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A Guide to Federal Government ACH Payments
ACH Payment
Processing
Overview
In this chapter…
A: Financial Organization Master File (FOMF) ..................................................................................... 2-3
Purpose .......................................................................................................................................................................... 2-3
Financial Institution Responsibility .................................................................................................................... 2-3
Changes to Financial Institution Name and Mailing Address ......................................................................2-3
Changes to Routing Transit Numbers .....................................................................................................................2-3
Updating ACH Customer Directory (ACD): ...........................................................................................................2-3
New Depository Institutions ........................................................................................................................................ 2-4
B: Federal Government ACH Processing ................................................................................................ 2-4
General Flow ................................................................................................................................................................ 2-4
Prenotification ............................................................................................................................................................. 2-4
Payment Formats ....................................................................................................................................................... 2-4
Account Requirements ............................................................................................................................................. 2-4
Misdirected Payments .............................................................................................................................................. 2-5
Notice of Misdirected Payment ............................................................................................................................. 2-6
Availability of Funds ................................................................................................................................................. 2-6
C: Federal ACH Payment Schedule ..................................
......................................................................... 2-7
D: Identifying Treasury Disbursed Payments ...................................................................................... 2-7
Consumer Payments ................................................................................................................................................. 2-7
Consumer Payment Formats .......................................................................................................................................2-7
Standard Entry Class Code ...........................................................................................................................................2-7
Social Security Administration Use of Prearranged Payment and Deposit (PPD+) ...........................2-7
Payment Types ..................................................................................................................................................................2-8
Identifying the Paying Agency/Payment Type ............................................................................................... 2-8
Identifying the Payee ................................................................................................................................................ 2-8
2
This chapter provides information about how federal government ACH payments are processed. It
also contains valuable information on payment dates and information to assist in identifying
Treasury disbursed payments.
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A Guide to Federal Government ACH Payments
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Company entry description for IRS Advance Child Tax Credit Payments ............................................ 2-9
E: Identifying Non-Treasury Disbursed Payments ........................................................................... 2-09
Identifying the Paying Agency/Payment Type ............................................................................................. 2-09
Identifying the Payee .............................................................................................................................................. 2-09
F: Garnishment of Federal Ƥ .............................................................................................. 2-10
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A Guide to Federal Government ACH Payments
A: Financial Organization Master File (FOMF)
The Financial Organization Master File (FOMF) is a Department of the Treasury master list of
financial institutions receiving federal government ACH payments. It contains RTNs, a single
financial institution name and mailing address for each RTN.
The FOMF is derived from the Federal Reserve Bank’s (FRB) ACH Customer Directory (ACD), which
contains the RTNs and related information of all valid ACH participants. The FOMF is updated on a
monthly basis using information from the most current ACD file.
Purpose
The Fiscal Service relies on the FOMF data to validate RTNs used to originate payments and to send
financial institutions the following:
x
reclamation notices,
x
trace inquiries, and
x
marketing materials.
Financial Institution Responsibility
Changes to Financial Institution Name and Mailing Address
Financial institutions are responsible for keeping their name and mailing address for each RTN up
to date with the FRB. Any changes to RTN data should be provided to the FRB as soon as possible so
that the ACD and FOMF contain current data. If the financial institution fails to notify the FRB, it
may be held liable for information (e.g., reclamation notices) mailed to obsolete addresses.
Changes to Routing Transit Numbers
If a financial institution changes RTNs (e.g., due to merger), it must notify the FRB ACH department
as soon as possible to have the old RTN rescinded in ACD and have all future ACH transactions
reflect the financial institution’s active ACH routing number. Updates to the ACD will update the
FOMF. Additionally, financial institutions should send a Notification of Change (NOC) to each
originating federal agency from which it receives payments impacted by the routing number
changes.
The following steps should be taken in updating the ACD routing number data:
x
Confirm that no activity is being received on the obsolete RTN prior to deletion.
x
Allow at least three months after the update to the ACD before deleting an obsolete RTN.
x
Delete an obsolete RTN only after all activity has been transferred to the surviving RTN.
Updating ACH Customer Directory (ACD):
If an institution wants to update the information that appears on the file, they should submit a new
“Part 1 - Agreement to Terms and General Participant Information” of the FedACH Participation
Agreement to the FRB.
