Chapter 4600. Treasury Lockbox Network

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## Treasury Lockbox Network Introduction : This chapter prescribes the procedures of lockbox and remittance processing for federal entity receipts. Section 4610 - Scope and Applicability : This chapter prescribes the procedures to be observed by all federal entities involved with the lockbox paper check and/or remittance processing (electronic or paper) of federal entity receipts. Section 4615 - Authority : See, inter alia, 12 U.S.C. § 90 “Depositaries of public moneys and financial agents of Government,” 12 U.S.C. § 265 “Insured banks as depositaries of public money; duties; security; discrimination between banks prohibited; repeal of inconsistent laws,” 12 U.S.C. § 266 “State-chartered banks and other institutions as depositaries of public money; fiscal agents; duties,” 31 U.S.C § 321 “General authority of the Secretary,” 31 U.S.C § 3301 “General duties of the Secretary of the Treasury,” and 31 U.S.C § 3720 “Collection of payments.

" Section 4620 - Terms and Definitions : For terms and definitions related to this chapter, please view the TFX Glossary. Section 4625 - Background : Treasury Lockbox processing is accomplished by Treasury designated financial agents that provide lockbox and remittance services to the Treasury on behalf of federal entities. The financial agents are strategically located to minimize mail, processing, and collection float. Remittances are mailed directly to a P.O. Box (lockbox) established by the financial agent to collect federal entity mail for processing.

Treasury-operated lockboxes have accelerated the deposit of funds into the Treasury's account and provided secure, accurate, and efficient data capture of financial and remittance data. Nevertheless,Executive Order 14247, Modernizing Payments To and From America’s Bank Account(90 FR 14001, March 25, 2025) requires the phase out of paper check collections and the transition to electronic funds transfer

(EFT)for all federal collections, with limited exceptions. Agencies are expected to develop plans to transition lockbox cash flows to electronic collection options. Fiscal Service stands ready to assist the transition and can be reached at EO14247@fiscal treasury.gov. After December 31, 2025, Treasury lockbox services will only be provided on an exception basis. Agencies must seek an exception or waiver annually to continue to utilize Treasury lockbox services. Exception/waiver requests must be sent via email to EO14247@fiscal.treasury.gov. 4625.10—Types of Lockbox Activity There are three basic types of lockbox services available to federal entities: - Wholesale Lockbox. A wholesale lockbox involves the multi-stage processing of invoice documents and is best suited for collections requiring complex remittance capture requirements with an accompanying check or card payment. Remittance data is captured, and payments are processed and deposited via Electronic Check Processing

(ECP)or Pay.Gov and credited to the proper Agency Location Code (ALC). - Retail Lockbox. A retail lockbox uses machine readable documents for automated processing through optical character recognition

(OCR)equipment. It is best suited for simple remittance documents with accompanying check payment. High speed equipment captures specific remittance and check data and deposits are made via ECP. - Specialty Lockbox. Specialty lockboxes provide a range of intricate services in addition to lockbox processing services. Designated specialty lockbox financial agents provide collection and processing services to Treasury on behalf of agencies that administer major national level programs. Per EO 14247, Treasury will cease providing specialty lockbox services as soon as practicable, with plans to only support the Electronic Data Interchange lockbox that supports 3rd Party Insurance payments after December 31, 2026. Other specialty lockboxes, such as those involving passport applications or immigration benefit requests, are still authorized for operation by the underlying substantive agency. 4625.20—IRS Lockbox Network The IRS Lockbox Network consists of a limited number of financial agents that serve as collection points for various IRS taxes. The IRS Lockbox Network handles business master file

(BMF)and individual master file

(IMF)tax transactions. The financial agents process the tax receipts and transmit information to IRS service centers. The financial agents also send to IRS the original tax forms that accompanied the transactions. 4625.30—Electronic Check Processing

(ECP)Since most mail transactions involve paper checks or money orders, Treasury lockboxes use the ECP system to automate deposits through the capture and conversion or truncation of checks. The Financial Agent

(FA)opens the envelopes, and then digitally scans all associated checks to capture the electronic image of the checks. At this time, they would also scan any remittance data. The FAs then send all image and data files to ECP for processing. The FA must follow all minimum ECP processing guidelines concerning image quality. In cases where image quality in excess of the minimum ECP guidelines is required, such specifications shall be included in the Statement of Required Services

