[Federal Register Volume 59, Number 20 (Monday, January 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1980]
[[Page Unknown]]
[Federal Register: January 31, 1994]
_______________________________________________________________________
Part VI
Department of the Treasury
_______________________________________________________________________
Fiscal Service
_______________________________________________________________________
31 CFR Part 206
Management of Federal Agency Receipts, Disbursements, and Operation of
Cash Management Improvements Fund; Rule
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 206
RIN 1510-AA34
Management of Federal Agency Receipts, Disbursements, and
Operation of the Cash Management Improvements Fund
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: This document revises collection and deposit regulations
requiring timely methods, principally Electronic Funds Transfer (EFT),
for the collection and deposit of funds as authorized by section 2652
of the Deficit Reduction Act of 1984. This document also incorporates
revisions, authorized by the Cash Management Improvement Act of 1990
(CMIA 90) and the Cash Management Improvement Act Amendments of 1992
(CMIA 92), that require executive agencies to use effective, efficient
disbursement mechanisms, principally EFT, in the delivery of payments.
An agency's failure to comply may result in a charge equal to the cost
of such non-compliance to the Treasury's General Fund.
EFFECTIVE DATE: March 2, 1994.
ADDRESSES: Cash Management Policy and Planning Division, Financial
Management Service, U.S. Department of the Treasury, room 511, Liberty
Center, 401 14th Street SW., Washington, DC 20227.
FOR FURTHER INFORMATION CONTACT: John Galligan (202) 874-6935
(Director, Cash Management Policy and Planning Division); Donald Clark
(202) 874-6657 (Program Specialist); or Randall Lewis (202) 874-6680
(Principal Attorney).
SUPPLEMENTARY INFORMATION:
Authority
This regulation is authorized by section 2652 of the Deficit
Reduction Act of 1984, Pub. L. 98-369, 98 Stat. 494 (1984), codified at
31 U.S.C. 3720, as amended; section 4 of the Cash Management
Improvement Act of 1990, Pub. L. 101-453, 104 Stat. 1058 (1990),
codified at 31 U.S.C. 3335; the Cash Management Improvement Act
Amendments of 1992, Pub. L. 102-589, 106 Stat. 5133 (1992); and
additional authority found at 5 U.S.C. 301, 31 U.S.C. 321, 31 U.S.C.
3301, 31 U.S.C. 3302, 31 U.S.C. 3321, 31 U.S.C. 3327, 31 U.S.C. 3328,
and 31 U.S.C. 3332. Regulations governing Federal payments by the
Automated Clearing House method of EFT appear in 31 CFR part 210 and 31
CFR part 370. Additional agency guidance for the use of EFT is
published in the Treasury Financial Manual.
Background
Prior to passage of CMIA 90, part 206 of CFR title 31 (Management
of Federal Agency Receipts and Operation of the Cash Management
Improvements Fund) reflected exclusively the requirements of section
2652 of the Deficit Reduction Act of 1984 (DRA 84). Pursuant to the
authorities vested in the Secretary of the Treasury in DRA 84, and
given the technological and cost-effective breakthroughs in the
collection of funds such as pre-authorized debit and credit/debit cards
in the years since its passage into law, this Part prescribes that
executive agencies shall collect and deposit monies to the Treasury via
EFT, when cost effective, when practicable, and when consistent with
existing statutes.
CMIA 90 and the CMIA 92 expand the cash management regulatory role
of the Secretary of the Treasury (hereinafter, ``Secretary'') to
include the disbursement of funds. As outlined in the preamble to the
Notice of Proposed Rulemaking (NPRM) published August 5, 1993, it is
envisioned that the policy of the Secretary will be that all executive
branch collections will be made by EFT and all executive branch
payments will be disbursed by EFT, to the maximum extent possible, when
cost-effective, practicable, and consistent with current statutory
authority. Further, it is consistent with the policy outlined in the
Vice President's report dated September 7, 1993, ``From Red Tape To
Results: Creating A Government That Works Better and Costs Less.'' The
policy calls for the Federal Government to use EFT to pay and reimburse
expenses for all Federal employees, to handle all interagency payments,
to make payments to State and local governments, to pay for purchases
from the private sector, and to make all payments to private
individuals. EFT allows Federal agencies to meet program objectives
with convenience, security, and reliability for recipients and payers.
In addition, by permitting greater control over the timing of
collections and payments, EFT improves cash management and supports
agency efforts to comply fully with Office of Management and Budget
directives and guidelines which implement the Prompt Payment Act. EFT
reduces processing costs and paperwork and makes possible the
electronic interface between issuer and receiver accounting systems.