If you have any questions in reference to updating data, you should contact the FedACH and Check
Services Customer Support team.
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New Depository Institutions
Because the FOMF is updated monthly, a new depository institution may not receive government
ACH transactions for up to 30 days after being entered into the FRB ACD.
B: Federal Government ACH Processing
General Flow
Federal government ACH payments are initiated by the authorizing federal agency to a government
disbursing office. These include the Department of Defense disbursing offices, and Fiscal Service.
The FRB is the federal government’s ACH Operator.
Prenotification
The federal government prenotification process is handled in accordance with Nacha Operating
Rules & Guidelines. Social Security Administration originates prenotifications for Social Security
benefits for Direct Deposit enrollments and changes.
Payment Formats
Federal government ACH payments are originated in the Prearranged Payment and Deposit (PPD)
with or without addenda, Corporate Credit or Debit (CCD) with or without addenda, Corporate
Trade Exchange (CTX) formats, or International ACH Transaction (IAT). Refer to the Nacha
Operating Rules & Guidelines for details on payment record formats.
Account Requirements
All federal government benefit payment enrollments must be established for a deposit account at
the financial institution that is in the name of the recipient or beneficiary with the following
exceptions:
x
Where an authorized payment agent (representative payee) has been selected, a representative
payee is an individual or organization appointed by SSA to receive Social Security and/or SSI
benefits for someone who cannot manage or direct someone else to manage his or her money.
The main responsibilities of a payee are to use the benefits to pay for the current and
foreseeable needs of the beneficiary and properly save any benefits not needed to meet current
needs. A payee must also keep records of expenses.
x
Where the payment is to be deposited into an investment account established through a
securities broker or dealer registered with the Securities and Exchange Commission, or an
investment account established through an investment company registered under the
Investment Company Act of 1940 or its transfer agent, the payment may be deposited into an
account designated by the broker or dealer, investment company, or transfer agent.
•
Where a federal payment is disbursed to a resident of a nursing facility, as defined in 42 U.S.C.
1396r, the payment may be deposited into a resident trust or patient fund account established
by the nursing facility so long as it meets the requirements under federal law relating to the
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A Guide to Federal Government ACH Payments
protection of such funds. For more information on these requirements, please visit the ACH
regulations website.
•
Where a federal payment is disbursed to a member of a religious order who has taken a vow of
poverty, the payment may be deposited to an account established by the religious order. The
phrase ‘member of a religious order who has taken a vow of poverty’ is defined as it would be by
the Internal Revenue Service for federal tax purposes.
•
Where a federal payment is to be deposited to an account accessed by the recipient through a
prepaid card that meets the following requirements:
(A)
The account is held at an insured financial institution,
(B)
The account is set up to meet the requirements for pass-through deposit or share insurance
such that the funds accessible through the card are insured for the benefit of the recipient
by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance
Fund in accordance with applicable law (12 CFR part 330 or 12 CFR part 745),
(C)
The account is not attached to a line of credit or loan agreement under which repayment
from the account is triggered upon delivery of the federal payments, and
(D)
The issuer of the card complies with all the requirements and provides the holder of the
card with all the consumer protections, that apply to a payroll card account under the
rules implementing the Electronic Fund Transfer Act, as amended.
No person or entity may issue a prepaid card that receives federal payments in violation of these
requirements, and no financial institution may maintain an account for or on behalf of an issuer
of a prepaid card that receives federal payments if the issuer violates these requirements. If
Fiscal Service becomes aware that a prepaid card product that accepts federal government
payments does not meet these requirements, it will research the card product and report any
violations of these requirements to the institution’s primarily regulator.
•
Where Treasury has granted a waiver.
Misdirected Payments
. The RDFI decides to manually post the misdirected payment to the correct account and originates
an NOC entry with the correct account and/or RTN information. Please note that the financial
institution does this at its own risk and may be liable to the issuing agency if the financial
institution post the misdirect payment to an incorrect account and there is a resulting loss by the
agency. Please see Chapter 6, Notification of Change, for more information. If the financial
institution cannot credit the misdirected payment to the correct account, the financial institution
may return the payment to the agency with an appropriate reason code. Please see Chapter 4,
Returns, for more information.
