Proposed Rule2026-08278
Management of Federal Agency Disbursements
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 29, 2026
Issuing agencies
Treasury DepartmentFiscal Service
Abstract
Executive Order (E.O.) 14247, Modernizing Payments To and From America's Bank Account, directs the Secretary of the Treasury to cease issuing paper checks for all Federal disbursements to the extent permitted by law and to review and, as appropriate, revise procedures for granting limited exceptions where electronic payment methods are not feasible. In accordance with the E.O., the Department of the Treasury (Treasury), Bureau of the Fiscal Service ("Fiscal Service" or "we"), is proposing to amend its regulation that sets forth the limited circumstances under which paper check disbursements may be made by federal agencies.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 82 (Wednesday, April 29, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 82 (Wednesday, April 29, 2026)]
[Proposed Rules]
[Pages 23039-23045]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08278]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 208
[FISCAL-2026-0001]
RIN 1530-AA33
Management of Federal Agency Disbursements
AGENCY: Bureau of the Fiscal Service, Treasury.
ACTION: Notice of proposed rulemaking with request for comment.
-----------------------------------------------------------------------
SUMMARY: Executive Order (E.O.) 14247, Modernizing Payments To and From
America's Bank Account, directs the Secretary of the Treasury to cease
issuing paper checks for all Federal disbursements to the extent
permitted by law and to review and, as appropriate, revise procedures
for granting limited exceptions where electronic payment methods are
not feasible. In accordance with the E.O., the Department of the
Treasury (Treasury), Bureau of the Fiscal Service (``Fiscal Service''
or ``we''), is proposing to amend its regulation that sets forth the
limited circumstances under which paper check disbursements may be made
by federal agencies.
DATES: Comments must be received on or before June 15, 2026.
ADDRESSES: You may submit comments, identified by Docket ID FISCAL-
2026-0001 and RIN 1530-AA33, by any of the following methods:
Electronic Submission: Comments may be submitted electronically
through the Federal Government eRulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Mail: Send via regular or express mail to: Bureau of the Fiscal
Service, 3201 Pennsy Drive, Building E, Landover, MD 20785, Attn: Lisa
Andre, Senior Advisor.
Fiscal Service encourages the electronic submission of comments.
Comments received, including attachments and other supporting
materials, are part of the public record and subject to public
disclosure. Do not enclose any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure.
FOR FURTHER INFORMATION CONTACT: Lisa Andre, Senior Advisor, Office of
the Associate Commissioner for Business Operations at 215-516-8142 or
<a href="/cdn-cgi/l/email-protection#15797c66743b747b71677055737c667674793b616770746660676c3b727a63"><span class="__cf_email__" data-cfemail="0b6762786a256a656f796e4b6d6278686a67257f796e6a787e7972256c647d">[email protected]</span></a>, or Frank J. Supik, Associate Chief
Counsel at 202-874-6638 or <a href="/cdn-cgi/l/email-protection#741206151a1f5a0701041d1f34121d071715185a000611150701060d5a131b02"><span class="__cf_email__" data-cfemail="533521323d387d2026233a3813353a2030323f7d272136322026212a7d343c25">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
a. Part 208 and Executive Order 14247
In 1998, Fiscal Service issued a final rule, codified at 31 CFR
part 208 (part 208), to implement the requirements of Section 3332 of
Title 31 of the United States Code, as amended by section 31001(x)(1)
of the Debt Collection Improvement Act of 1996, Public Law 104-134, 110
Stat. 1321-376.
Section 3332 generally mandates that all Federal payments, other
than payments under the Internal Revenue Code of 1986, be delivered by
EFT unless the requirement is waived by the Secretary of the Treasury
(Secretary). Specifically, subsection (f)(2)(A) of section 3332
provides that ``[t]he Secretary of the Treasury may waive application
of [the EFT mandate] to payments--(i) for individuals or classes of
individuals for whom compliance poses a hardship; (ii) for
classifications or types of checks; or (iii) in other circumstances as
may be necessary.'' Section 3332 also authorizes the Secretary to
``prescribe regulations that the Secretary considers necessary to carry
out this section.'' 31 U.S.C. 3332(i)(1). The waivers authorized by
section 3332 are located in part 208.
Although 97% of the more than 1.3 billion payments Treasury
disburses each year on behalf of Federal agencies are made
electronically, in fiscal year 2025, Treasury still printed 40.9
million checks. In recognition of the ``unnecessary costs; delays; and
risks of fraud, lost payments, theft, and inefficiencies'' associated
with paper checks, on March 25, 2025, the President signed Executive
Order (E.O.) 14247, ``Modernizing Payments To and From America's Bank
Account,'' mandating the transition to electronic payments for all
Federal disbursements, to the extent permitted by law. The E.O. directs
the Secretary to cease issuing paper checks for all Federal
disbursements to the extent permitted by law, and to review and, as
appropriate, revise procedures for granting limited exceptions where
electronic payment methods are not feasible.
