security using a 
certificate of indebtedness as payment.

[[Page 497]]

    (c) You may not delete a pending redemption of all or part of the 
value of a certificate of indebtedness.



Sec. 363.145  May I transfer or deliver my certificate of indebtedness?

    A certificate of indebtedness is nontransferable. You may not 
deliver a certificate of indebtedness to another TreasuryDirect[supreg] 
account as a gift.



Sec. 363.146  May a certificate of indebtedness be pledged or used as 
collateral?

    A certificate of indebtedness may not be pledged or used as 
collateral for the performance of an obligation.

[69 FR 50309, Aug. 16, 2004. Redesignated at 70 FR 57437, Sept. 30, 
2005]



Sec. Sec. 363.147-363.152  [Reserved]



            Subpart E_Conversion of a Definitive Savings Bond

    Source: 70 FR 14943, Mar. 23, 2005, unless otherwise noted.



Sec. 363.160  What subparts govern the conversion of definitive savings 
bonds?

    (a) This subpart governs:
    (1) The process of converting definitive savings bonds of all 
eligible series and types of registration to book-entry bonds in 
TreasuryDirect[supreg];
    (2) Converted savings bonds of all series registered in the coowner 
form of registration, unless the non-converting coowner consents to a 
change in the registration of the bonds after conversion;
    (3) Converted savings bonds of Series E registered in the owner with 
beneficiary form of registration, unless the beneficiary consents to a 
change in the registration of the bonds after conversion; and
    (4) Converted savings bonds of all series that are held as gift 
bonds by the person who converted the bonds.
    (b) Subpart C governs:
    (1) Converted savings bonds of any series registered in the single 
owner form of registration;
    (2) Converted Series EE and Series I savings bonds registered in the 
owner with beneficiary form of registration;
    (3) Converted Series E savings bonds registered in the owner with 
beneficiary form of registration, where the beneficiary has consented to 
a change in the registration of the bonds after conversion; and
    (4) Converted savings bonds of all series registered in the coowner 
form of registration, where the non-converting coowner has consented to 
a change in the registration of the bonds after conversion.

[70 FR 14943, Mar. 23, 2005, as amended at 70 FR 57347, Sept. 30, 2005]



Sec. 363.161  What definitive savings bonds are eligible to be converted 
to book-entry bonds?

    Series E, Series EE, and Series I savings bonds issued in 
denominations of $25 or greater, in single owner, coowner, or owner with 
beneficiary forms of registration, are eligible for conversion to book-
entry bonds in TreasuryDirect[supreg].



Sec. 363.162  Who may convert a definitive savings bond?

    The owner of a TreasuryDirect[supreg] primary account may convert a 
definitive savings bond.
    (a) Bond that is registered to the account owner. The owner of a 
definitive savings bond registered in the single owner form of 
registration, either coowner of a bond registered in the coowner form of 
registration, and the owner of a bond registered in the owner with 
beneficiary form of registration of all eligible series, may convert 
that definitive bond to a book-entry bond to be held in his or her 
TreasuryDirect account.
    (b) Bond that is registered to someone other than the account owner. 
We will convert an eligible definitive savings bond submitted by someone 
other than the registered owner of the savings bond. See the special 
rules in section 363.166.



Sec. 363.163  How do I convert an eligible definitive savings bond?

    We will provide online instructions for converting your definitive 
savings bond. You must surrender to us the definitive bond to be 
converted at the time of conversion.

[[Page 498]]



Sec. 363.164  Is a converted savings bond eligible to be converted back 
into a definitive bond?

    Once a definitive savings bond has been converted to a book-entry 
bond, it may not be converted back into a definitive bond.



Sec. 363.165  What happens when I convert a savings bond that is 
registered in my name as the owner, either coowner, or the owner 
with a beneficiary?

    (a) Unmatured savings bond. When the conversion is approved, an 
unmatured savings bond that is registered in the name of the 
TreasuryDirect[supreg] account owner as single owner, either coowner, or 
owner with beneficiary, will be released to the account owner's 
conversion linked account.
    (b) Matured savings bond. A savings bond that has reached final 
maturity and is registered in the name of the Treasury Direct account 
owner as single owner, either coowner, or owner with beneficiary, will 
be converted to a book-entry bond and automatically redeemed. The 
redemption proceeds will be used to purchase a certificate of 
indebtedness in the account owner's name in his or her primary account.

[70 FR 14943, Mar. 23, 2005, as amended at 70 FR 57347, Sept. 30, 2005]



Sec. 363.166  What happens when I convert a savings bond that is not 
registered in my name as owner, either coowner, or owner with beneficiary 
(including a bond registered in the name of a minor)?

    We will presume that a savings bond registered in the name of 
someone other than the TreasuryDirect[supreg] account owner (including a 
bond registered in the name of a minor), was purchased by the account 
owner as a gift for the registered owner.
    (a) Unmatured savings bond--(1) General. An unmatured savings bond 
registered in the name of someone other than the account owner will be 
converted to a book-entry bond, released as a gift bond to the account 
owner's conversion linked account, and held until delivered to the 
TreasuryDirect account (or minor linked account, if the registered owner 
is a minor) of the registered owner.
    (2) Delivery of unmatured gift bond to registered owner. The 
TreasuryDirect account owner may deliver the converted gift bond to the 
TreasuryDirect account (or minor linked account, if the registered owner 
is a minor) of the registered owner, or, if the bond is registered in 
the coowner form of registration, to the account of either coowner. A 
bond registered in coowner or owner with beneficiary form of 
registration will retain the coowner or beneficiary form of registration 
upon delivery.
    (b) Savings bond that has reached final maturity--(1) General. A 
savings bond that has reached final maturity and is registered in the 
name of someone other than the account owner will be converted to a 
book-entry bond, released as a gift bond into the account owner's 
conversion linked account, and automatically redeemed. We will hold the 
redemption proceeds in the name of the registered owner of the 
definitive bond until the proceeds are delivered to the TreasuryDirect 
account (or minor linked account, if the registered owner is a minor) of 
the registered owner.
    (2) Delivery of bond proceeds to registered owner. If the gift bond 
has reached final maturity and has been automatically redeemed, then the 
Treasury Direct account owner may direct that the held redemption 
proceeds be delivered to the Treasury Direct account of the registered 
owner (or minor linked account, if the registered owner is a minor), 
where we will use the proceeds to purchase a certificate of indebtedness 
in the name of the registered owner. If the bond is registered in the 
coowner form of registration, the account owner may direct that the held 
redemption proceeds be delivered to the account of either coowner, where 
we will use the proceeds to purchase a certificate of indebtedness in 
the name of the coowner to whose account the bond was delivered.

[70 FR 14943, Mar. 23, 2005, as amended at 70 FR 57347, Sept. 30, 2005]



Sec. 363.167  How will a converted savings bond be registered?

    The registration of the converted bond will be the same as on the 
definitive bond, provided that it was registered properly in an 
authorized form

[[Page 499]]

of registration. We will change a definitive savings bond that was not 
registered in an authorized form of registration to the closest 
authorized form of registration. For example, a definitive savings bond 
erroneously registered ``John Doe and Jane Doe'' will be changed to 
``John Doe or Jane Doe.'' We are not liable to any person for any such 
decision as to the closest form of authorized registration.



Sec. 363.168  What rules regarding registration apply to a converted 
savings bond?

    (a) Savings bond of any series registered in the single owner form 
of registration. By converting a definitive bond of any eligible series 
registered in the single owner form of registration to book-entry in 
TreasuryDirect[supreg], the owner has consented to the bond being 
governed by the rules regarding registration contained in subpart C of 
this part.
    (b) Savings bond of Series EE or Series I registered in the owner 
with beneficiary form of registration. By converting a definitive bond 
of Series EE or Series I registered in an owner with beneficiary form of 
registration to a book-entry bond in TreasuryDirect, the owner has 
consented to the bond being governed by the rules regarding registration 
contained in subpart C of this part.
    (c) Savings bond of Series E registered in the owner with 
beneficiary form of registration. The registration of a converted 
savings bond of Series E registered in the owner with beneficiary form 
of registration may be changed upon the request of the owner and the 
consent of the beneficiary. The transaction will not be conducted 
through the registered owner's TreasuryDirect account.
    (d) Savings bond of any series registered in the coowner form of 
registration. The registration of a converted savings bond of any 
eligible series registered in the coowner form of registration may be 
changed upon the request of one coowner and the consent of the other 
coowner. The transaction will not be conducted through the registered 
owner's TreasuryDirect account.



Sec. 363.169  What transactions can I conduct in a converted savings 
bond on which I am registered as the single owner, either coowner, or 
the owner with a beneficiary?

    (a) Savings bond of any series registered in the single owner form 
of registration. By converting a definitive savings bond to a book-entry 
bond, you have consented to the bond being treated as if it were 
originally issued as a book-entry bond in TreasuryDirect[supreg]. The 
bond will be subject to the provisions of subpart C of this part. Any 
transaction available for a book-entry bond originally issued in the 
TreasuryDirect system is available for a converted bond registered in 
single owner form of registration.
    (b) Savings bond of Series EE and Series I registered in the owner 
with beneficiary form of registration. By converting a definitive 
savings bond to a book-entry bond, you have consented to the bond being 
treated as if it were originally issued as a book-entry bond in 
TreasuryDirect. The bond will be subject to the provisions of subpart C 
of this part. Any transaction available for a book-entry bond purchased 
in the TreasuryDirect system is available for a converted bond of Series 
EE and Series I registered in the owner with beneficiary form of 
registration.
    (c) Savings bond of Series E registered in the owner with 
beneficiary form of registration. The owner of a converted Series E bond 
registered in the owner with beneficiary form of registration may make 
the following transactions:
    (1) Provide view rights to the beneficiary. The owner may provide 
the beneficiary with the right to view the bond in the beneficiary's 
TreasuryDirect account. Once the right to view the bond is provided to 
the beneficiary, the owner may not revoke that right.
    (2) Transfer without change in registration. The owner may transfer 
the bond without a change of registration to another account in the name 
of the owner.
    (3) Remove the beneficiary from the registration. The owner may 
remove the beneficiary's name from the registration with the consent of 
the beneficiary. The transaction will not be conducted through the 
registered owner's TreasuryDirect account. The bond

[[Page 500]]

will be changed to the single owner form of registration. Once the 
transaction is completed, the bond will be treated as a bond originally 
issued as a book-entry bond in TreasuryDirect, and will be subject to 
subpart C of this part. The owner may then perform any transaction 
available for book-entry bonds purchased in the TreasuryDirect system.
    (4) Transfer to the beneficiary or a third party with a change in 
registration. The owner may remove his or her name from the registration 
and transfer the bond to the account of the beneficiary or a third 
party, with the consent of the beneficiary. The transaction will not be 
conducted through the registered owner's TreasuryDirect account. The 
bond will be transferred in the single owner form of registration. Once 
the transfer is completed, the bond will be treated as a bond originally 
issued as a book-entry bond in TreasuryDirect, and will be subject to 
subpart C of this part. The owner may then perform any transaction 
available for book-entry bonds purchased in the TreasuryDirect system.
    (d) Savings bond of any series registered in the coowner form of 
registration. The converting coowner of a converted bond registered in 
the coowner form of registration may make the following transactions:
    (1) Provide view or transact rights to non-converting coowner. The 
converting coowner may provide the non-converting coowner with the 
rights to view the bond or to view and redeem the bond through the non-
converting coowner's TreasuryDirect account. Once either of these rights 
is provided to the non-converting coowner, the converting coowner may 
not revoke the right.
    (2) Transfer without change in registration. The converting coowner 
may transfer the bond without a change in registration to another 
account in the name of the converting coowner. The bond may be 
transferred without the consent of the non-converting coowner, and will 
retain the coowner registration.
    (3) Remove a coowner from the registration. The converting coowner 
(or the non-converting coowner, if the bond has been previously 
transferred to the account of the non-converting coowner) may remove the 
other coowner from the registration. The consent of the other coowner is 
required. The bond must reside in the account of the coowner who is 
requesting the transaction. The transaction will not be conducted 
through the registered owner's TreasuryDirect account. The bond's 
registration will be changed to the single owner form of registration. 
Once this transaction is completed, the bond will be treated as a bond 
originally issued as a book-entry bond in TreasuryDirect, and will be 
subject to subpart C of this part. The owner may then perform any 
transaction available for book-entry bonds purchased in the 
TreasuryDirect system.
    (4) Transfer to non-converting coowner or a third party with a 
change in registration. The converting coowner may remove his or her 
name from the registration and transfer the bond to either the account 
of the non-converting coowner or to the account of a third party. The 
consent of the non-converting coowner is required. The transaction will 
not be conducted through the registered owner's TreasuryDirect account. 
The bond will be transferred in the single owner form of registration. 
Once the transfer is completed, the bond will be treated as a bond 
originally issued as a book-entry bond in TreasuryDirect, and will be 
subject to subpart C of this part. The owner may then perform any 
transaction available for book-entry bonds purchased in the 
TreasuryDirect system.



Sec. 363.170  What transactions can I conduct in a savings bond that 
I converted on which I am not registered as the owner, either coowner, 
or owner with beneficiary?

    The only transaction that you may conduct on a savings bond that you 
converted on which you are not registered as the owner, either coowner, 
or owner with beneficiary is to deliver the converted bond to the 
TreasuryDirect[supreg] account of the registered owner.



Sec. 363.171  How do I redeem a converted savings bond?

    (a) Before final maturity--(1) Savings bond of any series registered 
either in the single owner or owner with beneficiary form of 
registration. You may redeem

[[Page 501]]

your converted savings bond any time prior to final maturity after the 
minimum holding period through your TreasuryDirect[supreg] account.
    (2) Savings bond of any series registered in the coowner form of 
registration. The converting coowner may redeem the converted savings 
bond at any time prior to final maturity after the minimum holding 
period through his or her TreasuryDirect account. The non-converting 
coowner may redeem the converted savings bond at any time prior to final 
maturity after the minimum holding period provided that he or she has 
been granted transaction rights in the converted bond by the converting 
coowner.
    (b) Upon final maturity--(1) Savings bond of any series registered 
in the single owner, owner with beneficiary, or coowner forms of 
registration. If you have not previously redeemed or transferred your 
converted savings bond, it will be automatically redeemed for you at 
final maturity.
    (2) The redemption proceeds will be automatically used to purchase a 
certificate of indebtedness registered in your name and held in your 
TreasuryDirect account.



