Federal Reserve Banks Share Information about Advance Child Tax Credit Payments
Check and Direct Deposit Details for Financial Institutions
The American Rescue Plan’s expansion of the Child Tax Credit (CTC) will supplement the earnings of families receiving the tax credit. In support, the Federal Reserve Banks are working closely with the Department of the Treasury’s Bureau of the Fiscal Service (Fiscal Service) to distribute the advance CTC payments in the coming months. As your service provider, the Federal Reserve Banks are committed to keeping your institution informed, and we hope that you find the following resources beneficial in preparation for the upcoming CTC payments.
Advance CTC payments will be disbursed in monthly installments on these payment dates: July 15, August 13, September 15, October 15, November 15 and December 15. Payments will be issued either by direct deposit, as long as correct banking information has previously been provided to the IRS, or by check. Debit cards will not be issued for CTC payments in 2021.
The check symbol will be 40447, which was also used for round three Economic Impact Payments (EIPs) and will be displayed in the MICR line. The Treasury check for a CTC payment will have identifying text in the memo field stating, “Advance Child Tax Credit Payment” and “[payment month, year]” (e.g., July, 2021). Below is a sample image of the front of a CTC check payable under the Act:
Fiscal Service encourages financial institutions and check cashers to verify the security features of a U.S. Treasury check, and to determine the status of CTC checks by using the Treasury Check Verification System (TCVS) for bulk queries using an automated programming interface (API).
ACH company entry description
As Treasury communicated on June 10, from July through December 2021, CTC payments will be issued with a settlement date on the 15th of each month unless the 15th falls on a weekend or holiday. If the 15th falls on a weekend or holiday, the settlement date will be adjusted to the preceding business day. Treasury plans to transmit the payment files to ACH the day prior to the settlement date.
In accordance with Nacha Operating Rules, Internal Revenue Service (IRS) payments will be issued with the one-position Identification Code Designator (ICD) followed by the RTN in the Company Identification field.
The following table maps the field values found in the ACH Company/Batch Header (“5”) record of IRS advance CTC payments processed by Treasury:
NOTE: We also want to remind our customers that ACH returns should follow the normal return procedures in similar situations for tax refunds to have the payment re-issued.
The Federal Reserve Banks offer multiple services to assist your institution with processing the upcoming CTC payments, including the FedPayments® Reporter ACH Received Entries Detail Report and the FedACH Risk® RDFI Alert Service. If your institution already subscribes to these services for analysis and alerts, you may need to adjust the criteria due to CTC payment specifications.
Federal Reserve Cash Services has currency inventories sufficient to meet the needs of financial institutions during the disbursement of advance CTC payments. The Federal Reserve Banks continue to work closely with our supply chain partners to understand any changes in demand for currency and will support them as needed. We ask our financial institution customers to place reasonable orders for currency that meet the demand of their customers, and not order more currency than is needed. Also, please continue to reassure customers that there will be an ample inventory of currency available to meet their needs during the CTC disbursement period.
The IRS has created a special Advance Child Tax Credit Payments in 2021 page designed to provide the most up-to-date information about the credit and the advance payments, including:
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