Removal of Fed Reserve Banks as Depository

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Parts 1, 31, 35, 36, 40, 301, and
601 [TD 8952] RIN 1545-AY10

TITLE: Removal of Fed Reserve Banks as Depository

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

SUMMARY: This document contains final regulations which remove the
Federal Reserve banks as authorized depositaries for Federal tax
deposits. The regulations affect taxpayers who make Federal tax
deposits using paper Federal Tax Deposit (FTD) coupons (Form 8109)
at Federal Reserve banks.

DATES: Effective Date: These regulations are effective June 26,
2001.

Applicability Date: These regulations apply to deposits made after
December 31, 2000.

FOR FURTHER INFORMATION CONTACT: Brinton T. Warren, (202) 622- 4940
(not a toll-free number).

SUPPLEMENTARY INFORMATION

Background

This document contains amendments to 26 CFR parts 1, 31, 35, 36, 40,
301, and 601 relating to Federal tax deposits under section 6302(c)
of the Internal Revenue Code (Code). On December 26, 2000, temporary
regulations (TD 8918) relating to the removal of Federal Reserve
Banks as federal depositaries were. published in the Federal
Register (65 FR 81356). A notice of proposed rulemaking that
proposed the removal of Federal Reserve Banks as federal
depositaries was published in the Federal Register for the same day
(65 FR 81453). No comments were received from the public in response
to the notice of proposed rulemaking.

Explanation of Provisions

These final regulations, which permanently remove Federal Reserve
Banks as authorized depositaries for Federal tax deposits, adopt the
rules of the proposed regulations and remove the corresponding
temporary regulations. The term Federal Reserve Bank includes twelve
banks and their approximately two dozen branches that constitute the
nation's central banking system. The term does not include the
thousands of federally and state chartered banks that are recognized
as members of the Federal Reserve System. Accordingly, these final
regulations do not affect Federal Tax Deposits (FTDs) made with
paper coupons at any of the more than 10,000 financial institutions
nationwide that serve as Treasury Tax and Loan (TT&L) depositaries.
Deposits made through the Electronic Federal Tax Payment System
(EFTPS) are also not affected.

Special Analyses

It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and
because the regulations do not impose a collection of information on
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f) of the Internal Revenue
Code, the notice of proposed rulemaking preceding these regulations
was submitted to the Chief Counsel for Advocacy of the Small
Business Administration for comment on its impact on small business.

Drafting Information

The principal author of these regulations is Brinton T. Warren of
the Office of Associate Chief Counsel, Procedure and Administration
(Administrative Provisions and Judicial Practice Division). However,
other personnel from the IRS and Treasury Department participated in
their development. List of Subjects

26 CFR Part 1 Income taxes, Reporting and recordkeeping
requirements.

26 CFR Part 31 Employment taxes, Income taxes, Penalties, Pensions,
Railroad retirement, Reporting and recordkeeping requirements,
Social security, Unemployment compensation.

26 CFR Part 35 Employment taxes, Income taxes, Reporting and
recordkeeping requirements.

26 CFR Part 36 Employment taxes, Foreign relations, Reporting and
recordkeeping requirements, Social security.

26 CFR Part 40 Excise taxes, Reporting and recordkeeping
requirements.

26 CFR Part 301 Administrative practice and procedure, Employment
taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping requirements.

26 CFR Part 601 Administrative practice and procedure, Freedom of
information, Reporting and recordkeeping requirements, Taxes.
Adoption of Amendments to the Regulations Accordingly, and under the
authority of 26 U.S.C. 7805 and 5 U.S.C. 301, 26 CFR parts 1, 31,
35, 36, 40, 301 and 601 are amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in
part as follows: Authority: 26 U.S.C. 7805 * * * §1.6302-1
[Amended]

Par. 2. Section 1.6302-1 is amended by removing the fifth sentence
in paragraph (b)(1). §1.6302-2 [Amended]

Par. 3. Section 1.6302-2 is amended by removing the third sentence
in paragraph (b)(1).

