Securing and Successfully Transferring Treasury Securities In Lieu of Corporate Surety Bond

For Use Only When Choosing to Use a T-Note for Bond Collateral
Step 1

Purchase a Treasury note, or other acceptable security, from a local bank or brokerage firm.  Inform the Bank/Broker of your purpose for buying the securities and the pending transfer to an Alcohol and Tobacco Tax and Trade Bureau (TTB) Circular 154 Safekeeping Account at the St. Louis Federal Reserve Bank (FRB).

The security/collateral you purchase MUST NOT REMAIN with your Bank/Broker.  You are responsible for ensuring that the Bank/Broker you choose has the ability to transfer the security/collateral to the St. Louis FRB.  We will not approve your bond until your security/collateral is on deposit in the Circular 154 Safekeeping Account at the St. Louis FRB.

Note: You cannot use a security purchased through Treasury Direct as collateral security because it cannot be transferred into the Federal Reserve Bank holding account.


Step 2

Once you purchase the securities, you must provide TTB with the following:

- The bank/broker's name and complete address (location where the securities are held)
- The bank/broker's contact person's name and phone number
- The bank's American Banking Association (ABA) Number (also called a Routing number)
- The bank/broker's account number
- Your Employer Identification Number
- Proof of purchase such as a transcript or excerpt of the transaction printout providing:
- Security amount
- CUSIP number
- Maturity date (at least two years in the future)
- Interest rate


Step 3

To receive the interest income from the securities, the T-note owner must designate a bank for direct deposit.  You must provide the following information to TTB at the same time as the information in Step 2:
- The bank's name and complete address (where the interest income will be deposited)
- The bank's contact person's name and phone number
- The bank ABA/Routing number
- The account name and account number
- The account type (checking or savings)


Step 4

Once we receive this information, TTB's National Revenue Center (NRC) will ask the Federal Reserve Bank to set up an account for the applicant.  This will allow the FRB to accept the securities as collateral for the applicant and place it in the Circular 154 Safekeeping account listing TTB as pledgee.


Step 5

TTB will contact you when the account is set up (about two weeks).  You should then notify the bank or broker (listed in step 2) to transfer the securities into that account.


Step 6

The National Revenue Center will provide the proper bond forms and attachments for your specific situation.  You must submit the completed bonds with the appropriate power of attorney and other attachments to TTB.


Step 7

When the FRB receives the securities, they will send NRC a receipt describing the securities and verifying that the securities are on deposit in a Circular 154 Account.  We cannot approve the bond until we receive this receipt.


Step 8

The T-note will automatically 'roll over' at maturity unless TTB is notified at least 45 days prior to maturity that the security is to be released.  The T-note proceeds cannot be released until a superseding bond has been approved or the company has filed and been approved to discontinue operations.

TAX NEWS - NOVEMBER 2009

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