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Treasury Issues Final Rule on EFT 99

Thursday, January 1, 1998

In September, the Department of the Treasury and its Financial Management Service (FMS) published its final rule on EFT 99, which is a provision of the Debt Collection Improvement Act of 1996. EFT 99 requires federal agencies to use electronic funds transfer (EFT) for most payments, with the exception of tax refunds, starting Jan. 2, 1999. One element of the final rule concerns a loosening of waivers for individuals who receive federal payments electronically. Waivers can be granted if an individual determines, at his or her sole discretion, that payment by EFT would impose a hardship due to: a physical or mental disability; a geographic, language or literacy barrier; or a resulting financial hardship. Also, those without deposit accounts are entitled to an automatic waiver until an Electronic Transfer Account (ETAsm) is available to them.

Other aspects of the Treasury's final rule include:

Account requirements: All federal EFT payments, except for vendor payments, must be deposited at a financial institution in the name of the recipient. Exceptions include cases in which either an authorized payment agent (e.g., a representative payee or fiduciary) has been named to act on behalf of the recipient or the payment is to be deposited into an investment account established through a registered securities broker or investment company.

Agency requirements: Using model language from the Treasury, federal agencies must notify all check recipients and newly eligible recipients of their options both before and after an ETA becomes available to these recipients. In some special circumstances, select agencies will not be required to make payments electronically.

Withholding Payments: An agency may not withhold or delay a payment to an individual for any reason related to the implementation of EFT 99.

For more information, call Cheryl McCarthy at (314) 444-8459.