The elimination of paper checks in accordance with E.O. 14247 is
critical to defending against financial fraud and promoting operational
efficiency. Treasury checks are 16 times more likely to be reported
lost or stolen, returned undeliverable, or altered than an electronic
payment. In addition, the Federal Government has seen increased check
printing costs. The cost to print checks has climbed to an average of
$3.07 per check, which is 20 times more expensive than Automated
Clearing House payments. While Treasury has taken numerous steps to
reduce the cost of check production, including outsourcing its check
printing operations to the private sector, it firmly believes that
further reducing checks will increase efficiency, reduce costs, and
enhance the security of Federal payments.
In accordance with the E.O., Treasury has reviewed the categories
of waivers available to individual payees as well as the categories of
waivers available to paying agencies and proposes to: (i) modify the
waivers available to individuals and agencies for the purpose of
further refining the circumstances under which paper checks may be
disbursed; and (ii) transfer from Treasury to the payment-authorizing
agencies the responsibility for adjudicating hardship waivers that are
submitted by individuals, given those agencies established
relationships with the payees.
Treasury believes the proposed changes to part 208 will help to
reduce paper check disbursements and further the policy goals set forth
in the E.O. of defending against financial fraud and improper payments,
increasing efficiency, reducing costs, and enhancing the security of
Federal payments. Treasury will continue to work with paying agencies
to support their full transition to electronic payments. Treasury is
committed to empowering agencies to offer other modern electronic
payment options, and providing the public with a secure, efficient and
convenient customer experience.
b. Treasury's 2025 Request for Information
In June 2025, Treasury issued a Request for Information (RFI) which
offered the opportunity for interested individuals and organizations to
[[Page 23040]]
provide feedback on matters related to Treasury's implementation of
E.O. 14247. 90 FR 23108 (May 30, 2025). The RFI yielded 248 comments
from individuals and entities, including industry groups, non-profit
organizations, tribal governments, financial institutions, and consumer
advocates. There were notable themes within the feedback regarding
potential barriers to electronic payments that may impact certain
individuals and concerns that may make individuals hesitant to use
electronic payments. Barriers and challenges noted from the commenters
spanned a broad spectrum, including but not limited to account
identification requirements, account fees, financial and digital
literacy among the underbanked and the elderly, tribal considerations,
international payment considerations, as well as concerns about
consumer protection, privacy, data security, and fraud risk.
Overall, the comments indicated a broad consensus in favor of
electronic payments. Commenters acknowledged the efficiency, security,
and reduction in fraud associated with electronic payments. Commenters
noted that many of the advantages of electronic payments would redound
to the payees, many of whom would realize benefits from increased
financial inclusion, consumer protections, and faster receipt of
payments, with lower fees from industry in many instances. In addition,
commenters noted that electronic payments create significant cost-
savings for the government, when compared with check payments.
Some commenters proposed continued exemptions for certain
populations. For example, some commenters noted that tribal communities
and rural areas may have higher rates of unbanked and underbanked
individuals and also may lack sufficient technological infrastructure
to acclimate to fully electronic disbursing. Several commenters
supported exemptions for seniors and persons with disabilities who may
need assistance with managing their financial affairs or may have
difficulty navigating electronic payment methods.
Many commenters also noted that long-standing habits or inadequate
understanding of potential electronic payment or account options drive
the preference of some payment recipients to continue receiving checks,
noting the importance of robust public awareness or education campaigns
to accompany the EFT mandate. Several commenters noted such campaigns
should provide simple EFT enrollment processes, clear communication,
and support resources (such as chat functions, in-person assistance,
and other measures) which have helped in past initiatives to
successfully assist individuals in signing up for electronic financial
services. They further noted that the reach of such efforts could be
maximized through multiple channels, including government websites,
community outreach, direct mail, press and news releases, and social
media, amongst others.
There were differing positions regarding access to financial
services by unbanked and underbanked populations. While some commenters
maintained that the presence of the underbanked should lead to the
continued availability of exceptions from the EFT requirement, others
noted that the exponential growth of EFT payment options over the last
few years should largely address accessibility gaps. Moreover, some
commenters focused on the challenges posed by banking deserts which may
impact both rural and urban populations, indicating that checks may
remain a viable alternative for these situations.
Finally, many commenters expressed concern that the E.O.'s
implementation timeline did not provide sufficient time for agencies or
the public to fully eliminate check transactions with the Federal
Government. Treasury acknowledges that, although great strides have
been made across the government to meet the E.O.'s directives, more
time is required to address the remaining regulatory, policy, and
technical limitations. All of the feedback provided by RFI commenters
has been reviewed, considered and has helped to shape the changes
proposed in this rulemaking.
II. Proposed Change to Regulation
Fiscal Service proposes amending existing part 208 by eliminating
or modifying certain waivers currently available to individual payees
and establishing new waiver categories available to agencies. The
proposed rule would require agencies--rather than Treasury--to approve
individual hardship waiver requests in accordance with guidelines
established by Treasury. Treasury has concluded that paying agencies
are better positioned to review and adjudicate hardship waiver requests
submitted by their payees, given the established relationship between
the payee and their paying agency, and the paying agency's familiarity
with the nuances of its own programs. In fact, it would be more
efficient for the paying agency to process a hardship waiver request
when the paying agency initially enrolls the individual to receive a
Federal payment. Agency-managed waiver processes compliant with this
regulation and Treasury guidance will help agencies make well-informed
decisions about whether a payment should be issued by paper check.