The Secretary continues to acknowledge that there will be specific
exceptions for which the use of EFT will not be required. The
Secretary's policy is to use EFT whenever it is cost-effective,
practicable, and consistent with current statutory authority. Many
commenters described specific existing examples of collection or
payment cash flows that did not meet one, or more, of these tests. For
example, it has been suggested that delivering payments by EFT is not
practicable for: (1) Vendor payments to companies whose banks do not
pass on to them the information identifying the reason for the payment,
and (2) Salary or benefit payments to recipients who have no
established bank account. Several commenters said that program agencies
should be allowed the discretion to determine when not to require EFT
for specific cash flows. To provide the clearest guidance and to
clarify the policy for requiring EFT, the Financial Management Service
has inserted more specific language regarding when EFT will be required
for specific cash flows within the body of the rule. This language
reflects the approach that was contemplated in the preamble of the NPRM
for inclusion in the Treasury Financial Manual.
Comments on the Proposed Rule
The Financial Management Service (hereinafter, ``the Service'')
received a total of 60 comments on the August 5, 1993, NPRM from 18
commenters: 17 from Federal agency officials and one from a private
citizen.
The following is a discussion of the significant and most
frequently commented-upon issues:
All commenters expressed strong support for the goal of expanding
the use of EFT for collecting and disbursing Federal funds. Two
commenters expressed complete support for the NPRM, as written. Several
commenters noted the importance of potential improvements of economy
and efficiency that will accompany this paperless approach.
Authority: Five agencies questioned the Service's authority to
regulate all disbursements pursuant to section 4 of the CMIA 90, as
amended, and as codified at 31 U.S.C. 3335. Two other agencies
questioned the Service's authority to regulate all collections under
section 2652 of the Deficit Reduction Act of 1984 (DRA 84), as amended,
and as codified at 31 U.S.C. 3720. The Service has reviewed the
statutory language and legislative history of CMIA and DRA 84 in light
of the concerns raised by agencies, and remains confident of its
authority under these statutes. The plain language of 31 U.S.C. 3335
and 3720 unambiguously provide the Secretary with authority to
promulgate this regulation.
As was stated in the preamble to the NPRM published on August 5,
1993 (58 FR 41902), it is not the intent of the Service to require the
use of EFT techniques when it is not cost-effective, when it is not
practicable, or when it is not consistent with other statutes. We have
reinforced this policy by specifically including these policies within
the language of part 206.
We thank those agencies that responded to our invitation for
comments regarding specific statutory barriers to achieving an all-EFT
environment. As stated in the preamble to the NPRM, these barriers will
be considered when the Service and agencies evaluate specific cash
flows to determine which ones should be converted to EFT.
Implementation Barriers: Fifteen comments related to existing
barriers that agencies will encounter when attempting to implement EFT
in collecting or disbursing Federal funds. Five of those commenters
noted the inability of some banks and vendors to receive and transmit
adequate accompanying data necessary to identify the source and purpose
of EFT funds transfers. Five commenters also noted that it may not be
cost-effective to make or receive nonrecurring, small-dollar payments
via EFT. One commenter noted the inability to make payments via EFT to
recipients who have no established bank account. Another commenter
noted that some service providers such as public utilities may refuse
to accept EFT payments.
The Service acknowledges that all of these may be legitimate
barriers and will consider them in the implementation of EFT conversion
initiatives. All of the above-mentioned barriers to Governmentwide use
of EFT, as well as many others, have been identified by interagency
work groups established under guidance of the Chief Financial Officers
Council Operations Group. The Service is working with these groups to
eliminate these and other impediments to EFT and to foster
Governmentwide use of EFT. Treasury applauds the progressive efforts of
agencies, such as the Federal Transit Administration, that require
vendors to accept EFT payment as a condition of acceptance of
contracts, the Department of Defense and Department of Veterans
Affairs, which require EFT for employee salary payments, and the
General Services Administration and Department of Agriculture which
modified payment systems so that payments made by EFT are available to
recipients no later than those made by check.
One commenter included a request that the Service work with
agencies to evaluate cash flows and identify candidates for EFT
transfer. The Service will continue working with agencies through the
periodic cash management review and annual cash management
certification processes to achieve conversion to EFT mechanisms
whenever cost-effective, practicable, and consistent with existing
statutes.
One commenter recommended postponing implementation of the Final
Rule until all barriers are eliminated. The Service believes that it is
possible to achieve immediate progress in implementing EFT mechanisms
for some cash flows in which no barriers exist and to concurrently work
to eliminate barriers where they do exist.