Sec. Sec. 363.172-363.175  [Reserved]



Sec. 363.176  May a converted savings bond be pledged or used as 
collateral?

    A converted savings bond may not be pledged or used as collateral 
for the performance of an obligation.



Sec. Sec. 363.177-363.178  [Reserved]



Sec. 363.179  Does Public Debt make any reservations as to the 
conversion of an eligible savings bond?

    We may reject any application for conversion or refuse to convert a 
savings bond in any case or class of cases, if we deem the action to be 
in the public interest. Our action in any such respect is final.



Sec. Sec. 363.180-363.199  [Reserved]



                Subpart F_Marketable Treasury Securities

    Source: 70 FR 57444, Sept. 30, 2005, unless otherwise noted.



Sec. 363.200  What Treasury securities does this subpart govern?

    This subpart provides the rules for holding marketable Treasury 
bills, notes, and bonds in book-entry form in TreasuryDirect[supreg].



Sec. 363.201  What other regulations govern book-entry marketable 
book-entry Treasury bills, notes, and bonds?

    (a) 31 CFR part 356 governs the sale and issue of marketable book-
entry Treasury securities on or after March 1, 1993, whether held in 
TreasuryDirect[supreg], Legacy Treasury Direct, or the commercial book-
entry system.
    (b) 31 CFR part 357 governs holding marketable book-entry Treasury 
bills, notes, and bonds in the Legacy Treasury Direct system and in the 
commercial book-entry system.



Sec. 363.202  What marketable Treasury securities may I purchase and 
hold through my TreasuryDirect[supreg] account?

    (a) Purchase. You may purchase any marketable Treasury security that 
is available for purchase through the TreasuryDirect Web site.
    (b) Hold. You may transfer into the system and maintain in your 
TreasuryDirect account any eligible marketable book-entry Treasury bill, 
note, or bond.



Sec. 363.203  After I purchase my marketable Treasury security in 
TreasuryDirect[supreg], is there a period of time during which I may 
not transfer the security?

    Once you purchase a marketable Treasury security in TreasuryDirect, 
you may not transfer that security for a period of 45 calendar days 
after the issue date of the security, or the term of the security, 
whichever is less.



Sec. 363.204  What registrations are available for my marketable 
Treasury securities held in TreasuryDirect[supreg]?

    You may register your marketable Treasury securities in any form of 
registration permitted by Sec. 363.20 of this part.

[[Page 502]]



Sec. 363.205  How do I reinvest the proceeds of a maturing security 
held in TreasuryDirect[supreg]?

    You can reinvest the proceeds of a maturing security held in 
TreasuryDirect by first directing that the proceeds from the maturing 
security be used to purchase a certificate of indebtedness in your 
account, and then using the redemption proceeds of your certificate of 
indebtedness to purchase another security. Any purchase using the 
proceeds from a certificate of indebtedness is considered a 
reinvestment.



Sec. 363.206  How can I transfer my marketable Treasury security into 
my TreasuryDirect[supreg] account from another book-entry system?

    (a) Legacy Treasury Direct to TreasuryDirect. 31 CFR part 357, 
subpart C, governs the transfer of a marketable book-entry Treasury 
security from your Legacy Treasury Direct account into TreasuryDirect.
    (b) Commercial book-entry system to TreasuryDirect. You may transfer 
your marketable Treasury security from the commercial book-entry system 
by contacting the financial institution or broker that handles your 
commercial book-entry account.
    (c) Form of registration upon transfer to TreasuryDirect. When your 
security is transferred into your TreasuryDirect account, it will be 
transferred into your account in your name in the sole owner form of 
registration, regardless of the form of registration prior to the 
transfer. After the transfer is completed, you can change the 
registration to any form of registration permitted by Sec. 363.20.
    (d) Amounts transferred. You can only transfer in increments of 
$1000.



Sec. 363.207  Can I transfer my marketable Treasury security from my 
TreasuryDirect[supreg] account to another TreasuryDirect account?

    After the initial 45-calendar day holding period for your marketable 
Treasury security (see Sec. 363.203) you can transfer your security to 
another TreasuryDirect account in increments of $1000.



Sec. 363.208  Can I transfer my marketable Treasury security from my 
TreasuryDirect[supreg] account to an account in another book-entry system?

    After the initial 45-calendar day holding period for your marketable 
Treasury security (see Sec. 363.203) you can transfer your security to 
an account in Legacy Treasury Direct or to an account in the commercial 
book-entry system in increments of $1000.



Sec. 363.209  How can I direct that my marketable Treasury security be 
sold on the open market (Sell Direct[supreg])?

    (a) Sell Direct. We offer a service, referred to as Sell Direct, in 
which we will sell your marketable Treasury security for you on the open 
market at your request. We will transfer your security to an account in 
the commercial book-entry system maintained by our agent, and will sell 
the security on your behalf. By authorizing the transfer and sale of the 
security, you agree to accept the price received by our agent. If our 
agent is unable to obtain at least one price quote for the security, the 
security will be returned to your TreasuryDirect[supreg] account.
    (b) Fee. We charge a fee for each security sold on your behalf. By 
authorizing the sale of the security, you authorize our agent to deduct 
the fee from the proceeds of the sale. If our agent is unable to 
complete the sale, no fee will be charged. The amount of the fee is 
published in the Federal Register.
    (c) Definitions. The following definitions will help you understand 
this section and the confirmation that you will receive after the sale 
is completed.
    (1) The trade date is the date that your security is sold.
    (2) A security, for the purpose of this section, is any amount 
represented by a separate CUSIP number (see definition of CUSIP in 31 
CFR part 356).
    (3) The settlement date is the date that the proceeds of the sale 
are released to the financial institution that you designated to receive 
the proceeds.

[[Page 503]]

    (4) The yield to maturity, or yield, is the annualized rate of 
return to maturity on a fixed principal security expressed as a 
percentage. For an inflation-indexed security, yield means real yield, 
as defined in 31 CFR part 356.
    (d) On the settlement date, our agent will release the settlement 
proceeds, less the fee, to the account at the financial institution that 
you designated.
    (e) When the transaction is complete, our agent will send you a 
confirmation. The confirmation will include the price, trade date, 
settlement date, settlement amount or net amount, transaction fee, and 
yield to maturity.
    (f) We are not liable for changes in market conditions affecting the 
price received for the security, or for any loss that you may incur as a 
result of the sale or the inability of our agent to complete the sale.
    (g) We reserve the right to terminate the Sell Direct[supreg] 
service at any time.



Sec. 363.210  Is there any period of time during which I will be unable 
to process certain transactions regarding my security?

    A closed book period will be in effect for four business days prior 
to the date a marketable security interest or redemption payment is 
made. This means that certain transactions made during the closed book 
period will be delayed until after the closed book period is completed 
and the payment is made. You will be unable to transfer the security, 
change the payment destination, change the registration of the security, 
or use Treasury's Sell Direct[supreg] service during this closed book 
period.



Sec. Sec. 363.211-363.249  [Reserved]

Subpart G [Reserved]



                         Subpart H Miscellaneous



Sec. 363.250  May Public Debt waive these regulations?

    We may waive or modify any provision of the regulations in this 
part. We may do so in any particular case or class of cases for the 
convenience of the United States or in order to relieve any person or 
persons of unnecessary hardship:
    (a) If the waiver would not be inconsistent with law or equity;
    (b) If the waiver does not impair any material existing rights; and
    (c) If we are satisfied that the waiver would not subject the United 
States to any substantial expense or liability.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 14943, Mar. 23, 2005. 
Redesignated at 70 FR 57444, Sept. 30, 2005]



Sec. 363.251  Can I be required to provide additional evidence to 
support a transaction?

    We may require additional evidence and/or a bond of indemnity, with 
or without surety, in any case where we determine it necessary to 
protect the interests of the United States.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 14943, Mar. 23, 2005. 
Redesignated at 70 FR 57444, Sept. 30, 2005]



Sec. 363.252  May Public Debt amend or supplement these regulations?

    We may amend, revise, or supplement these regulations at any time.

[67 FR 64286, Oct. 17, 2002. Redesignated at 70 FR 14943, Mar. 23, 2005. 
Redesignated at 70 FR 57444, Sept. 30, 2005]



PART 370_ELECTRONIC TRANSACTIONS AND FUNDS TRANSFERS RELATING TO UNITED 
STATES SECURITIES--Table of Contents




                      Subpart A_General Information

Sec.
370.0 What does this part cover?
370.1 What special terms do I need to know to understand this part?

                      Subpart B_Credit ACH Entries

370.5 How can I appoint a financial institution to receive payments on 
          my behalf?
370.6 What requirements apply to a financial institution that handles a 
          credit entry?
370.7 How can my financial institution change my designated deposit 
          account?
370.8 Are there any requirements related to a prenotification entry?
370.9 How can my payment instructions be changed?
370.10 What can cause my payments to be suspended?
370.11 What must my financial institution do when it receives a payment?

[[Page 504]]

370.12 What happens if an error is made in a credit entry, or if a 
          duplicate credit entry is made?
370.13 Can time limits for taking an action on a credit entry be 
          extended?
370.14 Can substitute payment procedures be used?
370.15 What limitations exist on liability?

                         Subpart C_Debit Entries

370.20 What requirements apply if I want to authorize a debit entry to 
          my deposit account?
370.21 Are there any requirements related to a prenotification entry?
370.22 What requirements apply to a financial institution that debits a 
          deposit account?
370.23 What other requirements apply to a financial institution?
370.24 What right does the Bureau of the Public Debt have to terminate 
          or suspend debit entries?
370.25 What rights do I have to terminate or suspend debit entries?
370.26 What limitations exist on liability?

  Subpart D_Electronic Submission of Transaction Requests Through the 
                        Bureau of the Public Debt

370.35 Does the Bureau of the Public Debt accept all electronically 
          signed transaction requests?
370.36 When does a transaction request become effective?
370.37 Where is the point of transaction for an electronically submitted 
          transaction request?
370.38 What is the legal effect of an electronic signature?
370.39 To what extent is a digital signature admissible in any civil 
          litigation or dispute?
370.40 Can I be held accountable if my negligence contributes to a 
          forged signature?
370.41 What limitations exist on liability?

                     Subpart E_Additional Provisions

370.45 What is the status of a security if the remittance cannot be 
          collected?
370.46 Are there any situations in which the Bureau of the Public Debt 
          may waive these regulations?
370.47 To what extent may the Bureau of the Public Debt change these 
          regulations?

    Authority: 12 U.S.C. 391; 31 U.S.C. chapter 31.

    Source: 64 FR 40487, July 26, 1999, unless otherwise noted.



                      Subpart A_General Information



Sec. 370.0  What does this part cover?

    (a) Scope. This part applies to the transfer of funds by the 
Automated Clearing House method as used by us in connection with United 
States securities. This part also provides regulations for the 
electronic submission of transaction requests through us, except as 
varied by agreement or as otherwise provided. This part does not apply 
to transactions for the sale of United States Savings Bonds accomplished 
through savings bond issuing agents generally, except and to the extent 
we direct otherwise.
    (b) Operating Rules of the National Automated Clearing House 
Association and Regulations of the Financial Management Service. The 
Operating Rules of the National Automated Clearing House Association 
generally apply to these transactions. However, the Operating Rules do 
not apply to the extent that the Operating Rules are preempted entirely 
and excluded specifically by application of Financial Management Service 
regulations in part 210 of this chapter. In the event of any 
inconsistencies between this part 370 and either the Operating Rules or 
part 210, this part 370 applies.
    (c) Regulations of the Board of Governors of the Federal Reserve. To 
the extent that Regulation E (12 CFR part 205) and Regulation Z (12 CFR 
part 226) of the Board of Governors of the Federal Reserve System apply 
to transactions authorized by this part, those Federal laws are 
unaffected by this part 370.
    (d) Variance by agreement. The terms of this part may be varied by 
agreement.



Sec. 370.1  What special terms do I need to know to understand this part?

    Automated Clearing House (ACH) entry means a transaction in 
accordance with the Operating Rules of the National Automated Clearing 
House Association, as modified by these regulations and other law. The 
regulations in this part control in the event of any inconsistencies 
with the applicable Operating Rules.