Paying agencies will also have greater visibility into their remaining
paper check disbursements, helping them better prioritize and expand
electronic payment offerings.
Fiscal Service also proposes to amend the regulation to require
agencies to: (i) confirm that an applicable exception applies prior to
authorizing a check payment; and (ii) provide Fiscal Service with
reporting on the agency's compliance with part 208, which may include
information regarding the waiver requests the agency has approved and
rejected.
Fiscal Service invites public comment on the proposed changes more
fully described below in the section-by-section analysis and is
particularly interested in comments on Fiscal Service's proposed
changes to the individual and agency waivers set forth in Sec. 208.4.
III. Section-by-Section Analysis
Sec. 208.1 Scope and Application
We propose to revise Sec. 208.1 for clarity by inserting ``other
than payments made under the Internal Revenue Code of 1986'' as a new
clause at the end of the first sentence of the section which currently
reads: ``This part applies to all Federal payments made by an agency.''
With this proposed change, we propose to delete as unnecessary the
reference to the statutory carve-out for payments made under the
Internal Revenue Code in the second sentence of the section. The new
proposed section would read as follows: ``This part applies to all
Federal payments made by an agency, other than payments made under the
Internal Revenue Code of 1986. Except as specified in Sec. 208.4, this
part requires Federal payments to be made by electronic funds
transfer.'' These revisions are not intended to alter the scope of part
208.
Sec. 208.2 Definitions
Fiscal Service proposes to update the definitions section by
eliminating the definitions of ``Authorized payment agent'' and
``Federally-insured financial institution'' because those terms are not
used in the current regulation. We propose, however, to add the text of
the ``Authorized payment agent'' definition to the definition of
``Recipient'' to clarify that the term includes any recipient of a
Federal payment who is
[[Page 23041]]
permitted to receive payment on behalf of another individual entitled
to payment, such as a Social Security representative payee.
Fiscal Service proposes to revise the second sentence of the
definition of ``Electronic funds transfer'' which provides a non-
exhaustive list of the types of electronic funds transfers that are
included in the definition for the purpose of highlighting the types of
electronic funds transfers that are most germane to the regulation.
Accordingly, the revised list of examples would no longer refer to
``transfers made at automated teller machines and point-of-sale
terminals.'' In addition to the current references to Automated
Clearing House and Fedwire transfers, we propose to add a reference to
transfers made by ``instant payment networks.'' We have also, in light
of the account requirements for Federal payments under 31 CFR part 210,
added a reference to transfers that are made to ``accounts that meet
applicable requirements under 31 CFR part 210.'' For clarity, the
proposed revision also notes that such accounts may include bank
accounts and certain prepaid debit cards and digital wallets.
To align with the definition under 31 U.S.C. 3332(j)(3), we propose
to exclude ``[p]ayments under the Internal Revenue Code of 1986'' as an
example within the definition of ``Federal payment.'' While the
reference was previously added to support the delivery of tax payments
via Treasury-sponsored accounts, we have determined that this can be
accomplished instead through revisions to Sec. 208.5--the section that
addresses Treasury's authority to deliver payments to Treasury-
sponsored accounts. This proposed revision does not imply that payments
under the Internal Revenue Code of 1986 cannot be disbursed by EFT, nor
that the Internal Revenue Service is precluded from pursuing an EFT
mandate. Finally, we also propose to add ``disaster assistance'' as an
additional example of a ``miscellaneous payment'' type.
We propose non-substantive edits to the definition of ``Financial
Agent'' by proposing to delete ``as amended by the Omnibus Consolidated
Appropriations Act, 1997, Section 664, Public Law 104-208.'' This
clause, which follows a list of United States Code sections under which
Treasury may designate a Financial Agent, is unnecessary because those
sections already incorporate the changes of the omnibus appropriations
act for fiscal year 1997.
We are proposing to add ``Indian land'' as a new defined term
because of the proposal to add a new waiver category for individuals or
entities located on Indian land lacking the infrastructure to support
electronic funds transfers. Under the proposal, ``Indian land'' is
defined as having the meaning set forth in 25 U.S.C. 3501(2).
Finally, we propose an editorial change to the definition of
``Treasury-sponsored account.'' The current definition provides that a
Treasury-sponsored account ``means a Direct Express card account, a
U.S. Debit Card account, or another account established pursuant to
Sec. 208.5 or Sec. 208.11.'' We propose to make the Direct Express
card and U.S. Debit Card accounts illustrative examples of the
definition, so that ``Treasury-sponsored account'' is primarily defined
as an account established pursuant to Sec. 208.5. Accordingly, the
proposed revision would read: ``Treasury-sponsored account means an
account established pursuant to Sec. 208.5, such as a Direct Express
card account or a U.S. Debit Card account.'' This proposed editorial
change is not intended to increase the scope of the definition. The
proposed change also eliminates the reference to Sec. 208.11, in light
of the proposal discussed below to eliminate that section.
Section 208.3 Payment by Electronic Funds Transfer
In light of the proposal discussed above to exclude ``[p]ayments
under the Internal Revenue Code of 1986'' as an example within the
definition of ``Federal payment,'' we are proposing to delete as
unnecessary the last sentence of current Sec. 208.3 which provides
that the requirement to make Federal payments by electronic funds
transfer does not apply to payments under the Internal Revenue Code of
1986.