It is important to note that a financial institution is not required to manually verify that the name on
the ACH entry matches the name on the account at the time the payment is posted. An RDFI is only
liable for posting the payment to the account in the ACH credit entry.
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Notice of Misdirected Payment
In accordance with 31 CFR part 210, an RDFI that becomes aware that an agency has misdirected
an ACH credit entry to the wrong account must promptly notify the agency. A financial institution
may become aware of a misdirected payment through the following ways:
x
The account holder notifies the financial institution of the misdirected payment,
x
A non-receipt claim being investigated by Fiscal Service,
x
A financial institution that manually posts their ACH credits notices that a payment is being
credited to the wrong account. (It is important to note that an institution is not required to
match names when posting a federal government ACH entry; however, if it routinely posts
entries manually and notices that an entry is being directed to the wrong account, it is required
to notify the agency.), and
x
A call from the federal agency that disbursed the payment.
If a financial institution becomes aware of a misdirected payment, it can notify the agency in the
following ways and meet the requirements of 31 CFR part 210:
x
The RDFI decides to manually post the misdirected payment to the correct account and
originates an NOC entry with the correct account and/or RTN information. Please note that the
financial institution does this at its own risk and may be liable to the issuing agency if the
financial institution is incorrect and there is a resulting loss by the agency,
x
Return the original ACH credit entry to the agency with the appropriate return reason code,
x
Contact the agency by phone or by letter. Please see Chapter 7, Contacts, and
x
Any other means deemed acceptable by the agency that disbursed the ACH credit payment.
Availability of Funds
In accordance with Nacha Operating Rules & Guidelines, any non-Same Day ACH credit payment
must be made available for withdrawal by the Receiver no later than 9:00 a.m., Receiving
Depository Financial Institution (RDFI) local time, on the settlement date (provided the entries are
made available to the RDFI by its ACH operator no later than 5:00 p.m. on the banking day prior to
the settlement date).
On January 03, 2022, the Fiscal Service accepted the Nacha rule changes that allow for Same Day
ACH transactions, and effective March 22, 2022, Fiscal Service amended 31 CFR Part 210, to
address changes made by Nacha through the 2021 Nacha Operating Rules & Guidelines book,
including supplements thereto.
Same Day ACH rules have established three windows for all financial institutions to submit Same
Day ACH payments: 10:30 a.m., 2:30 p.m., and 4:45 p.m. ET. Fiscal Service only uses the second and
third windows for same day ACH transactions. Funds from Same Day ACH credits processed in the
second processing window will be made available by 5:00 p.m. RDFI’s local time, while funds from
Same Day ACH credits processed in the third window are settled at 6:00 p.m. ET. The amount of a
third window Same Day ACH credit must be available to the receiver’s account no later than the end
of the RDFI’s processing day (RDFI’s local time). Such funds are not required to be
available for
withdrawal on the settlement date. There is a $1,000,000 per payment limit for Same Day ACH that
applies to all Fiscal Service payment customers.
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Non-Treasury Disbursed Organizations, who do not submit their payments through the Fiscal
Service, are currently prohibited from authorizing any Same Day ACH credits for payments. Only
agencies that disburse through the Fiscal Service will be permitted to request Same Day ACH
payments. Fiscal Service began to process Same Day ACH credits (for payments) in April 2018. The
Fiscal Service began to accept Same Day ACH credits and debits for tax collections beginning in
September 2017.
C: Federal ACH Payment Schedule
Fiscal Service publishes the federal ACH Payment Schedule annually on the Fiscal Service website.
This listing provides the actual payment date for recurring federal payments. The payment date
equals the ACH settlement date. RDFIs are liable for provisional payments made in advance of
settlement date and may use their own discretion posting provisional payments to accounts
D: Identifying Treasury Disbursed Payments
Consumer Payments
Consumer Payment Formats
Consumer payments are designated for deposit into an individual’s account. They are identified by
the Standard Entry Class (SEC) code to be used for consumer entries which is found in the
Company/Batch Header Record (Field 6) of the payment file data. (Note: If the correct format is not
used, the payment should be returned.)
Standard Entry Class Code
The Prearranged Payment and Deposit (PPD) is the SEC code used for identifying federal agency
consumer payments. The payment entries may be accompanied by a PPD addenda record (PPD+)
which further identifies the reason for the payment.