[[Page 505]]

    Credit entry means an ACH entry for the payment of money to a 
deposit account.
    Debit entry means an ACH entry for the collection of money from a 
deposit account.
    Deposit account means a demand deposit (checking), savings, or asset 
account (other than an occasional or incidental credit balance in a 
credit plan) held directly or indirectly by a financial institution.
    Digital signature means a type of electronic signature. A signer 
creates a digital signature by using public-key encryption to transform 
a message digest of an electronic message. If a recipient of the digital 
signature has an electronic message, message digest function, and the 
signer's public key, the recipient can verify:
    (1) Whether the transformation was accomplished with the private key 
that corresponds to the signer's public key; and
    (2) Whether the electronic message has been altered since the 
transformation was made.
    Electronic message means information that is stored in an electronic 
medium and is retrievable in perceivable form.
    Electronic signature means a signature of an electronic message 
that:
    (1) Identifies and authenticates a particular person as the source 
of the electronic message; and
    (2) Indicates such person's approval of the information contained in 
the electronic message.
    Financial institution means:
    (1) Any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank that is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (2) Any mutual savings bank as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) or any bank that is eligible to 
make application to become an insured bank under section 5 of such Act 
(12 U.S.C. 1815);
    (3) Any savings bank as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) or any bank that is eligible to make 
application to become an insured bank under section 5 of such Act (12 
U.S.C. 1815);
    (4) Any insured credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752) or any credit union that is 
eligible to make application to become an insured credit union pursuant 
to section 201 of such Act (12 U.S.C. 1781);
    (5) Any savings association as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813) that is an insured depository 
institution as defined in that act or is eligible to apply to become an 
insured depository institution under that act; and
    (6) Any Federal branch or agency of a foreign bank as defined in 
section 1(b) of the International Banking Act, as amended (12 U.S.C. 
3101).
    Investor account is our record of your TreasuryDirect holdings, 
including a list of your total security holdings, the exact form of 
registration of your account, your mailing address, your TreasuryDirect 
account number, your social security account number or employer 
identification number, and your deposit account instructions.
    Message digest function means an algorithm that transforms an 
electronic message into a seemingly unintelligible, generally smaller, 
result called the message digest. A message digest function has these 
qualities:
    (1) The same electronic message yields the same message digest every 
time the algorithm is executed;
    (2) It is computationally infeasible that an electronic message can 
be derived from the message digest result produced by the algorithm; and
    (3) it is computationally infeasible that two electronic messages 
can be found that produce the same message digest using the algorithm.
    Payment means, for the purpose of this part, funds paid by us to 
you.
    Person means any natural person or organization.
    Public-key encryption means a cryptographic process which generates 
and employs a key pair, consisting of a public key and a different but 
mathematically related private key. One use of the public key is to 
verify a digital signature created by the private key.
    Security means an obligation offered by the Secretary of the 
Treasury.
    Settlement date means the date an exchange of funds with respect to 
an ACH

[[Page 506]]

entry is reflected on the books of the Federal Reserve Bank(s).
    Signature means any symbol or method executed or adopted by a person 
with present intention to be bound.
    We (or ``us'') refers to the Secretary of the Treasury and the 
Secretary's delegates at the Treasury Department and Bureau of the 
Public Debt. The term also extends to any fiscal or financial agent 
acting on behalf of the United States when designated to act by the 
Secretary or the Secretary's delegates. The term does not extend to 
United States Savings Bond issuing and paying agents.
    You means a deposit account owner, in subparts B and C, unless 
stated otherwise. The word ``you'' means a person who electronically 
submits transaction requests through us, in subpart D.



                      Subpart B_Credit ACH Entries



Sec. 370.5  How can I appoint a financial institution to receive 
payments on my behalf?

    You must name a financial institution to receive payments through 
credit entries using the ACH method. You also must identify the deposit 
account to which payments are to be made. To do this, you must use a 
form approved by us.



Sec. 370.6  What requirements apply to a financial institution that 
handles a credit entry?

    A financial institution that accepts and handles a credit entry 
initiated by us agrees to the provisions of this subpart, and warrants 
that it will comply with all requirements imposed upon Receiving 
Depository Financial Institutions under the Operating Rules of the 
National Automated Clearing House Association, as modified by these 
regulations and other law.



Sec. 370.7  How can my financial institution change my designated 
deposit account?

    If your financial institution requests us to make a change in your 
deposit account number or type of your account, we will change the 
information without requiring any confirmation from you. The request 
from the financial institution must be made following the Operating 
Rules of the National Automated Clearing House Association. The 
financial institution's request will be deemed an agreement by the 
institution to indemnify us and you for any loss resulting from the 
requested change.



Sec. 370.8  Are there any requirements related to a prenotification 
entry?

    (a) Use of prenotification in our discretion. In our discretion, we 
may initiate a prenotification entry to a financial institution before 
we send a credit entry. We may also send a prenotification message 
whenever there is a change in the payment instructions. If we send a 
prenotification message, we will follow the time frames as established 
by the Operating Rules of the National Automated Clearing House 
Association. A prenotification is a zero-dollar ACH entry that can help 
us determine whether there might be problems with sending a subsequent 
credit entry.
    (b) Requirements placed upon financial institution that receives a 
prenotification. A financial institution must respond to a 
prenotification within the time frame for such responses as established 
by the Operating Rules of the National Automated Clearing House 
Association. If the receiving financial institution does not respond to 
the prenotification message within the specified time period, we may 
interpret the nonresponsiveness as the financial institution's agreement 
to this subpart. Furthermore, a financial institution warrants by its 
nonresponsiveness that the deposit account number and the type of 
account contained in the prenotification entry message was accurate as 
of the moment the financial institution received it.



Sec. 370.9  How can my payment instructions be changed?

    Your payment instructions will continue to apply until either you or 
your financial institution requests us to make a change.



Sec. 370.10  What can cause my payments to be suspended?

    (a) Change in deposit account. We will suspend payments if we 
receive notice that your deposit account has been

[[Page 507]]

closed, that someone named on your deposit account is dead or has been 
declared legally incompetent, that there is a change in the title of 
your deposit account that alters your interests; or, if a corporation is 
the owner, that it has been dissolved.
    (b) Change in status of owner. We will suspend payments when we 
receive notice that an owner of a bond, security, or investor account is 
dead or has been declared legally incompetent, or in any case where we 
receive notice of a change in the name or status of an organization or 
representative named on a bond, security, or investor account.
    (c) Continuation of Suspension. Payments will continue to be 
suspended until we receive satisfactory evidence as to who is authorized 
or entitled to receive payments.



Sec. 370.11  What must my financial institution do when it receives a 
payment?

    An institution which receives a payment on behalf of its customer 
must:
    (a) Upon receipt, make the payment available to you on the payment 
date. If a scheduled payment date is not a business day for the Federal 
Reserve Bank of the district in which the institution is located, 
payment will be made on the next-succeeding business day. If the 
institution is unable to make a credit entry to the designated account, 
it must return the payment in accordance with the Operating Rules of the 
National Automated Clearing House Association.
    (b) Promptly notify us when your account has been closed, or when it 
is on notice of the death or legal incapacity of you or any other 
individual named on your account, or when it is on notice of the 
dissolution of a corporation in whose name the deposit account is held. 
The institution must return all payments received along with an 
explanation for the return.



Sec. 370.12  What happens if an error is made in a credit entry, or if a 
duplicate credit entry is made?

    If we make an erroneous credit entry under this part, we will make a 
corrected credit entry to your account. We will then take action to 
recover the erroneous credit entry, or any duplicate credit entry, as 
follows:
    (a) Return of amount of erroneous or duplicate credit entry by 
financial institution. We will send a notice to the financial 
institution to which the erroneous or duplicate credit entry was sent. 
When it receives this notice, the financial institution must immediately 
return to the appropriate Federal Reserve Bank an amount equal to the 
credit entry. If the institution is unable to do this, the institution 
must immediately notify us, and provide any information that it has 
about the matter. We reserve the right to request the return of a 
partial amount of an erroneous or duplicate credit entry.
    (b) Collection of amount of unreturned erroneous or duplicate credit 
entry. Where the erroneous or duplicate credit entry has not been 
returned, we will undertake any other actions that are appropriate. To 
the extent permitted by law, the collection action may include deducting 
the amount owed from future credit entries made to the deposit account 
to which the erroneous or duplicate credit entry was made.
    (c) Authorization of Debit to collect unreturned dulicate or 
erroneous credit entry. If a financial institution has not responded 
within 60 calendar days of the notice, its acceptance of the credit 
entry will be considered an authorization for a debit in the amount of 
the entry. The debit will be made from the account maintained or 
utilized by the financial institution at the Federal Reserve Bank to 
which the entry was made. An institution designated by a financial 
institution to receive payment on its behalf, in permitting the usage, 
is deemed to have authorized a debit. The debit will be made from its 
account maintained at the Federal Reserve Bank to which the entry was 
made. The institution to which the credit entry has been directed is 
deemed to have agreed to provide information and assistance to recover 
any erroneous or duplicate entry. You are also deemed to have agreed to 
provide information and assistance, and to take any action provided by 
law to recover an erroneous or duplicate credit entry.

[[Page 508]]



Sec. 370.13  Can time limits for taking an action on a credit entry be 
extended?

    If we or your financial institution are delayed beyond applicable 
time limits in taking any action with respect to a credit entry because 
of circumstances beyond our control, then the time for taking that 
action will be extended as necessary until the cause of the delay ends.



Sec. 370.14  Can substitute payment procedures be used?

    We may use substitute payment procedures, instead of ACH, if we 
consider it to be necessary. Any such action is final.



Sec. 370.15  What limitations exist on liability?

    (a) We may rely on the information provided by you or anyone else 
authorized to provide information concerning your financial institution 
or deposit account to which payments are to be made. We do not need to 
verify this information. We are not liable for any action we may take in 
reliance on the information furnished.
    (b) Our liability does not extend beyond the amount of the payment 
due.
    (c) When you name a financial institution to receive payments on 
your behalf, you are appointing that institution as your agent for the 
receipt of payments. When a credit entry is made to your financial 
institution for deposit to your account following your instructions, we 
no longer have any further responsibility for that payment. Where your 
financial institution has arranged with the Federal Reserve Bank to have 
payments made through another financial institution, the crediting of 
your payment to that institution relieves us of any further 
responsibility for that payment.



                         Subpart C_Debit Entries



Sec. 370.20  What requirements apply if I want to authorize a debit 
entry to my deposit account?

    (a) General. You may pay for a security and related fees by 
authorizing us to initiate one or more debit entries to your deposit 
account. For a purchase of a book-entry security to be held in an 
investor account maintained by us, you must be named on the investor 
account. The authorization must be accomplished only through forms or 
means approved by us.
    (b) Single-entry and recurring debit entries. You only may authorize 
single-entry debits for purchases of book-entry securities held in 
TreasuryDirect. You only may authorize recurring debit entries for 
purchases of definitive savings bonds.
    (c) Credit entries to be made to same deposit account. To the extent 
that payments by us with respect to a security are to be made through 
credit entries, you must receive debit and credit entries in the same 
deposit account.
    (d) Signature. The authorization must have your signature and that 
of any other person whose signature is required to withdraw funds from 
the deposit account. We need not verify your identity or the 
authenticity of your signature.



Sec. 370.21  Are there any requirements related to a prenotification 
entry?

    (a) Use of prenotification in our discretion. In our discretion, we 
may initiate a prenotification entry to a financial institution prior to 
sending a debit entry. A prenotification is a zero-dollar ACH entry that 
can help us determine whether there might be problems with sending a 
subsequent debit entry.
    (b) Requirements placed upon financial institution that receives a 
prenotification. If sent, a financial institution must respond to a 
prenotification within the time frame for such responses as established 
by the National Automated Clearing House Association. If the receiving 
financial institution does not respond to the prenotification message 
within the specified time period, we may interpret the nonresponsiveness 
as the financial institution's agreement to this subpart. Furthermore, a 
financial institution warrants by its nonresponsiveness that the deposit 
account number and the type of account contained in the prenotification 
entry message was accurate as of the moment the financial institution 
received it.

[[Page 509]]



Sec. 370.22  What requirements apply to a financial institution that 
debits a deposit account?

    A financial institution that debits a deposit account upon receiving 
a debit initiated by us agrees to the provisions of this subpart. A 
financial institution that does so also warrants that it has the 
authority to receive debit entries.



Sec. 370.23  What other requirements apply to a financial institution?

    The financial institution warrants that it will comply with all 
requirements imposed upon Receiving Depository Financial Institutions 
under the Operating Rules of the National Automated Clearing House 
Association, as modified by these regulations and other law.



Sec. 370.24  What right does the Bureau of the Public Debt have to 
terminate or suspend debit entries?

    We may terminate or suspend the availability of one or more debit 
entries in any case or class of cases, and may do so without notice at 
any time. A decision to terminate or suspend the availability of debit 
entries is in our sole discretion and is final.



Sec. 370.25  What rights do I have to terminate or suspend debit entries?

    (a) General. If you are an investor account owner or deposit account 
owner, you generally may terminate or suspend one or more debit entries 
by notifying us orally or in writing at least three business days before 
the scheduled date of a transfer. In response to an oral notice, we may 
require you to give written notice, to be received by us within fourteen 
days of an oral notice. An oral notice ceases to be binding after 
fourteen days if you fail to provide the required written confirmation. 
A suspension will remain in effect for the duration you specify, but for 
no more than six months. The termination and suspension methods need not 
be recited in the authorization. These termination or suspension rights 
are in addition to those that you may have through your financial 
institution under Regulation E of the Board of Governors of the Federal 
Reserve System (12 CFR part 205).
    (b) Exception. If you submit a debit entry authorization in 
conjunction with a Treasury auction tender for the purchase of a book-
entry security, you cannot terminate or suspend a debit entry after the 
auction closes.



Sec. 370.26  What limitations exist on liability?

    If we sustain a loss because a financial institution fails to handle 
an entry in accordance with this part, the financial institution is 
liable to us for the loss, but not beyond the amount of the debit entry. 
In no instance does our liability extend beyond the amount of the debit 
entry.



  Subpart D_Electronic Submission of Transaction Requests Through the 
                        Bureau of the Public Debt



Sec. 370.35  Does the Bureau of the Public Debt accept all electronically 
signed transaction requests?

    An electronic signature will not be accepted if it has not been 
accomplished through a method that has been approved for specific 
purposes by us.



Sec. 370.36  When does a transaction request become effective?

    Except for auction bids of U.S. securities or unless otherwise 
agreed, a transaction request becomes effective at the moment we send a 
confirmation message. In no instance does a transaction request become 
effective before we actually receive the request.



Sec. 370.37  Where is the point of transaction for an electronically 
submitted transaction request?

    For jurisdiction and venue purposes, the point of transaction for a 
transaction request handled pursuant to this subpart is Parkersburg, 
West Virginia, regardless of from where the transaction request is 
transmitted or where the transaction request is actually processed.



Sec. 370.38  What is the legal effect of an electronic signature?

    An electronic signature and any electronic message to which it is 
affixed or

[[Page 510]]

attached may not be denied legal effect, including legal effect as a 
signature, a writing, or an original, solely because the signature or 
record is in electronic form.



Sec. 370.39  To what extent is a digital signature admissible in any 
civil litigation or dispute?

    In asserting a digital signature against you in any civil litigation 
or dispute, extrinsic evidence of authenticity as a condition precedent 
of admissibility (such as testimony about the scientific validity of 
digital signatures) is not necessary to establish:
    (a) That a digital signature corresponds to a specific public key 
pair, and;
    (b) That an electronic message to which the digital signature is 
affixed has not been altered from its original form.