Section 208.4 Waivers
The waivers the Secretary has authorized from the requirement that
a Federal payment be made electronically are set forth in Sec. 208.4.
Fiscal Service is proposing to revise Sec. 208.4(a)(1) which sets
forth the waivers available to individuals by eliminating or modifying
the waivers available under Sec. 208.4(a)(1)(i), (ii), and (iii).
Fiscal Service is proposing to eliminate the waiver available under
current paragraph (a)(1)(i) for individuals ``born prior to May 1,
1921, [who were] receiving payment by check on March 1, 2013'' as that
waiver was established to mitigate the impacts of the EFT requirement
on Federal check payment recipients who were at least 90 years old on
May 1, 2011--the effective date of the final rule published on December
22, 2010 requiring that all Federal nontax payment recipients receive
payments by EFT. See 75 FR 80320. Given the limited applicability of
the waiver to individuals who would now be over 104 years old, we
propose eliminating the waiver category. While there would no longer be
any individual waiver based on age, an agency could request Treasury's
approval to establish a waiver that takes recipient age into account,
utilizing the new waiver under proposed Sec. 208.4(d)(5) (``[w]here
the Federal agency identifies a group of recipients that has have a
reasonable need for non-electronic payments'').
Fiscal Service is also proposing to modify the waiver under
paragraph (a)(1)(ii) that applies where a person ``[r]eceives a type of
payment for which Treasury does not offer delivery to a Treasury-
sponsored account.'' Under the proposal, agencies would be required to
request Treasury's approval to issue paper check disbursements based
upon the unavailability of a Treasury-sponsored account. Additionally,
Fiscal Service is removing the waiver discussed in the last sentence of
current paragraph (a)(1)(ii) which currently permits an agency to file
a waiver request to continue to issue paper checks after Treasury has
provided the agency with an option to issue the payments to a Treasury-
sponsored account. To the extent the agency has a legitimate reason to
continue making paper check payments despite the availability of a
Treasury-sponsored account program, the agency may be able to request
approval under the new waiver that applies if an agency ``identifies a
group of recipients that has a reasonable need for non-electronic
payments.''
We are also proposing to eliminate the waiver under current
paragraph (a)(1)(iii) that applies if an individual ``[i]s ineligible
for a Treasury-sponsored account because of suspension or cancellation
of the individual's Treasury-sponsored account by the Financial
Agent.'' Fiscal Service proposes eliminating this waiver as it has had
extremely limited use since it was first introduced in 2010 with
respect to Direct Express cards.
We are proposing to retain in proposed paragraphs (a)(i) and (ii)
the hardship waivers that are currently set forth in paragraphs
(a)(1)(iv) and (v). Under the proposed rule, however, the requests to
utilize a hardship waiver would be submitted by the individual to the
paying agency rather than to Treasury for adjudication. We are also
proposing a minor edit to the language in current paragraph (a)(1)(v)
to replace the reference to ``electronic financial transactions'' with
``electronic funds
[[Page 23042]]
transfers'' for consistency with the rest of the regulation.
We are proposing a new Sec. 208.4(b) which would require an
individual who seeks a waiver under new paragraphs (a)(i) or (ii) to
request approval from the paying agency in a form and manner determined
by the agency pursuant to Treasury guidance. The new paragraph (b)
would also provide that a waiver granted by a paying agency under
paragraphs (a)(i) or (ii) may be revoked by the agency pursuant to
Treasury guidance.
We are proposing a new Sec. 208.4(c) which would cover waivers
that an agency could utilize without obtaining Treasury's prior
approval. The waivers in this section would include those that are
substantively covered in current Sec. 208.4(a)(2) through (6).
Proposed Sec. 208.4(c)(1) would permit an agency to issue a paper
check ``[w]here payment into a foreign country by electronic funds
transfer is not supported by Treasury or is otherwise not feasible due
to the financial infrastructure or political conditions in the foreign
country.'' This waiver seeks to streamline the text of current Sec.
208.4(a)(2) and (3). As part of this change, instead of retaining the
current reference to ``political, financial, or communications
infrastructure in a foreign country,'' we propose to refer more simply
to ``the financial infrastructure or political conditions in the
foreign country.'' We believe the reference to ``financial
infrastructure'' is sufficiently broad to cover any relevant
communications or internet availability issues and that the reference
to ``political conditions'' more directly addresses challenges that
could limit electronic funds transfers into a foreign country.
Proposed paragraph (c)(2) contains without modification the
substance of the waiver currently contained in paragraph (a)(4) for
payments to recipients within an area designated by the President or an
authorized agency administrator as a disaster area that are made within
the first 120 days after the disaster is declared. In proposed
paragraph (c)(3), Fiscal Service proposes to simplify the text of the
waiver under current paragraph (a)(5) for certain military operations
by directly incorporating the statutory definition of ``contingency
operation'' on which the current waiver is based. See 62 FR 48720
(Sept. 16, 1997). Additionally, proposed paragraph (c)(3) clarifies
that the waiver applies only when disbursement by paper check is
necessary as a result of the contingency operation. Proposed paragraph
(c)(3) would read as follows: ``Where disbursement by paper check is
necessary as a result of a contingency operation as defined in 10
U.S.C. 101(a)13.'' Proposed paragraph (c)(4) contains, without
modification, the substance of the waiver in current paragraph (a)(6)
for certain security and law enforcement purposes.
