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Vol 1 - Part 5 - Chapter 5000 T/L 552

UNCOLLECTED AND LOST CHECKS

This chapter provides instructions for agencies to


follow to recover funds that result from unpaid checks.

Section 5010 - Introduction

Checks not paid for any reason by the bank on


which they're drawn, except as specified by the
Department of the Treasury (Treasury), will be
processed for fund recovery according to the debit
voucher procedures in this chapter.

Section 5015 - Authority

Section 3(b) of the Government Losses in Shipment


Act, as amended (40 U.S.C. 725), provides that the
Secretary of the Treasury is authorized to execute and
deliver agreements of indemnity to enable the United
States to obtain replacement of any instrument or
document received by the United States which, after
having been so received, became lost, destroyed, or so
mutilated as to impair its value.

Section 5020 - Depositary and Agency Procedures for


Unpaid Checks

5020.10 - Depositaries

When a check is returned unpaid to the depositary


with which the check was originally deposited, the
depositary will immediately (1) prepare and execute an
SF 5515 (Appendix No. 1 to I TFM 5-3000) and (2) charge
the amount of the unpaid item in the U.S. Treasury's
General Account.

Check endorsements should contain the agency


location code (ALC) and depositor's address (I TFM
5-2040.40) to allow depositaries to prepare SF 5515s
without referencing the related SF 215: Deposit Ticket.
If such information is not readable, the depositary
will have to refer to the related SF 215.

5020.20 - Depositors

Upon receipt of an unpaid check and copies of the


SF 5515 from the depositary, depositors will adjust
their accounts and proceed at once to collect the
amount as though no check had been received. If a check
is lost (whether before or after deposit), depositors
must adjust their accounts and immediately request the
drawer to stop payment on the check. Depositors will
process for deposit, as new business, new checks
received as a result of the above actions.

5020.30 - Adjustments of SF 5515


If a depositary prepares an SF 5515 and charges
the amount of an unpaid check to Treasury's General
Account under the wrong ALC, the depositor whose ALC
has been charged in error will, upon receipt of the
unpaid check and copies of the SF 5515 from the
depositary, prepare an SF 215 (I TFM 5-3000) to offset
the debit. The usual copies of the SF 215 and the
unpaid check will be forwarded to the depositary, along
with an explanation of the action.

5020.40 - Special Arrangement Between Depositary and


Depositor

Depositaries may defer charging the Treasury's


General Account under an arrangement with the
depositor, by which uncollectible checks are
automatically reprocessed for collection or returned to
the depositor to be presented again, or replaced by new
checks. Under such an arrangement, SF 5515s would not
be prepared to charge the account unless the checks are
not collected or replaced within an agreed period of
time.

Section 5030 - Replacement of Lost, Destroyed, and


Mutilated Checks

Immediately upon discovering loss, destruction, or


mutilation of checks, agencies should notify the drawer
to request a stop payment be placed on the original and
a replacement check be reissued. The agency must
attempt to obtain a replacement without an agreement of
indemnity.

When it is not possible to obtain a replacement


without an agreement of indemnity, the case should be
transmitted to the Bureau of the Public Debt (see
Contacts section) for execution of the agreement of
indemnity. The following information must be included
in the request.

1. A complete description of the check and a


photocopy, if possible. The description should include
at a minimum, the type of check, date issued, amount,
payee, and purchaser (for cashier's checks or money
orders).

2. A statement from the bank issuing the check


stating that the check has not been presented for
payment. This statement should clearly show the name
and address of the bank to which the agreement of
indemnity should be sent, and the name and address of
the bank upon which the original check was drawn, if
different.

3. A complete address of the office to which the


replacement check is to be delivered.
4. A recommendation by the agency that an
agreement of indemnity be issued.

Upon approval of the agency's recommendation, the


Bureau of the Public Debt will execute and deliver the
agreement of indemnity, as appropriate. To expedite the
replacement of the check, all agreements of indemnity
will be transmitted directly by the Bureau of the
Public Debt to the bank issuing the replacement check.
A copy of the agreement, together with a copy of the
transmittal letter will be sent to the office
requesting the agreement of indemnity and to the office
to which the replacement check is to be delivered.

CONTACTS

General inquiries regarding this chapter should be


directed to--

Banking Operations Branch


Banking Management Division
Financial Management Service
Department of the Treasury
3700 East West Highway, Room 501A
Hyattsville, MD 20782
(Telephone 202-874-6900)

Inquiries regarding Agreements of Indemnity In


Connection With The Replacement of Checks should be
directed to

Department of the Treasury


Bureau of the Public Debt
Division of Financial Management
P.O. Box 1328
Parkersburg, WV 26106-1328
(Telephone 304-480-8200)