Sec. 370.40  Can I be held accountable if my negligence contributes 
to a forged signature?

    (a) General. If your failure to exercise ordinary care substantially 
contributes to the submission of a forged signature, then you cannot 
claim that the signature is a forgery. However, we cannot invoke this 
section against you if we cannot first establish that we were reasonable 
in relying upon the signature. If we can do so, you bear the burden of 
production and the burden of persuasion in establishing your exercise of 
ordinary care. If you cannot do so, then you cannot claim that the 
signature is a forgery.
    (b) Exception. This section has no application in any dispute 
involving a debit authorization or credit card transaction.



Sec. 370.41  What limitations exist on liability?

    In no instance does our liability extend beyond the amount of the 
transaction.



                     Subpart E_Additional Provisions



Sec. 370.45  What is the status of a security if the remittance cannot 
be collected?

    If we cannot promptly collect all of the remittance for a security, 
we may in our discretion cancel the security unless it has been legally 
transferred for value to a third person who had no knowledge of the 
improper debit entry at the time of the transfer.



Sec. 370.46  Are there any situations in which the Bureau of the Public 
Debt may waive these regulations?

    We reserve the right, in our discretion, to waive any provision of 
these regulations in any case or class of cases. We may do so if such 
action is not inconsistent with law and will not subject the United 
States to substantial expense or liability.



Sec. 370.47  To what extent may the Bureau of the Public Debt change 
these regulations?

    Any aspect of this part may be changed at any time and without 
notice. You assume the risk that a change may terminate a provision that 
was to your advantage. Nothing in this part creates vested rights in 
your favor.



PART 375_MARKETABLE TREASURY SECURITIES REDEMPTION OPERATIONS--Table of 
Contents




                      Subpart A_General Information

Sec.
375.0 What authority does the Treasury have to redeem its securities?
375.1 Where are the rules for the redemption operation located?
375.2 What special definitions apply to this rule?
375.3 What is the role of the Federal Reserve Bank of New York in this 
          process?

            Subpart B_Offering, Certifications, and Delivery

375.10 What is the purpose of the redemption operation announcement?
375.11 Who may participate in a redemption operation?
375.12 How do I submit an offer?
375.13 What requirements apply to offers?
375.14 Do I have to make any certifications?
375.15 Who is responsible for delivering securities?

   Subpart C_Determination of Redemption Operation Results; Settlement

375.20 When will the Treasury decide on which offers to accept?

[[Page 511]]

375.21 When and how will the Treasury announce the redemption operation 
          results?
375.22 Will I receive confirmations and, if I am submitting offers for 
          others, do I have to provide confirmations?
375.23 How does the securities delivery process work?

                   Subpart D_Miscellaneous Provisions

375.30 Does the Treasury have any discretion in this process?
375.31 What could happen if someone does not fully comply with the 
          redemption operation rules or fails to deliver securities?

    Authority: 5 U.S.C. 301; 31 U.S.C. 3111; 12 U.S.C. 391.

    Source: 65 FR 3116, Jan. 19, 2000, unless otherwise noted.



                      Subpart A_General Information



Sec. 375.0  What authority does the Treasury have to redeem its 
securities?

    Section 3111 of Title 31 of the United States Code authorizes the 
Secretary of the Treasury to use money received from the sale of an 
obligation and other money in the general fund of the Treasury to buy, 
redeem, or refund, at or before maturity, outstanding bonds, notes, 
certificates of indebtedness, Treasury bills, or savings certificates of 
the United States Government. For the purposes of this part, we will 
refer to these outstanding obligations as ``securities''.



Sec. 375.1  Where are the rules for the redemption operation located?

    The provisions in this part and the redemption operation 
announcement govern the redemption of marketable Treasury securities 
under 31 U.S.C. 3111. (See Sec. 375.10.)



Sec. 375.2  What special definitions apply to this rule?

    The definitions in 31 CFR part 356 govern this part except as 
follows:
    Accrued interest means an amount payable by the Treasury as part of 
the settlement amount for the interest income earned between the last 
interest payment date up to and including the settlement date.
    Bank means the Federal Reserve Bank of New York.
    Customer means a person or entity on whose behalf a submitter has 
been directed to submit an offer of a specified amount of securities in 
a specific redemption operation.
    Minimum offer amount means the smallest par amount of a security 
that may be offered to the Treasury. We will state the minimum offer 
amount in the redemption operation announcement.
    Multiple means the smallest additional par amount of a security that 
may be offered to the Treasury. We will state the multiple in the 
redemption operation announcement.
    Offer means an offer to deliver for redemption a stated par amount 
of a specific security to the Treasury at a stated price.
    Price means the dollar amount to be paid for a security expressed as 
a percent of its current par amount.
    Privately held amount means the total amount outstanding of a 
security less holdings of the Federal Reserve System and Federal 
Government accounts.
    Redemption amount means the maximum par amount of securities that we 
are planning to redeem through a redemption operation. We will state the 
redemption amount in the redemption operation announcement.
    Redemption operation means a competitive process by which the 
Treasury accepts offers of marketable Treasury securities that by their 
terms are not immediately payable.
    Security means an outstanding unmatured obligation of the United 
States Government that the Secretary is authorized to buy, redeem or 
refund under section 3111 of Title 31 of the United States Code.
    Settlement means full and complete delivery of and payment for 
securities redeemed.
    Settlement amount means the par amount of each security that we 
redeem, multiplied by the price we accept in a redemption operation, 
plus any accrued interest.
    Settlement date means the date specified in the redemption operation 
announcement on which you must deliver a security to the Treasury for 
payment.
    Submitter means an entity submitting offers directly to the Treasury 
for its

[[Page 512]]

own account, for the account of others, or both. (See Sec. 375.11(a)).
    Tender means a computer transmission or document submitted in a 
redemption operation that contains one or more offers.
    We (``us'') means the Secretary of the Treasury and his or her 
delegates, including the Treasury Department, the Bureau of the Public 
Debt, and their representatives. The term also includes the Federal 
Reserve Bank of New York, acting as fiscal agent of the United States.
    You means a prospective submitter in a redemption operation.



Sec. 375.3  What is the role of the Federal Reserve Bank of New York 
in this process?

    As fiscal agent of the United States, the Federal Reserve Bank of 
New York performs various activities necessary to conduct a redemption 
operation under this part. These activities may include but are not 
limited to:
    (a) Accepting and reviewing tenders;
    (b) Calculating redemption operation results;
    (c) Issuing notices of redemptions;
    (d) Accepting deliveries of Treasury securities at settlement; and
    (e) Processing the Treasury payment for securities delivered at 
settlement.



            Subpart B_Offering, Certifications, and Delivery



Sec. 375.10  What is the purpose of the redemption operation 
announcement?

    We provide public notice that we are redeeming Treasury securities 
by issuing a redemption operation announcement. This announcement lists 
the details of each proposed redemption operation, including the maximum 
redemption amount, the range of maturities of eligible securities, 
descriptions of the securities that fall within that maturity range, and 
the redemption operation and settlement dates. The redemption operation 
announcement and this part specify the terms and conditions of a 
redemption operation. If anything in the redemption operation 
announcement differs from anything in this part, the redemption 
operation announcement will apply. Accordingly, you should read the 
applicable redemption operation announcement along with this part.



Sec. 375.11  Who may participate in a redemption operation?

    (a) Submitters. To be a submitter, you must be an institution that 
the Federal Reserve Bank of New York has approved to conduct open market 
transactions with the Bank.
    (b) Others. A person or entity other than a submitter may 
participate only if it arranges to have an offer or offers submitted on 
its behalf by a submitter.



Sec. 375.12  How do I submit an offer?

    As a submitter, you must submit an offer in a tender to the Treasury 
via the Federal Reserve Bank of New York. You must submit any tenders in 
an approved format and the Bank must receive them prior to the closing 
time stated in the redemption operation announcement. If we do not 
receive your tenders timely, we will reject them. Your tenders are 
binding on you after the closing time specified in the redemption 
operation announcement. You are responsible for ensuring that we receive 
your tenders on time. We will not be responsible in any way for any 
unauthorized tender submissions or for any delays, errors, or omissions 
in submitting tenders.



Sec. 375.13  What requirements apply to offers?

    (a) General. You may only submit competitive offers (specifying a 
price). All offers must state the security description, par amount, and 
price of each security offered. All offers must equal or exceed the 
minimum offer amount, and be in the multiple, stated in the redemption 
operation announcement.
    (b) Price format. You must express offered prices in terms of price 
per $100 of par with three decimals, e.g., 102.172. The first two 
decimals represent fractional 32nds of a dollar. The third decimal 
represents eighths of a 32nd of a dollar, and must be a 0, 2, 4, or 6. 
For example, an offer of 102.172 means one hundred two and seventeen 
32nds and two eighths of a 32nd, or in decimals, 102.5390625.
    (c) Maximum number of offers. There is no limit on the number of 
offers you

[[Page 513]]

may make for each eligible security. There is also no limit on the 
number of eligible securities you may offer.



Sec. 375.14  Do I have to make any certifications?

    By submitting a tender offering a security or securities for sale, 
you certify that you are in compliance with this part and the redemption 
operation announcement.



Sec. 375.15  Who is responsible for delivering securities?

    As a submitter, you are responsible for delivering any securities we 
accept in the redemption operation, including any securities for which 
you submitted offers on behalf of others. (See Sec. 375.23.) All 
securities you deliver must be free and clear of all liens, charges, 
claims, and any other restrictions.



   Subpart C_Determination of Redemption Operation Results; Settlement



Sec. 375.20  When will the Treasury decide on which offers to accept?

    We will determine which offers or portions of offers to accept after 
the closing time for receipt of tenders. All such determinations will be 
final.



Sec. 375.21  When and how will the Treasury announce the redemption 
operation results?

    We will make an official announcement of the redemption operation 
results through a press release. For each security we redeem, the press 
release will include such information as the amounts offered and 
accepted, the highest price accepted, and the remaining privately held 
amount outstanding.



Sec. 375.22  Will I receive confirmations and, if I am submitting offers 
for others, do I have to provide confirmations?

    (a) Confirmations to submitters. We will provide a confirmation of 
acceptance or rejection in the form of a results message to submitters 
of offers by the close of the business day of the redemption operation.
    (b) Confirmation of customer offers. If you submit a successful 
offer for a customer, you are responsible for notifying that customer of 
the impending redemption.



Sec. 375.23  How does the securities delivery process work?

    If any of the offers you submitted are accepted, you must transfer 
the correct book-entry Treasury securities in the correct par amount 
against the correct settlement amount on the settlement date. You must 
deliver the securities to the account specified in the redemption 
operation announcement.



                   Subpart D_Miscellaneous Provisions



Sec. 375.30  Does the Treasury have any discretion in this process?

    (a) We have the discretion to:
    (1) Accept or reject any offers or tenders submitted in a redemption 
operation;
    (2) Redeem less than the amount of securities specified in the 
redemption operation announcement;
    (3) Add to, change, or waive any provision of this part; or
    (4) Change the terms and conditions of a redemption operation.
    (b) Our decisions under this part are final. We will provide a 
public notice if we change any redemption operation provision, term or 
condition.



Sec. 375.31  What could happen if someone does not fully comply with 
the redemption operation rules or fails to deliver securities?

    (a) General. If a person or entity fails to comply with any of the 
redemption operation rules in this part, we will consider the 
circumstances and take what we deem to be appropriate action. This could 
include barring the person or entity from participating in future 
redemption operations under this part and future auctions under 31 CFR 
part 356. We also may refer the matter to an appropriate regulatory 
agency.
    (b) Liquidated damages. If you fail to deliver securities on time, 
we may require you to pay liquidated damages of up to 1% of your 
projected settlement amount.

[[Page 514]]



PART 380_COLLATERAL ACCEPTABILITY AND VALUATION--Table of Contents




                      Subpart A_General Information

Sec.
380.0 What do these regulations govern?
380.1 What special definitions apply to this part?

            Subpart B_Acceptable Collateral and its Valuation

380.2 What collateral may I pledge if I am a depositary or a financial 
          agent of the Government under 31 CFR part 202, and what value 
          will you assign to it?
380.3 What collateral may I pledge if I am a Treasury Tax and Loan 
          depositary under 31 CFR part 203, and what value will you 
          assign to it?
380.4 What collateral may I pledge instead of a surety bond under 31 CFR 
          part 225, and what value will you assign to it?

                   Subpart C_Miscellaneous Provisions

380.5 Where can I find current information, and who can I contact for 
          additional guidance and interpretation?

    Authority: 12 U.S.C. 90, 265-266, 332, 391, 1452(d), 1464(k), 1767, 
1789a, 2013, 2122, 3101-3102; 26 U.S.C. 6302; 31 U.S.C. 321, 323, 3301-
3304, 3336, 9301, 9303.

    Source: 65 FR 55427, Sept. 13, 2000, unless otherwise noted.



                      Subpart A_General Information



Sec. 380.0  What do these regulations govern?

    The regulations in this part govern the types of acceptable 
collateral that you may pledge to secure deposits of public monies and 
other financial interests of the Federal Government, as well as the 
valuation of that collateral. Specifically, the regulations in this part 
apply to the programs governed by the Department of the Treasury's 
regulations at 31 CFR part 202 (Depositaries and Financial Agents of the 
Government), 31 CFR part 203 (Payment of Federal Taxes and the Treasury 
Tax and Loan Program), and 31 CFR part 225 (Acceptance of Bonds Secured 
by Government Obligations in Lieu of Bonds with Sureties). The 
regulations in this part apply only to the acceptability and valuation 
of collateral that may be pledged under these programs. 31 CFR parts 
202, 203, and 225 continue to govern the respective programs themselves.



Sec. 380.1  What special definitions apply to this part?

    Special definitions that may apply to this part are contained in 31 
CFR parts 202, 203 and 225.



            Subpart B_Acceptable Collateral and its Valuation



Sec. 380.2  What collateral may I pledge if I am a depositary or a 
financial agent of the Government under 31 CFR part 202, and what value 
will you assign to it?