Social Security Administration Use of Prearranged Payment and Deposit (PPD+)
For Direct Deposit of Representative Fee Payments and Direct Deposit of Representative
Payees/Organizational Representative Payees
The Social Security Administration (SSA) issues fee payments either by check or direct deposit to
individuals who have represented Social Security claimants and/or act as a representative payee.
SSA has begun to use the PPD+ format for ACH payments to representatives that include adequate
payment-related information that can be passed onto them to identify and credit the payment to
the correct person/account. The information is included in 9 + rtn of the Addenda Record (Payment
Related Information) and is based on ANSI X12 (American National Standards Institute coding for
Electronic Data Interchange) syntax.
Fiscal Service encourages RDFIs to pass through to their account holders, as quickly as possible,
pertinent information from both the Entry Detail Record and the Addenda Record when a payment
is received. The representative needs this addenda information to reconcile their client account
records. The method of providing this information to the account holder is at the discretion of the
financial institution and its customer.
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Payment Types
Types of payments that utilize the PPD standard entry class category include the following:
x
benefit,
x
annuity,
x
travel,
x
salary,
x
allotment,
x
IRS tax refund,
x
IRS (Advance Child Tax Credit), and
x
public debt payments.
Identifying the Paying Agency/Payment Type
Field 7 “Company Entry Description” (Company/Batch Header Record)
The first 2 positions are the Garnishment Exempt Indicator. The ~ symbol indicates a blank space. See section F for
additional details on the Garnishment Exempt Indicator.
Paying Agency/Payment Type Field Contents
Fiscal Service/TreasuryDirect
Marketable Securities / Savings Bonds
Government Series Security Payments
‘~~MISC PAY’
‘~~SLG_PMT ‘
Department of Treasury
Internal Revenue Service – Tax Refund
Internal Revenue Service (Economic Impact Payment
Internal Revenue Service (Advance Child Tax Credit)
‘~~TAX REF ‘
‘~~TAXEIP#_’ (# = 1, 2, or 3)
‘~~CHILDCTC’
Central Intelligence Agency
CIA Annuity
CIARDSANNU
Department of Veterans Affairs
Compensation and Pension
Insurance
Education
‘XXVA_BENEF’
‘XXVA INSUR’
‘XXVA _ _ _ _ _ _’ (Various values like ‘EDUC’, ‘CH35’, ‘1607’, etc.)
Federal Pay
Federal Salary
Federal Travel Payments
Federal Annuity
Federal Vendor/Misc
‘~~FED SAL ‘
‘~~FED TVL
‘~~FED ANNU’
‘~~MISC PAY’
Office of Personnel Management
Civil Service Retirement (Annuity)
‘XXCIV SERV’
Railroad Retirement Board
Railroad Retirement/Annuity
Unemployment/Sickness
‘XXRR RET ‘
‘XXRR UISI ‘
Social Security Administration
Social Security
Supplemental Security Income
‘XXSOC SEC ‘
’XXSUPP SEC’
Department of Defense
Marine Corps Salary
Current Use
‘~~MCTF PAY’
Department of Defense
Air Force Military Pay
Army Military Pay
Future Use: New descriptions to be implemented with the future
transition of payments from Dept of Defense to Treasury.