Proposed paragraph (c)(5) would provide a new waiver category
available to agencies for payments ``made to individuals or entities
located on Indian land lacking the infrastructure to support electronic
funds transfers.'' This new waiver, which we propose in response to
paying agency feedback and comments received in response to the Request
for Information related to E.O. 14247, attempts to provide flexibility
for tribal communities that may lack sufficient technological
infrastructure to acclimate to fully electronic disbursing.
Proposed paragraph (d) provides six waiver categories that an
agency may request Treasury's approval to utilize. Proposed paragraph
(d)(1) contains the waiver currently contained in paragraph (a)(7) for
non-regular and non-recurring payments to individuals and small
businesses. While this waiver can currently be used by an agency
without prior Treasury approval, Fiscal Service believes that amending
part 208 to require agencies to seek approval to issue check payments
for non-regular and non-recurring payments (including classes of such
payments) would meaningfully support the administration's goal, as set
forth in E.O. 14247, to eliminate paper-based transactions.
Under proposed paragraph (d)(2), agencies could request Treasury's
approval to issue paper check payments ``[w]here a particular payment
is not eligible for deposit to a Treasury-sponsored account.'' As noted
above, this waiver is addressed in current paragraph (a)(1)(ii) as a
waiver that is available when an individual ``[r]eceives a type of
payment for which Treasury does not offer delivery to a Treasury-
sponsored account.'' Fiscal Service believes part 208 should be revised
to explicitly require agencies to request Treasury approval to utilize
this waiver, because individual payees are not likely to know whether a
Treasury-sponsored account is available for the type of payment they
are receiving. Moreover, if a paying agency determines that a Treasury-
sponsored account is not available for a particular type of payment,
the agency would be able to work with Treasury to determine whether an
agency implementation of a Treasury-sponsored account could be a viable
mechanism for the payment type, and if it is not, then the agency could
initiate a waiver request with Treasury.
Proposed paragraphs (d)(3) and (d)(4) contain, without
modification, the waivers available in current paragraph (a)(8) that
apply where an agency has an urgent need for goods and services or
where there is only one source for the goods or services, and the
Government would be seriously injured unless payment is made by check.
Proposed paragraph (d)(5) includes a new waiver ground that is not
covered in the current regulation. Consistent with the previously
discussed proposal to empower paying agencies to adjudicate hardship
waiver requests, proposed paragraph (d)(5) would allow agencies to
request Treasury's approval to issue a paper check payment ``[w]here
the Federal agency identifies a group of recipients that has a
reasonable need for non-electronic payments.'' Fiscal Service believes
that the paying agencies would be best-positioned to understand the
needs of their payees and to identify to Fiscal Service any payees that
should be granted an exception from the EFT requirement.
Proposed paragraph (d)(6) contains the waiver that is available in
current paragraph (a)(4) and permits agencies to request an extension
of the waiver for payments to recipients within an area designated by
the President or an authorized agency administrator as a disaster area
beyond the first 120 days after the disaster is declared.
Proposed paragraph (e) tracks current paragraph (b) and provides
that an agency seeking Treasury's approval to utilize a waiver under
proposed paragraph (d) shall submit a written request to Treasury's
Chief Disbursing Officer in such form that Treasury may prescribe and
notes that Treasury reserves the right to reject any such request.
Finally, proposed paragraph (f) largely tracks current paragraph
(c) and provides that if application of an agency waiver under proposed
paragraphs (c) or (d) would, in Treasury's determination, lead to the
agency initiating an unusually large number or proportion of payments
by means other than electronic funds transfer, Treasury reserves the
right to revoke the relevant waiver and require the agency to work with
Treasury to identify and implement ways to make the payments by
electronic funds transfer. Additionally, for consistency with the
phrasing used in proposed paragraph (b) with respect to the hardship
waivers granted by agencies, proposed paragraph (f) replaces the word
``nullify'' with the word ``revoke.'' This
[[Page 23043]]
edit is not intended to effect a substantive change.
Section 208.5 Accounts for Disbursement of Federal Payments
Section 208.5 addresses Treasury's authority to designate a
Financial Agent to establish and administer Treasury-sponsored accounts
for individuals for the disbursement of Federal payments. Given the
proposed removal of ``[p]ayments under the Internal Revenue Code of
1986'' from the definition of ``Federal payment'' for the purpose of
aligning the regulation's definition with 31 U.S.C. 3332(j)(3), we
propose to add a new sentence at the end of Sec. 208.5 to clarify that
Treasury's authority to disburse payments to Treasury-sponsored
accounts extends not only to Federal payments within the meaning of
part 208 but also to payments made under the Internal Revenue Code of
1986.
Section 208.6 Availability of Treasury-Sponsored Accounts
We are not proposing any changes to Sec. 208.6.