    Unless we specify otherwise, we will list the types and valuation of 
acceptable collateral in Treasury procedural instructions. We will also 
post updated information and guidance on Treasury's Bureau of the Public 
Debt website at www.publicdebt.treas.gov.



Sec. 380.3  What collateral may I pledge if I am a Treasury Tax and 
Loan depositary under 31 CFR part 203, and what value will you assign 
to it?

    Unless we specify otherwise, we will list the types and valuation of 
acceptable collateral in Treasury procedural instructions. We will also 
post updated information and guidance on Treasury's Bureau of the Public 
Debt website at www.publicdebt.treas.gov.



Sec. 380.4  What collateral may I pledge instead of a surety bond under 
31 CFR part 225, and what value will you assign to it?

    Unless we specify otherwise, we will list the types and valuation of 
acceptable collateral in Treasury procedural instructions. We will also 
post updated information and guidance on Treasury's Bureau of the Public 
Debt website at www.publicdebt.treas.gov.



                   Subpart C_Miscellaneous Provisions



Sec. 380.5  Where can I find current information, and who can I contact 
for additional guidance and interpretation?

    You can find a current list of acceptable classes of securities, 
instruments

[[Page 515]]

and respective valuations on Treasury's Bureau of the Public Debt 
website at www.publicdebt.treas.gov. You may also contact the Office of 
the Commissioner. We can be reached by postal mail at: Department of the 
Treasury, Bureau of the Public Debt, Office of the Commissioner, 
Government Securities Regulations Staff, 999 E Street, NW., Room 315, 
Washington, DC 20239-0001, or by e-mail at [email protected].



PART 391_WAIVER OF INTEREST, ADMINISTRATIVE COSTS, AND PENALTIES--Table 
of Contents




Sec.
391.0 Scope of regulations.
391.1 General.
391.2 Equitable considerations.
391.3 Resolution of disputes.
391.4 Documentary evidence.
391.5 Waiver approval.

    Authority: 31 U.S.C. 3701; 31 U.S.C. 3711; 31 U.S.C. 3717.

    Source: 50 FR 6344, Feb. 15, 1985, unless otherwise noted.



Sec. 391.0  Scope of regulations.

    These regulations apply to the waiver of late charges on claims due 
the Bureau of the Public Debt as authorized by 31 U.S.C. 3717(h). They 
are consistent with the Federal Claims Collection Standards on interest, 
administrative costs, and penalties prescribed jointly by the General 
Accounting Office and the Department of Justice and set forth in 4 CFR 
102.13. The term ``claim'' as used in this part refers to an amount of 
money or property that has been determined to be owed to the Bureau of 
the Public Debt from any person, organization, or entity, except another 
Federal agency. The term ``late charges'' as used in this part includes 
interest, administrative costs, and penalties. When applying the 
following regulations, a distinction shall be drawn between an 
adjustment and a waiver. An adjustment is an account correction under 
any circumstances where the Bureau records a claim or accrues late 
charges to which it is not legally entitled. An adjustment may be made 
without the promulgation of regulations. A waiver applies whenever the 
Bureau accrues late charges it is entitled to assess and later 
relinquishes that right. Two examples of an adjustment are: (a) Where 
the underlying claim is without merit, and (b) where the debtor is not 
notified of the claim as required by 31 U.S.C. 3717. The latter includes 
being misinformed as to the amount of the charges or the time of their 
commencement.



Sec. 391.1  General.

    (a) Waiver of late charges. Late charges may be waived:
    (1) When the underlying claim is compromised in accordance with 4 
CFR part 103;
    (2) Where the underlying claim is not compromised but it is 
appropriate to waive late charges under the criteria of 4 CFR part 103 
relating to enforcement policy;
    (3) When collection of the underlying claim is terminated in 
accordance with 4 CFR part 104;
    (4) When a claim is suspended in accordance with 4 CFR part 104.
    (5) Where the cost of collecting the unpaid late charges would 
approach or exceed the amount of unpaid late charges to be collected and 
the amount of late charges does not qualify for referral to a collection 
agency or the Department of Justice;
    (6) Where the late charges pertain to claims involving savings bonds 
and notes arising under 31 U.S.C. 3105 and 3106 which are replaced 
pursuant to 31 U.S.C. 3126;
    (7) For reasons of equity or good conscience as provided in Sec. 
391.2.
    (b) Partial waiver. Late charges may be waived in full or in part.



Sec. 391.2  Equitable considerations.

    For reasons of equity and good conscience, late charges may be 
waived under the circumstances identified in this section.
    (a) Where, without fault or bad faith, the debtor could not submit 
payment within 30 days of the interest accrual date, the mandatory 
waiver provision in 4 CFR 102.13(g) may be extended. Such waiver will be 
considered on a case-by-case basis. Examples include, but are not 
limited to:
    (1) Postal service delays in forwarding the notice of indebtedness 
to a new address; and

[[Page 516]]

    (2) Late receipt of the notice of indebtedness where the debtor was 
away from home on an extended vacation or hospitalized.
    (b) Where an installment plan is contemplated and the amount of the 
late charges in relation to the amount of reasonably affordable 
installment payments is so large that the debt may never be paid, late 
charges may be waived.



Sec. 391.3  Resolution of disputes.

    (a) To avoid the accrual of additional late charges during the 
resolution of a dispute, a debtor has the option of paying the amount of 
the claim and filing a request for a refund together with a request for 
review of the claim.
    (b) Where the claim is a result of the Bureau's administrative 
error, late charges accruing during the review period may be waived 
unless the Bureau's actions would have placed a reasonable person on 
notice that the Bureau erred and that the person should inquire further.
    (c) Where the claim is a result of the debtor's error or negligence 
and the administrative review is unreasonably protracted, late charges 
accruing during the protracted portion of the review period may be 
waived.
    (d) The period for administrative review begins on the date the 
request for review is received and ends 10 days after the final 
determination is mailed to the debtor. This paragraph shall not apply if 
the request for review is made in bad faith or for purposes of delay.



Sec. 391.4  Documentary evidence.

    (a) When late charges are waived, the debtor's administrative file 
shall be properly documented with a memorandum. The memorandum shall 
contain a brief narrative statement describing the circumstances leading 
to the waiver and the reason(s) for granting the waiver.
    (b) A credit report or a financial statement sworn to by the debtor 
may be required before waiver of late charges is approved for a 
compromise, suspension, or termination, except where the cost of 
obtaining such a report or statement exceeds the late charges due.



Sec. 391.5  Waiver approval.

    Waivers of late charges shall be approved by the Commissioner of the 
Bureau of the Public Debt or designee, except that compromises and 
terminations of the underlying claim shall be upon the recommendation of 
the Chief Counsel in accordance with 31 CFR 5.3.

[[Page 517]]



         CHAPTER IV--SECRET SERVICE, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
401             Seizure and forfeiture of vessels, vehicles 
                    and aircraft used to transport 
                    counterfeit coins, obligations, 
                    securities, and paraphernalia...........         519
402             Reproduction of canceled United States 
                    Internal Revenue Stamps.................         520
403             Authorization of all banks, U.S. Post 
                    Offices, and Disbursing Officers of the 
                    United States and their agents to 
                    deliver to the Treasury Department 
                    counterfeit obligations and other 
                    securities and coins of the United 
                    States or of any foreign government.....         520
405             Illustration of savings bonds...............         520
406             Seizure and forfeiture of gold for 
                    violations of Gold Reserve Act of 1934 
                    and gold regulations....................         521
407             Regulations governing conduct in the 
                    Treasury Building and the Treasury Annex         521
408             Designation of temporary residence of the 
                    President or other person protected by 
                    the Secret Service and temporary offices 
                    of the President and staff, or other 
                    person protected by the Secret Service--
                    rules governing access..................         523
409             Standard and procedures utilized in issuing 
                    a security clearance in connection with 
                    an application for a press pass to the 
                    White House.............................         524
411             Color illustrations of United States 
                    currency................................         526
413             Closure of streets near the White House.....         526

[[Page 519]]



PART 401_SEIZURE AND FORFEITURE OF VESSELS, VEHICLES AND AIRCRAFT USED 
TO TRANSPORT COUNTERFEIT COINS, OBLIGATIONS, SECURITIES, AND PARAPHERNALIA
--Table of Contents




Sec.
401.1 Secret Service agents authorized to make seizures.
401.2 Custody.
401.3 Authority of District Directors of Customs to hold in custody.
401.4 Duties of Bureau of Customs.
401.5 Disposition.

    Authority: Sec. 8, 53 Stat. 1293; 49 U.S.C. 788.

    Source: 33 FR 4257, Mar. 7, 1968, unless otherwise noted.



Sec. 401.1  Secret Service agents authorized to make seizures.

    All officers of the U.S. Secret Service engaged in the enforcement 
of counterfeiting laws are hereby authorized and designated to seize 
such vessels, vehicles, and aircraft as may be subject to seizure 
because of violations of the said act of August 9, 1939, pertaining to 
contraband articles referred to in section 1(b) (3) of said act.



Sec. 401.2  Custody.

    Each vessel, vehicle, or aircraft seized pursuant to the said act of 
August 9, 1939, and the regulations in this part shall forthwith be 
placed by the seizing officer in the custody of the District Director of 
Customs for the customs district in which such seizure is made. Such 
placing in custody shall be effected by immediate notification of the 
appropriate District Director of Customs of the seizure, together with a 
statement of the facts including a description of the vessel, vehicle, 
or aircraft, and the holding by the seizing officer of such vessel, 
vehicle, or aircraft subject to the instructions of the said district 
director of customs.



Sec. 401.3  Authority of District Directors of Customs to hold in 
custody.

    District Directors of Customs are hereby authorized and designated 
to hold in custody awaiting appropriate disposition vessels, vehicles, 
and aircraft seized pursuant to the said act of August 9, 1939, and the 
regulations in this part.



Sec. 401.4  Duties of Bureau of Customs.

    With respect to every vessel, vehicle, and aircraft seized and 
placed in the custody of a district director of customs pursuant to the 
said act of August 9, 1939, and the regulations in this part, the 
appropriate officials of the Bureau of Customs are hereby authorized and 
designated as the officers who shall perform such administrative duties 
in connection with--
    (a) The summary and judicial forfeiture and condemnation of such 
vessel, vehicle, or aircraft;
    (b) The disposition of such vessel, vehicle, or aircraft or the 
proceeds from the sale thereof;
    (c) The remission or mitigation of the forfeiture of such vessel, 
vehicle, or aircraft; and
    (d) The compromise of claims and the award of compensation to 
informers in respect to such vessel, vehicle, or aircraft;

as may be necessary and proper by virtue of the provisions of said act 
of August 9, 1939, and by virtue of the provisions of the customs laws 
which the said act makes applicable in connection with seizures and 
forfeitures incurred or alleged to have been incurred under the said act 
and the regulations in this part. In the performance of said 
administrative duties the said appropriate officials of the Bureau of 
Customs shall be governed by the procedures established by the customs 
regulations, insofar as such procedures are applicable and not 
inconsistent with the provisions of the said act of August 9, 1939, and 
the regulations in this part. Powers of the character of those exercised 
by the Secretary of the Treasury and Commissioner of Customs is 
connection with the remission or mitigation of forfeitures under the 
customs laws and in connection with the compromise of claims and the 
award of compensation to informers under the customs laws shall be 
exercised by the Secretary of the Treasury in connection with the 
remission or mitigation of forfeitures under the said act of August 9, 
1939, and in connection with the compromise of claims and the award of

[[Page 520]]

compensation to informers under the said act.



Sec. 401.5  Disposition.

    With respect to each vessel, vehicle, and aircraft seized pursuant 
to the said act of August 9, 1939, and the regulations in this part, the 
Director of the Secret Service shall promptly notify the Administrator 
of the General Services Administration and the Commissioner of Customs 
whether the Secret Service desires to have such vessel, vehicle, or 
aircraft for its official use. When forfeiture of any vessel, vehicle, 
or aircraft has been perfected otherwise than by court decree, the 
district director holding in custody such vessel, vehicle, or aircraft 
shall:
    (a) Either return the same to the Secret Service if the Director of 
the Secret Service has requested it for the official use of the Secret 
Service
    (b) Or, if the Secret Service does not desire such vessel, vehicle, 
or aircraft for its official use, hold such vessel, vehicle, or aircraft 
subject to the instructions of the Administrator of the General Services 
Administration.

(Secs. 301-308, 49 Stat. 879-880; 40 U.S.C. 304f-304m)



PART 402_REPRODUCTION OF CANCELED UNITED STATES INTERNAL REVENUE STAMPS
--Table of Contents




    Authority: Secs. 474, 492, 62 Stat. 706, 710; 18 U.S.C. 474, 492.



Sec. 402.1  Reproductions authorized.

    Authority is hereby given to make, hold, and dispose of black and 
white reproductions of canceled U.S. internal revenue stamps: Provided, 
That such reproductions are made, held and disposed of as part of and in 
connection with the making, holding, and disposition, for lawful 
purposes, of the reproductions of the documents to which such stamps are 
attached.

[33 FR 4257, Mar. 7, 1968]



PART 403_AUTHORIZATION OF ALL BANKS, U.S. POST OFFICES, AND DISBURSING 

OFFICERS OF THE UNITED STATES AND THEIR AGENTS TO DELIVER TO THE TREASURY 
DEPARTMENT COUNTERFEIT OBLIGATIONS AND OTHER SECURITIES AND COINS OF THE 
UNITED STATES OR OF ANY FOREIGN GOVERNMENT--Table of Contents




    Authority: Sec. 492, 62 Stat. 710; 18 U.S.C. 492.



Sec. 403.1  Delivery of counterfeit obligations and other securities and 
coins authorized.

    Authority is hereby given to all banks and banking institutions of 
any nature whatsoever organized under general or special Federal or 
State statutes, to all U.S. Post Offices, and to all disbursing officers 
of the United States and their agents, to take possession of and deliver 
to the Treasury Department through the Secret Service all counterfeit 
obligations and other securities and coins of the United States or of 
any foreign government which shall be presented at their places of 
business.

