This chapter prescribes instructions for federal agencies to follow to recover funds from unpaid checks, including uncollected and lost checks, as well as returned items.
Section 5010—Scope and Applicability
This guidance is being issued to ensure that checks unpaid for any reason by the bank on which they are drawn, except as specified by the Department of the Treasury (Treasury), will be processed for fund recovery according to the procedures in this chapter and the Over-the-Counter Channel Application Network (OTCnet) Adjustment, Correction, or Rescission procedures as appropriate. Checks that have been lost, destroyed, or mutilated after receipt by the government will be managed in accordance with Section 5035.
The Secretary of the Treasury’s authority to make and deliver Agreements of Indemnity is found at section 17306 of the Government Losses in Shipment Act, 40 U.S.C. § 721.
Section 5020—Terms and Definitions
For terms and definitions related to this chapter, please view the TFM Glossary.
Section 5025—Return Items or Dishonored Checks
5025.10—Federal Agency Depositors
Upon receipt of an unpaid check from the depositary, agency depositors will:
- Log into OTCnet to get the corresponding debit voucher data,
- Follow any internal agency guidelines and procedures to collect the amount as though no check had been received, and
- Log into CIR to view the debit to the appropriate Agency Location Code (ALC).
When a check is returned unpaid (i.e., checks returned for insufficient funds, stop payment, or closed accounts) to the depositary with which the check was originally deposited, the depositary will create a return item adjustment in OTCnet.
Section 5030—Charges to Wrong ALC
If the amount of an unpaid check to Treasury's General Account is charged to the wrong ALC, the depositary should request from the Fiscal Service OTC Customer Support the appropriate ACR Request Form to initiate the correction or adjustment.
The federal agency whose ALC has been charged in error should contact the depositary to request from Fiscal Service OTC Customer Support the appropriate ACR Request Form by email to correct the debit (see Contacts).
For any corrections that cannot be made in OTCnet, the ACR Request Form should be used.
Section 5035—Uncollected, Lost, Destroyed, and Mutilated Checks
5035.10—Replacement without an Agreement of Indemnity
The federal agency must attempt to obtain a replacement without an Agreement of Indemnity, immediately upon discovering loss, destruction, or mutilation of checks. If a check is lost, whether before or after deposit, federal agency depositors will notify the drawer to stop payment on the check and reissue a replacement check, and follow any internal guidelines and procedures. New checks received will be processed for deposit as new business.
5035.20—Agreement of Indemnity for Replacement
When a replacement cannot be obtained without an Agreement of Indemnity, the federal agency should request an Agreement of Indemnity from Fiscal Service.
The following information must be included in the federal agency’s request for an Agreement of Indemnity:
- Copy of the check or money order, if available,
- Complete description of the check including the type of check, issue date, amount, and payee,
- Amount requested for reimbursement,
- Name and address of the bank that will receive the Agreement of Indemnity, (i.e., the bank that will issue the replacement check),
- Memo from the issuing bank, stating the check or money order has not been cashed, and
- Complete address of the federal agency to which the replacement check is to be delivered.
Upon approval of the federal agency's request, the Fiscal Service will execute and deliver the Agreement of Indemnity to the bank issuing the replacement check.
Fiscal Service will send a copy of the Agreement of Indemnity and the transmittal letter to the federal agency that requested the Agreement of Indemnity, and to the federal agency that will receive the replacement check (if different from the requesting agency).
Direct general inquiries concerning the ACR Request Form to:
OTC Customer Support Team
Toll Free Phone: 510-428-6824
Direct inquiries concerning Agreements of Indemnity in connection with the replacement of checks to:
Department of the Treasury
Bureau of the Fiscal Service
Financial Management Division
Warehouse and Operations Center, Dock 1
257 Bosley Industrial Park Drive
Parkersburg, WV 26101
Direct general inquiries concerning this TFM Chapter to:
Federal Reserve Bank of St. Louis
OTC Support Team
Summary of Updates in this Release
|Section Number||Section Title||Summary of Change|
|5020||Definition||Hyphenated Over-the-Counter in two definitions.|
|5020||Terms and Definitions|
|Contacts||Contacts||Updated the address listed for inquiries concerning Agreements of Indemnity and created hyperlinks for the three email addresses listed.|
|All||Made format changes in chapter|