Section 208.7 Agency Responsibilities
Current Sec. 208.7(a) requires agencies to ``put into place
procedures that allow recipients to provide the information necessary
for the delivery of payments to the recipient by electronic funds
transfer to an account at the recipient's financial institution or a
Treasury-sponsored account.'' We propose to revise the section by
adding a reference to the delivery of payments to ``a prepaid account
designated by the recipient that meets applicable requirements under 31
CFR part 210'' for the purpose of clarifying that permissible accounts
for Federal EFT payments extend beyond traditional demand deposit
accounts. We are not proposing any changes to Sec. 208.7(b).
Section 208.8 Recipient Responsibilities
We propose to amend Sec. 208.8 by removing the last sentence of
the section which currently provides: ``For recipients who do not
designate a bank account for the receipt of payments, Treasury may
disburse payments to a Treasury-sponsored account or to an account to
which the recipient is receiving other Federal payments.'' We are
proposing this revision because Treasury does not view unilaterally
redirecting certified payments without payee consent or appropriate
statutory authority as a feasible approach to expand electronic
payments.
Section 208.9 Compliance
For clarity, we propose to replace the second sentence of Sec.
208.9(a), which states that ``Treasury may require agencies to provide
information about their progress in converting payments to electronic
funds transfer,'' with the following sentence: ``Treasury may require
an agency to report on the agency's compliance with this part in a
manner and timeframe prescribed by Treasury.'' Additionally, we propose
to add a new sentence stating that the reporting Treasury may require
an agency to provide may include information regarding the agency's
efforts to enroll check recipients in electronic funds transfer
payments and the waiver requests the agency has approved and rejected.
We propose to add a new paragraph (b) which states that an agency's
Certifying Officer must ensure prior to certifying disbursement by
paper check that there is an applicable waiver under Sec. 208.4. We
are proposing this new paragraph to emphasize the importance of
ensuring that disbursements of Federal funds are legal, proper, and
accurate, which includes compliance with Sec. 208.4 and E.O. 14247.
We do not propose any changes to the provisions in current
paragraph (b), which would be redesignated as new paragraph (c).
Section 208.10 Reservation of Rights
We are not proposing any changes to Sec. 208.10.
Section 208.11 Accounts for Disaster Victims
Section 208.11 provides that Treasury may establish and administer
accounts at any financial institution designated as a Financial Agent
for disaster victims to facilitate the delivery of Federal payments by
EFT. This section was added in the aftermath of Hurricane Katrina and
is no longer needed given Sec. 208.6 which generally provides that
Treasury may designate a Financial Agent to establish and administer
Treasury-sponsored accounts for individuals for the disbursement of
Federal payments.
IV. Regulatory Analysis
Request for Comment on Plain Language
Executive Order 12866 requires each agency in the Executive branch
to write regulations that are simple and easy to understand. We invite
comment on how to make the proposed rule clearer. For example, you may
wish to discuss: (1) Whether we have organized the material to suit
your needs; (2) whether the requirements of the rule are clear; or (3)
whether there is something else we could do to make the rule easier to
understand.
Regulatory Planning and Review
The proposed rule does not meet the criteria for a ``significant
regulatory action'' as defined in Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.
Regulatory Flexibility Act Analysis
It is hereby certified that the proposed rule will not have a
significant economic impact on a substantial number of small entities.
The rule provisions being amended primarily apply to Federal agencies
and recipients of Federal payments, and do not have any material impact
on small entities. Notwithstanding this certification, comments are
invited about impacts this rule may have on small entities.
Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
1532 (Unfunded Mandates Act), requires that the agency prepare a
budgetary impact statement before promulgating any rule likely to
result in a Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more in any one year. If a budgetary
impact statement is required, section 205 of the Unfunded Mandates Act
also requires the agency to identify and consider a reasonable number
of regulatory alternatives before promulgating the rule. We have
determined that the proposed rule will not result in expenditures by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more in any one year. Accordingly,
we have not prepared a budgetary impact statement or specifically
addressed any regulatory alternatives.
List of Subjects in 31 CFR Part 208
Banks, Banking, Debit cards, Disbursements, Electronic funds
transfers, Federal payments, Treasury-sponsored accounts.
0
For the reasons set out in the preamble, we propose to revise and
republish 31 CFR part 208 as follows:
PART 208--MANAGEMENT OF FEDERAL AGENCY DISBURSEMENTS
Authority: 5 U.S.C. 301; 12 U.S.C. 90, 265, 266, 1767, 1789a;
31 U.S.C. 321, 3122, 3301, 3302, 3303, 3321, 3325, 3327, 3328, 3332,
3335, 3336, 6503.
[[Page 23044]]
Sec. 208.1 Scope and application.
This part applies to all Federal payments made by an agency, other
than payments made under the Internal Revenue Code of 1986. Except as
specified in Sec. 208.4, this part requires Federal payments to be
made by electronic funds transfer.
Sec. 208.2 Definitions.
The following definitions apply to this part:
Agency means any department, agency, or instrumentality of the
United States Government, or a corporation owned or controlled by the
Government of the United States.
Direct Express[supreg] card means the prepaid debit card issued to
recipients of Federal benefits by a Financial Agent pursuant to
requirements established by Treasury.
