Title 31 of the Code of Federal Regulations, Part 210 is the Treasury rule that governs how the federal government sends and recovers electronic payments through the Automated Clearing House network. It binds federal agencies, the Bureau of the Fiscal Service, and the banks and credit unions that receive federal ACH entries. It covers Social Security benefits, tax refunds, vendor payments, and most other federal disbursements, and it sets out the process the government uses to claw back benefit payments that landed in an account after the recipient died or became legally incapacitated.
What the Regulation Actually Governs
Part 210 doesn’t build a separate government payment system. The ACH network was built by the private sector, and the Treasury plugs into it. Under 31 CFR § 210.3, the regulation formally adopts the Nacha Operating Rules — the same procedures private banks and businesses follow for electronic transfers — so federal payments move through the same channels and formats as a direct deposit from any private employer.1eCFR. 31 CFR 210.3 – Governing Law
When Part 210 and the Nacha rules conflict, Part 210 wins.2eCFR. 31 CFR Part 210 – Federal Government Participation in the Automated Clearing House That matters because Part 210 carries government-specific requirements — unique liability rules, reclamation procedures, account restrictions — that private ACH transfers don’t have.
Where Federal Payments Must Be Deposited
Under § 210.5, federal payments other than vendor payments must go into a deposit account at a financial institution, and the account has to be in the recipient’s name.3eCFR. 31 CFR 210.5 – Account Requirements for Federal Payments Standard Nacha rules would let ACH credits flow into general ledger or loan accounts; Part 210 overrides that so a benefit recipient’s money lands in a checking or savings account they can actually reach, not against a debt.
Vendor payments to businesses and contractors are the exception and can go to a wider range of account types.
What Banks Owe When They Accept Federal ACH Entries
A financial institution that accepts a recipient’s direct deposit authorization must verify the recipient’s identity, and for written authorizations, verify the signature.4eCFR. 31 CFR 210.4 – Authorizations and Revocations of Authorizations If the bank later decides to close an account that receives benefit payments, it has to give the recipient at least 30 calendar days’ written notice before closing, unless fraud is involved.
Banks are allowed to process ACH entries based on the account number alone, even when the name on the entry doesn’t exactly match the account holder’s name. That keeps legitimate payments from bouncing over clerical differences, but it puts the burden of correct account information on the recipient and the paying agency.
If the government loses money because a financial institution mishandled an entry, the bank is liable up to the amount of that entry.2eCFR. 31 CFR Part 210 – Federal Government Participation in the Automated Clearing House That’s true regardless of how Nacha would normally allocate the loss.
What Agencies Owe When They Send Entries
Section 210.6 governs agency conduct. An agency can only receive ACH debit or credit entries with prior written authorization from the Bureau of the Fiscal Service.5eCFR. 31 CFR 210.6 – Agencies Agency liability for mistakes is capped at the amount of the entry: if the agency fails to originate a payment correctly, it owes the recipient for the loss; if it originates duplicate or erroneous entries, it owes the receiving bank, though that liability shrinks if the bank also failed to follow standard commercial practices.
Once a payment is finally credited to a recipient’s account, that credit constitutes full acquittance of the federal government. The payment obligation is satisfied. Agencies can reverse duplicate or erroneous entries, and the government can reverse an entire erroneous file, but reversals must comply with the Nacha time limits, and the government still has to indemnify the receiving institution up to the amount of the reversed entry or file.
Reclaiming Benefits Paid After Death or Incapacity
Subpart B is where Part 210 has real teeth. It’s the mechanism the Treasury uses to recover benefit payments — Social Security, VA, federal retirement — that hit an account after the recipient died or became legally incapacitated. A certifying agency notifies the Bureau of the Fiscal Service, which then issues a Notice of Reclamation using FS Form 133. The notice states the date of death or incapacity, identifies each payment at issue, and gives the total amount the bank may owe.6Treasury Financial Experience. 5 Reclamations
The 60-Day Response Window
The financial institution has 60 calendar days from the notice’s issue date to respond.6Treasury Financial Experience. 5 Reclamations Respond means either returning the funds or supplying the certifications needed to claim limited liability. Missing the window has a hard consequence: the government debits the institution’s Federal Reserve Bank account for the full amount, and that debit is final.
How Far Back the Government Can Reach
The agency itself has to file the reclamation request within 120 calendar days of first learning about the death or incapacity.7eCFR. 31 CFR 210.10 – RDFI Liability There’s also a six-year lookback: an agency generally can’t reclaim payments made more than six years before the notice. One exception matters. If the account balance at the time of the notice exceeds the total post-death payments from the last six years, the six-year cap drops away, and the bank is exposed for everything up to the current balance.
Full Liability Versus Limited Liability
The default is full liability. The bank owes the total of every benefit payment received after the death or incapacity.7eCFR. 31 CFR 210.10 – RDFI Liability With monthly benefits continuing to deposit for months before anyone flags the death, the totals build fast.
Under § 210.11, a bank that had no actual or constructive knowledge of the death or incapacity when the payments came in can claim limited liability. To qualify, it has to certify on the reclamation notice:8eCFR. 31 CFR Part 210 Subpart B – Reclamation of Benefit Payments
- That it had no actual or constructive knowledge of the death or incapacity when the payments were credited or withdrawn.
- The date it first learned of the death or incapacity, from any source.
- The name, last known address, and phone number of the recipient, any co-owners, anyone authorized to withdraw, and anyone who actually withdrew funds after the death or incapacity.
Limited liability is calculated in two parts. The primary amount is the lesser of the account balance at the time of the notice (plus any additional benefit payments deposited before the institution fully responds) or the total outstanding amount. If the agency still can’t collect everything, the bank may owe an additional amount equal to the lesser of the benefit payments received within 45 days after the death or incapacity, or whatever balance remains uncollected.8eCFR. 31 CFR Part 210 Subpart B – Reclamation of Benefit Payments
Protesting or Rebutting a Reclamation
If the bank believes the agency missed the 120-day filing deadline, it can protest by checking the appropriate box on the electronic FS Form 133 in the Automated Reclamation Processing System. The Fiscal Service verifies the timeline with the agency and answers within 45 days. A valid protest ends the reclamation.6Treasury Financial Experience. 5 Reclamations
A different situation: the bank has evidence the recipient is actually alive. Acceptable proof includes a government-issued photo ID with an issue date after the supposed date of death, a signed and notarized statement from the recipient, or a written confirmation from the certifying agency. The bank still has to respond in the processing system while presenting the evidence. If the agency finds the reclamation was issued in error, it has to return the improperly reclaimed funds.6Treasury Financial Experience. 5 Reclamations
What Part 210 Does Not Cover
Subpart B governs the relationship between the government and the bank, not between the government and the individual account holder. Part 210 does not authorize or direct a bank to debit the recipient’s account, though it preserves whatever rights the bank has under state law or its own account agreement to recover funds from the account.8eCFR. 31 CFR Part 210 Subpart B – Reclamation of Benefit Payments When a bank receives a reclamation notice, it has to give the account owner a copy of any notice the Fiscal Service requires, so the account holder knows what’s happening. Any dispute between the bank and the account holder over the actual funds plays out under state law, not this regulation.
Part 210 also doesn’t reach payments under the Internal Revenue Code or federal payments that never travel through the ACH network.2eCFR. 31 CFR Part 210 – Federal Government Participation in the Automated Clearing House The separate mandate that federal payments generally must be made electronically in the first place lives in 31 CFR Part 208, not here.9eCFR. 31 CFR 208.3 – Payment by Electronic Funds Transfer