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

Par. 4. The authority citation for part 31 continues to read in part
as follows: Authority: 26 U.S.C. 7805 * * * §31.6302-1
[Amended]

Par. 5. Section 31.6302-1 is amended by removing the fourth sentence
in paragraph (i)(3). §31.6302(c)-3 [Amended]

Par. 6. Section 31.6302(c)-3 is amended by removing the third
sentence in paragraph (b)(2).

PART 301--PROCEDURE AND ADMINISTRATION

Par. 7. The authority for part 301 continues to read in part as
follows: Authority: 26 U.S.C. 7805 * * * §301.6302-1T [Removed]

Par. 8. Section 301.6302-1T is removed. PARTS 1, 31, 35, 36, 40,
301, 601 [AMENDED]

Par. 9. In the list below, for each section indicated in the left
column, remove the language in the middle column and add, if any,
the language in the right column: Section Remove Add

1.1461-1(a)(1), a Federal reserve an first sentence bank or
1.1502-5(a)(1), commercial financial fourth sentence Federal Reserve
dispositary or institution Bank 1.6151-1(d)(1) Federal Reserve Banks
or Section Remove Add 1.6302-1(b)(1) 214 or, at the 203 fourth
sentence election of the corporation, to a Federal Reserve bank
1.6302-1(b)(1), the Federal fifth sentence Reserve bank or
1.6302-2(a)(1)(i), a Federal Reserve an first sentence bank or
1.6302-2(a)(1)(ii), a Federal Reserve an first sentence bank or
1.6302-2(a)(1)(iv), a Federal Reserve an first sentence bank or
1.6302-2(b)(1), 214 or, at the 203 second sentence election of the
withholding agent, to a Federal Reserve bank 1.6302-2(b)(1), the
Federal third sentence Reserve bank or 1.6302-3(a) or with a Federal
Reserve Bank 31.6071(a)-1(a)(1), or by a Federal last sentence
Reserve bank 31.6071(a)-1(c), a Federal Reserve last sentence bank
or by 31.6151-1(b), first Federal Reserve sentence banks and Section
Remove Add 31.6302-1(c)(1), a Federal Reserve an first sentence bank
or 31.6302-1(c)(2)(i) a Federal Reserve an introductory text bank or
31.6302-1(c)(3) a Federal Reserve an bank or 31.6302-1(i)(3) 214 or,
at the 203 introductory text, election of the first sentence
employer, to a Federal Reserve bank 31.6302-1(i)(5) the Federal
Reserve bank or 3 1.6302(c)- with a Federal 2A(b)(1)(i) Reserve bank
or 31.6302(c)-2A(b)(3) with a Federal Reserve bank or 31.6302(c)-
with a Federal 3(a)(1)(i) Reserve bank or 31.6302(c)- with a Federal
3(a)(1)(ii) Reserve bank or 31.6302(c)-3(a)(3) with a Federal
Reserve bank or 31.6302(c)-3(b)(2) 214 or, at the 203 second
sentence election of the employer, to a Federal Reserve bank
31.6302(c)-3(b)(2), the Federal third sentence Reserve bank or
35.3405-1T e-10A., a Federal Reserve first sentence Bank or
36.3121(l)(10)-4 a Federal Reserve an bank or Section Remove Add
40.6302(c)-1(d)(1) 214) or to a 203) Federal Reserve bank
301.6302-1(a) Federal Reserve authorized banks and financial
authorized institutions commercial banks 301.6302-1(b)(1) Federal
Reserve authorized banks or financial authorized institutions
commercial banks 301.6302-1(b)(2) Federal Reserve authorized banks
or financial authorized institutions commercial banks 301.9100-5T(c)
Federal Reserve concluding text banks and 601.401(a)(5) Federal
Reserve heading banks and 601.401(a)(5)(iii) a Federal Reserve an
first sentence bank or 601.401(a)(5)(iii) a Federal Reserve an
second sentence bank or Section Remove Add 601.401(a)(5)(iv), a
Federal Reserve an authorized first sentence bank or a financial
financial institution institution authorized in accordance with
Treasury Department Circular No. 1079, revised, to accept
remittances of these taxes for transmission to a Federal Reserve
bank.

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

Approved: June 15, 2001

Mark A. Weinberger
Assistant Secretary of the Treasury (Tax Policy).

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