Disbursement means, in the context of payments delivered to
Treasury-sponsored accounts, the performance of the following duties by
a Financial Agent acting as agent of the United States:
(1) The establishment of an account for the recipient that meets
the requirements of the Federal Deposit Insurance Corporation or the
National Credit Union Administration Board for deposit or share
insurance;
(2) The maintenance of such an account;
(3) The receipt of Federal payments through the Automated Clearing
House system or other electronic means and crediting of Federal
payments to the account; and
(4) The provision of recipient access to funds in the account on
the terms specified by Treasury.
Electronic benefits transfer (EBT) means the provision of Federal
benefit, wage, salary, and retirement payments electronically, through
disbursement by a financial institution acting as a Financial Agent.
For purposes of this part and Public Law 104-208, EBT includes, but is
not limited to, disbursement through a Treasury-sponsored account or a
Federal/State EBT program.
Electronic funds transfer means any transfer of funds, other than a
transaction originated by cash, check, or similar paper instrument,
that is initiated through an electronic terminal, telephone, computer,
or magnetic tape, for the purpose of ordering, instructing, or
authorizing a financial institution to debit or credit an account. The
term includes, but is not limited to, transfers made by Automated
Clearing House (ACH), Fedwire, and instant payment networks to accounts
that meet applicable requirements under 31 CFR part 210, including bank
accounts and certain prepaid debit cards and digital wallets.
Federal payment means any payment made by an agency. The term
includes, but is not limited to:
(1) Federal wage, salary, and retirement payments;
(2) Vendor and expense reimbursement payments;
(3) Benefit payments; and
(4) Miscellaneous payments including, but not limited to:
interagency payments; grants; loans; fees; principal, interest, and
other payments related to U.S. marketable and nonmarketable securities;
overpayment reimbursements; payments under Federal insurance or
guarantee programs for loans; and disaster assistance.
Federal/State EBT program means any program that provides access to
Federal benefit, wage, salary, and retirement payments and to State-
administered benefits through a single delivery system and in which
Treasury designates a Financial Agent to disburse the Federal payments.
Financial Agent means a financial institution that has been
designated by Treasury as a Financial Agent for the provision of
electronic funds transfer or EBT services under any provision of
Federal law, including 12 U.S.C. 90, 265, 266, 1767, and 1789a, and 31
U.S.C. 3122 and 3303.
Financial institution means:
(1) Any insured bank as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make
application to become an insured bank under section 5 of such Act (12
U.S.C. 1815);
(2) Any mutual savings bank as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813) or any bank which is eligible to
make application to become an insured bank under section 5 of such Act
(12 U.S.C. 1815);
(3) Any savings bank as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) or any bank which is eligible to make
application to become an insured bank under section 5 of such Act (12
U.S.C. 1815);
(4) Any insured credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752) or any credit union which is
eligible to make application to become an insured credit union under
section 201 of such Act (12 U.S.C. 1781);
(5) Any savings association as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813) which is an insured depository
institution (as defined in such Act) (12 U.S.C. 1811 et seq.) or is
eligible to apply to become an insured depository institution under the
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.); and
(6) Any agency or branch of a foreign bank as defined in section
1(b) of the International Banking Act, as amended (12 U.S.C. 3101).
Indian land has the meaning set forth in 25 U.S.C. 3501(2).
Individual means a natural person.
Recipient means an individual, corporation, or other public or
private entity that is authorized to receive a Federal payment from an
agency, including any individual or entity that is appointed or
otherwise selected as a representative payee or fiduciary, under
regulations of the Social Security Administration, the Department of
Veterans Affairs, the Railroad Retirement Board, or other agency making
Federal payments, to act on behalf of an individual entitled to a
Federal payment.
Secretary means Secretary of the Treasury.
Treasury means the United States Department of the Treasury.
Treasury-sponsored account means an account established pursuant to
Sec. 208.5, such as a Direct Express card account or a U.S. Debit Card
account.
U.S. Debit Card means the prepaid debit card issued to recipients
of certain Federal payments by a Financial Agent pursuant to
requirements established by Treasury.
Sec. 208.3 Payment by electronic funds transfer.
Subject to Sec. 208.4, and notwithstanding any other provision of
law, all Federal payments made by an agency shall be made by electronic
funds transfer.
Sec. 208.4 Waivers.
(a) An individual may request approval from an agency to receive a
Federal payment by paper check in the following circumstances:
(i) payment by electronic funds transfer would impose a hardship
because of the individual's inability to manage an account at a
financial institution or a Treasury-sponsored account due to a mental
impairment; or
(ii) payment by electronic funds transfer would impose a hardship
because of the individual's inability to manage an account at a
financial institution or a Treasury-sponsored account due to the
individual living in a geographic location lacking the infrastructure
to support electronic funds transfers.
[[Page 23045]]
(b) An individual who seeks a waiver under paragraphs (a)(i) or
(ii) of this section must request approval from the agency in a form
and manner determined by such agency pursuant to guidance provided by
Treasury. A waiver granted by an agency under paragraphs (a)(i) or (ii)
of this section may be revoked by the agency pursuant to Treasury
guidance.
