Treasury Tax and Loan Service, or TT&L, is a service offered by the

Federal Reserve Bank A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve ...

s of the United States that keeps

tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

receipts in the banking sector by depositing them into select banks that meet certain criteria. TT&L accounts are Treasury accounts created at commercial banks to accept electronic tax payments and to disburse Treasury funds. This is an alternative to the direct deposit of tax payments into Treasury accounts with Federal Reserve banks. There are two types of TT&L accounts: 80% of TT&L accounts clear tax payments overnight, the remainder (note option) accounts receive Treasury funds for longer periods of time. TT&L accounts provide stability to the supply of banking reserves within the banking system. Banking reserves are the

interbank Interbank is a Peruvian provider of financial services. History In 1897, Elias Mujica opened an agency at Jiron de la Union in Lima's historical center under the name of ''Banco Internacional''. In 1934, branches were opened in Chiclayo and ...

"currency" used to settle payments between banks and the government. Management of the supply of reserves within the system is critical to ensuring that interbank payments clear on a daily basis. Because tax payments to the government reduce the amount of reserves in the banking system, the TT&L program provides a buffer for system reserve management, preventing reserve shortfalls on heavy tax payment days which would threaten the ability of banks to settle their payment obligations (ATM transaction and

cheque clearing Cheque clearing (or check clearing in American English) or bank clearance is the process of moving cash (or its equivalent) from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the c ...

). Note option banks, which retain TT&L funds for longer periods, are free to use those funds in any way allowed for deposits, which includes investing them. Note option banks are required to pay interest to the Treasury on deposited funds.

References

{{Reflist Federal Reserve System Taxation in the United States