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Statement of Need: Section 31001(x) of the Debt Collection Improvement Act of 1996 (DCIA) amended 31 U.S.C. 3332 to require Federal agencies to convert all Federal payments (other than payments under the Internal Revenue Code) from checks to electronic funds transfer (EFT) in two phases. Phase one began July 26, 1996; all recipients who become eligible to receive Federal payments on or after that date are required to receive such payments by EFT unless the recipient certifies in writing that the recipient does not have an account at a financial institution or authorized payment agent. The Financial Management Service issued an interim rule on July 26, 1996 to implement these requirements. ^PPhase two begins for payments made after January 1, 1999. The DCIA provides that, subject to the authority of the Secretary of the Treasury to grant waivers, all Federal payments (other than payments under the Internal Revenue Code) made after that date must be made by EFT. After a 90-day public comment period for the proposed rule, FMS will issue final regulations to implement the requirements that take effect after January 1, 1999.

Summary of the Legal Basis: Section 31001(x) of the DCIA amends 31 U.S.C. 3332 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 and benefits of converting from paper checks to EFT are directly imposed by the underlying statute and are not attributable to the implementing regulations.

Risks: Not applicable.