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Statement of Need: Section 31001(x) of the Debt Collection Improvement Act of 1996 (Act) requires Federal agencies to convert from checks to electronic funds transfers (EFT) in two phases. During Phase 1, which began on July 26, 1996, all recipients of Federal payments (other than payments under the Internal Revenue Code of 1986) who become eligible to receive those payments on or after July 26, 1996, must receive them electronically unless the recipient certifies that the recipient does not have an account at a financial institution or authorized payment agent. Phase 2 covers the conversion from checks to EFT for all Federal payments (except payments under the Internal Revenue Code of 1986). The Act provides, subject to waivers that may be granted by the Secretary of the Treasury, that all Federal payments made after January 1, 1999, must be made by EFT. FMS issued an interim rule to implement the Phase 1 requirements. FMS plans to publish a notice of proposed rulemaking and final rule in 1997 to provide necessary guidance to agencies redarding implementation of Phase 2.

Summary of the Legal Basis: Section 31001(x) of the Act amends 31 U.S.C. to require Federal agencies to convert from paper-based payment methods to EFT in two phases under regulations prescribed by the Secretary of the Treasury.

Alternatives: FMS is evaluating options for implementing the Secretary's authority to grant waivers from the EFT requirements.

Anticipated Costs and Benefits: Costs for implementing the regulation include the collection of information about the financial institution to which EFT payments will be transmitted. This information collection is required by the Act. Cost savings will accrue to the Government from the elimination of Federal payments by paper checks.

Risks: Not applicable.