District Circular Letters

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February 17, 1998

TREASURY TAX AND LOAN:
SYSTEM-UNIFORM OPERATING CIRCULAR 9

To Depository Institutions
in the Twelfth Federal Reserve District

Effective Date for Treasury Tax and Loan Circular

In November 1997, the Federal Reserve distributed new System-uniform operating circulars, including Operating Circular 9, Federal Tax Payments and Treasury Tax and Loan Depositaries. The System-uniform circulars are designed to assist the financial community in taking full advantage of the opportunities presented by interstate branch banking by making the provisions, requirements, and legal liabilities for transactions conducted with all Federal Reserve Banks consistent. In addition, the new circulars include information and provisions supporting the Federal Reserve's new account structure.

While most of the new circulars became effective January 2, 1998, the effective date of Operating Circular 9, Federal Tax Payments and Treasury Tax and Loan Depositaries was delayed pending the Department of the Treasury's issuance of a revised regulation governing the Treasury Tax and Loan (TT&L) program (31 CFR Part 203). The revised regulation was published in the Federal Register on February 3, 1998, and becomes effective March 5, 1998 (see 63 Fed. Reg. 5643).

Because we anticipated that these revisions would be finalized as proposed, they were incorporated into the new Operating Circular 9 as originally published. The revised regulation as finalized requires no changes to Operating Circular 9, which therefore also becomes effective March 5, 1998.

Summary of Revisions to the Regulation

The revisions to the Treasury regulation implement provisions of the North American Free Trade Agreement (NAFTA) Implementation Act. NAFTA requires the development and implementation of an electronic funds transfer (EFT) system for the collection of certain depository taxes. This regulation implements the Electronic Federal Tax Payment System (EFTPS) by prescribing rules for financial institutions and Federal Reserve Banks that use EFT mechanisms to process Federal tax payments through the EFTPS. The EFTPS began operation in the fall of 1996. The revisions to the Treasury regulation also update the rules governing the changes to the Treasury's investment program that were necessitated by the implementation of this EFT system.

For Additional Information

For additional information about the Federal Reserve's Treasury Tax and Loan program, Operating Circular 9, or the revised Treasury regulation, please contact Mr. Rick Miller, Manager, Treasury Tax and Loan, at (415) 974-2061, or your local Business Development office, as listed below:

KERRY WEBB
Senior Vice President