‘~~AIRF PAY’
‘~~ARMY PAY’
‘~~NAVY PAY’
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Navy Military Pay
DoD Retired Pay
DoD Civilian Pay
DoD Vendor / Misc Pay
DoD Travel
‘~~RET PAY ‘
‘~~CIV PAY ‘
‘~~DOD MISC’
‘~~DOD TVL ‘
E: Identifying Non-Treasury Disbursed Payments
Identifying the Paying Agency/Payment Type
Field 7 “Company Entry Description” (Company/Batch Header Record)
Paying Agency/Payment Type Field Contents
Air Force
Active Duty
Active Duty Allotments
Annuity
Retirement
Retirement Pay Allotments
AF_PAY_J_ _
AF_MP_ALLT
AF_RET_PAY
AF_RET_PAY
AF_RP_ALLT
Army
Active Duty
Annuity
Reserve
Retirement
ARMYACTIVE
ARMY_BEN_ _
ARMY_RC_ _ _
ARMY_RET_ _
Navy
Active Duty
Active Duty Allotments
Annuity
Retirement
Retirement Pay Allotments
Reserve Drill Pay
NAVY_ACT_ _
NAVY_ALT_ _
NAVY_ANN_ _
NAVY_RET_ _
NAVY_RPA_ _
NAVY_RDP_ _
Identifying the Payee
Field 7 Contents (Entry Detail Record)
IF the payment type is …
THEN the Individual ID
Number field contents
identify the payee by…
IF the payment type is … THEN Field 7 contents
identify the payee by…
Air Force
Active Duty
Active Duty Allotment
Annuity
Individual's SSN
Individual's SSN
Individual's SSN
Reserve
Retirement
Retirement Pay Allotment
Individual's SSN
Individual's SSN
Individual's SSN
Army
Active Duty
Annuity
Individual's SSN
Individual's SSN
Reserve
Retirement
Individual's SSN
Individual's SSN
Marine Corps
Active Duty
Active Duty Allotment
Annuity
Letters "KR"
Individual's SSN
Individual's SSN
Reserve
Retirement
Retirement Pay Allotment
Individual's SSN
Individual's SSN
Individual's SSN
Navy
Active Duty
Active Duty Allotment
Annuity
Individual's SSN
Individual's SSN
Individual's SSN
Reserve
Retirement
Retirement Pay Allotment
Individual's SSN
Individual's SSN
Individual's SSN
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F: Garnishment of Federal Ƥ
Garnishment is the execution, levy, attachment, or other legal process involving a written
instruction issued by a court, a state or state agency, a municipality or municipal corporation or a
state child support enforcement agency. This includes a lien arising by operation of law for overdue
child support or an order to freeze the assets in an account, to impact a garnishment against a
debtor.
Financial institutions are subject to the requirements of title 31 of the Code of Federal Regulations,
part 212 (31 CFR part 212) which requires financial institutions to take certain actions upon
receipt of garnishment orders.
Fiscal Service has published the document “Guidelines for Garnishments of Accounts Containing
Federal Benefit Payments” that financial institutions can reference when a garnishment order is
received for an account into which federal benefit payments have been directly deposited.
Financial institutions that receive a garnishment order are required to determine the sum of
protected federal benefits deposited to the account during a two month period, and ensure that the
account holder has access to an amount equal to that sum or to the current balance of the account,
whichever is lower.
Title 31 CFR part 212 applies to the following federal programs:
x
Social Security and Supplemental Security Income benefits administered by the Social Security
Administration;
x
Veterans benefits administered by the Department of Veterans Affairs;
x
Federal Railroad retirement unemployment and sickness benefits administered by the
Railroad Retirement Board; and
x
Civil Service Retirement System and Federal Employee Retirement System benefits
administered by the Office of Personnel Management.
To assist financial institutions, Fiscal Service is encoding an “XX” in Positions 54-55 of the
“Company Entry Description” field of the Batch Header Record for ACH/PPD and ACH/CCD
payments that are designated as federal benefit payments that are exempt from garnishment. This
encoding allows financial institutions to determine whether a federal direct deposit payment is an
exempt federal benefit payment. Financial institutions may rely on the presence of an “XX”
encoded in Positions 54-55 of the “Company Entry Description” Field to identify a federal
benefit payment exempt from garnishment.
EXAMPLES:
Company Entry Description (Positions 54-63)
Benefit Payment Type
Prior to the Garnishment Rule With the Garnishment Rule
Social Security SOC SEC XXSOC SEC
Supplemental Security Income SUPP SEC XXSUPP SEC
Railroad Retirement RR RET XXRR RET
Because it is possible that a commercial payment could also have an “XX” encoded in Positions 54-
55, financial institutions must verify that the payment is a federal payment. This can be confirmed
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either by searching for a “2” in the “Originator Status Code” Field in the Batch Header Record
(Position 79) OR by reviewing the description of the payment in the ACH Batch Header Record
Company Entry Description to ensure that the payment is one of the exempt federal benefit types
shown in the Fiscal Service publication “Guidelines for Garnishments of Accounts Containing
Federal Benefit Payments”.