(SRS)between the FA and Fiscal Service. After receiving information from the lockbox financial agents, ECP forwards the check information to Revenue Collections Management’s Debit Gateway application, which settles the transactions electronically. 4625.40—Credit Card Settlement Remitters can submit credit card information through the mail for processing by the financial agent at the lockbox site. Credit card transactions received at the lockbox will be processed via Pay.gov®. Section 4630—Lockbox Implementation : 4630.10—Determining if a Paper Lockbox is Suitable Fiscal Service is committed to maximizing electronic revenue collections, and federal entities should exhaust the possibility of electronic collection options prior to requesting lockbox services. Fiscal Service establishes and provides lockbox services at its sole discretion. Factors in determining whether lockbox services are appropriate include what electronic options are available, volume and dollar size of cash flows, and the legal need or requirement for paper remittances or original documents. Pursuant to EO14247, Fiscal Service does not anticipate authorizing lockbox services for new arrangements absent a truly compelling government need. 4630.20—Requesting Lockbox Services Pursuant to EO 14247, Fiscal Service is not considering new requests for lockbox services. If you feel your agency has a critical need to establish new lockbox services then you may submit an official request for new lockbox services in writing to the Revenue and Remittance Management Division (See Contact Information). The request must include the potential number and dollar amount of items, an explanation why federal entities cannot manage the cash flow electronically including specific legal requirements, and a compelling reason for accepting paper checks. The Fiscal Service will perform an analysis, and in its sole discretion, determine if lockbox services are necessary. If denied, the Revenue and Remittance Management Division will recommend an alternative collection mechanism. 4630.30—Standard Lockbox Services If a request for a lockbox is approved, Fiscal Service offers a standard suite of lockbox services at no charge to the federal entity. The process of setting up or converting to a paper lockbox begins with the federal entity review of the standard general specifications for all lockbox services, or the model SRS. Working in collaboration with Fiscal Service, the federal entity shall fill in detailed federal entity specifications where required. Fiscal Service and the federal entity shall sign the SRS. The SRS will serve as instructions to the FA. If volumes drop too low, Fiscal Service reserves the right to close a lockbox or move it to an electronic collection service. 4630.40—Reimbursable Services If a request for a lockbox is approved, Fiscal Service will provide a range of standard lockbox services at no cost to the federal entity. In some cases, Fiscal Service may offer to other federal entities, on a reimbursable basis, specialized services that are related to but outside the basic collection process. For details on the criteria used for determining whether Fiscal Service will provide a financial service on a reimbursable or non- reimbursable basis, see TFM Volume I, Part 6, Chapter 3200, Section 3235 “Criteria for Determining Whether a Financial Service Will Be Provided on a Reimbursable or Non-reimbursable Basis”. If a federal entity receives reimbursable services, then Fiscal Service and its FA, in coordination with the federal entity, will add further lockbox processing requirements to the SRS that reflect these added reimbursable services. Fiscal Service requires the federal entity receiving these services to also enter into an Interagency Agreement

(IAA)with them. 4630.50—Interagency Agreement

(IAA)In accordance with the Economy Act, if Fiscal Service conducts work for another federal entity that is outside the collection process, and hence Fiscal Service will be reimbursed for those services, then that federal entity must complete an Interagency Agreement

(IAA)Form. (See FS Form 7600A and FS Form 7600B.) Section 4635—Obtaining Lockbox Services : Fiscal Service has the exclusive authority to obtain lockbox services with the selected bank and the federal entity. A federal entity is prohibited from entering into contractual agreements, modifications of existing contracts, or renewal of existing contracts for federal entity collection systems without the prior approval of Fiscal Service. Section 4640—Financial Agent Roles and Agreements : 4640.10—Financial Agency Agreement

(FAA)All qualified financial institutions tasked by the Fiscal Service with providing lockbox services to federal entities enter into Financial Agency Agreements

(FAA)with Fiscal Service, in advance of doing so. Under these FAAs, Fiscal Service designates the financial institutions as depositaries and financial agents of the United States. The FAA specifies the terms and conditions under which the FA will perform lockbox services. 4640.20—Service Level Agreement

(SLA)A Service Level Agreement

(SLA)shall be part of every FAA and it, along with a Performance Scorecard, shall communicate expectations and goals for services to be provided by the FA, define measurements of performance by the FA in meeting these expectations and goals, set out specific metrics to be used in support of these measurements, and outline a process or methodology for how the FA’s overall performance in the delivery of lockbox services shall be measured. Fiscal Service monitors the FA performance through these tools and measurements. Section 4645—Federal Entity Monitoring Requirements : 4645.10—General Accountability of Funds and Performance The federal entity is responsible for the accounting requirements of all transactions and funds transferred. Federal entities are required to monitor lockbox execution of the SRS on a daily basis to ensure quality service, reconciliation of detail remittance data, and the timely transferring of funds. Federal entities are to prepare the necessary financial statements and reports to Fiscal Service (I TFM Part 2). 4645.20—Changes to the SRS The federal entity shall provide to Fiscal Service advance written request of any requested changes to the operating process or lockbox services. Fiscal Service will review this request, reach a decision and convey it within 30 days. A federal entity cannot negotiate or implement, without prior approval of Fiscal Service, changes in the processing specification (as detailed in the SRS) and pricing. 4645.30—Reconciliation Inquiries The federal entity shall pursue inquiries concerning reconciliation of detail data/documents processed through the lockbox directly with the lockbox bank customer representative. Federal entities should report operational problems to Fiscal Service. 4645.40—Required Services In accordance with the SRS if the lockbox bank fails to perform the required services, then the federal entity shall inform Fiscal Service in writing within 10 calendar days. 4645.50—Evaluation The federal entity shall respond to periodic Treasury surveys for evaluation of services provided by both Fiscal Service and the FA bank. 4645.60—Escalation of Issues Report to Fiscal Service immediately incidents that include fraud, waste, abuse, theft, compromise of sensitive data, identity theft, accidental or malicious destruction of documents, suspected or actual data breach, or lost mail. In addition, the federal entity shall inform Fiscal Service as soon as practical, if the FA fails to perform the required services in conformity with the SRS or experiences other operational problems. ## Contact Information Detailed Contacts : Direct inquiries concerning this chapter to: Department of the Treasury Bureau of the Fiscal Service Revenue and Remittance Management Division 3201 Pennsy Drive, Building E Landover, MD 20785 Email: glnecp@fiscal.treasury.gov ## Summary of Updates Summary of Updates : --- --- --- Section No. Section Title Summary of Change 4625 Background Added language to align with EO 14247 4625.10 Types of Lockbox Activity Added language to align with EO 14247 4630.10 Determining If a Paper Lockbox is Suitable Added language to align with EO 14247 4630.20 Requesting Lockbox Services Add language to align with EO 14247 4630..30 Product Initiation Removed section. Contacts Contact Information Updated contact information |

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