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Special thanks to @Marcy Cauthon, AAP, AFPP, APRP, NCP, Director, On-Demand Education for helping me write this blog!

When our members hear U.S. Treasury reclamations, they often think of ACH benefit payments first. However, there is also a separate reclamation process for issued U.S. Treasury checks.

So, Why Discuss U.S. Treasury Check Reclamations?  

1. Direct deposit, which sends funds directly to a checking or savings account; or  
2. Direct Express^® Card, which loads funds onto a prepaid debit card instead of a bank account.

In cases where a waiver is granted, the following exceptions may apply: 

The Secretary of the Treasury shall review and, as appropriate, revise procedures for granting limited exceptions where electronic payment and collection methods are not feasible, including exceptions for:

• Individuals who do not have access to banking services or electronic payment systems,
• Certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208,
• National security or law enforcement-related activities where non-EFT transactions are necessary or desirable and
• Other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance. 

The check reclamation process is a recovery procedure used by the Bureau of the Fiscal Service (Fiscal Service) to obtain refunds (reclamations) from a presenting financial institution for paid U.S. Treasury checks. It is important to note that all U.S. Treasury checks, regardless of payment type, are subject to check reclamation procedures. 

For ACH federal government reclamations, the Green Book is often referenced. When dealing with U.S. Treasury Check reclamations, the appropriate reference is the Gold Book.

Reclamation actions may be initiated against a presenting financial institution when: 

• A check is presented with a forged or unauthorized endorsement,
• A benefit check is negotiated after the payee’s death or
• A check has been materially altered. 

This table shows how long the Fiscal Service has to reclaim funds from the presenting financial institution: 

The presenting financial institution is liable for the principal amount of the check and, if applicable, any accrued interest, penalties and administrative fees. This liability is not contingent upon the financial institution’s ability to collect from prior endorsers. Financial institutions are responsible for paying reclamations in a timely manner to avoid a direct debit, which occurs on the 31^st calendar day if the reclamation has not been paid or protested. The Fiscal Service will only accept reclamation protests from presenting financial institutions, not their clients or other correspondents. 

Notice of Direct Debit 

All check reclamations are issued to the presenting financial institution via a Notice of Direct Debit, which outlines the amount demanded, the reason for the demand and instructions for processing. A Summary of Debt Statement may also be provided when applicable. These documents, along with related reports, are generated by the Bureau of the Fiscal Service and transmitted through the Federal Reserve Bank (FedMail^®).

The Notice of Direct Debit serves as the initial notice to the presenting financial institution and may include a copy of the payee’s claim if applicable. If the Fiscal Service provides a sequence number and a deposit date, then a check image will not be provided. 

Presenting financial institutions have 30 calendar days from the date of the Notice of Direct Debit to make full payment or submit a protest to the Fiscal Service to avoid a direct debit to their Federal Reserve master account. If no action is taken, the Fiscal Service will automatically process the Direct Debit on the 31^st day.

Response procedures include: 

Step 1: Verify all information on the Notice of Direct Debit. If any information is incorrect, the presenting financial institution may protest the reclamation action. 

Step 2: If not protesting, authorize the Fiscal Service to debit the presenting financial institution’s Federal Reserve master account for the total amount due, including any interest, penalties and administrative fees that appear on the Summary of Debt Statement. 

Step 3: Submit authorization to the Fiscal Service via fax (215.516.8201) or e-mail (NPRCReclamation@fiscal.treasury.gov). A copy of the Notice of Direct Debit should be retained for the presenting financial institution’s records.  

The presenting financial institution will also receive a monthly Summary of Debt Statement, which includes:  

• Identifying check information
• Reclamation details
• Status of the reclamation and any applicable charges (interest, penalties and administrative fees) 

The Summary of Debt Statement is a multi-part document that includes:  

• A listing of outstanding reclamations and related details
• An explanation of Fiscal Service authorities, procedures, protests and collections
• A description of each column on the Summary of Debt Statement.  

The Summary of Debt Statement will show one of the following three reclamation status codes per line item:

The “C” code indicates that the Fiscal Service has referred or will refer the debt to the Treasury Offset Program and/or to another federal entity to offset payments owed to the financial institution. If the debt is not collected through an administrative offset, the Fiscal Service will initiate a Treasury Check Offset, directing the Federal Reserve Bank to offset credits from treasury checks presented by the financial institution. These offset credits are applied toward the financial institution’s outstanding debt. 

To learn more about handling offsets, protesting reclamations or requesting additional information on a reclamation, refer to the Gold Book.