(c) An agency may, without obtaining Treasury's prior approval,
certify a Federal payment for disbursement by paper check under the
following circumstances:
(1) Where payment into a foreign country by electronic funds
transfer is not supported by Treasury or is otherwise not feasible due
to the financial infrastructure or political conditions in the foreign
country;
(2) Where the Federal payment is to a recipient within an area
designated by the President or an authorized agency administrator as a
disaster area. This waiver is limited to Federal payments made within
120 days after the disaster is declared;
(3) Where disbursement by paper check is necessary as a result of a
contingency operation as defined in 10 U.S.C. 101(a)(13);
(4) Where a threat may be posed to national security, the life or
physical safety of any individual may be endangered, or a law
enforcement action may be compromised; or
(5) Where the Federal payment will be made to individuals or
entities located on Indian land lacking the infrastructure to support
electronic funds transfers.
(d) An agency must request Treasury's approval to certify a Federal
payment for disbursement by paper check under the following
circumstances:
(1) Where the agency does not expect to make multiple payments to
the same recipient within a one-year period on a regular, recurring
basis but only if the payments are made to an individual or a small
business concern where ``small business concern'' has the meaning given
the term in section 3 of the Small Business Act at 15 U.S.C. 632 and
its implementing regulations;
(2) Where a particular payment is not eligible for deposit to a
Treasury-sponsored account;
(3) Where an agency's need for goods and services is of such
unusual and compelling urgency that the Government would be seriously
injured unless payment is made by a method other than electronic funds
transfer;
(4) Where there is only one source for goods or services and the
Government would be seriously injured unless payment is made by a
method other than electronic funds transfer;
(5) Where the Federal agency identifies a group of recipients that
has a reasonable need for non-electronic payments; or
(6) Where a Federal agency seeks to extend a waiver under Sec.
208.4(c)(2) beyond 120 days after the disaster is declared.
(e) An agency seeking Treasury's approval to utilize a waiver under
paragraph (d) of this section shall submit a written request to
Treasury's Chief Disbursing Officer in such form that Treasury may
prescribe. Treasury reserves the right to reject any such request.
(f) If application of an agency waiver under paragraphs (c) or (d)
of this section would, in Treasury's determination, lead to the agency
initiating an unusually large number or proportion of payments by means
other than electronic funds transfer, Treasury reserves the right to
revoke the waiver in this class of cases and require the agency to work
with Treasury to identify and implement ways to make the payments by
electronic funds transfer.
Sec. 208.5 Accounts for disbursement of Federal payments.
Treasury may designate a Financial Agent to establish and
administer Treasury-sponsored accounts for individuals for the
disbursement of Federal payments. Such accounts may be established upon
terms and conditions that the Secretary considers appropriate or
necessary and shall be made available at a reasonable cost and with the
same consumer protections provided to other account holders at the
financial institution. Treasury may deliver payments to such accounts
and the maintenance of accounts and the provision of account-related
services under this section shall constitute reasonable duties of a
Financial Agent of the United States. This section applies to the
disbursement of Federal payments and payments made under the Internal
Revenue Code of 1986, as amended.
Sec. 208.6 Availability of Treasury-sponsored accounts.
An individual who receives a Federal payment shall be eligible to
open a Treasury-sponsored account under terms and conditions
established by Treasury.
Sec. 208.7 Agency responsibilities.
(a) An agency shall put into place procedures that allow recipients
to provide the information necessary for the delivery of payments to
the recipient by electronic funds transfer to an account at the
recipient's financial institution, a prepaid account designated by the
recipient that meets applicable requirements under 31 CFR part 210, or
a Treasury-sponsored account.
(b) Upon request from Treasury, an agency shall provide Treasury
with a list of the employer identification numbers (EINs) assigned to
the agency that the agency has used to make or receive a Federal
intragovernmental payment during the 12-month period preceding the
request from Treasury as well as a list of the EINs for all Federal
agencies to whom the agency has made a Federal intragovernmental
payment during the same 12-month period.
Sec. 208.8 Recipient responsibilities.
Each recipient who is required to receive payment by electronic
funds transfer shall provide the information necessary to effect
payment by electronic funds transfer.
Sec. 208.9 Compliance.
(a) Treasury will monitor agencies' compliance with this part.
Treasury may require an agency to report on the agency's compliance
with this part in a manner and timeframe prescribed by Treasury.
Required reporting may include information regarding the agency's
efforts to enroll check recipients in electronic funds transfer
payments and the waiver requests the agency has approved and rejected.
(b) The agency's Certifying Officer must ensure prior to certifying
disbursement by paper check that there is an applicable waiver under
Sec. 208.4.
(c) If an agency fails to make payment by electronic funds transfer
as prescribed under this part, Treasury will consider that payment to
be not timely pursuant to 31 U.S.C. 3335, as electronic funds transfer
payments are processed, disbursed, and settled more quickly than checks
and, accordingly, Treasury may assess a charge to the agency pursuant
to 31 U.S.C. 3335.
Sec. 208.10 Reservation of rights.
The Secretary reserves the right, in the Secretary's discretion, to
waive any provision(s) of this part in any case or class of cases.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. 2026-08278 Filed 4-28-26; 8:45 am]
BILLING CODE 4810-AS-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on April 29, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.