Setting Standards for EFT: One commenter questioned why language in
the preamble of the NPRM states that agencies will set their own
standards, but the last sentence of section 206.4(b) states that the
Service will work jointly with the agency to set timetables for
converting cash flows to EFT. Based on agency comments, the Service
wishes to make a very clear distinction between the setting of agency
standards for EFT attainment, on the one hand, and setting conversion
timetables and issuing Notices of Deficiency for non-compliance with
the provisions of 31 CFR Part 206, on the other hand. Overall
``standards,'' or ``goals,'' of EFT attainment are numerical
percentages agencies may establish as benchmarks to measure success in
attaining EFT. These standards/goals are not addressed in this rule and
do not relate to the conversion timetables or issuance of Notices of
Deficiency. Instead, this Rule describes the process whereby the
Service will work jointly with agencies to evaluate individual cash
flows, identify candidates for EFT conversion, and negotiate timetables
for those conversions, as described in sections 206.4(b) and 206.6.
Billing Policy and Procedures: NPRM Sec. 206.3 Billing Policy and
Procedures (Final Rule Sec. 206.3 Billing Policy and Procedures). One
commenter disagreed with the inclusion in this section of a billing
standard of 5 business days. The commenter suggested that separate
billing standards be established within each agency for every
application. The Rule currently reads: ``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.'' The Rule remains unchanged and
will accommodate agency variations, when proven to be cost-effective.
Consult Further with other Entities Before Publishing Rule: Two
commenters suggested that more consultation with entities outside
Government is warranted before publishing the Final Rule. The Service
disagrees. The Service met with Federal agencies during the 9 months
prior to publication of the NPRM and incorporated agency comments into
the NPRM. Non-governmental entities were afforded the opportunity to
respond to the NPRM, published for public comment on August 5, 1993.
Further, the Service has ongoing dialogue with financial institutions
that participate in Treasury's various financial networks and the
Service hosts an interagency work group created to develop
Governmentwide Electronic Data Interchange standards in close
consultation with the financial institution community and associations.
Another commenter recommended consulting with the ``Small Business
Community,'' by way of the Small Business Administration (SBA). The SBA
has been involved with the effort to expand EFT, as a participant of
the EFT Vendor Payment Work Group, operating under the auspices of the
Chief Financial Officers Council Operations Group. The Work Group is
developing better means of expanding EFT payments and was specifically
invited to review the NPRM and submit comments.
Promote Use of the Government Small Purchase Card: (Final Rule
Sec. 206.2 Definitions) Two commenters recommended that the Service
promote use of the Government Small Purchase Card as a tool for
streamlining the procurement and payment process for many purchases.
The Final Rule includes reference to the Small Purchase Card within the
definition of EFT. The Service will continue to promote the use of the
Government Small Purchase Card as an EFT application, whenever cost-
effective.
Exceptions to EFT Policy: One commenter noted an inconsistency
between the NPRM preamble and Secs. 206.4(b) and (d). The preamble of
the NPRM lists three exceptions for use of EFT applications: (1) Not
cost-effective, (2) not practicable, and (3) not consistent with
current statutory authority. The commenter noted that language in
Sec. 206.4 only recognized the first two of these exception situations.
The Service agrees and has revised the wording in Secs. 206.4(b) and
(d) to include, ``not consistent with current statutory authority.''
Another commenter suggested that an application should be exempted
if the use of EFT would undermine accomplishment of program objectives.
The Service acknowledges that such concerns are covered by the ``when
practicable'' exception of Sec. 206.4(b). If a Federal agency
demonstrates that the use of EFT, in and of itself, would undermine
program objectives, the Service would exempt specific cash flows.
Cost-benefit Analysis: Four comments related to possible
requirements for agencies to submit cost-benefit analyses in support of
using mechanisms other than EFT. One commenter expressed concern that
obtaining Treasury approval of non-EFT mechanisms was intrusive upon
agencies' management prerogatives. Section 206.4(c) states that an
agency may be required to provide a cost-benefit analysis when
proposing the use of a collection or payment mechanism other than EFT.
Where the inefficiency or impracticality of EFT is evident, a cost-
benefit analysis may not be required. One commenter suggested that it
may be counterproductive to require a cost-benefit analysis if an
agency uses lockbox or other Treasury-approved mechanism. The Service
initiated the lockbox network in 1983, when it was considered the most
efficient mechanism for collecting and depositing funds. In the
intervening 10 years, technological advances have made other
mechanisms, such as EFT, pre-authorized debit, more cost effective.