[33 FR 4257, Mar. 7, 1968]



PART 405_ILLUSTRATION OF SAVINGS BONDS--Table of Contents




    Authority: Sec. 474, 62 Stat. 706; 18 U.S.C. 474.



Sec. 405.1  Illustrations authorized.

    (a) Authority is hereby given to make, hold, dispose of, and use 
illustrations of U.S. savings bonds for publicity purposes in connection 
with the campaign for the sale of such bonds.
    (b) The making of any reproduction of a U.S. savings bond in any 
manner or any form is not permitted other than as provided in this part 
or pursuant to title 18, United States Code, section 504 (18 U.S.C. 
504).

[36 FR 21338, Nov. 6, 1971]

[[Page 521]]



PART 406_SEIZURE AND FORFEITURE OF GOLD FOR VIOLATIONS OF GOLD RESERVE 
ACT OF 1934 AND GOLD REGULATIONS--Table of Contents




Sec.
406.1 Secret Service officers authorized to make seizures of gold.
406.2 Custody of seized gold valued not in excess of $2,500.
406.3 Forfeiture of gold valued not in excess of $2,500.
406.4 Duties of customs officers.
406.5 Forfeiture of gold valued in excess of $2,500.

    Authority: R.S. 161, as amended, sec. 4, 48 Stat. 340; 5 U.S.C. 301, 
31 U.S.C. 443.

    Source: 33 FR 4258, Mar. 7, 1968, unless otherwise noted.



Sec. 406.1  Secret Service officers authorized to make seizures of gold.

    All agents of the U.S. Secret Service, in addition to officers of 
the customs, are hereby authorized and designated to seize any gold 
which may be subject to forfeiture for violations of the Gold Reserve 
Act of 1934 (31 U.S.C. 440-445) and the Gold Regulations.



Sec. 406.2  Custody of seized gold valued not in excess of $2,500.

    Any gold, the value of which does not exceed $2,500, seized by 
officers of the Secret Service pursuant to the Gold Reserve Act of 1934 
and the Gold Regulations, if not needed as evidence or for further 
investigation by the Secret Service, shall be placed forthwith by the 
seizing officer in the custody of the district director of customs for 
the customs district in which such seizure is made. Such gold shall be 
accompanied by a report from the Secret Service showing the basis of the 
seizure and a citation to each of the statutes and sections of the Gold 
Regulations violated.



Sec. 406.3  Forfeiture of gold valued not in excess of $2,500.

    The district director of customs receiving custody of gold seized by 
the Secret Service, shall, if no petition is filed for the remission of 
mitigation of the forfeiture incurred, institute summary forfeiture 
proceedings in the judicial district in which such seizure is made under 
the appropriate provisions of the law and Customs Regulations applicable 
to the forfeiture of merchandise imported contrary to law.



Sec. 406.4  Duties of customs officers.

    The appropriate officials of the Bureau of Customs are hereby 
authorized and designated as the officers who shall perform such 
administrative duties in connection with the summary forfeiture of gold 
seized by the Secret Service, the sale or other disposition of such 
gold, and the remission or mitigation of the forfeiture of such gold, as 
may be necessary or proper by virtue of the provisions of the Gold 
Reserve Act of 1934 and the Gold Regulations, and by virtue of the 
provisions of the customs laws which the said Gold Reserve Act makes 
applicable in connection with the seizures and forfeitures incurred or 
alleged to have been incurred under the said act and regulations. In the 
performance of said administrative duties the appropriate officials of 
the Bureau of Customs shall be governed by the procedures established by 
the Customs Regulations insofar as such procedures are applicable and 
not inconsistent with the provisions of the Gold Reserve Act of 1934 and 
the Gold Regulations.



Sec. 406.5  Forfeiture of gold valued in excess of $2,500.

    When the value of the gold seized by the Secret Service exceeds 
$2,500, the seizing officer shall furnish a report, approved by the 
principal local officer, to the U.S. attorney, and shall include in such 
report a statement of all the facts and circumstances of the case, 
together with the names of the witnesses and a citation to each of the 
statutes and sections of the Gold Regulations believed to have been 
violated and on which reliance may be had for forfeiture.



PART 407_REGULATIONS GOVERNING CONDUCT IN THE TREASURY BUILDING AND THE 
TREASURY ANNEX--Table of Contents




Sec.
407.1 Authority.
407.2 Applicability.
407.3 Recording presence.
407.4 Preservation of property.

[[Page 522]]

407.5 Conformity with signs and directions.
407.6 Nuisances.
407.7 Gambling.
407.8 Intoxicating beverages and narcotics.
407.9 Soliciting, vending, debt collection, and distribution of 
          handbills.
407.10 Photographs for news, advertising, or commercial purposes.
407.11 Dogs and other animals.
407.12 Vehicular and pedestrian traffic.
407.13 Weapons and explosives.
407.14 Penalties and other law.

    Authority: 5 U.S.C. 301; FPMR Temp. Reg. D-40, 38 FR 20650; Treasury 
Dept. Order 177-25 (Revision 2), 38 FR 21947.

    Source: 33 FR 7149, May 15, 1968, unless otherwise noted.



Sec. 407.1  Authority.

    The regulations in this part governing conduct in and on the 
Treasury Building and grounds and the Treasury Annex Building and 
grounds are promulgated pursuant to the authority vested in the 
Secretary of the Treasury, including (5 U.S.C. 301), and that vested in 
him by delegation from the Administrator of General Services, 38 FR 
20650 (1973), and in accordance with the authority vested in the 
Director of the U.S. Secret Service by Treasury Department Order No. 
177-25 (Revision 2), 38 FR 21947 (1973).

[38 FR 31975, Nov. 20, 1973]



Sec. 407.2  Applicability.

    The regulations in this part apply to the building and grounds of 
the Main Treasury Building and the Treasury Annex Building located in 
Washington, DC, at 15th Street and Pennsylvania Avenue NW., and Madison 
Place and Pennsylvania Avenue NW., respectively, and to all persons 
entering in or on such property. The Main Treasury Building and grounds 
and the Treasury Annex Building and grounds shall hereafter be referred 
to in the regulations in this part as ``property''.



Sec. 407.3  Recording presence.

    Except as otherwise ordered, the property shall be closed to the 
public after normal working hours and at such other times as may be 
necessary for the orderly conduct of the business of the Treasury 
Department. The property shall also be closed to the public when, in the 
opinion of the Assistant Secretary for Administration, or his delegate, 
an emergency situation exists. Admission to the property during periods 
when the property is closed to the public will be limited to authorized 
individuals who may be required to sign the register and/or display 
identification documents when requested by Treasury guards or other 
authorized individuals.



Sec. 407.4  Preservation of property.

    No person shall, without proper authority, willfully destroy, 
damage, deface, or remove property or any part thereof, or any 
furnishings therein.



Sec. 407.5  Conformity with signs and directions.

    Persons in and on the property shall comply with the instructions of 
Treasury guards, with official signs of a prohibitory or directory 
nature, and with the directions of other authorized officials.



Sec. 407.6  Nuisances.

    The use of loud, abusive, or profane language, unwarranted 
loitering, unauthorized assembly, the creation of any hazard to persons 
or things, improper disposal of rubbish, spitting, prurient prying, the 
commission of any obscene or indecent act, or any other disorderly 
conduct on the property is prohibited. The throwing of any articles of 
any kind in, upon, or from the property and climbing upon any part 
thereof is prohibited.



Sec. 407.7  Gambling.

    Participating in games for money or other property, the operation of 
gambling devices, the conduct of a lottery or pool, the selling or 
purchasing of numbers tickets, or any other gambling, in or on the 
property is prohibited.



Sec. 407.8  Intoxicating beverages and narcotics.

    Entering or being on the property, or operating a motor vehicle 
thereon, by a person under the influence of intoxicating beverages or 
narcotic drugs is prohibited.

[[Page 523]]



Sec. 407.9  Soliciting, vending, debt collection, and distribution of 
handbills.

    The unauthorized soliciting of alms and contributions, the 
commercial soliciting and vending of all kinds, the display or 
distribution of commercial advertising, or the collecting of private 
debts, in or on the property is prohibited. This prohibition does not 
apply to Department of Treasury concessions or notices posted by 
authorized employees on the bulletin boards. Distribution of material 
such as pamphlets, handbills, and flyers is prohibited without prior 
approval from the Assistant Secretary for Administration, or his 
delegate.



Sec. 407.10  Photographs for news, advertising, or commercial purposes.

    Except where security regulations apply, or a Federal court order or 
rule prohibits it, photographs for news purposes may be taken in areas 
on the property to which the public customarily has access without prior 
permission. Photographs for advertising and commercial purposes may be 
taken in such areas only with the prior written permission of the 
Assistant Secretary for Administration, or his delegate.



Sec. 407.11  Dogs and other animals.

    Dogs and other animals, except seeing-eye dogs, shall not be brought 
upon the property for other than official purposes.



Sec. 407.12  Vehicular and pedestrian traffic.

    (a) Drivers of all vehicles in or on the property shall drive in a 
careful and safe manner at all times and shall comply with the signals 
and directions of Treasury guards and all posted traffic signs.
    (b) The blocking of entrances, driveways, walks, loading platforms, 
or fire hydrants in or on the property is prohibited.
    (c) Parking in or on the property is not allowed without a permit or 
specific authority. Parking without authority, parking in unauthorized 
locations, or in locations reserved for other persons, or contrary to 
the directions of Treasury guards or posted signs is prohibited.
    (d) This section may be supplemented from time to time with the 
approval of the Assistant Secretary for Administration, or his delegate, 
by the issuance and posting of specific traffic directives as may be 
required and when so issued and posted such directives shall have the 
same force and effect as if made a part hereof.



Sec. 407.13  Weapons and explosives.

    No person while on the property shall carry firearms, other 
dangerous or deadly weapons, or explosives, either openly or concealed, 
except for official purposes.



Sec. 407.14  Penalties and other law.

    Whoever shall be found guilty of violating the regulations in this 
part while on the property is subject to a fine of not more than $50 or 
imprisonment of not more than 30 days, or both (see 40 U.S.C. 318c). 
Nothing contained in these regulations shall be construed to abrogate 
any other Federal laws or regulations of the District of Columbia 
applicable to the property referred to in Sec. 407.2 and governed by 
the regulations.



PART 408_DESIGNATION OF TEMPORARY RESIDENCE OF THE PRESIDENT OR OTHER 

PERSON PROTECTED BY THE SECRET SERVICE AND TEMPORARY OFFICES OF THE 
PRESIDENT AND STAFF, OR OTHER PERSON PROTECTED BY THE SECRET 
SERVICE_RULES GOVERNING ACCESS--Table of Contents




Sec.
408.1 Authority.
408.2 Designation.
408.3 Rules governing access.

    Authority: 18 U.S.C. 1752 (84 Stat. 1891, 96 Stat. 1451).

    Source: 49 FR 28553, July 13, 1984, unless otherwise noted.



Sec. 408.1  Authority.

    The designation of the buildings and grounds in this part which 
constitute the temporary residence of the President or other person 
protected by the Secret Service and the temporary offices of the 
President and Presidential staff or of any other person protected

[[Page 524]]

by the Secret Service and the regulations governing access to such 
restricted areas where the President or any other person protected by 
the Secret Service is or will be temporarily visiting, are promulgated 
pursuant to the authority vested in the Secretary of the Treasury by 18 
U.S.C. 1752 (84 Stat. 1891, 96 Stat. 1451).



Sec. 408.2  Designation.

    (a) For the purpose of 18 U.S.C. 1752, the buildings and grounds 
which constitute temporary residence of the President are as follows:

    Santa Barbara County, California home. That certain tract land in 
the County of Santa Barbara, State of California, shown and designated 
as ``Parcel 1'' on Parcel Map No. 11697 filed January 2, 1973 in Book 
11, page 40 of Parcel Maps in the office of the County Recorder of said 
County.
    This property and the related conditions, restrictions, 
reservations, easements, rights and rights of way of record are more 
fully described in a Grant Deed recorded with the Santa Barbara County 
Recorder's Office (Book 2540, Pages 1381-1385).

    (b) For the purposes of 18 U.S.C. 1752, the buildings and grounds 
which constitute temporary residences of other persons protected by the 
Secret Service shall be that property which each designates for 
protection by the Secret Service in accord with the provisions of 
section 3 of Pub. L. 95-524 (90 Stat. 2475). To the extent that a 
further description of such property may be necessary, such description 
shall be provided by the Secret Service in the form of a verbal or 
written notice to prospective visitors at each protective site.
    (c) For purposes of 18 U.S.C. 1752, the buildings and grounds which 
constitute temporary offices of the President and Presidential staff or 
offices of other persons protected by the Secret Service shall be those 
offices outside of Washington, DC, which are either supplied to the 
individual protectee by the government by virtue of that individual's 
position/former position with the government or those offices in which 
the individual conducts/is conducting his or her business affairs. To 
the extent that a further description of such property may be necessary, 
such description shall be provided by the Secret Service in the form of 
a verbal or written notice to prospective visitors at each protective 
site.



Sec. 408.3  Rules governing access.

    (a) For the purposes of 18 U.S.C. 1752 (84 Stat. 1891, 96 Stat. 
1451), ingress or egress to or from the buildings or grounds designated 
in Sec. 408.2 and any posted, cordoned off, or otherwise restricted 
areas of a building or grounds where the President or other person 
protected by the United States Secret Service is or will be visiting is 
authorized only for the following persons:
    (1) Invitees: Persons invited by or having appointments with the 
protectee, the protectee's family, or members of the protectee's staff;
    (2) Members of the protectee's family and staff;
    (3) Military and Communications Personnel assigned to the Office of 
the President;
    (4) Federal, state, and local law enforcement personnel engaged in 
the performance of their official duties and other persons, whose 
presence is necessary to provide services or protection for the premises 
or persons therein;
    (5) Holders of grants of easement to the property, provided such 
persons or their authorized representatives show title to the grant of 
easement and obtain authorization from the United States Secret Service.
    (b) Authorized persons must possess and display identification 
documents issued by or satisfactory to the United States Secret Service.
    (c) Unauthorized entry is prohibited.
    (d) The term ``protectee'' as used in this rule includes the 
President and any other person receiving protection from the United 
States Secret Service as provided by law.



PART 409_STANDARD AND PROCEDURES UTILIZED IN ISSUING A SECURITY CLEARANCE 
IN CONNECTION WITH AN APPLICATION FOR A PRESS PASS TO THE WHITE HOUSE
--Table of Contents




Sec.
409.1 Standard.
409.2 Procedures.

    Authority: 18 U.S.C. 3056 and 3 U.S.C. 202.

[[Page 525]]



Sec. 409.1  Standard.

    In granting or denying a request for a security clearance made in 
response to an application for a White House press pass, officials of 
the Secret Service will be guided solely by the principle of whether the 
applicant presents a potential source of physical danger to the 
President and/or the family of the President so serious as to justify 
his or her exclusion from White House press privileges.

[43 FR 26718, June 22, 1978]



Sec. 409.2  Procedures.

    (a) If the Special Agent in Charge of the Secret Service, Technical 
Security Division, in applying the standard set forth in Sec. 409.1, 
anticipates that a denial of the security clearance should be issued, 
the applicant will be notified in writing, by that official, of the 
basis for the proposed denial in as much detail as the security of any 
confidential source of information will permit. This notification will 
be sent by registered mail.
    (b) The notification of the proposed denial sent to the applicant 
will also contain a statement advising the applicant of his right to 
respond to the proposed denial and to rebut any factual basis supporting 
the proposed denial by contacting the Assistant Director--Protective 
Operations, United States Secret Service, 1800 ``G'' Street, NW., 
Washington, DC 20223.
    (c) The applicant shall be allowed thirty days from the date of the 
mailing of the proposed denial notification to respond in writing. The 
response shall consist of any explanation or rebuttal deemed appropriate 
by the applicant and will be signed by the applicant under oath or 
affirmation.
    (d) If the applicant is unable to prepare a response within thirty 
days, an extension for one additional thirty day period will be granted 
upon receipt of the applicant's written request for such an extension.
    (e) At the time of the filing of the applicant's written response to 
the notification of the proposed denial the applicant may request, and 
will be granted, the opportunity to make a personal appearance before 
the Assistant Director--Protective Operations of the Secret Service for 
the purpose of personally supporting his eligibility for a security 
clearance and to rebut or explain the factual basis for the proposed 
denial. This official shall exercise final review authority in the 
matter. The applicant may be represented by counsel during this 
appearance.
    (f)(1) On the basis of the applicant's written and personal response 
and the factual basis for the proposed denial, the Assistant Director--
Protective Operations of the Secret Service will determine whether or 
not further inquiry or investigation concerning the issues raised, is 
necessary.
    (2) If a decision is made that no such inquiry is necessary a final 
decision will be issued in conformity with paragraph (g) of this 
section.
    (3) If a decision is made that such further inquiry is necessary the 
Assistant Director--Protective Operations of the Secret Service, will 
conduct such further inquiry as that official deems appropriate. At the 
official's discretion, the inquiry may consist of:
    (i) The securing of documentary evidence;
    (ii) Personal interviews;
    (iii) An informal hearing;
    (iv) Any combination of paragraphs (f)(3)(i) through (iii) of this 
section.
    (g) On the basis of the applicant's written and personal response, 
the factual basis for the proposed denial and the additional inquiry 
provided for, if such inquiry is conducted, a final decision will be 
expeditiously made by the Assistant Director--Protective Operations of 
the United States Secret Service in accordance with the standard set 
forth in Sec. 409.1. If a final adverse decision is reached, the 
applicant will be notified of this final decision in writing. This 
notification will set forth, as precisely as possible and to the extent 
that security considerations permit, the factual basis for the denial in 
relation to the standard set forth in Sec. 409.1. This notification 
will be sent by registered mail and will be signed by the Assistant 
Director--Protective Operations of the Secret Service.

[43 FR 26718, June 22, 1978]

[[Page 526]]



PART 411_COLOR ILLUSTRATIONS OF UNITED STATES CURRENCY--Table of Contents




    Authority: 18 U.S.C. 504; Treasury Directive Number 15-56, 58 FR 
48539 (September 16, 1993)

    Source: 61 FR 27281, May 31, 1996, unless otherwise noted.



Sec. 411.1  Color illustrations authorized.

    (a) Notwithstanding any provision of chapter 25 of Title 18 of the 
U.S. Code, authority is hereby given for the printing, publishing or 
importation, or the making or importation of the necessary plates or 
items for such printing or publishing, of color illustrations of U.S. 
currency provided that:
    (1) The illustration be of a size less than three-fourths or more 
than one and one-half, in linear dimension, of each part of any matter 
so illustrated;
    (2) The illustration be one-sided; and
    (3) All negatives, plates, positives, digitized storage medium, 
graphic files, magnetic medium, optical storage devices, and any other 
thing used in the making of the illustration that contain an image of 
the illustration or any part thereof shall be destroyed and/or deleted 
or erased after their final use in accordance with this section.
    (b) [Reserved]



PART 413_CLOSURE OF STREETS NEAR THE WHITE HOUSE--Table of Contents




Sec.
413.1 Closure of streets.
413.2 Coordination with other authorities.

    Authority: 31 U.S.C. 321, 18 U.S.C. 3056, 3 U.S.C. 202, Treasury 
Order 170-09.

    Source: 60 FR 27885, May 26, 1995, unless otherwise noted.



Sec. 413.1  Closure of streets.

    (a) District of Columbia. The following streets in the District of 
Columbia are closed to public vehicular traffic:
    (1) The segment of Pennsylvania Avenue, Northwest, situated between 
Madison Place, Northwest, and Seventeenth Street, Northwest;
    (2) The 1600 block of State Place, Northwest, situated between 
Seventeenth Street, Northwest, and the White House Complex; and
    (3) The segment of South Executive Avenue that connects to the 1600 
block of State Place, Northwest.
    (b) Authorized access. The streets described in paragraph (a) shall 
remain open to public pedestrian use, official use of the United States, 
and authorized vehicular access for ingress and egress to the White 
House Complex and adjacent Federal Buildings.



Sec. 413.2  Coordination with other authorities.

    Nothing in Sec. 413.1 shall be in derogation of any authority 
conferred upon the Secretary of the Interior, the Secretary of the 
Treasury or the Director, United States Secret Service.

[[Page 527]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 529]]

            Material Approved for Incorporation by Reference

                      (Revised as of July 1, 2006)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


31 CFR (PARTS 200 TO 499)

FISCAL SERVICE, DEPARTMENT OF THE TREASURY
                                                                  31 CFR


American Law Institute

  4025 Chestnut Street, Philadelphia, PA 19104
Uniform Commercial Code, Revised Article 8,        354.1; 357.2; 357.10; 
  Investment Securities (with conforming and                      357.11
  miscellaneous amendments to Articles 1, 3, 4, 5, 
  9, and 10) 1994 Official Text.
Uniform Commercial Code, Revised Article 9,        357.2; 357.10; 357.11
  Secured Transactions, (with conforming and 
  miscellaneous amendments to Articles 1, 2, 2A, 
  4, 5, 6, 7, and 8) 1999 Official Text.


National Automated Clearing House Association

  The Electronic Payments Association, 13665 
  Dulles Technology Drive, Suite 300, Herndon, VA 
  20171
2005 ACH Rules: A Complete Guide to Rules &                     210.3(b)
  Regulations Governing the ACH Network.

[[Page 531]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2006)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 100-199)
        II  Office of Management and Budget Circulars and Guidance 
                (200-299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements [Reserved]


                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)

[[Page 532]]

        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
     LXVII  Institute of Museum and Library Services (Part 7701)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)

[[Page 533]]

    LXXVII  Office of Management and Budget (Part 8701)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Part 
                9701)
      XCIX  Department of Defense Human Resources Management and 
                Labor Relations Systems (Department of Defense--
                Office of Personnel Management) (Part 9901)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)

[[Page 534]]

     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

[[Page 535]]

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1303--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (Parts 500--599)

[[Page 536]]

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

[[Page 537]]

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

[[Page 538]]

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)

[[Page 539]]

        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)

[[Page 540]]

        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

[[Page 541]]

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)

[[Page 542]]

    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                         Title 35--[RESERVED]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)

[[Page 543]]

       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                301--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)

[[Page 544]]

       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

[[Page 545]]

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)

[[Page 546]]

        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees' 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  [Reserved]
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)

[[Page 547]]

        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)

[[Page 548]]

        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 549]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2006)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 550]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 551]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, II
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II

[[Page 552]]

  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 553]]

  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Defense Acquisition Regulations System          48, 2
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
   Archives and Records Administration
[[Page 554]]

Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50

[[Page 555]]

  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
  Copyright Royalty Board                         37, III
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52

[[Page 556]]

Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII

[[Page 557]]

Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 559]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985 and 1986-2000'' published in 
11 separate volumes.

                                  2001

31 CFR
                                                                   66 FR
                                                                    Page
Chapter II
210.2 (d) revised; interim.........................................10580
210.3 (b) revised; interim.........................................10580
211.1 (a) revised..................................................63623
285.11 (b)(3), (c), (e)(3) and (g) revised.........................51868
337.0 Revised......................................................56432
337.2 Revised......................................................56432
337.4 (a) revised..................................................56432
337.14 Revised.....................................................56432
337.15 Revised.....................................................56432
356.13 (b) revised.................................................56761
357 Determination..................................................33832
    Policy statement...............................................44526

                                  2002

31 CFR
                                                                   67 FR
                                                                    Page
Chapter II
203.2 (w) through (kk) redesignated as (x) through (ee) and (hh) 
        through (nn); new (w) added; (g), new (x), (dd) and (nn) 
        revised; (ff) and (gg) added...............................11575
203.3 (c) revised..................................................11576
203.13 (b), (c)(1) and (d)(1) revised..............................11576
203.19 Revised.....................................................11576
203.21 Revised.....................................................11576
203.22 (b) amended; (c) revised; (d) added.........................11576
203.23 (a)(1), (2), (c), (d) and (e) revised; (f) added............11576
203.24 (b) through (f) redesignated as (c) through (g); (a) and 
        new (d)(1) revised; new (b) added..........................11577
205 Revised........................................................31885
210.2 (d) revised; interim.........................................17902
210.3 (b) revised; interim.........................................17903
210.6 (g), (h) and (i) added; interim..............................17903
210 Appendices A, B and C added; interim...........................17903
240 Authority citation revised.....................................36518
240.7 (a)(1), (b) and (c)(1) revised; interim......................36518
240.8 (c) revised; interim.........................................36518
240.9 Redesignated as 240.10; new 240.9 added; interim.............36518
240.10 Redesignated as 240.11; new 240.10 redesignated from 240.9; 
        interim....................................................36518
240.11 Redesignated as 240.12; new 240.11 redesignated from 
        240.10; interim............................................36518
240.12 Redesignated as 240.13; new 240.12 redesignated from 
        240.11; interim............................................36518
240.13 Redesignated as 240.14; new 240.13 redesignated from 
        240.12; (a)(2)(ii) revised; interim........................36518
240.14 Redesignated as 240.15; new 240.14 redesignated from 
        240.13; interim............................................36518
240.15 Redesignated as 240.16; new 240.15 redesignated from 
        240.14; interim............................................36518
240.16 Redesignated from 240.15; interim...........................36518
285.5 Added; interim...............................................78942

[[Page 560]]

351.6 Revised......................................................64278
352 Table 1 removed................................................78384
357.0 Revised......................................................64278
357.2 Amended.......................................................7079
    (e)(1)(i) through (vii) redesignated as (e)(1)(ii) through 
(viii); new (e)(1)(i) added; new (e)(1)(ii) and (2) revised........78384
356.2 Amended......................................................68516
357.10--357.15 (Subpart B) Revised..................................7080
356.12 (c)(1)(i) and (2) revised...................................68516
356.13 (a) revised.................................................68516
356.20 (a) revised.................................................68516
356.21 (a) revised; (b) amended....................................68516
356.22 (b) revised.................................................68517
357.44 Removed......................................................7082
359 Revised........................................................64278
360 Heading revised................................................64285
360.0 Revised......................................................62485
360.2 (a) revised..................................................64286
363 Added..........................................................64286

                                  2003

31 CFR
                                                                   68 FR
                                                                    Page
Chapter II
210.2 (d) revised; interim; eff. 7-7-03............................33829
210.3 (b) revised; interim; eff. 7-7-03............................33830
315.71 Revised.....................................................24795
315.72 Removed.....................................................24796
321.8 (a)(2) redesignated as (a)(3); (a)(1) revised; (a)(2) added 
                                                                    2666
    (a)(1) corrected................................................7427
321.9 (a) revised...................................................2666
    (a)(1) corrected................................................7427
321 Appendix amended................................................2666
    Appendix corrected..............................................7427
323.2 (b) revised..................................................67944
348 Added..........................................................41267
351 Revised........................................................24796
351.2 (d) amended...................................................2667
    (d) corrected...................................................7427
352.7 (a) amended...................................................2667
    (a) corrected...................................................7427
353.0 Revised......................................................24805
353.2 (a) revised..................................................24805
353.10 (a) amended.................................................24805
353.11 (b)(3) revised..............................................24805
353.12 Revised.....................................................24805
353.35 (b) revised..................................................2667
    (b) corrected...................................................7427
353.71 Revised.....................................................24805
353.72 Removed.....................................................24806
359.6 Revised.......................................................2667
    (a) corrected...................................................7427
359.50 Revised.....................................................24806
359.51 Revised.....................................................24806
359.65 Removed.....................................................24806
359 Appendix D amended.............................................24806
360.35 (b) revised..................................................2667
    (b) corrected...................................................7427
360.71 Revised.....................................................24806
360.72 Removed.....................................................24807
363.3 Revised......................................................24807
363.6 Amended......................................................24807
363.34 Amended.....................................................24807
363.38 Heading amended.............................................24807
363.50--363.64 (Subpart C) Heading revised.........................24807
363.50 Revised.....................................................24807
363.51 Heading amended.............................................24807
363.52 Heading and (a) revised.....................................24807
363.53 Heading amended.............................................24807
363.54 Heading amended.............................................24807
363.55 (b) and (d) amended.........................................24807
363.56 Heading amended.............................................24807
363.57 Heading amended.............................................24807
363.58 Heading amended.............................................24807
363.65 Heading amended.............................................24807
363.66 Heading amended.............................................24807
360.71 Revised.....................................................24806
360.72 Removed.....................................................24806
363.80 Heading amended.............................................24807
363.81 Heading amended.............................................24807
363.82 Heading amended.............................................24807
363.83 Heading amended.............................................24807
363.85 Heading amended.............................................24807
363.90 Heading amended.............................................24807
363.95 Heading and introductory text amended.......................24807
363.97 Heading amended.............................................24807
363.105 Heading amended............................................24807
363.106 Heading amended............................................24807
363.111 Amended....................................................24807
363.112 Amended....................................................24807
363.113 Heading amended............................................24807
363.114 Amended....................................................24807
363.125 Heading amended............................................24807