Therefore, a lockbox may no longer qualify as more effective than EFT.
Two commenters stated a concern that cost-benefit analyses should
include all costs. For example, they suggest that requiring vendors to
accept payment by EFT could potentially narrow the field of bidders and
result in higher prices. Demonstratably higher prices and other
additional agency costs, such as those needed to obtain and maintain
bank account information necessary for EFT transmission, should be
included in cost-benefit analyses. The Service will consider this
comment when revising the Treasury Financial Manual and will direct
that cost-benefit analyses will include all relevant costs.
Consider Agency Staff Time Required to Prepare Reports: One
commenter expressed concern over additional agency burden required to
prepare reports for the Service, as outlined in Sec. 206.6(c). The
review and reporting necessary to implement this regulation, as
described in Sec. 206.6(c), is already in place and has been operating
successfully since 1985. It includes the periodic complete cash
management reviews and the annual cash management certifications
already performed jointly by the agency and the Service.
Appeals Process: Three comments were received addressing the
appeals process. Two commenters felt that the Appeals Board was not
objective, because two members are from the Service and one member is
from outside the Service.
The authority to assess agencies with penalties for failure to use
efficient mechanisms to make payments or collections is vested solely
with Treasury through statutes. The language of 31 U.S.C. 3335 and 31
U.S.C. 3720(a) places the authority to impose and collect charges for
noncompliance with the Secretary, and the appeals process is within the
discretion of the Secretary. However, in consideration of the comments
that the Appeals Board should be represented by individuals with broad
and varied experience, the composition of the Appeals Board has been
altered in the Final Rule to include only one member from the Service.
The Appeals Board will consist of two permanent members--the Deputy
Chief Financial Officer, Department of the Treasury, and the Assistant
Commissioner for Federal Finance of the Service. The temporary member
of the Appeals Board will be a cash management official of an agency
other than the agency appealing the Notice of Deficiency.
Penalties: Seven comments addressed the use of penalties. Four
comments expressed preference for positive inducements to encourage EFT
use, rather than penalties. The Deficit Reduction Act of 1984, required
agencies to pay charges for failure to comply with scheduled
conversions of collections cash flows to improved mechanisms.
Procedures implementing those requirements have been in effect since
1985. The procedures in this Rule regarding the use of penalties for
payments noncompliance closely reflect those existing procedures for
collections. The CMIA 90/92 statutes provide specifically for
assessment of penalties, when agencies fail to use the most efficient
funds transfer mechanisms. The CMIA statutes do not provide for the use
of positive inducements. However, to allow for time to review agency
concerns questioning when and how to assess penalties against agencies
that fail to meet scheduled implementation dates for conversion to
efficient payment mechanisms, Treasury will defer issuing regulations
to implement the provision of the CMIA 90/92 giving Treasury the
authority to assess such penalties. Therefore, references to penalties
in this rule pertain solely to collection cash flows.
Regulatory Analysis
It is hereby certified that this regulation will not have a
significant economic impact on a substantial number of small entities.
Accordingly, a regulatory flexibility analysis is not required. The
Regulatory Flexibility Act defines small entities to include certain
nonprofit, for-profit, and Governmental entities. Revisions made
pursuant to CMIA 90 only will impact executive agencies, entities not
encompassed by that definition. The flexibility incorporated into the
revisions to deposit and collection provisions has been included in
order to avoid the imposition of EFT in those situations where
significant costs or impracticality preclude its effective use and,
therefore, will not result in a significant economic impact on a
substantial number of small entities.
It has been determined that this document is not a significant
regulatory action as defined in E.O. 12866. Therefore, an assessment of
anticipated benefits, costs, and regulatory alternatives is not
required.
List of Subjects in 31 CFR Part 206
Accounting, Banks, Banking, Electronic funds transfer.
Authority and Issuance
For the reasons set out in the preamble, it is proposed to revise
title 31, part 206 of the Code of Federal Regulations to read as
follows:
PART 206--MANAGEMENT OF FEDERAL AGENCY RECEIPTS, DISBURSEMENTS, AND
OPERATION OF THE CASH MANAGEMENT IMPROVEMENTS FUND
Sec.
206.1 Scope and application.
206.2 Definitions.
206.3 Billing policy and procedures.
206.4 Collection and payment mechanisms.
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.
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.
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 P(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 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. PI 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 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]
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.
(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.
Russell D. Morris,
Commissioner.
[FR Doc. 94-1980 Filed 1-28-94; 8:45 am]
BILLING CODE 4810-35-P