                                  2004

31 CFR
                                                                   69 FR
                                                                    Page
Title 31 Nomenclature change.......................................18803
Chapter II
210.6 (h) revised..................................................13189
210.8 (d) added....................................................13189
210.10 (a) and (d) revised.........................................13189
210.11 (b)(3)(i) revised...........................................13189
210.14 (a) revised.................................................13189

[[Page 561]]

210 Appendix C revised.............................................13189
240 Revised........................................................17274
    Revised; interim...............................................61568
344 Authority citation revised.....................................41756
344.3 (c), (e), (f), (g)(1), (h)(1) and (4) revised; interim.......41756
351.62 Revised.....................................................50308
351.63 Revised.....................................................50308
351.64 Revised.....................................................50308
352.0 Revised......................................................40318
352.2 (a), (b) and (c) amended.....................................40318
352.4 Amended......................................................40318
352.5 Revised......................................................40318
352.7 Revised......................................................40318
352.8 (a) and (b) amended..........................................40319
352.9 Amended......................................................40319
352.11 Amended.....................................................40319
356 Revised........................................................45202
356.12 (b)(1), (c)(1)(i), (ii) and (iii) revised...................53621
356.20 (b) and (c) revised.........................................53621
356.22 (a) revised.................................................53622
    Appendix B corrected...........................................52967
    Appendix B amended......................................53622, 53625
359.47 Revised.....................................................50308
359.48 Revised.....................................................50308
359.49 Revised.....................................................50308
363 Authority citation revised.....................................50308
363.3 Revised......................................................50308
363.4 Revised.......................................................2507
363.6 Amended................................................2507, 50308
363.15 Revised......................................................2507
363.24 (p) added....................................................2507
    (q) and (r) added..............................................50309
363.27 Revised......................................................2507
    (d)(8) and (e)(4) added........................................50309
363.28 Removed......................................................2508
363.29 Removed......................................................2508
363.30 Removed......................................................2508
363.31 Removed......................................................2508
363.32 Removed......................................................2508
363.36 Revised...............................................2508, 50309
363.37 Revised.....................................................50309
363.38 Revised.....................................................50309
363.41 Revised.....................................................50309
363.51 (b) removed; (c) and (d) redesignated as new (b) and (c).....2508
363.66 Revised......................................................2508
363.70 Removed......................................................2508
363.71 Removed......................................................2508
363.82 Revised......................................................2508
363.85 Removed......................................................2508
363.90 (a)(3) removed; (a)(4), (5) and (6) redesignated as new 
        (3), (4) and (5)............................................2508
    (a)(6) added; (d) introductory text revised....................50309
363.96 (e) removed..................................................2508
363.130--363.152 (Subpart D) Added.................................50309

                                  2005

31 CFR
                                                                   70 FR
                                                                    Page
Subtitle A
Chapter II
210.2 (d) revised; interim.........................................67366
210.3 (b) revised..................................................67367
210.6 Introductory text, (g), (h)(1), (2) and (i) amended; interim
                                                                   67367
210.8 (b) introductory text amended................................67367
285 Authority citation revised...............................3145, 22799
285.5 Heading, (d)(5)(iv), (10)(v), (f)(3), (g)(1), (3)(iii), and 
        (i)(3) revised..............................................3145
285.7 (a)(1), (d)(1) and (4) revised; (a)(4) and (f) amended; 
        (a)(6) added...............................................22799
285.8 Regulation at 64 FR 71231 confirmed...........................3617
306.2 (u) added....................................................57429
306.65 Revised.....................................................57429
306.66 Removed.....................................................57429
306.67 Removed.....................................................57429
315.0 (a) revised..................................................14941
315.2 (b) through (p) redesignated as (c) through (q); new (b) 
        added......................................................14941
    (r) added......................................................57430
315.3 Added........................................................14941
315.71 Revised.....................................................57430
316.2 (a) amended..................................................14941
316.3 Revised......................................................14941
344.0--344.3 (Subpart A) Revised; eff. 8-15-05.....................37911
344.4--344.6 (Subpart B) Revised; eff. 8-15-05.....................37911
344.7--344.9 (Subpart C) Revised; eff. 8-15-05.....................37911
344.10--344.11 (Subpart D) Revised; eff. 8-15-05...................37911
351.0 Amended......................................................17288
351.1 (a) and (b) revised..........................................14941
351.3 Amended......................................................14941
351.29 Undesignated center heading and section heading revised; 
        (a)(2) amended.............................................17288
351.30 Heading revised.............................................17288

[[Page 562]]

351.31 Amended.....................................................17288
351.32 Heading revised.............................................17288
351.33 Heading revised.............................................17288
351.34 Undesignated center heading and section added...............17288
351.35 Added.......................................................17289
353.0 (a) and (c) amended..........................................14941
353.2 (b) through (l) redesignated as (c) through (m); new (b) 
        added......................................................14941
    (n) added......................................................57430
353.3 Added........................................................14941
353.71 Revised.....................................................57430
356 Nomenclature changes...........................................57439
356.2 Amended......................................................57439
356.4 Introductory text and (b) revised; (c) added.................57439
356.5 Introductory text revised....................................57439
356.11 (a)(1) amended; (c) revised; (d) added......................57440
356.12 (b)(1) and (c)(3) revised...................................57440
356.17 (b) and (c) redesignated as (c) and (d); new (b) added; new 
        (c) and (d) revised........................................57440
    (d)(1) and (2) correctly added.................................71401
356.22 (a) revised.................................................57440
356.25 (c) redesignated as (d); (a), (b) and new (d) revised; new 
        (c) added..................................................57440
356.30 (c)(2) redesignated as (c)(3); new (c)(2) added; new (c)(3) 
        revised....................................................57441
356 Appendix A amended; eff. 7-22-05...............................29456
357 Heading revised; nomenclature changes..........................57431
    Nomenclature changes...........................................57441
357.0 (c) revised..................................................57431
    (a) revised....................................................57441
357.2 Amended...............................................57431, 57441
357.22 (a) introductory text and (1) amended; (a)(3) revised.......57441
357.28 (c) revised.................................................57431
359.1 (a) and (b) revised..........................................14942
359.3 Amended......................................................14942
360.0 Revised......................................................14942
360.2 (b) through (l) redesignated as (c) through (m); new (b) 
        added......................................................14942
    (n) added......................................................57432
360.3 Added........................................................14942
360.70 Introductory text amended...................................57432
360.71 Revised.....................................................57432
363 Heading revised; nomenclature changes..........................57433
    Nomenclature changes...........................................57442
363.3 Revised......................................................14942
    Removed........................................................57442
363.4 Revised......................................................14942
    Revised........................................................57442
363.5 (a) and (b) redesignated as (b) and (c); new (a) added; new 
        (c) revised................................................57442
363.6 Amended......................................................14942
    Amended.................................................57433, 57442
363.9 Transferred to Subpart B; text added.........................57433
363.10 Transferred to Subpart B; redesignated from 363.15..........57433
    Heading and (a)(2) revised; (b)(1) amended.....................57442
363.11 Transferred to Subpart B; redesignated from 363.16..........57433
363.12 Transferred to Subpart B; text added........................57433
363.13 Transferred to Subpart B....................................57433
    Redesignated from 363.17.......................................57434
363.14 Transferred to Subpart B....................................57433
    Redesignated from 363.18.......................................57434
363.15--363.49 (Subpart B) Heading revised.........................57433
363.15 (a)(1), (2), (3) and (b)(3) revised.........................14943
    Redesignated as 363.10.........................................57433
    Redesignated from 363.19.......................................57434
363.16 Redesignated as 363.11......................................57433
    Redesignated from 363.20.......................................57434
363.17 Redesignated as 363.13; new 363.17 redesignated from 363.21
                                                                   57434
363.18 Redesignated as 363.14; new 363.18 redesignated from 363.22
                                                                   57434
363.19 Redesignated as 363.15; new 363.19 redesignated from 363.23
                                                                   57434
363.20 Redesignated as 363.16; new 363.20 added....................57434
363.21 Redesignated as 363.17; new 363.21 redesignated from 363.24
                                                                   57434
    Heading and (a) through (e) revised............................57442
363.22 Redesignated as 363.18......................................57434
    (c) revised....................................................57443
363.23 Redesignated as 363.19......................................57434
363.24 Revised.....................................................14943
    Redesignated as 363.21; new 363.24 added.......................57434

[[Page 563]]

363.26 (a) revised; (c) added......................................57443
363.27 (a) through (f) redesignated as (b) through (g); new (a) 
        added; new (e)(2) amended; new (e)(3), (4), (6) and (7) 
        revised....................................................57443
363.28 Added.......................................................57434
363.29 Added.......................................................57434
363.36 Revised.....................................................14943
    Revised........................................................57443
363.37 Revised.....................................................57443
363.38 Revised.....................................................57443
363.40 Revised.....................................................14943
    Revised........................................................57443
363.42 Amended.....................................................57435
363.43 (a)(4)(i) revised...........................................57435
363.44 Added.......................................................57435
    (a)(1) revised.................................................57443
363.45 Added.......................................................57435
363.46 Added.......................................................57435
363.47 Added.......................................................57436
363.50 Revised.....................................................14943
363.51 Removed.....................................................57436
363.54 Heading revised.............................................57436
363.55 (a) revised.................................................57436
363.65--363.69 Undesignated center heading removed.................57437
363.65 Removed.....................................................57437
363.66 Removed.....................................................57437
363.67 Removed.....................................................57437
363.68 Removed.....................................................57437
363.69 Removed.....................................................57437
363.80 Removed.....................................................57444
363.81 Removed.....................................................57444
363.82 Redesignated as 363.101.....................................57444
363.83 Heading revised.............................................57437
363.90 Undesignated center heading and section removed.............57437
363.95 Heading and introductory text revised.......................57437
363.97 Heading revised.............................................57437
363.100 Added......................................................57444
363.101 Redesignated from 363.82 and revised.......................57444
363.105--363.107 Undesignated center heading removed...............57437
363.105 Removed....................................................57437
363.106 Removed....................................................57437
363.107 Removed....................................................57437
363.110--363.119 Undesignated center heading removed...............57437
363.110 Removed....................................................57437
363.111 Removed....................................................57437
363.112 Removed....................................................57437
363.113 Removed....................................................57437
363.114 Removed....................................................57437
363.115 Removed....................................................57437
363.116 Removed....................................................57437
363.117 Removed....................................................57437
363.118 Removed....................................................57437
363.119 Removed....................................................57437
363.125 Heading revised............................................57437
363.138 (c) revised................................................57444
363.142 Revised....................................................57444
363.146 Removed; redesignated from 363.150.........................57437
363.147 Removed....................................................57437
363.148 Removed....................................................57437
363.149 Removed....................................................57437
363.150 Redesignated as 363.146....................................57437
363.151 Removed....................................................57437
363.152 Removed....................................................57437
363.160--363.199 (Subpart E) Added.................................14943
363.160 (a)(4) revised.............................................57437
363.165 Heading revised; (b) amended...............................57437
363.166 (b)(1) and (2) amended.....................................57437
363.172 Removed....................................................57437
363.173 Removed....................................................57437
363.174 Removed....................................................57437
363.175--363.177 (Subpart F) Redesignated as Subpart H.............57444
363.175 Redesignated as 363.200....................................14943
    Removed........................................................57437
363.176 Redesignated as 363.201....................................14943
363.177 Redesignated as 363.202....................................14943
    Removed........................................................57437
363.178 Removed....................................................57437
363.200--363.249 (Subpart F) Added.................................57444
363.200 Redesignated from 363.175..................................14943
    Redesignated as 363.250........................................57444
363.201 Redesignated from 363.176..................................14943
    Redesignated as 363.251........................................57444
363.202 Redesignated from 363.177..................................14943
    Redesignated as 363.252........................................57444
363.250 Redesignated from 363.200..................................57444
363.251 Redesignated from 363.201..................................57444
363.252 Redesignated from 363.202..................................57444

[[Page 564]]

                                  2006

   (Regulations published from January 1, 2006, through July 1, 2006)

31 CFR
                                                                   71 FR
                                                                    Page
Chapter II
215 Authority citation revised......................................2150
    Authority citation correctly revised............................5737
215.1 Revised.......................................................2150
215.2 (h)(2)(i), (l) and (m) revised................................2150
215.3 Revised.......................................................2150
215.4 Revised.......................................................2150
215.5 Removed; new 215.5 redesignated from 215.6 and amended........2150
215.6--215.12 (Subpart C) Heading revised...........................2150
215.6 Redesignated as 215.5; new 215.6 redesignated from 215.7......2150
215.7 Redesignated as 215.6; new 215.7 redesignated from 215.8......2150
215.8 Redesignated as 215.7; new 215.8 redesignated from 215.9......2150
215.9 Redesignated as 215.8; new 215.9 redesignated from 215.10.....2150
215.10 Redesignated as 215.9; new 215.10 redesignated from 215.11 
                                                                    2150
215.11 Redesignated as 215.10; new 215.11 redesignated from 215.12
                                                                    2150
215.12 Redesignated as 215.11; new 215.12 redesignated from 215.13
                                                                    2150
215.13 Redesignated as 215.12.......................................2150


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